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Dianne Mehany Comments on Taxing U.S. Shareholders of Foreign Corporations

February 12, 2018, Tax Notes

Section 962 provides an election for individuals who are U.S. shareholders of foreign corporations to be taxed at corporate rates on amounts included in income under section 951(a) and to claim section 960 deemed paid credits for subpart F inclusions. [Treasury officials suggested at the American Bar Association Section of Taxation meeting February 9 in San Diego that use of the election would aid individuals in avoiding the higher repatriation tax.]

. . .

But an election under 962 to be taxed as a corporation and avoid the higher repatriation tax “is not as simple as it sounds, and not really a feasible option for many individuals,” Dianne Mehany of Caplin & Drysdale told Tax Analysts. “There are a number of consequences to that election, including especially that a taxpayer would not be able to access the cash to pay the repatriation tax without incurring a second level of tax.”

For the full article, please visit Tax Notes’ website (subscription required).

Excerpt taken from the article “Treasury Officials Preview Upcoming Transition Tax Guidance” by Amanda Athanasiou for Tax Notes.


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