The proposed regulations seek to clarify and expand the section 892 tax exemption for certain income received by foreign governments. Specifically, the regulations address issues related to the "commercial activity limitation," which previously resulted in controlled entities forfeiting the entire exemption if engaging in any commercial activity. The key changes include: 1) classifying investments and trading in financial instruments as non-commercial activities; 2) clarifying that the nature, not purpose, of an activity determines if it's commercial; and 3) providing that disposing of U.S. real property will not alone constitute a commercial activity. The regulations aim to ameliorate the harsh effects of the previous all-or-nothing approach to commercial activities under the exemption.
The document summarizes recent developments regarding mutual funds investing in commodities. Specifically, it discusses:
1) A Senate hearing where Senators criticized the IRS for private letter rulings allowing mutual funds to invest in commodities through offshore subsidiaries, claiming this maneuvered around rules limiting commodity investments.
2) In response, the IRS suspended new private letter rulings on this issue and will re-examine whether such income should be considered qualifying income for mutual funds.
3) This action creates uncertainty for mutual funds' ability to invest in commodities until the IRS issues new guidance.
This document provides an overview of Form 8938 filing requirements. It discusses who must file Form 8938, what types of foreign assets are considered specified foreign financial assets (SFFAs) that must be reported, and some exceptions. Key points include:
- Form 8938 must be filed by U.S. citizens, residents, and some nonresidents who hold specified foreign financial assets above the reporting threshold.
- SFFAs include foreign financial accounts and other foreign assets held for investment, such as stocks, bonds, and interests in foreign entities.
- Assets like personal residences and retirement accounts are usually not considered SFFAs. However, foreign real estate held through a foreign entity must be reported by
Tier 1 of Regulation A+ provides an exemption for
securities offerings of up to $20 million in a 12-
month period while Tier 2 provides an exemption
for securities offerings of up to $50 million in a 12-
month period. An issuer of $20 million or less of
securities in its offering can elect to proceed under
either Tier 1 or Tier 2.
Position Paper No. 3-Pursuing Government R D Engagements-2Tony Mackey
The document discusses the various types of contracts and agreements used by the US government to procure goods and services or provide financial assistance. It outlines 20 different types of contractual instruments for procurement ("contracts") and assistance ("assistance agreements" like grants and cooperative agreements). The document then provides brief descriptions of major contract types like fixed-price and cost reimbursement contracts. It also describes assistance agreements and other transaction agreements, noting their differences from contracts. Finally, it proposes a custom solution for commercial product labs to obtain federal R&D funding by combining elements of different agreement types.
Do Your Withholding Processes Comply with FATCA?CBIZ, Inc.
The recently enacted Foreign Account Tax Compliance Act (FATCA) added a chapter to the Internal Revenue Code designed to prevent U.S. persons from using offshore accounts and investments to evade U.S. tax. Effective July 1, 2014, any person making a payment of U.S. source income to either a Foreign Financial Institution (FFI) or a Non-Financial Foreign Entity (NFFE) must consider whether it is subject to FATCA.
United Health Group [PDF Document] Form 10-Qfinance3
This document is UnitedHealth Group's quarterly report filed with the SEC for the quarter ended September 30, 2004. It includes condensed consolidated financial statements such as the balance sheet, statements of operations, and cash flows. It also provides notes to the financial statements, management's discussion of financial results, market risk disclosures, and certifications of internal controls. The balance sheet shows the company had over $8 billion in current assets including cash, investments, and accounts receivable as of September 30, 2004. Total assets were over $17 billion.
This document summarizes a seminar by J.P. Morgan on the Foreign Account Tax Compliance Act (FATCA). FATCA aims to identify U.S. persons invested in foreign accounts by imposing new reporting and withholding requirements on foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs). FFIs must enter agreements to report U.S. account information to the IRS or face 30% withholding on U.S. payments, while NFFEs must certify they have no substantial U.S. owners or provide owner information to avoid withholding. The seminar covers key FATCA definitions, requirements, exceptions, and timeline, as well as preliminary IRS guidance that requests industry comments
This document is an IRS Form 56 that provides instructions for notifying the IRS of the creation or termination of a fiduciary relationship. Key details:
1. The form is used by fiduciaries like executors, trustees, or guardians to establish that they have authority to act on tax matters for another person or entity.
2. It allows the fiduciary to receive tax notices and communicate with the IRS regarding tax returns and liabilities.
3. Parts of the form provide spaces to identify the taxpayer and fiduciary, describe the fiduciary authority, specify tax years involved, and revoke or terminate previous notices.
The document summarizes recent developments regarding mutual funds investing in commodities. Specifically, it discusses:
1) A Senate hearing where Senators criticized the IRS for private letter rulings allowing mutual funds to invest in commodities through offshore subsidiaries, claiming this maneuvered around rules limiting commodity investments.
2) In response, the IRS suspended new private letter rulings on this issue and will re-examine whether such income should be considered qualifying income for mutual funds.
3) This action creates uncertainty for mutual funds' ability to invest in commodities until the IRS issues new guidance.
This document provides an overview of Form 8938 filing requirements. It discusses who must file Form 8938, what types of foreign assets are considered specified foreign financial assets (SFFAs) that must be reported, and some exceptions. Key points include:
- Form 8938 must be filed by U.S. citizens, residents, and some nonresidents who hold specified foreign financial assets above the reporting threshold.
- SFFAs include foreign financial accounts and other foreign assets held for investment, such as stocks, bonds, and interests in foreign entities.
- Assets like personal residences and retirement accounts are usually not considered SFFAs. However, foreign real estate held through a foreign entity must be reported by
Tier 1 of Regulation A+ provides an exemption for
securities offerings of up to $20 million in a 12-
month period while Tier 2 provides an exemption
for securities offerings of up to $50 million in a 12-
month period. An issuer of $20 million or less of
securities in its offering can elect to proceed under
either Tier 1 or Tier 2.
Position Paper No. 3-Pursuing Government R D Engagements-2Tony Mackey
The document discusses the various types of contracts and agreements used by the US government to procure goods and services or provide financial assistance. It outlines 20 different types of contractual instruments for procurement ("contracts") and assistance ("assistance agreements" like grants and cooperative agreements). The document then provides brief descriptions of major contract types like fixed-price and cost reimbursement contracts. It also describes assistance agreements and other transaction agreements, noting their differences from contracts. Finally, it proposes a custom solution for commercial product labs to obtain federal R&D funding by combining elements of different agreement types.
Do Your Withholding Processes Comply with FATCA?CBIZ, Inc.
