The document outlines the timeline and process for passing the Tax Cuts and Jobs Act of 2017 in the U.S. Congress. It then provides a high-level overview of some of the major provisions introduced in the new tax law, including lower corporate tax rates, limitations on interest expense deductibility, immediate expensing, changes to net operating loss rules, new FDII rules, lowered rates for pass-through entities, related party anti-hybrid rules, and the new Base Erosion and Anti-Abuse Tax (BEAT). The provisions are complex due to existing rules layered on top of the new rules, and regulations will be needed to provide further guidance. Tax planning flexibility will be important given elements that
US/ Canada cross-border tax planning could be impacted by the recent finalization of Section 385 regulations by the IRS and Treasury Department. Because most of these new rules apply with an effective date reaching back to April 5, 2016, it is imperative that Canadian companies with U.S. activities assess their potential impact and develop a strategy for managing their exposure to these rules.
US/ Canada cross-border tax planning could be impacted by the recent finalization of Section 385 regulations by the IRS and Treasury Department. Because most of these new rules apply with an effective date reaching back to April 5, 2016, it is imperative that Canadian companies with U.S. activities assess their potential impact and develop a strategy for managing their exposure to these rules.
Business Law & Order - September 16, 2013 - What you don't know can cost you ...AnnArborSPARK
Compensating employees with equity compensation is not uncommon, particularly with start-up companies. Unfortunately, what also is not uncommon are unforeseen consequences detrimental to the business or employee when equity plans are poorly structured. Our panel of experienced attorneys will discuss a myriad of equity related issues, including: positive and negative aspects of stock options (ISOs or NQOs?); founders stock, restricted stock and 83(b) elections, as well as common pitfalls, including fair market value, change in control and permissible payment dates under Code Section 409A; which employees are given equity; what equity grant vesting and buyback restrictions are typical and why, and what impact does equity compensation have on mergers and IPOs?
Moderator:
Melvin J. Muskovitz
Dykema Gossett PLLC
Panelists:
Charles M. Russman
Bodman PLC
Margaret Hunter
Dykema Gossett PLLC
Executive compensation continues its movement towards performance pay as the standard. Compensation structures and proxy disclosures are more and more complex. Investors and proxy advisors continue to increase influence on compensation issues. This webinar examines executive compensation, including equity-based compensation plans and executive employment and severance agreements. The importance of disclosure, alignment of risk, and metrics is also examined. Practical guidance on pay-for-performance and supplemental pay definitions is provided. The panelists discuss the effect of the Dodd-Frank Act on executive compensation, including SEC regulations. Exchange rules are compared to applicable federal law. Best practices regarding executive compensation committees and regulatory requirements for those committees are examined. Shareholder advisory groups promulgate executive compensation related advisory policies for their institutional shareholder clients annually and these policies are also discussed. Issues regarding board composition and leadership structure issues are discussed in relation to executive compensation.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/executive-compensation-2021/
It may not be the sexiest topic related to IPO, but it's important not to neglect your equity compensation when you're thinking of going public. The last thing on the list can be the first thing that gets you pinched. Originally presented at Synergy 2014, this deck was developed by experts from four firms (Radford, PwC, Cooley LLP and Solium), and is loaded with indispensable information. Don't go public without it!
Practical Guidance on Securities Offerings (including High Yield and Initial ...Winston & Strawn LLP
The third installment of The Real Deal, “Practical Guidance on Securities and Initial Public Offerings in a Changing Environment,” was held on March 18, 2014. The Real Deal is a webinar series addressing current trends, challenges, and legal topics pertinent to M&A and securities professionals.
Winston & Strawn partners Jim Junewicz, Cabell Morris, and Karen Weber participated in an interactive webinar focused on what you need to know about the latest developments in securities offerings, including high yield offerings and IPOs.
IFRS 10 set the rules and principles for preparing Consolidated Financial Statements when an entity owns one or more other entities. It also includes the history and background of the IFRS 10 that how it came into existence.
It is critical for fund portfolio managers and analysts as well as financial executives of the investee companies to understand when valuation of debt or debt-like securities is required and how the subject debt's economics impact the "synthetic" credit rating, estimation of required yield, and valuation methodologies. In addition, proper identification of features of the debt instrument(s) that may require additional accounting consideration is essential.
Related Party Transactions - An Audit PerspectiveJRA & Associates
Related Parties could be any KMP (Key Managerial Personnel), stockholder or a related corporation. The existence of a large number of family owned business houses in India has also contributed to the natural occurrence of related party transactions. At their very outset, contracts or agreements with related parties are viewed sceptically, the reason being preconceived notion of being entered into on account of non-commercial considerations. After all, relationships do play an influential role in businesses as well.
