Repatriation of Untaxed Foreign Earnings: Strategies to Minimize Tax Liability, Section 965 Issues, Pitfalls to Avoid

For U.S. taxpayers, the repatriation of foreign earnings back to the U.S. is one of the most complex aspects of current U.S. tax law. Income earned overseas that has not been taxed in the foreign country may be a taxable event once the income is distributed. Tax counsel must be well versed in the application of U.S. tax rules regarding foreign earnings and available planning tools to minimize tax liability for U.S. taxpayers.

The GILTI rules capture and tax income that was not taxed under Subpart F or would not otherwise be taxed in the United States. However, a CFC can continue to have untaxed earnings. Ten percent of a CFC shareholder's allocable portion of qualified business asset investment less specified interest expense is excluded from GILTI. Untaxed income is captured and accumulated as Section 1248 E&P. These accumulated earnings under Section 1248 can provide tax-saving and planning opportunities.

In addition, Section 311(b) provides that if a corporation distributes property at a fair market value that is greater than the corporation's basis in the property, the gain will be treated as a sale to the distributee at its fair market value. This, coupled with gain recharacterization requirements of Section 1248 and the 245 DRD (dividend received deduction), presents a significant tax-saving opportunity for multinational companies and U.S. taxpayers.

Listen as Michael Dana, Partner at Husch Blackwell, provides tactics to mitigate taxes paid by CFC shareholders, Section 965 issues, Section 245A dividend received deduction from certain foreign corporations distributions, Section 311(b) distributions, Section 964(e) stock sales, Section 1248, and other key items for repatriating foreign earnings.

1. Repatriation of foreign earnings: overview and applicable rules
2. Section 245A dividends received deduction
3. Section 1248 E&P, untaxed foreign earnings
4. 311(b) distributions
5. 964(e) stock sales
6. Planning techniques and best practices for tax counsel

The panelist will cover these and other critical issues:

• Application of Section 1248
• Minimizing tax on earnings repatriated as Section 311(b) distributions
• Utilizing Section 245A DRD
• Mitigating tax on Section 964(e) stock sales

Learning Objectives

After completing this course, you will be able to:

• Identify tax-saving strategies that can be used to repatriate foreign earnings
• Determine how the Section 245A DRD can reduce tax on distributions
• Decide how Section 1248 prevents CFC shareholders from characterizing gains
• Ascertain when a distribution under Section 1248 might be tax free

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).