The recently enacted Foreign Account Tax Compliance Act (FATCA) added a chapter to the Internal Revenue Code designed to prevent U.S. persons from using offshore accounts and investments to evade U.S. tax. Effective July 1, 2014, any person making a payment of U.S. source income to either a Foreign Financial Institution (FFI) or a Non-Financial Foreign Entity (NFFE) must consider whether it is subject to FATCA.
United Health Group [PDF Document] Form 10-Qfinance3
This document is UnitedHealth Group's quarterly report filed with the SEC for the quarter ended September 30, 2004. It includes condensed consolidated financial statements such as the balance sheet, statements of operations, and cash flows. It also provides notes to the financial statements, management's discussion of financial results, market risk disclosures, and certifications of internal controls. The balance sheet shows the company had over $8 billion in current assets including cash, investments, and accounts receivable as of September 30, 2004. Total assets were over $17 billion.
This document summarizes a seminar by J.P. Morgan on the Foreign Account Tax Compliance Act (FATCA). FATCA aims to identify U.S. persons invested in foreign accounts by imposing new reporting and withholding requirements on foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs). FFIs must enter agreements to report U.S. account information to the IRS or face 30% withholding on U.S. payments, while NFFEs must certify they have no substantial U.S. owners or provide owner information to avoid withholding. The seminar covers key FATCA definitions, requirements, exceptions, and timeline, as well as preliminary IRS guidance that requests industry comments
This document is an IRS Form 56 that provides instructions for notifying the IRS of the creation or termination of a fiduciary relationship. Key details:
1. The form is used by fiduciaries like executors, trustees, or guardians to establish that they have authority to act on tax matters for another person or entity.
2. It allows the fiduciary to receive tax notices and communicate with the IRS regarding tax returns and liabilities.
3. Parts of the form provide spaces to identify the taxpayer and fiduciary, describe the fiduciary authority, specify tax years involved, and revoke or terminate previous notices.
Staffscapes, Inc. is a Human Resources Outsourcing firm that specializes in HR, Payroll & Benefits. We recently presented this slide show to a group of Colorado Small Business Owners and Managers and are sharing it with the general public today.
What Happens Off-Shore, Stays Off-Shore - NOT oliviajrowe
Dennis Brager discusses the issues and penalties surrounding undisclosed foreign bank accounts and assets. FBARs must be filed for foreign accounts over $10,000 and failure to do so can result in both criminal and civil penalties, including prison time and fines up to 50% of the highest account balance. The IRS now has access to data from FATCA, Swiss bank tax amnesties, whistleblowers, and foreign banks closing accounts of noncompliant U.S. clients. The offshore voluntary disclosure program allows taxpayers to avoid criminal prosecution but charges a penalty of 27.5% of undisclosed assets. Strict documentation is required for the disclosure.
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013LexisNexis
Tax laws are constantly evolving. In fact, the only thing you can count on is change—and industry-leading tax content from LexisNexis®.
Find the latest LEXIS® FEDERAL TAX JOURNAL QUARTERLY and other tax related publications on the LexisNexis® Store - http://www.lexisnexis.com/store/catalog/catalog.jsp?pageName=catalogProducts&catId=992&id=137
From assessing tax ramifications of acquisitions, spin-offs, recapitalizations and other actions … to coordinating compliance requirements … to international tax planning, LexisNexis delivers a wealth of tax resources and time saving tools to help you keep pace with rapidly morphing tax regulation.
Colorado MMIP | Permanent Medical Marijuana Rules, Adopted 10, 2014coloradommip
The document defines terms used in the rules for Colorado's Medical Marijuana program. It provides definitions for terms like "child-resistant", "restricted access area", "batch number", "container", "good cause", "pesticide", "production batch", "retail marijuana", "sample", and "security alarm system". The definitions were created based on input from public health experts, consumer advocates, and industry representatives.
This document discusses the allocation and apportionment of expenses and how it affects foreign tax credit benefits. It covers key definitions such as class of income, statutory groupings, and residual groupings. It provides examples of how interest, research and experimental, stewardship, and state taxes and charitable deductions are allocated and apportioned. It also discusses adopting a plan to apportion selling, general and administrative expenses. The document examines how expense apportionment impacts the calculation of foreign source taxable income and the foreign tax credit limitation.
The document provides details of a student's school-based assessment project on workplace attitudes and relationships. It includes an introduction outlining the research topic, acknowledgements, a table of contents listing the criteria covered, and sections addressing the project title and aims, methodology used, findings and limitations. The student investigated how skills, attitudes and attributes of employees impact workplace relationships at the National Land Agency. They distributed questionnaires, conducted interviews and observed interactions. The findings suggested staff could improve politeness towards customers, even when faced with inappropriate attitudes. The student recommended maintaining discipline and courtesy in all workplace interactions.
The document provides details of a student's school-based assessment project on office orientation and procurement and inventory management. It includes sections on the aims of the assessment, functions of the department studied, methodology used including questionnaires and interviews, findings from the research, and the impact of office equipment. The key findings were that the business studied operates primarily in an open-plan office layout and employees reported having a generally good relationship with their coworkers. The research showed the importance of the office orientation and procurement department in improving the business's growth, services, and efficiency.
Guidelines for office administration sbaLisa Forbes
This document provides guidelines for completing a School Based Assessment (SBA) project on office administration for the Caribbean Secondary Education Certificate (CSEC). It outlines the required sections and content for the SBA, including:
1. Preparation with a title page, aim, and correspondence letter.
2. Gathering data through a methodology outlining data collection and analysis, questions asked during research, and an activities schedule.
3. Addressing regulations by stating relevant legislation, how it was learned, health and safety practices observed, and staff rules complied with.
4. Presenting findings in a report on results and recommendations, and explaining the use and suitability of office equipment for tasks.
This document provides an overview of the taxation of foreign taxpayers in the United States. It discusses two types of income subject to tax: income effectively connected to a U.S. business, which is taxed at progressive rates, and fixed or determinable annual or periodic income from U.S. sources, which is generally taxed at a 30% rate. Exceptions include portfolio interest, interest on securities, and gains from the sale of property that are not effectively connected. The Foreign Investment in Real Property Tax Act treats gains from the sale of U.S. real property as effectively connected income. The branch profits tax and earnings stripping rules aim to prevent base erosion through interest payments between related parties.
Treasury & IRS Continue Action Against Corporate Inversions [Whitepaper]LexisNexis
On April 8, 2016, the IRS and Treasury took additional action against corporate inversions and issued temporary, proposed, and final regulations targeting: (1) transactions structured to avoid the purposes of IRC Sections 7874 and (2) certain post-inversion tax avoidance transactions. [T.D. 9761 (final and temporary regulations) and 81 FR 20858 and 81 FR 20912 (proposed regulations)].
