International Aspects of U.S. Income Taxation

International Aspects of U.S. Income Taxation

Description

This book addresses international aspects of U.S. tax law—the rules that govern U.S. taxation of U.S. activity by foreign persons and foreign activity by U.S. persons. It is an outgrowth of materials I have prepared for various courses in international taxation offered in the LL.M. program in taxation at New York University School of Law over the last twenty years. Though primarily attended by LL.M. students from the United States and numerous foreign countries, J.D. students typically also enroll in the courses, and there is no reason why the book may not be used with either group of students. The book is informed not only by teaching experience, but also by my experience practicing international tax law. I have tried to cover not only what is academically interesting, but also what is practical and important to tax practitioners in the private and public sectors. International tax draws from many sources and is exceedingly difficult. The book is designed to capture within its covers all that a student needs (other than the Internal Revenue Code and Treasury Regulations) to gain a sophisticated understanding of the field. There are many fine primers and treatises on international tax, but the rules are so intricate that students, who rarely have time to read outside sources, learn best by focusing on the primary material. My observation is that it is desirable that students studying international tax have prior or contemporaneous academic or practical exposure to corporate tax and at least passing familiarity with partnership tax. Each section of the book begins with carefully selected reading assignments in the Code and Regulations, followed by introductory “Notes” and then primary and secondary materials (cases, rulings, studies, etc.). In order to illustrate the effect of treaties, the reading assignments often include provisions of the U.S. Treasury Model Treaty and the treaty between the United States and the Netherlands, which are reproduced in the Appendix. Most sections conclude with a problem, which may be used as a vehicle for class lecture or discussion, designed to text understanding of the material in as practical a setting as brief hypothetical patterns permit. The Notes provide introductory explanation and probe policy and practical issues raised only peripherally or obscurely by the other assigned reading material. Though primarily intended as a teaching resource, the book may also serve as a research and practice tool for practitioners. The Notes, which cite numerous cases, administrative materials, and law review articles, provide overview and analysis of most relevant practice areas and are an entry point to numerous research topics. In that sense the Notes function as a concise analytical compendium, with more depth than a primer but not as exhaustive as a treatise. A table of contents follows immediately and a table of authorities and index are at the end of the book. The book, which is now in the third edition, reflects developments through July 1, 2007. Since the second edition, which reflected the extensive international provision of the American Jobs Creation Act of 2004, there have been significant developments, mostly new regulations, in virtually all of the major fields. I will mention some of the highlights. On inbound matters, several treaties have adopted zero withholding on subsidiary-to-parent dividends and there is a new U.S. Model Treaty, which broaches the OECD project on attribution of profits to a permanent establishment and how the transfer pricing approach embraced by the project meshes with existing treaties. There are new transfer pricing regulations governing services and intangibles and proposed regulations on cost sharing, with global securities dealing regulations on the way. A huge transfer pricing dispute over inbound marketing was settled and important conflicts are in the pipeline, and advance pricing agreements continue to roll out. In the foreign tax credit area, new regulations govern partnership allocations of credits, and controversial proposed regulations address “technical taxpayer” issues arising in group consolidation regimes and reverse hybrid structures and “voluntary” taxes generated in duplicative tax benefit arbitrage structures. The baskets are now down to two. The status of dual charter companies has been cleared up in regulations. In subpart F, new Section 654(c)(6)’s look-through rule has had a significant effect. Contract manufacturing regulations are expected soon and the government has announced that the substantial assistance piece of the foreign base company services rules will be significantly curtailed. There are also new proposed regulations on previously taxed income. In cross-border mergers and acquisitions, new regulations authorize mergers involving foreign companies, detail numerous intricacies in Section 367, and spell out the nettlesome rules on carryover of attributes and preservation of Section 1248 potential in assets reorganizations. Temporary regulations provide useful guidance on inversion transactions. Extensive regulations on dual consolidated losses were adopted, as were proposed regulations taking a very different approach to branch currency transactions. It has been a very busy two years for regulations writers.

Publication Date

2007

Edition

3

International Aspects of U.S. Income Taxation

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