chapte U.S. Tax ation of aEiR宝
1 Chapter 16: U.S. Taxation of Foreign-Related Transactions
US. TAX OF FOREIGN RELATED TRANSACTIONS Jurisdiction to tax Taxation of u.s. citizens residents Taxation of nonresidents U.S. taxation of foreign activity Foreign sales corporations
2 U.S. TAX OF FOREIGNRELATED TRANSACTIONS Jurisdiction to tax Taxation of U.S. citizens & residents Taxation of nonresidents U.S. taxation of foreign activity Foreign sales corporations
Jurisdiction to Tax Taxpayer's country of citizenship Taxpayer's country of residence Type of income earned Location where the income is earned 3
3 Jurisdiction to Tax Taxpayer’s country of citizenship Taxpayer’s country of residence Type of income earned Location where the income is earned
Taxation of u.s. citizens and residents (1 of 3) U.S. citizens and resident aliens taxed on worldwide income Income earned in foreign countries or U.s. possessions receives special treatment The foreign tax credit permits U.s taxpayers to avoid double taxation
4 Taxation of U.S. Citizens and Residents(1 of 3) U.S. citizens and resident aliens taxed on worldwide income Income earned in foreign countries or U.S. possessions receives special treatment The foreign tax credit permits U.S. taxpayers to avoid double taxation
Taxation of u.s. citizens and Residents (2 of 3) Foreign tax credit Directly reduces U.S. tax liability FTC and FEl are mutually exclusive FTC restricted for some taxpayers FTC limited to lesser of Foreign tax actually paid OR ((foreign taxable inc)/(worldwide taxable income)X(U.S tax liability 5
5 Taxation of U.S. Citizens and Residents(2 of 3) Foreign tax credit –Directly reduces U.S. tax liability –FTC and FEI are mutually exclusive –FTC restricted for some taxpayers –FTC limited to lesser of Foreign tax actually paid OR ((foreign taxable inc)/(worldwide taxable income)) x (U.S. tax liability)