Repatriating Foreign-Source Income for U.S. Taxpayers: Minimizing the Tax Impact of Transferring Offshore Income and Gains

Provisions in the Internal Revenue Code provide opportunities to defer U.S. tax on foreign income and profits earned by U.S. taxpayers. However, many companies and individuals, even the largest multinational firms, will eventually need to repatriate some or all of those foreign-source earnings. This often involves a recognition event, unless the foreign-source income has been previously subject to U.S. income tax or some other deduction or another provision applies.

The tax consequences of repatriating income depend upon not only the character of the gain or income held abroad, but also the nature of the foreign entity that earned the income. Corporations, which have utilized earnings stripping strategies such as related-party debt transactions, will be faced with significant challenges due to the newly proposed and far-reaching Section 385 “debt to equity” regulations.

Tax advisers must have a thorough grasp of tax and operational consequences of repatriating foreign-source income held offshore to avoid costly tax consequences. At the same time, there are circumstances in which repatriation is necessary and even advantageous to U.S. resident multinational taxpayers. A critical skill for advisers is identifying situations in which repatriation can be accomplished in a tax-efficient manner.

Listen as our experienced panel provides a practical guide to the tax opportunities, pitfalls and strategies of repatriating foreign-source income.

1. Deferral regime for foreign-source income and gains
2. Impact of foreign entity classification on repatriation treatment
3. Identifying deductions and calculating income on repatriation events
4. Strategies for minimizing tax impact of repatriating foreign-source income
5. Impact of proposed Section 385 regulations

The panel will discuss these and other important issues:

• Creating a repatriation strategy
• Impact of Section 385 proposed regulations on earnings stripping intra-company debt strategies
• Identifying deductions and credits which would reduce taxable income on repatriation
• Repatriation issues for individual and small business taxpayers

Learning Objectives

After completing this course, you will be able to:

• Identify tax consequences in repatriating offshore income
• Decide which situations are appropriate for repatriation
• Recognize the impact of the proposed Section 385 regulations on loan transactions between U.S. and foreign related entities
• Indicate whether a repatriation strategy complies with IRS rules against earnings stripping

• 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 at mid-level within the organization, supervising other preparers/accountants. Specific knowledge and understanding of foreign entity structures and foreign information reporting requirements. Familiarity with foreign income deferral rules.

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).