Treasury notice creates need for caution for companies contemplating inversionsGrant Thornton LLP
Treasury notice creates need for caution.
The Treasury Department’s recent rules try to make tax inversions less financially attractive, so companies need to analyze whether the deals are still worth pursuing. Read more about inversions: http://gt-us.co/1oH7qCg
Doing business in the united states presentation 101028 (1)Denis Dovgopoliy
The document provides an overview of key considerations for doing business in the United States, including:
1) Regulatory environment covers areas like antitrust, consumer protection, intellectual property, accounting standards.
2) Choice of entity includes LLC, LP, C Corp, S Corp which provide liability protection.
3) Transfer pricing is important for related party transactions to reflect arm's length prices and avoid penalties.
Inst 8918-Instructions for Form 8918, Material Advisor Disclosure Statementtaxman taxman
This document provides a correction to the Instructions for Form 8918 Material Advisor Disclosure Statement. It notes errors in two bullet points under the heading "Who is a Material Advisor" and provides corrected versions. Specifically, the word "expects" should be replaced with "expect" in the second and fourth bullet points. The document also states that the Instructions for Form 8918 will not be updated at this time but the correction will be included in a future revision.
NEW WHISTLEBLOWER INCENTIVES AND PROTECTION IN THE DODD-FRANK ACTptcollins
On July 21, 2010, President Obama signed into law the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (“Dodd-Frank Act”). The legislation is primarily designed to increase overall regulation of the financial industry, but it also contains numerous provisions designed to encourage and protect whistleblowers in and outside of the financial industry.
NMM Law Alert
Business and Business Income Lecture Notesgetabelete
This document discusses business income and its taxation under Ethiopian law. It defines business as any organized commercial activity conducted for profit, including industries, professions, ventures. Business income under Ethiopian tax law refers to gross amounts derived from conducting a business, including disposal of assets and provision of services, excluding employment income. The document outlines how Ethiopian commercial and tax laws characterize and regulate different business forms and activities to determine what qualifies as a business and business income subject to taxation.
Sheet1Major Paper Grading Rubric - I will not accept direct quotat.docxlesleyryder69361
Sheet1Major Paper Grading Rubric - I will not accept direct quotations in your major paper. If you use an outside source, you should paraphrase it in your own words and not quote it.Maximum PointsItemDescriptionPointsComments10Basic requirementsThe length of the paper is 6 - 10 double spaced pages, not including sources cited. Use 12 point font and 1" margins. The paper should be well sourced and should comply with APA format. There will be a five-point deduction for each page in excess of ten.1020WritingThe paper should be free from typographical and grammatical errors and be well written. This means the paper contains little if any passive voice, is direct and to the point, and is written clearly.2025Subject MatterThe paper should reflect higher-order thinking, be related to auditing, and pose either a thesis for the reasons for an auditing issue or problem or provide a solution to an auditing issue or problem. Failure to state and address a thesis will result in a 10-point reduction.2510SourcingThe paper should be thoroughly sourced. This means the paper contains a minimum of 7 primary sources. Also, sources should be credible. Thus, you should limit your sources to major publications and professional sources. 1020FormatThe paper should be properly formatted and include useful ways to convey information, such as tables, charts, diagrams, pictures, and other such methods. The paper should contain a brief summary of its thesis or recommendation, a body of discussion, and a logical conclusion.2015OverallThis section is an overall judgment by the professor as to how well the paper works.15100Total100
S.E.C. Whistleblower Program: Overview and Analysis
University of Maryland University College
ACCT 630 – Fall 2015
April 26, 2015
Abstract
Amidst the corporate scandals, fraud, and securities laws violations that have made headlines, Congress passed laws to change corporate practices and increase accountability with the intent of protecting investors and regaining investor confidence. Two of such laws enacted were the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. While each law has different emphasis, both have whistleblower protection and anti-retaliation provisions. They are similar in context but the Dodd-Frank Act provides additional rules and it is also responsible for the creation of the U.S. SEC Whistleblower Program.
The establishment of the program, however, did not happen without debate. The SEC received many letters and comments concerning the program rules. Some provided support while others, opposition. This paper seeks to examine the laws from which the program is derived as well as to dissect and analyze the primary concerns that were debated prior to the SEC producing the final rules. Comment by JP: This isn't an abstract, it is an introduction. You are talking only about what you will do, not what you concluded as well. Comment by JP: I don.
On, July 17, 2018, the proposed changes were published to the Federal Register which opens up a 60 day window, allowing the industry to provide comments and feedback on the proposed changes. This window will close September 17, 2018. Attached is a summary of the proposed changes as documented in the Federal Register submission.
This document summarizes key securities laws related to raising capital under the EB-5 immigrant investor visa program. It discusses using Regulation S and Regulation D exemptions to conduct securities offerings to immigrant investors without registering with the SEC. Regulation S exempts offerings made only to non-US persons, while Regulation D exempts private placements to accredited investors. The document provides guidance on complying with the requirements of these exemptions, such as restricting securities transfers for one year under Regulation S. The goal is to assist legal counsel in addressing challenges of EB-5 securities offerings under US securities laws.
Doing business in an international context can be daunting. WeiserMazars serves as a bridge between the United States and the global markets, making doing business easier and less risky for our clients. We connect overseas clients with American professionals and service the tax, transaction services and financial reporting needs of foreign entities based in the U.S.
The document discusses recent updates from the U.S. Treasury regarding regulations on the Foreign Account Tax Compliance Act (FATCA). It outlines FATCA's goal of ensuring tax compliance for U.S. taxpayers' offshore financial assets and accounts. Key points include: expanded categories of compliant foreign institutions, extended timelines for requirements, and reduced burdens for foreign institutions. FATCA now joins existing disclosure regimes for foreign bank accounts, offshore entities, and specified foreign assets. Implementation of FATCA provisions will take place between 2013-2017.
The document discusses how various provisions of the Dodd-Frank Act and proposed Department of Labor rules expand the scope of fiduciary responsibilities for financial entities. Key points include: the Private Fund Investment Advisers Registration Act requiring most hedge fund and private equity fund advisers to register with the SEC; the "Volcker Rule" prohibiting banks from proprietary trading and limiting investments in hedge funds; and the Wall Street Transparency and Accountability Act establishing new regulation of the derivatives market, with some questions around treatment of stable value contracts and regulation of employee benefit plans.
Staffscapes, Inc. is a Human Resources Outsourcing firm that specializes in HR, Payroll & Benefits. We recently presented this slide show to a group of Colorado Small Business Owners and Managers and are sharing it with the general public today.
