Managing excess foreign tax credits
Article Abstract:
The reduction in US tax rates by the Tax Reform Act of 1986 decreased the benefits from excess foreign tax credits accrued by US corporations. US corporations are allowed to take foreign tax credits against their US tax liabilities. Corporations using tax strategies that create excess foreign tax credits are at a disadvantage because they cannot immediately use all foreign taxes paid or incurred against the US tax. In order to reduce excess foreign tax credits, corporations have the options of: reducing foreign taxes directly; increasing foreign source taxable income; or combining both approaches. Corporations can reduce foreign taxes directly through: treaty shopping; transfer pricing; or investing in foreign tax shelters. Corporations can increase foreign source taxable income through: a global dividend policy; changes in corporate structure and transaction locations; and deduction allocations.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1989
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401(k) plan sponsors, the Labor Department is watching you!
Article Abstract:
Employers who are sponsoring 401(k) plans should carefully manage these schemes because the Dept of Labor has become more active in auditing such plans. The department is performing more regular and stricter audits and intensifying its drive for the implementation of plan regulatory compliance statutes under the Employee Retirement Income Security Act or ERISA. In addition, the number of fiduciary liability lawsuits is increasing, exposing 401(k) plan sponsors without proper fund management policies. To avoid audits and lawsuits, companies should develop procedurally prudent written policies and guidelines for plan management. They should also avoid full-service or bundled service providers and instead examine the portfolio investment performance of vendors and use comparative performance databases to select the best vendor.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1998
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