iTAX GLOBAL

• Limitation on Subpart F income.
  
• Amount taxable on investments in U.S. property.
  
• Amount and character of gains on the sale of controlled foreign corporations (i.e., control meaning greater than 50% vote or value ownership by U.S. shareholders).
  
• U.S. interest expense apportionment impacting the foreign tax credit.
  

Earnings & Profits

How can an undefined term be a critical Building Block of U.S. tax?

Earnings and profits, or E&P, is an economic concept that reflects the amount of funds available for distribution to shareholders. E&P, while similar to taxable income, is not a clearly defined concept in the Internal Revenue Code but rather the term and concept has evolved over the years through regulations, rulings and case law.

U.S. shareholders of foreign corporations are required to maintain records supporting the current year and accumulated amount of E&P from the later of a foreign corporation's date of incorporation or February 28, 1913.

We have helped clients compute, document, and analyze E&P and it's impact on the following non-exhaustive list of documents and computations:

• Forms 5471, 8858, 8865 - information forms generally filed annually with the IRS by U.S. owned foreign legal entities (corporations, branches, and partnerships).
  
• Taxability of deemed or actual distributions as dividends vs. returns of capital.
  
• Foreign tax deemed paid on actual or deemed dividends