Tax Considerations of Repatriation: Previously Taxed E&P, Non-PTEP, Return of Capital, Multi-Tiered Distributions

Before the 2017 Tax Act multinationals businesses avoided paying U.S. taxes by not repatriating foreign earnings to its U.S. shareholders. Profits stayed in the country of origin or were repatriated to the U.S. and taxed. Under Section 965 of the same tax act, a transition tax was levied on all previously unrepatriated earnings. Now even though the tax rates are lower, the decision to repatriate earnings is much more complex.

Distributions are made from previously taxed earnings and profits (PTEP) first. Although these earnings were previously taxed, foreign tax credits and foreign currency gains and losses must be considered. Following PTEP, distributions are made from non-PTEP. For non-PTEP distributions, a DRD (dividends received deduction) under Section 245A may be available.

Once E&P is exhausted, shareholders have a return of basis and calculations of potential gains to consider. Further complicating the calculations are tiered multi-national corporations. Here calculations can be required at each level and recharacterization of gains under Section 1248(c)(2) may need to be considered. Advisers to multi-national businesses and shareholders need be aware of the tax implications of returning money to its U.S. investors.

Listen as our authoritative panel explains the issues that must be addressed when repatriating earnings to U.S. shareholders.

1. CFCs
2. Taxation regimes
3. GILTI
4. FDII
5. Subpart F
6. Section 965 transition tax
7. E&P
   1. PTEP and ordering rules
   2. Non-PTEP and 245A DRD
   3. Return of basis
8. Foreign currency gains and losses
9. Foreign withholding and tax credits

The panel will cover these and other critical issues:

• Identifying distributions for ordering rules
• Analyzing distributions of PTEP and non-PTEP for tax consequences
• Calculating gain or loss on returns of capital
• Determining foreign currency gains and losses
• When non-PTEP distributions may be eligible for a 245A dividends received deduction

Learning Objectives

After completing this course, you will be able to:

• Identify U.S. shareholders subject to tax on repatriation
• Determine when a foreign tax credit may be available relative to a distribution
• Decide tax consequences of repatriating returns of capital
• Ascertain when a distribution is a non-PTEP distribution

• 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).