Tax Cuts and Jobs Act - International Tax Provisions - For the 2019 Tax Year (Course Id 1539)

Taxes - Taxes for Course Id 1539

The Tax Cuts and Jobs Act of 2018 was a significant change to the US tax code. The Tax Cuts and Jobs Act is organized into four primary sections of: Individual Tax Reform, Business Tax Reform, Exempt Organizations and International provisions. This is an updated course for 2019 that will provide a thorough review of the International Tax Provisions portion of the Tax Cuts and Jobs Act Bill (H.R.1.) and it also includes the provisions that have changed for 2019 for International Tax Provisions. Part 1 of this course will provide a summary description of all provisions referenced in the Tax Cuts and Jobs Act for the International Tax Provisions section. It will identify which sections changed for 2018 and which were updated for 2019. Each provision will reference a more detailed description of the provision in Part 2 of this course.  The detailed description will review the pre-2018 law, provide a detailed description of the changes for 2018, and identify the effective date that the provision became effective.

NASBA QAS - Text - Technical - NASBA Registry - IRS Enrolled Agents - 1539

Course Learning Objectives

• Review the International Tax Provisions section of the Tax Cuts and Jobs Act and identify which sections changed for 2018 and which were updated for 2019;
• Recognize the tax rate changes associated with Subpart F
• Identify the changes to foreign income taxation that were implemented with the Tax Cuts and Jobs Act
• Recognize where to find more information about each provision in part 2 of this course; and
• Identify the effective dates for the International Tax Provisions portion of the Tax Cuts and Jobs Act.

Chapter 1 - Tax Cuts and Jobs Act - International Tax Provisions

Course Learning Objectives

Introduction

Part 1 - Overview of the Tax Cuts and Jobs Act

INTERNATIONAL TAX PROVISIONS

Establishment of Participation Exemption System for Taxation of Foreign Income

Deduction for foreign-source portion of dividends received by domestic corporations from specified 10-percent owned foreign corporations

Modification of subpart F inclusion for increased investments in United States property

Special rules relating to sales or transfers involving specified 10-percent owned foreign corporations

Treatment of deferred foreign income upon transition to participation exemption system of taxation and deemed repatriation at two-tier rate

Election to increase percentage of domestic taxable income offset by overall domestic loss treated as foreign source

Rules Related to Passive and Mobile Income

Deduction for foreign-derived intangible income and global intangible low-taxed income

Special rules for transfers of intangible property from controlled foreign corporations to United States shareholders

Modifications Related to Foreign Tax Credit System

Repeal of section 902 indirect foreign tax credits; determination of section 960 credit on current year basis

Source of income from sales of inventory determined solely on basis of production activities

Separate foreign tax credit limitation basket for foreign branch income

Acceleration of election to allocate interest, etc., on a worldwide basis

Modification of Subpart F Provisions

Repeal of inclusion based on withdrawal of previously excluded subpart F income from qualified investment

Repeal of treatment of foreign base company oil related income as subpart F income

Inflation adjustment of de minimis exception for foreign base company income

Look-thru rule for related controlled foreign corporations made permanent

Modification of stock attribution rules for determining CFC status

Modification of definition of United States shareholder

Elimination of requirement that corporation must be controlled for 30 days before subpart F inclusions apply

Current year inclusion of foreign high return amounts or global intangible low-taxed income by United States shareholders

Prevention of Base Erosion

Base erosion using deductible cross-border payments between affiliated companies

Limitations on income shifting through intangible property transfers

Certain related party amounts paid or accrued in hybrid transactions or with hybrid entities

Shareholders of surrogate foreign corporations not eligible not eligible for reduced rate on dividends

Provisions Related to the Possessions of the United States

Extension of deduction allowable with respect to income attributable to domestic production activities in Puerto Rico

Extension of temporary increase in limit on cover over of rum excise taxes to Puerto Rico and the Virgin Islands

Extension of American Samoa economic development credit

Other International Reforms

Restriction on insurance business exception to the passive foreign investment company rules

Repeal of fair market value of interest expense apportionment

Modification to source rules involving possessions

Part 1 - Review Questions

Part 2 - Detailed Information and Present Law

INTERNATIONAL TAX PROVISIONS

A. Establishment of Participation Exemption System for Taxation of Foreign Income

1. Deduction for foreign-source portion of dividends received by domestic corporations from specified 10-percent owned foreign corporations

2. Modification of subpart F inclusion for increased investments in United States property

3. Special rules relating to sales or transfers involving specified 10-percent owned foreign corporations

4. Treatment of deferred foreign income upon transition to participation exemption system of taxation and deemed repatriation at two-tier rate

5. Election to increase percentage of domestic taxable income offset by overall domestic loss treated as foreign source

B. Rules Related to Passive and Mobile Income

1. Deduction for foreign-derived intangible income and global intangible low-taxed income

2. Special rules for transfers of intangible property from controlled foreign corporations to United States shareholders

C. Modifications Related to Foreign Tax Credit System

2. Source of income from sales of inventory determined solely on basis of production activities. 75

3. Separate foreign tax credit limitation basket for foreign branch income

4. Acceleration of election to allocate interest, etc., on a worldwide basis

D. Modification of Subpart F Provisions

1. Repeal of inclusion based on withdrawal of previously excluded subpart F income from qualified investment

2. Repeal of treatment of foreign base company oil related income as subpart F income

3. Inflation adjustment of de minimis exception for foreign base company income

4. Look-thru rule for related controlled foreign corporations made permanent

5. Modification of stock attribution rules for determining CFC status

6. Modification of definition of United States shareholder

7. Elimination of requirement that corporation must be controlled for 30 days before subpart F inclusions apply

8. Current year inclusion of foreign high return amounts or global intangible low-taxed income by United States shareholders

Part 2a - Review Questions

9. Limitation on deduction of interest by domestic corporations which are members of an international group

E. Prevention of Base Erosion

1. Base erosion using deductible cross-border payments between affiliated companies

2. Limitations on income shifting through intangible property transfers

3. Certain related party amounts paid or accrued in hybrid transactions or with hybrid entities

4. Shareholders of surrogate foreign corporations not eligible not eligible for reduced rate on dividends

F. Provisions Related to the Possessions of the United States

1. Extension of deduction allowable with respect to income attributable to domestic production activities in Puerto Rico

2. Extension of temporary increase in limit on cover over of rum excise taxes to Puerto Rico and the Virgin Islands

3. Extension of American Samoa economic development credit

G. Other International Reforms

1. Restriction on insurance business exception to the passive foreign investment company rules

2. Repeal of fair market value of interest expense apportionment

3. Modification to source rules involving possessions

Part 2b - Review Questions

Glossary