Further, transactions with related parties are taken as one of the most common tool of 'tax management'. At times, the Company’s funds get diverted for personal gains of the directors & other related persons. Few cases such as Enron, Satyam and WorldCom have clearly highlighted the potential conflict of interests between the Company and its stakeholders as a result of undisclosed RPTs.
Though effective laws and regulations have now been implemented to ensure better transparency, but keeping a closer check over such transactions still remains the need of hour.Most of the provisions under the dealing Section 188 of the Companies Act 2013 are quite similar to the ones laid down under Sections 297 and 314 of the Companies Act, 1956. Some of the key changes envisaged in the Act 2013 include a broader ambit of transactions such as leasing of property of any kind, appointment of any agent for purchase and sale of goods, services or property. Compulsory disclosure requirements have now been laid down under the new Act, failing which, stricter provisions of penalty & imprisonment would be applicable.
Let us try to understand the audit perspective of identifying the checks & reporting of related party transactions under various Indian laws - Companies Act 2013, Accounting Standard 18, SEBI’s Corporate Governance norms and the Income Tax Act, 1961.
Rollovers: the impact it can have on your retirementAndrew Leeman
While leaving your money in your former employer's plan may be an option, one way to gain more control of your assets is to consolidate your retirement funds into a single individual retirement account (IRA). Email me with any questions: aleeman@ft.newyorklife.com
Business Law & Order - September 16, 2013 - What you don't know can cost you ...AnnArborSPARK
Compensating employees with equity compensation is not uncommon, particularly with start-up companies. Unfortunately, what also is not uncommon are unforeseen consequences detrimental to the business or employee when equity plans are poorly structured. Our panel of experienced attorneys will discuss a myriad of equity related issues, including: positive and negative aspects of stock options (ISOs or NQOs?); founders stock, restricted stock and 83(b) elections, as well as common pitfalls, including fair market value, change in control and permissible payment dates under Code Section 409A; which employees are given equity; what equity grant vesting and buyback restrictions are typical and why, and what impact does equity compensation have on mergers and IPOs?
Moderator:
Melvin J. Muskovitz
Dykema Gossett PLLC
Panelists:
Charles M. Russman
Bodman PLC
Margaret Hunter
Dykema Gossett PLLC
Executive compensation continues its movement towards performance pay as the standard. Compensation structures and proxy disclosures are more and more complex. Investors and proxy advisors continue to increase influence on compensation issues. This webinar examines executive compensation, including equity-based compensation plans and executive employment and severance agreements. The importance of disclosure, alignment of risk, and metrics is also examined. Practical guidance on pay-for-performance and supplemental pay definitions is provided. The panelists discuss the effect of the Dodd-Frank Act on executive compensation, including SEC regulations. Exchange rules are compared to applicable federal law. Best practices regarding executive compensation committees and regulatory requirements for those committees are examined. Shareholder advisory groups promulgate executive compensation related advisory policies for their institutional shareholder clients annually and these policies are also discussed. Issues regarding board composition and leadership structure issues are discussed in relation to executive compensation.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/executive-compensation-2021/
It may not be the sexiest topic related to IPO, but it's important not to neglect your equity compensation when you're thinking of going public. The last thing on the list can be the first thing that gets you pinched. Originally presented at Synergy 2014, this deck was developed by experts from four firms (Radford, PwC, Cooley LLP and Solium), and is loaded with indispensable information. Don't go public without it!
Practical Guidance on Securities Offerings (including High Yield and Initial ...Winston & Strawn LLP
The third installment of The Real Deal, “Practical Guidance on Securities and Initial Public Offerings in a Changing Environment,” was held on March 18, 2014. The Real Deal is a webinar series addressing current trends, challenges, and legal topics pertinent to M&A and securities professionals.
Winston & Strawn partners Jim Junewicz, Cabell Morris, and Karen Weber participated in an interactive webinar focused on what you need to know about the latest developments in securities offerings, including high yield offerings and IPOs.
IFRS 10 set the rules and principles for preparing Consolidated Financial Statements when an entity owns one or more other entities. It also includes the history and background of the IFRS 10 that how it came into existence.
It is critical for fund portfolio managers and analysts as well as financial executives of the investee companies to understand when valuation of debt or debt-like securities is required and how the subject debt's economics impact the "synthetic" credit rating, estimation of required yield, and valuation methodologies. In addition, proper identification of features of the debt instrument(s) that may require additional accounting consideration is essential.
Related Party Transactions - An Audit PerspectiveJRA & Associates
Related Parties could be any KMP (Key Managerial Personnel), stockholder or a related corporation. The existence of a large number of family owned business houses in India has also contributed to the natural occurrence of related party transactions. At their very outset, contracts or agreements with related parties are viewed sceptically, the reason being preconceived notion of being entered into on account of non-commercial considerations. After all, relationships do play an influential role in businesses as well.