What Happens Off-Shore, Stays Off-Shore - NOT oliviajrowe
Dennis Brager discusses the issues and penalties surrounding undisclosed foreign bank accounts and assets. FBARs must be filed for foreign accounts over $10,000 and failure to do so can result in both criminal and civil penalties, including prison time and fines up to 50% of the highest account balance. The IRS now has access to data from FATCA, Swiss bank tax amnesties, whistleblowers, and foreign banks closing accounts of noncompliant U.S. clients. The offshore voluntary disclosure program allows taxpayers to avoid criminal prosecution but charges a penalty of 27.5% of undisclosed assets. Strict documentation is required for the disclosure.
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013LexisNexis
Tax laws are constantly evolving. In fact, the only thing you can count on is change—and industry-leading tax content from LexisNexis®.
Find the latest LEXIS® FEDERAL TAX JOURNAL QUARTERLY and other tax related publications on the LexisNexis® Store - http://www.lexisnexis.com/store/catalog/catalog.jsp?pageName=catalogProducts&catId=992&id=137
From assessing tax ramifications of acquisitions, spin-offs, recapitalizations and other actions … to coordinating compliance requirements … to international tax planning, LexisNexis delivers a wealth of tax resources and time saving tools to help you keep pace with rapidly morphing tax regulation.
Colorado MMIP | Permanent Medical Marijuana Rules, Adopted 10, 2014coloradommip
The document defines terms used in the rules for Colorado's Medical Marijuana program. It provides definitions for terms like "child-resistant", "restricted access area", "batch number", "container", "good cause", "pesticide", "production batch", "retail marijuana", "sample", and "security alarm system". The definitions were created based on input from public health experts, consumer advocates, and industry representatives.
This document discusses the allocation and apportionment of expenses and how it affects foreign tax credit benefits. It covers key definitions such as class of income, statutory groupings, and residual groupings. It provides examples of how interest, research and experimental, stewardship, and state taxes and charitable deductions are allocated and apportioned. It also discusses adopting a plan to apportion selling, general and administrative expenses. The document examines how expense apportionment impacts the calculation of foreign source taxable income and the foreign tax credit limitation.
The document provides details of a student's school-based assessment project on workplace attitudes and relationships. It includes an introduction outlining the research topic, acknowledgements, a table of contents listing the criteria covered, and sections addressing the project title and aims, methodology used, findings and limitations. The student investigated how skills, attitudes and attributes of employees impact workplace relationships at the National Land Agency. They distributed questionnaires, conducted interviews and observed interactions. The findings suggested staff could improve politeness towards customers, even when faced with inappropriate attitudes. The student recommended maintaining discipline and courtesy in all workplace interactions.
The document provides details of a student's school-based assessment project on office orientation and procurement and inventory management. It includes sections on the aims of the assessment, functions of the department studied, methodology used including questionnaires and interviews, findings from the research, and the impact of office equipment. The key findings were that the business studied operates primarily in an open-plan office layout and employees reported having a generally good relationship with their coworkers. The research showed the importance of the office orientation and procurement department in improving the business's growth, services, and efficiency.
Guidelines for office administration sbaLisa Forbes
This document provides guidelines for completing a School Based Assessment (SBA) project on office administration for the Caribbean Secondary Education Certificate (CSEC). It outlines the required sections and content for the SBA, including:
1. Preparation with a title page, aim, and correspondence letter.
2. Gathering data through a methodology outlining data collection and analysis, questions asked during research, and an activities schedule.
3. Addressing regulations by stating relevant legislation, how it was learned, health and safety practices observed, and staff rules complied with.
4. Presenting findings in a report on results and recommendations, and explaining the use and suitability of office equipment for tasks.
This document provides an overview of the taxation of foreign taxpayers in the United States. It discusses two types of income subject to tax: income effectively connected to a U.S. business, which is taxed at progressive rates, and fixed or determinable annual or periodic income from U.S. sources, which is generally taxed at a 30% rate. Exceptions include portfolio interest, interest on securities, and gains from the sale of property that are not effectively connected. The Foreign Investment in Real Property Tax Act treats gains from the sale of U.S. real property as effectively connected income. The branch profits tax and earnings stripping rules aim to prevent base erosion through interest payments between related parties.
Treasury & IRS Continue Action Against Corporate Inversions [Whitepaper]LexisNexis
On April 8, 2016, the IRS and Treasury took additional action against corporate inversions and issued temporary, proposed, and final regulations targeting: (1) transactions structured to avoid the purposes of IRC Sections 7874 and (2) certain post-inversion tax avoidance transactions. [T.D. 9761 (final and temporary regulations) and 81 FR 20858 and 81 FR 20912 (proposed regulations)].
Treasury notice creates need for caution for companies contemplating inversionsGrant Thornton LLP
Treasury notice creates need for caution.
The Treasury Department’s recent rules try to make tax inversions less financially attractive, so companies need to analyze whether the deals are still worth pursuing. Read more about inversions: http://gt-us.co/1oH7qCg
Doing business in the united states presentation 101028 (1)Denis Dovgopoliy
The document provides an overview of key considerations for doing business in the United States, including:
1) Regulatory environment covers areas like antitrust, consumer protection, intellectual property, accounting standards.
2) Choice of entity includes LLC, LP, C Corp, S Corp which provide liability protection.
3) Transfer pricing is important for related party transactions to reflect arm's length prices and avoid penalties.
Inst 8918-Instructions for Form 8918, Material Advisor Disclosure Statementtaxman taxman
This document provides a correction to the Instructions for Form 8918 Material Advisor Disclosure Statement. It notes errors in two bullet points under the heading "Who is a Material Advisor" and provides corrected versions. Specifically, the word "expects" should be replaced with "expect" in the second and fourth bullet points. The document also states that the Instructions for Form 8918 will not be updated at this time but the correction will be included in a future revision.
NEW WHISTLEBLOWER INCENTIVES AND PROTECTION IN THE DODD-FRANK ACTptcollins
On July 21, 2010, President Obama signed into law the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (“Dodd-Frank Act”). The legislation is primarily designed to increase overall regulation of the financial industry, but it also contains numerous provisions designed to encourage and protect whistleblowers in and outside of the financial industry.
NMM Law Alert
Business and Business Income Lecture Notesgetabelete
This document discusses business income and its taxation under Ethiopian law. It defines business as any organized commercial activity conducted for profit, including industries, professions, ventures. Business income under Ethiopian tax law refers to gross amounts derived from conducting a business, including disposal of assets and provision of services, excluding employment income. The document outlines how Ethiopian commercial and tax laws characterize and regulate different business forms and activities to determine what qualifies as a business and business income subject to taxation.
