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2016 U.S. International Tax Guide

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The 2016 U.S. International Tax Guide is an essential desk reference designed for practitioners advising businesses and individuals on the U.S. taxation of international transactions.

 

Replete with practical examples, the Guide describes the federal taxation of U.S. taxpayers' foreign income and foreign taxpayers’ U.S. income.

 

 

Designed for practitioners advising on the U.S. taxation of international transactions, this year's Guide has been updated to cover the major changes that affect withholding and reporting requirements under the “FATCA” provisions.  Additional coverage includes:

 

  • Foreign tax credit
  • Tax treatment of controlled foreign corporations
  • Taxation of foreigners’ U.S. business and investment income
  • Foreign investment in U.S. real property
  • Foreign earned income and foreign housing exclusions
  • U.S. income tax treaties
  • And much more!

 

See for yourself how the 2016 U.S. International Tax Guide can save you time by allowing you to get to the tax information you need – even faster.

 

 

Note: Bulk quantity discounts are available. Please call customer service at 1-800-372-1033.


TABLE OF CONTENT

¶110. FOREIGN INCOME TAXATION — GENERAL
PRINCIPLES
OVERVIEW 
¶110.01. Interplay Between Foreign Tax Rules and General
Federal Income Tax Rules
¶110.02. U.S. Jurisdiction to Tax Foreign Persons and Income
    A. Scope of U.S. Power to Tax Income 
    B. Pattern of Taxation 
¶110.03. The Persons Taxed
    A. Introduction
    B. Classification of Taxable Persons
         1. Introduction
         2. Classification Rules 
¶110.04. Source Rules for Income, Deductions and Losses
    A. Purposes of the Source Rules
    B. Overview of the Source Rules
    C. Conduit Treatment for Source Characterization
    D. ‘‘United States’’
    E. Within and Without the United States 
    F. Source of Income
         1. Income from Capital 
         2. Compensation for Personal Services
         3. Rents and Royalties
         4. Disposition of Interests in Real Property
         5. Sale or Exchange of Personal Property
         6. Insurance Underwriting Income
         7. Certain Transportation Income 
         8. Space and Certain Ocean Activity Income 
         9. International Communications Income 
         10. Foreign Currency Transactions 
         11. Notional Principal Contracts 
         12. Securities Lending Transactions 
         13. Scholarships, Fellowships, Prizes and
         Other Awards 
         14. Transactions Involving the Transfer
         of Computer Programs 
         15. REMIC Inducement Fees 
         16. Late Fees for Untimely Delivery of U.S.
         Treasury Obligations (‘‘Fails’’ Charges) 
         17. None of the Above: Decisional Source Rules 
    G. Source of Taxable Income 
         1. Introduction 
         2. Attribution of Deductions to Gross Income 
         3. Terminology 
         4. Mechanics 
         5. Operating Rules 
         6. Treatment of Specific Deductions 
    H. Allocation and Apportionment of Losses 
    1. Dispositions of Property 
    2. Net Operating Loss Deduction
¶120. FOREIGN PERSONS’ U.S. ACTIVITIES
OVERVIEW 
¶120.01. Foreign Persons 
¶120.02 Taxation of Foreign Persons’ Income Effectively
Connected with a U.S. Trade or Business 
    A. U.S. Trade or Business Activity 
         1. General Concepts 
         2. Specific Applications 
         3. Imputation of Trade or Business Activity from
         One Person to Another 
         4. Trade or Business and Permanent Establishment 
    B. Trade or Business Activity Within the United States 
    C. Trade or Business Activity Within the United States
    During the Taxable Year 
    D. Income Effectively Connected with the Conduct of
    U.S. Trade or Business 
         1. Overview 
         2. U.S. Source Effectively Connected Income 
         3. Foreign Taxpayers with Both Effectively Connected and
         FDAP Income
         4. Foreign Source Effectively Connected Income 
         5. Special Rules Relating to Effectively Connected Income 
         6. Effectively Connected Taxable Income 
    E. Branch Level Taxes on U.S. Trades or Businesses 
         1. Overview 
         2. Taxpayers Subject to the Branch Level Tax 
         3. Branch Profits Tax 
         4. Coordination with Income Tax Treaties 
         5. Branch Profits Tax in Business Terminations and
         Restructurings
         6. Coordination with Second Level Dividend
         vi U.S. INTERNATIONAL TAX GUIDE
         Withholding Tax 
         7. Branch Level Tax on Interest Paid or Deducted 
¶120.03. Taxation of Foreign Persons’ Income Not Effectively
Connected with a U.S. Trade or Business 
    A. Overview
    B. Income Not Effectively Connected with a U.S. Trade or
    Business
         1. Gain from the Sale of Capital Assets