Further, transactions with related parties are taken as one of the most common tool of 'tax management'. At times, the Company’s funds get diverted for personal gains of the directors & other related persons. Few cases such as Enron, Satyam and WorldCom have clearly highlighted the potential conflict of interests between the Company and its stakeholders as a result of undisclosed RPTs.
Though effective laws and regulations have now been implemented to ensure better transparency, but keeping a closer check over such transactions still remains the need of hour.Most of the provisions under the dealing Section 188 of the Companies Act 2013 are quite similar to the ones laid down under Sections 297 and 314 of the Companies Act, 1956. Some of the key changes envisaged in the Act 2013 include a broader ambit of transactions such as leasing of property of any kind, appointment of any agent for purchase and sale of goods, services or property. Compulsory disclosure requirements have now been laid down under the new Act, failing which, stricter provisions of penalty & imprisonment would be applicable.
Let us try to understand the audit perspective of identifying the checks & reporting of related party transactions under various Indian laws - Companies Act 2013, Accounting Standard 18, SEBI’s Corporate Governance norms and the Income Tax Act, 1961.
Rollovers: the impact it can have on your retirementAndrew Leeman
While leaving your money in your former employer's plan may be an option, one way to gain more control of your assets is to consolidate your retirement funds into a single individual retirement account (IRA). Email me with any questions: aleeman@ft.newyorklife.com
2018 Pennsylvania Tax Update: The State Budget, Legislation, and Multistate T...McKonly & Asbury, LLP
This webinar was hosted by McKonly & Asbury Senior Tax Manager and SALT Leader, Michael Eby, and Tax Supervisor, Lindsey Waltemyer.
It provides an overview of the enacted 2017-2018 Pennsylvania State Budget; a brief update on recently passed Pennsylvania tax legislation and court decisions of interest; and discusses how states, including Pennsylvania, are addressing these changes at the Federal level in their own respective tax structure.
Startup Basics: Money People and TechnologyRoger Royse
The Royse Law firm offers significant advise that early stage startups should ensure they understand. The slides contain great considerations that startups should utilize. Our team is a full service firm that provides legal counseling to many startups. Please contact us so we can help you ensure the health of your startup. (01/2018)
Tax Reform - Issues and Opportunities - A Primer for MLPs, PE Funds andPubli...Michael J. Blankenship
Topics to be Covered Include:
Pass-Through Business Income Deduction and Tax Planning for MLPs
New Treatment of Carried Interest
Rethinking Your Compensation and Benefits Plans
Tax Issues and Planning on New Tax Rates, NOLs and Deductions
Public Company Issues and Disclosures
This presentation includes an overview of tax changes from 2012 and what's new in 2013.
For more information about our tax services, visit www.cbiz.com
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.
Tax Cuts & Job Act Implications for Small Business Investments Companies Polsinelli PC
On December 22, 2017, the President signed into law a federal tax reform bill commonly known as the Tax Cuts & Jobs Act (the “Tax Act”). The Tax Act resulted in significant changes to the U.S. tax system on a number of fronts. This webinar will provide an overview the provisions of the Tax Act relevant to SBIC’s. We will also address the impact of the Tax Act upon the choice of entity decisions and a number of ancillary matters.
soluiton manual for South-Western Federal Taxation 2022 Corporations, Partner...ssuserf63bd7
https://qidiantiku.com/soluiton-manual-for-south-western-federal-taxation-2022-corporations-partnerships-estates-and-trusts-45th-edition.shtml
Full download please contact u84757@protonmail.com or qidiantiku.com
Tax Foundation University 2017, Part 1: Why Tax Reform? Why Now? Why Not Just...Tax Foundation
This presentation reviews key considerations in tax reform – balancing revenues, growth, and tax equity.
Charts describe the current tax system, its general framework, progressive structure, complexity, biases, and distorting features.
It also explores who pays taxes, and how markets shift the tax burden.
Learning how a VC firm works behind the scenes is a good way to gain important strategic insights on becoming a more attractive investment. But understanding the ins and outs of a VC firm can be easier said than done, even for entrepreneurs who spend a lot of time speaking to investors.
Lors du séminaire portant sur les distinctions importantes à considérer entre le droit civil et la common law en matière contractuelle, nos conférenciers ont traité des sujets suivants :
• L’application de la notion de la bonne foi en matière contractuelle
• Les exclusions ou limitations de responsabilité
• La question de la prescription ou des limitations
• Les clauses pénales
• L’exécution en nature ou la specific performance
• Les enjeux de langue française
• Les clauses d’arbitrage
Learn more about: Current Trends in AI, Machine Learning and New Technologies, The Growth and Development of AI, Learning How to Gain Efficiencies and How Technologies Can Help You.