Sheet1Major Paper Grading Rubric - I will not accept direct quotat.docxlesleyryder69361
Sheet1Major Paper Grading Rubric - I will not accept direct quotations in your major paper. If you use an outside source, you should paraphrase it in your own words and not quote it.Maximum PointsItemDescriptionPointsComments10Basic requirementsThe length of the paper is 6 - 10 double spaced pages, not including sources cited. Use 12 point font and 1" margins. The paper should be well sourced and should comply with APA format. There will be a five-point deduction for each page in excess of ten.1020WritingThe paper should be free from typographical and grammatical errors and be well written. This means the paper contains little if any passive voice, is direct and to the point, and is written clearly.2025Subject MatterThe paper should reflect higher-order thinking, be related to auditing, and pose either a thesis for the reasons for an auditing issue or problem or provide a solution to an auditing issue or problem. Failure to state and address a thesis will result in a 10-point reduction.2510SourcingThe paper should be thoroughly sourced. This means the paper contains a minimum of 7 primary sources. Also, sources should be credible. Thus, you should limit your sources to major publications and professional sources. 1020FormatThe paper should be properly formatted and include useful ways to convey information, such as tables, charts, diagrams, pictures, and other such methods. The paper should contain a brief summary of its thesis or recommendation, a body of discussion, and a logical conclusion.2015OverallThis section is an overall judgment by the professor as to how well the paper works.15100Total100
S.E.C. Whistleblower Program: Overview and Analysis
University of Maryland University College
ACCT 630 – Fall 2015
April 26, 2015
Abstract
Amidst the corporate scandals, fraud, and securities laws violations that have made headlines, Congress passed laws to change corporate practices and increase accountability with the intent of protecting investors and regaining investor confidence. Two of such laws enacted were the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. While each law has different emphasis, both have whistleblower protection and anti-retaliation provisions. They are similar in context but the Dodd-Frank Act provides additional rules and it is also responsible for the creation of the U.S. SEC Whistleblower Program.
The establishment of the program, however, did not happen without debate. The SEC received many letters and comments concerning the program rules. Some provided support while others, opposition. This paper seeks to examine the laws from which the program is derived as well as to dissect and analyze the primary concerns that were debated prior to the SEC producing the final rules. Comment by JP: This isn't an abstract, it is an introduction. You are talking only about what you will do, not what you concluded as well. Comment by JP: I don.
On, July 17, 2018, the proposed changes were published to the Federal Register which opens up a 60 day window, allowing the industry to provide comments and feedback on the proposed changes. This window will close September 17, 2018. Attached is a summary of the proposed changes as documented in the Federal Register submission.
This document summarizes key securities laws related to raising capital under the EB-5 immigrant investor visa program. It discusses using Regulation S and Regulation D exemptions to conduct securities offerings to immigrant investors without registering with the SEC. Regulation S exempts offerings made only to non-US persons, while Regulation D exempts private placements to accredited investors. The document provides guidance on complying with the requirements of these exemptions, such as restricting securities transfers for one year under Regulation S. The goal is to assist legal counsel in addressing challenges of EB-5 securities offerings under US securities laws.
Doing business in an international context can be daunting. WeiserMazars serves as a bridge between the United States and the global markets, making doing business easier and less risky for our clients. We connect overseas clients with American professionals and service the tax, transaction services and financial reporting needs of foreign entities based in the U.S.
The document discusses recent updates from the U.S. Treasury regarding regulations on the Foreign Account Tax Compliance Act (FATCA). It outlines FATCA's goal of ensuring tax compliance for U.S. taxpayers' offshore financial assets and accounts. Key points include: expanded categories of compliant foreign institutions, extended timelines for requirements, and reduced burdens for foreign institutions. FATCA now joins existing disclosure regimes for foreign bank accounts, offshore entities, and specified foreign assets. Implementation of FATCA provisions will take place between 2013-2017.
The document discusses how various provisions of the Dodd-Frank Act and proposed Department of Labor rules expand the scope of fiduciary responsibilities for financial entities. Key points include: the Private Fund Investment Advisers Registration Act requiring most hedge fund and private equity fund advisers to register with the SEC; the "Volcker Rule" prohibiting banks from proprietary trading and limiting investments in hedge funds; and the Wall Street Transparency and Accountability Act establishing new regulation of the derivatives market, with some questions around treatment of stable value contracts and regulation of employee benefit plans.
Legal requirements must be followed to start and run a business in California. Licenses and permits are required from state and local government for specific aspects of the business, such as sellers permits, building permits, sign permits, and occupational licenses. The legal structure of the business such as sole proprietorship, partnership, LLC, or corporation also impacts licensing needs. Proper legal documentation and compliance is necessary to open and operate legally.
This document contains final regulations from the Internal Revenue Service (IRS) clarifying the tax treatment of losses from abandoned securities. The regulations state that a loss from an abandoned security is governed by section 165(g) of the tax code and is only allowed as a deduction if all rights to the security are permanently surrendered for no consideration. The regulations are effective March 12, 2008 and apply to any abandonment of stock or securities after that date.
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New Legislation Enhances the Benefits of a Section 1042 Tax-Deferred SaleChristopher T. Horner II
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The document provides an overview of the Foreign Account Tax Compliance Act (FATCA) regulatory framework. It defines key FATCA terms and concepts. It also outlines the main aims and objectives of FATCA, which are to combat offshore tax evasion by US persons and help pay for the US Hiring Incentives to Restore Employment Act. The document discusses FATCA's three pillars of classification, reporting, and withholding requirements. It also provides timelines of FATCA implementation.
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Crimea: U.S. Response Intensifies As Congress, President Obama Issue More San...Patton Boggs LLP
The U.S. has intensified its response to Russia's actions in Crimea through additional sanctions passed by Congress and issued by President Obama. The House passed legislation authorizing sanctions on those responsible for corruption or undermining Ukraine. President Obama signed an order allowing sanctions on broad sectors of the Russian economy. The U.S. has also frozen export licenses to Russia and designated more individuals under prior orders. Further sanctions may be imposed if Russia takes additional actions in Ukraine.
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With increasing demand on limited public resources, national and local governments are recognizing the need for a new approach to social services that emphasizes the identification of effective, innovative ideas. However, a lack of available funding and the reluctance to take on the risk that a promising, but unproven, idea might fail have created obstacles to this new approach. The social impact bond model is designed to eliminate these obstacles.
