The effect of this representation is to lower the effective tax rate, and to reflect the lower tax rates of certain foreign subsidiaries located in tax havens.
Under U.S. GAAP, U.S. companies are required to provide for tax at U.S. rates on a year by year basis on the income of their foreign subsidiaries, without regard to dividend distributions. Under ASC 740, the tax effects arising from a change in tax law should be recognized in full in the year the tax laws are enacted (i.e., the 4th Quarter of 2017). Under ASC 740 (formerly APB 23) a company could avoid having to provide U.S. tax on foreign income by making a “permanently reinvested” representation (on a subsidiary by subsidiary basis) to the effect that the income of the foreign subsidiary would NOT be brought back to the U.S. This video reviews whether U.S. companies will continue to make the representation.
Charles S. Kolstad
Withers Bergman LLP
- Tax partner Withers Bergman LLP, a leading international private capital law firm, specializing in international tax matters
- Focuses his practice on international tax, corporate, and partnership matters; he assists clients in tax and corporate planning relating to the acquisition, disposition and restructuring of businesses, corporations and partnerships both domestically and internationally
- Frequently advises foreign individuals moving to the U.S. on pre-immigration, income, gift and estate tax planning opportunities; he also focuses his practice on the cannabis industry/cannabusiness, crypto assets and block chain technology, and tax issues related to initial coin offerings (ICOs)
- Has advised over 200 clients with unreported foreign 1nancial accounts, foreign trusts, and other foreign investments, on the 1ling of FBARs and other information returns, and whether participating in the IRS’s various offshore voluntary disclosure programs is appropriate
- Written and lectured on the extensive information reporting requirements for U.S. taxpayers with international business operations
- During his career he’s been at Mitchell Silberberg & Knupp LLP and Venable LLP and was a tax partner at both Coopers & Lybrand and Ernst & Young
- J.D. degree, The University of Notre Dame; M.B.A. degree, Columbia University; B.Sc. degree, Villanova University
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