Tag Archives: international tax

U.S. Taxpayers and Foreign Tax Credits

globeThe U.S. federal tax system provides for the direct foreign tax credit and the indirect foreign tax credit.  U.S. taxpayers may claim the direct foreign tax credit as a dollar-for-dollar offset against their U.S. federal income tax liability.  The credit is claimed for foreign taxes paid directly by the U.S. taxpayer on foreign source income earned outside the United States.  The direct foreign tax credit can be claimed by a U.S. individual or corporation that pays foreign tax on foreign source income from activities engaged in directly in a foreign country.  The direct foreign tax credit is also available for

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Nonresident Foreign Individual’s Gain from Sale of U.S. Partnership Interest Is Taxable ECI

In Legal Advice Issued by Field Attorneys (LAFA 20123903F), the IRS ruled that a nonresident foreign individual’s gain on the sale of an interest in a U.S. partnership was subject to U.S. federal taxation.  The gain on the sale was taxable as effectively connected income (“ECI”).  The gain was also subject to an interest charge on the deferred tax liability under I.R.C. Section 453A since the sale was structured as an

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