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FTC Announces Study of "Patent Assertion Entities"Patton Boggs LLP
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ALJ Ruling on Heart Attack Reporting Requirements Creates Split of AuthorityPatton Boggs LLP
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3) However, the ALJ distinguished cases where CPR was required or the victim was unresponsive, requiring immediate reporting in those scenarios still. The full Commission has yet to address this issue definitively.
New TCPA Requirements for "Prior Express Written Consent" Effective October 16Patton Boggs LLP
This document summarizes new requirements under the Telephone Consumer Protection Act (TCPA) for obtaining "prior express written consent" before making telemarketing calls or texts. Beginning October 16, 2013, companies must get written permission that specifically authorizes automated calls or prerecorded messages to wireless or residential lines. The rules also eliminate exceptions for current customers and require consent for each phone number. Violations of the new consent rules could result in substantial damages in consumer lawsuits. Companies are advised to review their practices to ensure compliance.
This newsletter provides summaries of recent reinsurance cases:
1) The US Supreme Court clarified that arbitrators have broad authority to interpret contracts and their decisions should not be overturned even if their interpretation is incorrect, as long as they construed the contract.
2) A California court ordered parties to complete their arbitrator selection process and let the panel decide issues of consolidation and contractual provisions, rather than the court making those decisions.
3) A Connecticut court compelled arbitration in a fronting dispute, finding the reinsurer agreed to arbitrate based on references to underlying reinsurance agreements in an assumption agreement.
The newsletter also provides brief summaries of several other reinsurance court cases.
The U.S. Chemical Safety Board to OSHA: Get to Work on Combustible DustPatton Boggs LLP
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The Transatlantic Trade and Investment Partnership: The Intersection of the I...Patton Boggs LLP
This document summarizes a client alert from the law firm PattonBoggs regarding the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the EU and US. It notes that digital commerce and data privacy will be key issues discussed, as the EU and US have different approaches to these matters. Specifically, the EU views data privacy as a fundamental right while the US takes a sector-specific approach. Recent NSA surveillance revelations have heightened these differences. The next round of TTIP talks in October will likely start substantive discussions on finding common ground regarding data privacy standards.
The document provides a summary of legislative activities in the United States Congress for the week of July 29, 2013. In the Senate, cloture was filed on several nominations including the nomination of James Comey as FBI Director. The Senate also passed a bill tying student loan interest rates to Treasury rates. In the House, the agenda for the week includes consideration of an appropriations bill and several other pieces of legislation under suspension of the rules. The document also summarizes legislative activities relating to various policy areas such as agriculture, budget, cybersecurity, and defense.
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The document is a summary of frequently asked questions from the CFTC's cross-border guidance. It defines key terms like U.S. person, foreign branch, and affiliate conduit. For U.S. person, it provides a broad definition that includes natural persons residing in the U.S., entities organized in the U.S., certain trusts, collective investment vehicles majority-owned by U.S. persons, and entities with unlimited liability that are majority-owned by U.S. persons. It also considers factors like a party's connections to U.S. commerce in determining U.S. person status. For foreign branches, it notes they are considered part of the principal U.S. entity but may
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Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
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Recent years have seen a disturbing rise in violence, discrimination, and intolerance against Christian communities in various Islamic countries. This multifaceted challenge, deeply rooted in historical, social, and political animosities, demands urgent attention. Despite the escalating persecution, substantial support from the Western world remains lacking.
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Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
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Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
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New Tax Regulations Seek to Ameliorate Harsh Effects of Commercial Activity Limitation Under Section 892 Sovereign Tax Exemption
1. November 8, 2011 New Tax Regulations Seek to Ameliorate Harsh Effects of
Commercial Activity Limitation Under Section 892 Sovereign Tax
Exemption
Tax Policy Client Alert
On November 2, 2011, the U.S. Treasury and Internal Revenue Service issued
This Alert provides only proposed regulations (the “Proposed Regulations”) under section 892 of the Internal
general information and Revenue Code of 1986, as amended (the “Code”), which provides an exemption from
U.S. federal income tax for certain categories of U.S. source income when that income
should not be relied upon as
is received by a foreign government. The Proposed Regulations represent the first
legal advice. This Alert may major overhaul of regulations issued in 1988 (the “Existing Regulations”) and generally
be considered attorney focus on issues related to the so-called “commercial activity” limitation, which has
advertising under court and particular relevance for those entities that qualify for the section 892 exemption as
bar rules in certain
“controlled entities” of a non-U.S. sovereign. This memorandum contains a brief
overview of the section 892 exemption and a summary of the Proposed Regulations.
jurisdictions.
The Proposed Regulations are subject to a 90-day public comment period before they
For more information, contact are finalized. While the Proposed Regulations may be changed in one or more
your Patton Boggs LLP respects as a result of submissions made during the comment period, the Proposed
attorney or the authors listed
Regulations may, as discussed below, be relied upon until final regulations are issued.
below.
I. Overview of the Section 892 Exemption
Section 892 provides an exemption from U.S. federal income tax for certain categories
Donald V. Moorehead of U.S. source income when that income is received by a foreign government. The
dmoorehead@pattonboggs.com section 892 exemption applies to income from investments in the United States in (1)
stocks, bonds and other domestic securities; and (2) financial instruments held in the
Richard E. Andersen
randersen@pattonboggs.com
execution of the foreign government’s financial or monetary policy. It also applies to
interest on deposits in banks in the United States of monies belonging to the foreign
Lindsay M. Fainé government.
lfaine@pattonboggs.com
The section 892 exemption does not apply to any income (1) derived from a
“commercial activity,” whether conducted within or outside the United States; (2)
WWW.PATTONBOGGS.COM received by a “controlled commercial entity” or received (directly or indirectly) from a
controlled commercial entity; or (3) derived from the disposition of an interest in a
controlled commercial entity.
For purposes of the section 892 exemption, the term “foreign government” includes
both integral parts and controlled entities of a non-U.S. sovereign. In the case of a
controlled entity, the section 892 exemption is conditioned on a requirement that the
entity not engage, directly or indirectly, in any “commercial activity” (as that term is
defined in the Existing Regulations).1 This commercial activity limitation is applied on a
global basis and not merely to investments and other activities in or with respect to the
United States. Moreover, under the Existing Regulations, there is no de minimis
exception to the commercial activity limitation. Thus, as the result of this so-called “all
2. or nothing” rule, the slightest commercial activity undertaken directly or indirectly
anywhere in the world – even inadvertently – converts the controlled entity into a
controlled commercial entity and results in its forfeiture of the section 892 exemption in
its entirety. For controlled entities there are thus two issues that arise under section
892 with respect to proposed investments and other income producing activities;
namely, whether the income and gain generated by the investment or other activity will
be eligible for the section 892 exemption2 and whether the investment or activity
involves a commercial activity that will be treated as having been undertaken, directly
or indirectly, by the controlled entity. The Proposed Regulations address issues related
to the second of these questions – the scope of the commercial activity limitation – and
do not make any changes to the provisions of the Existing Regulations that define the
types of U.S. source income that are eligible for the section 892 exemption.
