The future of mixed-source income: the Intel appeal and other threats

Article Abstract:

US multinational corporations, seeking to avoid increased taxes on mixed-source income, should consider incorporating foreign branches, using foreign sales corporations, or investing in tax havens. Generally, US multinationals maximize foreign source components of their income from inventory property sales so as to minimize taxable income. However, the IRS wants to curtail this technique by limiting the source of income regs and changing the inventory sales rules. Although the IRS lost the Intel and Phillips cases, it will continue its campaign to reduce foreign tax credits by defining source income.

United States, International aspects, Corporate taxes, Corporate income taxes, Corporations, international

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U.S. competitiveness and the foreign tax credit

Article Abstract:

Foreign tax credit rules were made even more complex by the Tax Reform Act of 1986 and US competitiveness is adversely affected by this complexity. The rules regarding sourcing of income are one example of this complexity. The sourcing rules determine what is considered domestic income and thus liable for additional taxes, even if it is already taxed by a foreign country. Many countries where US multinationals do business have lower tax rates than ours, causing many such businesses to be in an excess foreign tax credit position, which raises their worldwide effective tax rate.

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Clinton's foreign tax credit proposals mean increased costs for doing business abroad

Article Abstract:

Clinton's 1993 budget includes many alterations in tax policy for American firms doing business overseas. Research and development expenditure deductions will be sourced to the actual site of research for purposes of deductions and the foreign tax credit. Interest earned on capital investments that produce foreign oil and gas extraction income and shipping income would be considered passive income for tax purposes. The effect of these new laws on the already over-burdened foreign tax credit area of taxation isdiscussed.

Analysis, Petroleum industry, Transfer pricing, Research and development tax credit

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