“Substantial economic presence” nexus standard formally embodied in regulation. As expected after recently having filed an economic impact statement, the Mississippi Department of Revenue on November 1 filed its final remote seller use tax regulation with the Secretary of State. The new regulation will be effective December 1, 2017, and contains numerous changes from the original proposal issued in January (see prior Jones Walker coverage here, here, here, and here). The notice contains no public hearing or comment period, so it is unlikely there will be any further revisions prior to the effective date. … [Read more...] about Mississippi Files Final Remote Seller Use Tax Regulation
Accelerate required minimum distributions. The 2014 Tax Proposal would have required participants who became 5% owners of their employer after age 70 ½, but before retirement, to begin to take distributions by April 1 of the following year. Under current law, the required date is April 1 of the year following retirement. Additionally, the 2014 Tax Proposal would have required that distributions to certain beneficiaries be made within five years following the death of the participant.. Under current law, distributions may, in some cases, be over the life expectancy of the beneficiary. … [Read more...] about Potential Impact of Trump Tax Reform Plan on Retirement Plans: What’s Old Could Be New Again
There is little authority on what constitutes tax-exempt income tax for this purpose. It is generally believed that only income that is permanently exempt from tax should result in a basis increase under Section 705(a)(1)(B). For example, interest on tax-exempt government bonds that is excluded under Section 103 and life insurance proceeds that are excluded under Section 101(a) should be covered by this provision, whereas income that is realized but not recognized in connection with a like-kind exchange (Section 1031), condemnation (Section 1033), or reorganization (Section 354) should not trigger a basis increase under Section 705. The rationale being that the latter provisions are intended not to forgive the tax on income realized, but merely to defer it until some future time. The question is which category of income should PTI fall under – income that is permanently exempt from tax or income that is realized but not recognized until some future time. … [Read more...] about Is a Distribution of Previously Taxed Income “Exempt from Tax”?
Pursuant to the Attributed Income System, all “attributed income” will be taxed to shareholders on an accrual basis at the time the income is earned by the corporation, regardless of whether such income is actually distributed to the shareholders. This method of taxing the shareholder is similar to the taxation of a U.S. shareholder on subpart F income pursuant to the controlled foreign corporation provisions under U.S. law. The effective tax rate under this Attributed Income System would be 35 percent, as under the current Chilean system. Thus, the corporation would be subject to a maximum corporate tax rate of 25 percent (beginning in 2017), with the nonresident shareholder being subjected to a “withholding tax” of 35 percent, but offset by a full credit for the tax already imposed at the corporate level. The only difference between this new system and the existing integrated tax regime is the loss of deferral at the shareholder level in situations where … [Read more...] about Recent Chilean Tax Reform Reinforces Need for U.S. Tax Treaty
The question is what benefits would a foreign person that is resident in a third country treaty jurisdiction derive from using an entity that is resident in another treaty jurisdiction under the derivative benefits article, if such person cannot qualify for a lower rate of U.S. withholding tax. The answer is the ability to gain access to more favorable local tax benefits, such as (i) a lower corporate income tax rate; (ii) a favorable regime for the taxation of intellectual property; (iii) a participation exemption on dividends and capital gains; (iv) no outbound withholding tax on interest, dividends or royalties; (v) no CFC rules; (vi) no thin capitalization rules; (vii) a better treaty network; and (viii) no transfer pricing rules. … [Read more...] about Local Law Shopping Through “Derivative Benefits” re: Tax on Foreign Income