II. Summary of the Proposed Regulations
A. What is a “Commercial Activity”?
1. General Definition of Commercial Activity. Subject to five enumerated exceptions,
the Existing Regulations contain a very broad definition of the term “commercial
activity.” Specifically, that term is defined to include “all activities (whether conducted
within or outside the United States) which are ordinarily conducted by the taxpayer or
by other persons with a view towards the current or future production of income or
gain.”3
The Proposed Regulations continue this rule, but with two important clarifications.4
First, only the “nature” of an activity and not the “purpose” or “motivation” of the section
892 entity for undertaking the activity will determine whether an activity will be
classified as a commercial activity. Second, an activity may be classified as a
commercial activity even if it does not constitute a trade or business under section 162
(relating to deductible business expenses) or does not constitute (or would not
constitute if undertaken in the United States) the conduct of a U.S. trade or business
for purposes of section 864(b).
2. Investments in Financial Instruments as Commercial Activities. The Existing
Regulations contain two exceptions for investment-type transactions. The first of these,
which is commonly referred to as the “investment” exception, provides that the term
“commercial activity” does not include investments in stock, bonds and other
securities, as well as certain other types of investment transactions, including
“investments in financial instruments held in the execution of governmental financial or
monetary policy.”5 The second exception, which is commonly referred to as the
“trading” exception, provides that the term “commercial activity” does not include
effecting transactions in stocks, securities or certain commodities for the government’s
own account, but makes no reference to trading financial instruments.6 Neither
exception applies to “dealers” or to transactions undertaken as part of a “banking,
financing, or similar business.”7
The Proposed Regulations amend both the investment exception and the trading
exception to provide that neither investing nor trading in financial instruments will be
classified as a commercial activity, whether or not the instruments are held in the
execution of governmental financial or monetary policy.8 The Proposed Regulations
continue the provision of the trading exception that limits the definition of
“commodities” to “commodities of a kind customarily dealt in on an organized
3. commodity exchange, but only if the transaction is of a kind customarily consummated
at such a place.”9
The provisions of the Proposed Regulations relating to financial instruments apply only
for purposes of the commercial activity limitation and, consistent with the language of
section 892 itself, the exemption continues to apply only with respect to income and
gain attributable to those financial instruments that are held in the execution of
governmental financial or monetary policy. Thus, under the Proposed Regulations as
under current law, to the extent income or gain from financial instruments that are not
held for these purposes is U.S. source income, a section 892 entity may be required to
file a U.S. tax return and pay U.S. tax with respect to that income or gain.
3. Certain Real Estate Investments as Commercial Activities. Under section 897(a)(1)
(part of the so-called FIRPTA provisions of the Code), if a non-resident alien individual
or a foreign corporation realizes gain on the sale or other disposition of a United States
real property interest (a “USRPI”), the gain is subject to U.S. tax as income that is
effectively connected with a U.S. trade or business.10 The Proposed Regulations clarify
that an entity that disposes of a USRPI will not be treated as engaged in a commercial
activity solely by reason of that disposition. The Preamble to the Proposed Regulations
states that “[t]he Treasury Department and the IRS believe that an entity that only
holds passive investments and is not otherwise engaged in commercial activities
should not be deemed to be engaged in commercial activities [and thus ineligible for
the section 892 exemption] solely by reason of the application of section 897(a)(1).”
For this reason, the Proposed Regulations provide that a disposition, including a
deemed disposition under section 897(h)(1), of a USRPI will not be treated as a
commercial activity.11 Significantly, however, the gain derived from the disposition of a
USRPI that is not stock in a United States real property holding corporation will not
qualify for the section 892 exemption;12 as a result, section 892 entities may be
required to file a U.S. tax return and pay U.S. tax on any such gain.
4. Investments in Partnerships as Commercial Activities. Under the Existing
Regulations, the commercial activities of a partnership (other than a publicly traded
partnership) are attributable to its general and limited partners.13 Under the Proposed
Regulations, this rule is continued, but subject to an exception under which a section
892 entity that is not otherwise engaged in commercial activities will not be treated as
so engaged solely because it holds an interest as a limited partner in a limited
partnership.14 For this purpose, a limited partnership interest is defined as an interest
in an entity that is properly classified as a partnership for U.S. federal income tax
purposes, but only if the holder of the limited partnership interest in question does not,
under either the law of the jurisdiction in which the partnership is organized or the
partnership’s governing instrument, have a right to participate in the management and
conduct of the partnership’s business at any time during the partnership’s taxable
year.15
The proposed limited partner rule applies only for purposes of determining whether the
section 892 entity is engaged in commercial activities. The section 892 entity’s
distributive share of the partnership’s income attributable to the non-exempt activities
of the partnership will not be exempt under section 892.16 Thus, if the income is U.S.
source income, the section 892 entity may have to file a U.S. tax return and pay U.S.
tax on that income.
5. Partnership Trading Activity. The Proposed Regulations extend the protection of the
revised ”trading” exception (as discussed above) to section 892 entities that are
4. members of a partnership that effects transactions in stocks, securities, certain
commodities or financial instruments for the partnership’s own account.17 As a result, a
section 892 entity that is a partner (including a general partner) in such a partnership
will not be deemed to be engaged in commercial activities so long as the partnership’s
activity is itself exempt under the trading exception. This new rule does not apply,
however, if the partnership is classified as a “dealer” in stocks, securities, commodities
or financial instruments.
B. Inadvertent Violations of the Commercial Activity Limitation
The Proposed Regulations contain a special provision that ameliorate the effects of the
“all or nothing” rule in certain cases.18 Specifically, an entity is not treated as engaged
in commercial activities (and therefore classified as a controlled commercial entity that
is outside the scope of the section 892 exemption) if its only commercial activities
qualify as “inadvertent.” For this purpose, a commercial activity is “inadvertent” only if
(1) the failure to avoid engaging in the commercial activity is “reasonable;”19 (2) the
commercial activity is promptly “cured;”20 and (3) certain record maintenance
requirements are satisfied.21
The Proposed Regulations provide a safe harbor under which a section 892 entity’s
failure to avoid engaging in a commercial activity will be treated as “reasonable” if (1)
the value of the assets used in, or held for use in, the commercial activity does not
exceed five percent of the total value of the assets reflected on the entity’s balance
sheet for the taxable year as prepared for financial accounting purposes; and (2) the
income earned by the entity from the commercial activity does not exceed five percent
of the entity’s gross income as reflected on its income statement for the taxable year
as prepared for financial accounting purposes. Importantly, the proposed safe harbor
will apply only if the section 892 entity has “adequate written policies and operational
procedures” in place to monitor its activities on a global basis.