Workplace harassment is a business-critical issue in all places of work and should be taken extremely seriously, particularly in the emerging and high growth companies space. Employers have an obligation to provide a safe workplace and have specific responsibilities under applicable legislation including developing and implementing policies, training and investigating workplace harassment. In addition to the detrimental effect on the well-being of employees, the potential costs and risks associated with workplace harassment include monetary damages, reputational risks, low employee morale, legal costs and more.
This presentation by Sam Ip, an associate in Osler’s Technology Group, details key considerations for emerging and high growth companies regarding OSS.
Emerging and high growth companies will have to navigate the complexities of early stage term sheets on their way to raising capital. In order to get to a term sheet, it’s crucial for you to focus on building and developing relationships with your investors right from the beginning.
Learn how to effectively communicate to your business' leaders about the difference between arbitration and litigation, including associated benefits and risks.
Businesses that engage in the collection, use, disclosure and management of personal information in Canada need to be cognizant of the regulatory framework governing the privacy landscape in order to stay compliant.
Brief The Board, Osler’s new five part webinar series, will provide you with practical tips on how to brief your board members and senior management, both in terms of key substantive points and effective (and privileged) communication skills, so you and your organization can respond nimbly and competently in business critical situations.
Brief The Board, Osler’s new five part webinar series, will provide you with practical tips on how to brief your board members and senior management, both in terms of key substantive points and effective (and privileged) communication skills, so you and your organization can respond nimbly and competently in business critical situations.
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
Visit Now: https://www.tumblr.com/trademark-quick/751620857551634432/ensure-legal-protection-file-your-trademark-with?source=share
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
1. Osler Hoskin & Harcourt LLP
U.S. Tax Reform for Canadians
The Tax Cuts and Jobs Act of 2017
January 9, 2018
Paul Seraganian
Jennifer Lee
2. 2
U.S. House
U.S. House
Ways &
Means
Committee
U.S.
Senate
U.S. Senate
Finance
Committee
Conference
Nov. 2
H.R. 1 released
for mark-up
1
Nov. 10
Amended H.R. 1
approved (24-16) for
full House vote
2
Nov. 10
Senate bill released
for mark-up
2
Dec. 1
Senate bill to be sent for
full Senate vote
3
Dec. 15
House bill sent to
Conference for
reconciliation
4 Dec. 15
Senate bill sent to
Conference for
reconciliation
5
6
Dec. 19-20
Reconciled bill sent to
House and Senate
for full vote
Timeline of Tax Cuts and Jobs Act
The White
House
Dec. 22
Signed into law by
President Trump
7
3. General Outlook for Tax Planning
3
• New rules on top of the old: The TCJA is not a complete tear-down of the
US tax system but rather a very thorough overhaul.
– This means that the “old” framework remains largely intact but with
transformative modifications in many key areas.
– The co-existence of “old” and “new” rules makes for complex layering and
undercuts “simplification”.
• Work in progress: Because of the hurried pace for enacting the TCJA, it
has a large number of flaws and needs substantial “scaffolding” from
regulations.
– Expect a technical corrections bill
– Expect a torrent of regulatory enactments.
• Phase in Phase out: Many key provisions either phase-out or phase-in
over the next 10 years.
3
2
1
Given these dynamics, preserving
flexibility in tax planning will be key.
4. Key U.S. Domestic and International Provisions
4
US Domestic
• Lower corporate rate of 21%
• Interest deduction restrictions
• Immediate expensing of capital assets
• Net operating loss operational rule changes
• Patent Box regime
• Pass-through rates lowered
International
• Anti-hybrid provisions for related parties
• Base Erosion and Anti-Abuse Tax
• CFC regime
• “Semi”-Territorial system of taxation
• GILTI targeting overseas intangible returns
• Partnership interests held by non-US persons
5. U.S. “Headline” Tax Rates Going Forward
5
Corporations:
35% 21%
FDII ETR: 13.125%
GILTI ETR: 10.5%
(16.406% after 2025)
(13.125% after 2025)
AMT: REPEALED
Individuals*:
39.6% 37% 29.6%Sunsets 12/31/2025
AMT: RETAINED (with temporary increase in exemption level)
“Qualified Income” ETR:
Sunsets 12/31/2025
* does not reflect the 3.8% Medicare tax which is still applicable to individuals on net investment income.
6. Limitation of Interest Expense Deductibility – Section 163(j)
Deductible business interest is the sum of business interest
income, plus 30% of adjusted taxable income.