         2. Interest 
         3. Dividends 
         4. Rent 
         5. Certain Salary and Other Compensation for Personal
         Services 
         6. Annuities 
         7. Pensions
         8. Social Security Benefits 
         9. Timber, Coal and Iron Ore Disposal Payments 
         10. Contingent Gain from Certain Intangibles 
         11. Residual REMIC Income 
         12. Gambling Winnings 
         13. Miscellaneous Fixed or Determinable Income 
    C. U.S. Source Gain or Loss from the Disposition of
    Capital Assets 
         1. Foreign Corporations
         2. Nonresident Alien Individuals 
¶120.04. Exempt Income 
    A. In General 
    B. Exemptions Specific to Foreign Individuals 
         1. Certain Annuities Received Under Qualified Plans 
         2. Certain Gambling Winnings 
         3. Compensation Received by Participants in Training
         or Exchange Programs 
         4. Certain U.S. Savings Bond Income 
    C. Exemptions Specific to Foreign Entities 
         1. Income from Railroad Rolling Stock 
         2. Income from Communications Satellites 
    D. Exemptions Available to Individuals or Entities
         1. Income from International Operation of Ships
         and Aircraft 
         2. Income Exempt Under Treaty 
    E. Exempt Income of Foreign Governments and International
    Organizations
         1. Foreign Governments and International Organizations
         2. Certain Income of Foreign Central Bank of Issue
    F. Exempt Income of Employees of Foreign Governments and
    International Organizations 
¶120.05. Income from Disposition of an Interest in U.S. Real
Property 
    A. Overview
    B. Foreign Persons Affected 
    C. U.S. Real Property Interests
         1. In General
         2. Real Property
         3. Interests in Real Property
    D. Dispositions of U.S. Real Property Interests by
    Foreign Persons
         1. Overview
         2. Sales of U.S. Real Property Interests
         3. Sale of Interest in a Partnership, Trust or Estate 
         4. Sale of U.S. Real Property Interest by a Partnership
         Trust or Estate
         5. Certain Transactions Involving Foreign Corporations 
         6. Certain Distributions by U.S. Corporations to Foreign
         Shareholders
         7. Coordination with General Code Nonrecognition
         Provisions 
         8. Election by Foreign Corporation to Be Treated as a
         Domestic Corporation 
         9. Real Estate Investment Trusts and Regulated Investment
         Companies
         10. Application of Tax Treaties to U.S.
         Real Property Interests 
         11. Real Property Interests in the Virgin Islands
    E. Computation of Gain or Loss from the Disposition of
    U.S. Real Property Interests
    F. Computation of Tax and Rates 
    G. Special Application of Branch Profits Tax
    H. Withholding on Disposition Payments to Foreign
    U.S. Real Property Interest Holders 
¶ 120.06. Specially Taxed Businesses 
    A. Foreign Insurance Companies
         1. In General 
         2. Computation of Tax
    B. Tax on Gross Transportation Income
¶ 130. U.S. PERSONS’ FOREIGN ACTIVITIES
OVERVIEW
¶ 130.01. Taxation of Worldwide Income
viii U.S. INTERNATIONAL TAX GUIDE
¶ 130.02. Foreign Earned Income and Housing
Cost Exclusions
    A. Overview
    B. Basic Qualifications
    C. Foreign Tax Home
         1. Bona Fide Resident Test 
         2. Foreign Presence Test
    D. Excludable Foreign Earned Income
         1. General Rules 
         2. Excludable Amount
         3. Treatment of Deductions Attributable to Earned Income 
         4. Disallowance of Foreign Tax Credit
    E. Treatment of Foreign Housing Costs
    F. Electing Exclusions
    G. Filing Returns While Foreign Status Is in Doubt 
    H. Related Matters 
         1. Moving Expenses
         2. Meals and Lodging Costs
         3. U.S. Wage Taxes
         4. Self-Employment Tax
         5. Employees of U.S. Government and Its Agencies
         6. Unearned Income Medicare Contribution Tax
I. Illustrative Example
¶130.03. Foreign Tax Credit 
    A. Introduction 
    B. Taxpayers Entitled to the Credit
         1. In General 
         2. Special Situations
    C. Election of the Credit 
         1. In General
         2. Credit vs. Deduction
    D. Accounting for the Credit 
         1. Election to Use Accrual Method 
         2. Year of the Credit
         3. Foreign Taxes Paid in Foreign Currency 
         4. Later Adjustments to Foreign Taxes Accrued 
    E. U.S. Taxes Available for Foreign Tax Offset 
    F. Creditable Foreign Taxes 
         1. Introduction 
         2. A ‘‘Tax’’
         3. An ‘‘Income Tax’’ 
         4. An Income Tax Levied by a Foreign Country 
         5. Single Foreign Levy and Multiple Foreign Levies 
         6. A Tax in Lieu of an Income Tax Levied by a Foreign
         Country 
         7. Holding Period for Stock Subject to Withholding Taxes
    G. Mechanics of the Foreign Tax Credit