Chairman:
Lee Cleland, Ernst & Young LLP, Houston, TX
Bart Bassett, Morgan Lewis & Bockius LLP, Palo Alto, CA
Monday, September 22, 2008
8:00 a.m. Continental Breakfast and Registration
9:00 a.m. Introduction and Overview of the Fundamentals of U.S. International Taxation
- A review of basic international tax concepts and definitions, including permanent establishments (PEs), controlled foreign corporations (CFCs) and Subpart F income
Lee Cleland, Ernst & Young LLP, Houston, TX
9:15 a.m. Understanding the Source of Income Rules
- Sourcing income from sales of personal property, inventory property, U.S. manufactured export property, and foreign manufactured import property
- How to source dividend, interest, royalty and rental income as well as contingent use asset gains
- Characterizing and sourcing income from sales of assets, stock or intangibles
Darren Miles, Cooper Industries Inc., Houston, TX
10:30 a.m. Refreshment Break
10:45 a.m. Allocating and Apportioning Expenses for Computing Foreign Source Taxable Income
- Understanding the general allocation and apportionment rules of Reg. Sec. 1.861-8
- Key definitions in applying the apportionment rules – classes of income, types of expenses, statutory v. residual groupings, gross-to-gross method of apportionment
- Apportionment of interest, losses, stewardship, state taxes and other general administrative expenses
- Working with the latest research and development apportionment regulations – interrelationships with cost sharing plans
- Understanding the importance of the affiliated group apportionment rules under Reg. Sec. 1.861-14T
Darren Miles, Cooper Industries Inc., Houston, TX
12:00 p.m. Luncheon
1:15 p.m. Understanding the Foreign Tax Credit – Part 1
- How the IRS taxes foreign income earned by a U.S. corporation – what constitutes a creditable foreign levy
- Claiming a credit v. deduction for foreign tax payments
- Computing the Sec. 78 gross-up for foreign taxes on dividend payments from foreign subsidiaries
- Procedural issues, including foreign tax credit carryovers
Lee Cleland, Ernst & Young LLP, Houston, TX
Michael Masciangelo, Ernst & Young LLP, Houston, TX
2:30 p.m. Refreshment Break
2:45 p.m. Understanding the Foreign Tax Credit – Part 2
- Utilizing foreign tax credits on dividends from first through sixth-tier foreign corporation – Interrelationship with the expense apportionment rules
- Applying the related party look-through rules for dividend and interest payments
- Understanding how the separate foreign tax credit basket limitation is computed for passive, 10-50 and overall basket income
Lee Cleland, Ernst & Young LLP, Houston, TX
Michael Masciangelo, Ernst & Young LLP, Houston, TX
4:00 p.m. Understanding the Basics of Income Tax Treaties and the Permanent Establishment Concept
- International Tax Treaty Construction
- Use of Tax Treaties in Planning
- P.E. or no P.E. – that is the question
- The limitation on benefit provisions
- Treaties in the check-the-box environment
- Section 894(c)
Kendra M. Massumi, Baker McKenzie, Houston, TX
5:15 p.m. Questions and Answers
5:30 p.m. Meeting Adjourns for the day
Tuesday, September 23, 2008
8:00 a.m. Continental Breakfast – Outside Conference Room
9:00 a.m. Chairpersons’ summary and overview
9:15 a.m. How the Subpart F Rules Operate
- Definitions of controlled foreign corporation and U.S. shareholder
- New final regulations on U.S. shareholder’s pro rata share of CFC’s Subpart F income
- Understanding the different categories of Subpart F income – working with the branch rules for foreign sales and manufacturing activities
- New Section 954(c)(6) look-through rule for foreign personal holding company income – law and planning considerations
- Exceptions and limitations on imputed dividends under the Subpart F Rules – treatment of PTI (previously-taxed income), including new proposed Section 959 regulations
- Affirmative use of Subpart F – making loans to U.S. shareholders from first or lower-tier CFCs
Bart Bassett, Morgan Lewis & Bockius LLP, Palo Alto, CA
10:30 a.m. Refreshment Break
10:45 a.m. Computing E&P for U.S. Tax Reporting and Other Purposes
- Importance of earnings and profits in U.S. tax planning for foreign operations: reporting, foreign tax credit, Subpart F, PFIC, etc.
- Pooling post-86 E&P and ordering of distributions for indirect credits
- Determining the functional currency – translation issues
- Making accounting and tax elections for U.S. GAAP
Riaz Salam, Ernst & Young LLP, Austin, TX
12:00 p.m. Luncheon
1:15 p.m. Transfer Pricing Under Sec. 482
- General issues surrounding transfer pricing under Sec. 482
- Intercompany transfer of goods
- Intercompany transfer of services
- Intercompany loans
- Intercompany licensing
- Cost sharing arrangements
Bart Bassett, Morgan Lewis & Bockius LLP, Palo Alto, CA
2:30p.m. Refreshment Break
2:45 p.m. How the U.S. Taxes Gain from a Sale or Reorganization Involving Shares in a Foreign Corporation
- Understanding the recharacterization rules of Sec. 1248 – treatment of deemed foreign dividends distributions
- Obtaining foreign tax credit benefits on sales of CFC stock
- Obtaining deferral of gain under Sec. 367(a) in establishing a foreign corporation of joint venture entity
- Compliance with the U.S. reporting requirements for international mergers and reorganizations under 367(b)
Sean King, Williams Mullins, Raleigh, NC
4:15 p.m. Questions and Answers
4:30 p.m. Meeting Adjourns for the Day