Adjusted taxable income means taxable income computed without regard to:
1) Any item not properly allocable to a trade or business;
2) Any business interest or business interest income;
3) The amount of any NOL deduction;
4) The amount of any Section 199A (pass-through) deduction;
5) For taxable years beginning before 1/1/2022, any depreciation,
amortization or depletion deduction.
7. Limitation of Interest Expense Deductibility
7
Other Key Aspects
• Unlike old Section 163(j), applies to all
interest, regardless of whether the debt is
with related parties.
• No debt-equity ratio safe harbor.
• Interest deductibility is determined at the
partnership level. This may negatively
impact leveraged blocker structures.
• Generally, certain small businesses whose
3-year average annual gross receipts do not
exceed $25 million, certain regulated public
entities and certain electing businesses are
excluded from Section 163(j).
• As before, indefinite carryforward of
disallowed interest expenses, but the
new Section 163(j) will subject the
disallowed interest carryforward to
limitations under Section 382 (i.e.,
restrict their utilization upon an
ownership change).
• Effective for taxable years beginning after
December 31, 2017, with no
grandfathering.
8. Limitation of Interest Expense Deductibility
8
Leveraged Blocker Example
Onshore Feeder
Investment Fund
Offshore
Feeder
US Real Estate Assets
Canadian Investors +
-
Loan
9. Immediate Expensing
9
• 100% Expensing: Taxpayers are allowed to currently expense 100% of cost
of “qualified” property” placed into service after September 27, 2017 and
before January 1, 2023 (with an additional year for certain property).
• “Qualified Property” is generally depreciable tangible property and does
not include real estate, intangibles (such as goodwill) or shares of a
corporation.
• Qualified property includes “used” property – accordingly, assets acquisitions (or
deemed asset acquisitions via 338 election) can benefit from immediate expensing.
• Phase out: Immediate expensing begins phasing out in 2023.
• Phase out occurs in 20% increments per year until it hits 0% in 2027.
• This may create strong incentives to cluster business expenditures in the next 5
years.
10. NOL changes – Limiting the Utility of NOLs
10
• Net operating losses (NOLs) can
be carried back 2 years.
• NOLs can be carried forward 20
years.
Old Rules TCJA New Rules
• NOLs can’t be carried back.
• NOLs can be carried forward
indefinitely.
• NOL carryforwards to any particular
tax year are limited to 80% of the
taxable income during that year.
Transition: The new rules generally become applicable to NOLs generated
in taxable years beginning after 12/31/2017.
Financial Statements Effect: historic (i.e., pre-2018) NOLs (and other tax
assets) may be subject to financial statement write-down due to drop in
corporate marginal rates.
11. The Importance of “Matching”
11
• The interaction of the new immediate expensing and NOL
provisions in the TCJA creates new tax planning dynamics.
• Specifically, to the extent that current year deductions exceed
current year income, the taxpayer will generally create an
NOL.
• All other things being equal, $1 of current year deduction (matched with current
year income) is more valuable to a taxpayer than $1 of NOL
• The “value” of the NOL is impaired by the 80% limitation and time-value of money
considerations.
• In order to maximize value of items of deductions, U.S.
corporate taxpayers should strive to achieve more effective
“matching” of current year expense with current year income.
• Taxpayers will look for means of controlling the flow of expense items
• E.g. sale-leaseback arrangements
12. “FDII” Rules – “Patent Box Lite”
12
• In an effort to encourage taxpayers to keep intangible and other high-
value assets in the United States, Congress enacted the “Foreign-Derived
Intangible Income” rules found in new Section 250 of the Code.
• The FDII rules are applicable to US corporations only.
STEP 1: Determine “Deduction Eligible Income” (DEI)
• DEI is essentially (1) the gross income of the corporation (with exclusions including most notably,
(i) subpart F income, (ii) GILTI, (iii) dividends from certain CFCs, and (iv) foreign branch income),
minus (2) deductions properly allocated to such gross income
STEP 2: Determine “Deemed Intangible Income” (DII)
• DII = DEI – [10% x “qualified business asset investment” (QBAI)]
• QBAI is essentially US tax basis in tangible depreciable business assets
STEP 3: Determine foreign-derived portion of DEI
• In general, and subject to exceptions for related parties, DEI is foreign-derived if it is (i) property sold or
licensed for use, consumption or disposition outside the US, (ii) for services provided to persons outside the
US
13. “FDII” Rules – “Patent Box Lite”
13
FDII = DII x [Foreign DEI / Total DEI]
• A US corporation is entitled to a 37.5% deduction for FDII, resulting in an effective
rate of tax on FDII of 13.125%.
• In 2026, the deduction ratchets down to 21.875% (resulting in an effective tax rate
of 16.406%).
• Is it preferable to place intangible assets in Canada or the US?