In the case of a commercial activity that qualifies as “inadvertent” under these
standards, the income attributable to the activity will retain its character as commercial
income and will not be exempt under section 892. Thus, if the income or gain is U.S.
source income, the section 892 entity may be required to file a U.S. tax return and pay
U.S. tax on that income or gain.
C. Year-by-Year Approach to Violations of Commercial Activity Limitation
The Existing Regulations do not expressly address the question of whether a violation
of the commercial activity limitation in one taxable year will result in the loss of the
section 892 exemption for that year and all future years. The Proposed Regulations
clarify this issue by providing that the determination of whether a controlled entity is
eligible for the section 892 exemption will be made on an annual basis, with the result
that an entity will not be classified as a “controlled commercial entity” (and thus as
ineligible for the section 892 exemption) solely because it engaged in a commercial
activity in a prior taxable year.22
D. Effective Date and Reliance on Proposed Regulations
By their terms, the Proposed Regulations apply from the date they are published in
final regulations in the Federal Register. However, the Preamble to the Proposed
Regulations states that “[t]axpayers may rely on the proposed regulations until final
regulations are issued.”
5. This Alert provides only general information and should not be relied upon as legal advice. This Alert may
also be considered attorney advertising under court and bar rules in certain jurisdictions.
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1
A “controlled entity” is defined as an entity that is separate in form from a foreign sovereign or
otherwise constitutes a separate juridical entity if it meets certain requirements. These include that it be
wholly-owned by the foreign sovereign, organized under the laws of the foreign sovereign by which it is
owned and its assets pass to the foreign sovereign when it is dissolved. Treas. Reg. section 1.892-
2T(a)(3). A controlled entity is classified as a “corporation” for U.S. tax purposes.
2
As a practical matter, given the general tax rules applicable with respect to passive non-U.S.
investors, the section 892 exemption generally is essential only with respect to (1) avoiding the U.S.
withholding tax on dividends from non-controlled U.S. corporations; (2) avoiding the U.S. withholding
tax on those types of U.S. source interest (i.e., contingent interest and interest from related but non-
controlled obligors) that are not eligible for the general withholding exemption applicable to “portfolio
interest”; and (3) avoiding the U.S. tax otherwise imposed under the FIRPTA provisions of the Code on
the disposition of interests in certain U.S. real property holding corporations.
3
Treas. Reg. section 1.892-4T(b).
4
Treas. Reg. section 1.892-4T(b).
5
Treas. Reg. section 1.892-4T(c)(1)(ii).
6
Treas. Reg. section 1.892-4T(c)(1)(ii).
7
Treas. Reg. section 1.892-4T(c)(1)(ii) and (iii).
8
Prop. Treas. Reg. section 1.892-4(e) (setting forth the “dealer” and “banking” business limitations).
9
Prop. Treas. Reg. section 1.892-4(e)(ii).
10
Under section 897(c)(1), a USRPI includes (1) an interest in real property located in the United States
or the Virgin Islands and (2) any interest (other than an interest solely as a creditor) in any U.S.
corporation that is a United States Real Property Holding Corporation (a “USRPHC”) during a
prescribed time period. In general, a USRPHC is, with certain exceptions, a corporation the value of
whose USRPIs equals or exceeds 50 percent of the value of the sum of its USRPIs, its non-U.S. real
property interests and its other assets if used or held for use in a trade or business. See section
897(c)(2).
11
Under section 897(h) and with certain exceptions, if a real estate investment trust (a “REIT”) or other
qualified investment entity (as defined) makes a distribution to a non-resident alien individual or a
foreign corporation that is attributable to the sale by the distributing entity of USRPI, the gain is taxed to
the recipient as if it were effectively connected with the conduct of a U.S. trade or business. Such a rule
was provided on the ground that, since REITs and other qualified investment entities are not subject to
U.S. tax if they distribute substantially all their income to their equity holders, gain on the sale of a
USRPI by such an entity would be entirely exempt from U.S. tax.
12
In Notice 2007-55, the IRS announced that it would issue regulations under which the section 892
exemption for gain on the sale of stock does not override section 897(h). The Proposed Regulations are
consistent with such an approach and the limitation to dispositions by a covered REIT or other qualified
investment entity of a direct interest in U.S. real property is consistent with provisions of the Existing
Regulations. See Treas. Reg. section 1.892-3T(a)(1).
13
Treas. Reg. section 1.892-5T(d)(3). In addition, under section 875(1), a non-resident alien individual
or foreign corporation that is a member of a partnership is treated as engaged in any U.S. trade or
business in which the partnership is engaged. In contrast, the commercial activities of a corporation
generally are not, however, attributed to its shareholders and likewise shareholders of a corporation are
generally not treated as engaged in any U.S. trade or business in which the corporation is engaged.
14
Prop. Treas. Reg. section 1.892-5(d)(i) and (iii).
15
Prop. Treas. Reg. section 1.892-5(d)(iii)(B), which also provides that rights to participate in the
management and conduct of a partnership’s business do not include consent rights in the case of
extraordinary events such as the admission or expulsion of a general or limited partner, disposition of
all or substantially all of the partnership’s property outside the ordinary course of the partnership’s
activities, merger or conversion.
6. 16
Prop. Treas. Reg. section 1.892-5(d)(iii) states that “pursuant to sections 875, 882, and
892(a)(2)(A)(i), a foreign government member’s distributive share of partnership income will not be
exempt from taxation under section 892 to the extent that the partnership derived such income from the
conduct of a commercial activity.”
17
Prop. Treas. Reg. section 1.892-5(d)(ii).
18
Prop. Treas. Reg. section 1.892-5(a)(2).
19
Prop. Treas. Reg. section 1.892-5(a)(2)(ii) specifies a general facts and circumstances test for this
determination, subject to a continuing due diligence requirement to identify commercial activities and,
as noted in the text, provides a safe harbor for reasonableness determinations.
20
Prop. Treas. Reg. section 1.892-5(a)(2)(iii) specifies that a timely cure will be considered to have
been made if the conduct of the commercial activity is discontinued within 120 days after its discovery.
21
Prop. Treas. Reg. section 1.892-5(a)(2)(iv).
22
Prop. Treas. Reg. section 1.892-5(a)(3).