Canco
USco
25%
13.125%
14. Pass-Through Rates Lowered – Section 199A
14
• Headline Rule: Beginning in 2018, individuals, trusts and estates are
allowed a deduction for 20% of domestic “qualified business income”
received through pass-through arrangements.
– This results in a highest effective U.S. tax rate (assuming full
deductibility) of 29.6%.
• Qualified Business Income must:
a. not be attributable to a “specified trade or business” (e.g., traditional service
businesses such as health, law, financial services, consulting businesses and
any trade or business where the principal asset is the reputation and skill of
one or more of its employees or owners);
b. be effectively connected with a US trade or business;
c. not be passive-type income;
d. not be compensation made to the taxpayer by the business.
*The ability to claim the 20% deduction is subject to a cap
**Some of the limitations described above are not applicable to individuals with
income below a prescribed level
15. Flow-Through vs. Incorporation – A Simplified Illustration
15
Individual
Qualifying
business
Flow-Through
“qualifying
income”
ETR: 29.6%
“Old” ETR: 39.6%
Individual
Qualifying
business
U.S.
Corporation
qualifying
dividend
ETR: 39.8%
“Old” ETR: 50.47%
21% corporate rate
23.8*% rate
*includes 3.8% Medicare tax
16. Related Party Anti-Hybrid Provision – Section 267A
16
New Section 267A denies a deduction for any disqualified related party
amount paid or accrued pursuant to a hybrid transaction or by, or to, a hybrid
entity.
1. Disqualified related party amount is generally any interest or royalty payments
paid or accrued to a related party (50% control or common control) to the extent that:
• such amount is not included in the income of such related party under the tax
law of its country, or
• (ii) the related party is allowed a deduction with respect to such amount under
the tax law of its country.
2. Hybrid Element can be the entities involved or the transaction itself:
• Hybrid Transaction: any transaction, series of transactions, agreement or
instrument one or more payments of which are treated as interest or royalties
for US tax purposes but is not so treated under the local tax law of the
recipient.
• Hybrid entity: any entity which is treated as fiscally transparent for US tax
purposes, but not so treated under the local tax law of the recipient, or vice
versa.
Effective for taxable years beginning after December 31, 2017
17. Related Party Anti-Hybrid Provision
17
New Rules on the Horizon: Section 267A grants broad regulatory
authority to the Treasury to issue regulations, including rules for:
• Denying deductions for conduit
arrangements involving hybrid
transaction or hybrid entity
• Denying deductions for certain
structured transactions
• Treating a tax preference as an
exclusion from income if such tax
preference has the effect of reducing
the generally applicable statutory
rate by at least 25%
• Application to foreign branches
• Denying deduction if such the interest
or royalty payment is subject to a
participation exemption system or
other system which provides for the
exclusion or deduction of a substantial
portion of such amount
18. Related Party Anti-Hybrid Provision
18
Sale and Repurchase (“Repo”) Financing Arrangement
Canadian
Parent
US Parent
Lender
US
AcquisitionCo
US LLCUS FinanceCo
Loan
Loan
Preferred
Forward Agreement
Support
Agreement
US Target
Corporation for U.S. and Canadian tax purposes
Fiscally transparent for U.S. tax; corporation for Canadian tax
19. Related Party Anti-Hybrid Provision
19
Tower Structure
Canadian
Parent
Canadian
Sub
US
Partnership
Lender
Loan
Canadian
ULC
US LLC US Opco
Loan
Corporation for U.S. and Canadian tax purposes
Fiscally transparent for U.S. tax; corporation for Canadian tax
Checked as corporation for U.S. tax; fiscally transparent for Canadian tax
20. Related Party Anti-Hybrid Provision
20
IFL Luxco Structure
Canadian
Parent
Other Entities Lux Finco
US Opco
Lender
Loan
Non-interest
Bearing
Loan of $X
Interest Bearing
Loan of $X
Corporation for U.S., Canadian, and Luxembourg tax purposes
21. The BEAT – Section 59A
21
• Designed to curb the use of base-stripping payments, or “base
erosion payments”, by U.S. taxpayers.
• Only applies to certain large taxpayers. Specifically, it only
applies to corporate taxpayers that have:
o an average annual gross receipts* of at least $500 million
for the preceding 3 tax years, and
o “base erosion percentage” of 3**% or higher
• Effective for base erosion payments paid or accrued in taxable
years after December 31, 2017
*Corporations within the same 50% controlled group are generally aggregated for
purposes of determining annual gross receipts. With respect to foreign corporations within
the group, only effectively connected gross receipts are taken into account.
**2% for banks and registered securities dealers.
22. Base Erosion and Anti-Abuse Tax – The BEAT
22
• Operates similar to an alternative minimum tax by increasing a
U.S. taxpayer’s tax liability by an amount equal to the taxpayer’s
“base erosion minimum tax amount” (the “BEAT”)
• The BEAT equals:
o 10*% of the taxpayer’s modified taxable income, minus
o taxpayer’s regular tax liability (reduced by credits**, but not
below zero).
*5% for the single taxable year beginning in 2018, and increasing to 12.5% for years
beginning after 2025. Rates for banks and registered securities dealers and their affiliates
are 1% higher.
**for taxable years beginning prior to 2026, the taxpayer’s regular tax liability is not
reduced by certain credits.
23. Base Erosion and Anti-Abuse Tax – Key Definitions
23
• At a high level, taxpayer’s modified taxable income is the
taxpayer’s taxable income recomputed to exclude:
o Tax benefits from base erosion payments; and
o The base erosion percentage of NOL carryforwards
• Base erosion percentage for a given tax year equals:
Base erosion tax benefits__
Total deductions*
*Includes deductions for the base erosion tax benefits and excludes NOL carryforwards,
participation exemption deductions and GILTI and FDII deductions
**interest deduction disallowed under Section 163(j) is allocated first to interest
payments paid to unrelated parties
24. Base Erosion and Anti-Abuse Tax – Base Erosion Payments
24
• Base erosion payments are payments paid or accrued to 25%-related
foreign persons that are:
o deductible payments (e.g., interest, royalties, fees for services);
o Payments for acquisition of depreciable and amortizable assets;
o Certain reinsurance payments; or
o Payments resulting in a reduction of gross receipts if paid or accrued to
a post-11/9/17 60% inverted company
• Base erosion payments generally do not include:
o U.S. source payments subject to gross-basis withholding tax at the full
30% (with a proration rule to the extent that the withholding tax rate is
reduced pursuant to a treaty);
o Service payments charged at cost with no markup and which are
eligible for the use of services cost method under U.S. transfer-pricing
rules; and
o Payments with respect to certain marked-to-market derivatives
25. Base Erosion and Anti-Abuse Tax – Illustration
25
Assumptions:
• Non-financial institution/non-broker corporate taxpayer
• Base erosion percentage > 3%
• No NOLs
• 2019 taxable year
Regular tax calculation BEAT calculation
Regular taxable income 1,000$ Regular taxable income 1,000$
Regular tax rate 21% Payment to related foreign person for services (150)$
Regular tax before credits 210$ Modified taxable income 1,150$
Tax credits (non-R&D) (100)$ BEAT rate 10%
Regular tax liability 110$ BEAT minimum tax threshold 115$
BEAT amount 5$
26. Base Erosion and Anti-Abuse Tax – Illustration
26
Canadian
Parent
UK Subsidiary US Subsidiary
Interest
US Branch
Interest
Service
Payments
This counts as a BE payment for BEAT
purposes, even if interest payable by the US
Sub is less than its interest receivable.
These payments appear to “count” for
BEAT purposes, even though there is
no BE.
27. CFC Rules – Three Adverse Changes
27
1. CFC Downward Attribution Rule:
o TCJA repealed Section 958(b)(4), which provided that in testing whether
a foreign corporation is a “controlled foreign corporation” (“CFC”), the
downward attribution rules will not be applied to treat a U.S. person as
owning stock in fact owned by a non-U.S. person.
o The repeal is effective for the last taxable year of the foreign
corporation beginning before 2018.
2. US Shareholder Rule: Effective for taxable year of the foreign corporation
beginning after 2017, “U.S. shareholder” definition expanded to include
U.S. shareholders that own 10% of a foreign corporation by vote or value.
3. 30 Day Rule: The requirement that a corporation be a CFC for an
uninterrupted period of 30 days before subpart F inclusion applies is
repealed.
Why does this matter?
28. CFC Attribution and Definitional Changes - Example
28
Canadian
Parent
US Sub
Canadian
Subs
Canadian
Subs
Public
Share-
holders
US Fund
10%
• US Sub subject to phantom income inclusions.
• Are US partners of US Fund subject to 956 inclusions?
• Are US Partners of US Fund subject to GILTI inclusions (with no FTC)?
Guarantee
Bank
Loan
99% held by Canadian Parent; 1% held by US Sub
29. “Semi”-Territorial System – Section 245A
29
• Headline Rule: 10% US corporate shareholders of a qualifying
foreign corporation receive a 100% dividends received
deduction on eligible dividends.
• The Fine Print:
o Not available with respect to “hybrid”
dividends, i.e., dividends for which the
foreign corporation receives a
deduction in a foreign jurisdiction
o Generally does not provide any
exemption for proceeds from the
direct or indirect sale of a foreign
subsidiary (except amounts re-
characterized as dividends under
Section 1248)
o Restricted to the foreign-source
portion of the dividends
o Requires a holding period of at least
365 days over the 731 days period
straddling the ex-dividend date
o 10% holdings determined by vote or
value
30. One-Time Repatriation/Transition Tax – Section 965
30
Headline rule: 10% U.S. shareholders of “specified foreign corporations” are
required to include in income the accumulated deferred earnings of such
foreign corporations.
• Applicable to corporate and non-corporate
shareholders
• Specified foreign corporations are (i) CFCs
and (ii) foreign corporations with at least
one 10% corporate U.S. shareholder
• For corporate U.S. shareholders, the
effective rate of the tax is 15.5% on earnings
held in cash and cash equivalents and 8%
rate on earnings held otherwise. Higher
effective rates generally apply to individual
U.S. shareholders.
• Accumulated deferred earnings is measured
as of 11/2/17 or 12/31/17, whichever is
greater
The Fine Print:
• The income inclusion occurs during such
U.S. shareholder’s taxable year that
includes the last taxable year of such
foreign corporation beginning before 2018
(i.e., 2017 for calendar taxpayers and
foreign corporations)
• May elect to pay tax in instalments over 8
years (subject to certain triggers)
• Various aggregation rules apply
31. GILTI – “global low-taxed intangible income” – Section 951A
31
The GILTI rules create an entirely new class of “phantom income”
that operate in parallel with subpart F rules.
• Current Inclusions: The GILTI rules require a 10% US
Shareholder of a CFC to pay a current, foreign minimum tax on
extraordinary returns earned by the CFC.
GILTI = Net Tested Income – Net Deemed Tangible Income Return
Net Tested Income = aggregate net income of each of its CFCs, except for (i) ECI, (ii)
subpart F income, (iii) income that would be subpart F income but for the high-tax
kickout, (iv) dividends from related parties, and (v) certain foreign oil and gas income.
Net Deemed Tangible Income Return = [10% x aggregate QBAI of applicable CFCs] minus
net interest expense taken into account in determining “net tested income”. QBAI
determined in a manner parallel to FDII rules.
32. GILTI – “global low-taxed intangible income”
32
• GILTI Deduction for Corporations. 10% US Shareholders that are
corporations (not individuals) are eligible to a 50% deduction for
GILTI income.
– This amounts to an effective rate of US tax on GILTI of 10.5%
– This deduction ratchets down to 37.5% after 2025 (effective rate of US tax on
GILTI of 13.125%)
• GILTI and Foreign Taxes. 10% US Shareholders that are
corporations (not individuals) may claim a FTC for foreign taxes
deemed paid on the GILTI. The FTCs that the shareholder may claim
is equal to:
Total Foreign Tax on Tested Income x 0.8 x [GILTI/Total Tested Income]
– As a general matter, so long as the total GILTI has borne a foreign ETR of at least 13.125%, there
should not be residual US tax payable on GILTI inclusions.
• Overarching GILTI Limitation. GILTI deduction is limited if a 10% US
Shareholder’s total GILTI + FDII exceeds its taxable income.
33. Foreign Person’s Sale of Partnership Interests – Section 864(c)(8)
33
• Headline Rule: Gain from the sale by a foreign person of a partnership
interest is subject to US taxation to the extent attributable to partnership
assets used in a US trade or business. Effective for dispositions on or after
November 27, 2017.
• Withholding scheme:
• Buyers of partnership interests must withhold 10% when necessary
• Partnerships must withhold on new partner if buyer did not withhold
US or Foreign
Partnership
Partners Foreign Partner
A
Sale Incoming Partner
B 10% ECI withholding – 1446
15% FIRPTA withholding – 1445
• Substantive liability under both ECI
and FIRPTA – 864 & 897
• Potential ECI withholding
obligation– 1446
Three new and cumbersome obligations:
3
2
1
Illustrative Steps
Canadian Parent borrows from third party Lender.
Canadian Parent lends to US Sub of $X.
US Sub subscribes for US Finco preferred shares for $X.
As part of an integrated transaction:
US Sub and Canadian Parent enter into a transfer agreement whereby US Sub agrees to transfer the US Finco preferred shares to Canadian Parent and as consideration for the loan made in Step 2.
Canadian Parent and US LLC enter into a Forward Agreement under which US LLC agrees to purchase the US Finco preferred shares from Canadian Parent on a specified future date and at a set price.
US Sub, Canadian Parent, US LLC, and US Finco enter into a Support Agreement whereby US Sub guarantees the payment of dividends by US Finco in respect of the US Finco preferred shares, and the obligations of US LLC under the Forward Agreement.
US Finco makes a loan to US Bidco for $X.
US Bidco acquires US Target.