IRA distributions to nonresident aliens: a treaty analysis

Article Abstract:

The IRS will consistently treat distributions from IRA accounts made to nonresident aliens in accordance with the 1996 Model US Income Tax Treaty. Prior treatment was complex and required scrutiny of various factors including IRA type. IRS Letter Ruling 9806012 contains valuable information regarding this new treatment. The ruling addresses issues including income in respect of a decedent, character of distributions, and withholding tax. Treatment is generally the same as treatment of direct pension plan distributions.

United States, Commercial Banks, Investment Banking and Securities Dealing, International, Tax Treaties, International Affairs, Bank Individual Retirement Accounts, Interpretation and construction, Distribution, Individual retirement accounts

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Extension of U.S. stock plans to nonresident aliens

Article Abstract:

US corporations may improve the profitability of their corporate groups by allowing nonresident aliens employed by foreign subsidiaries to participate in stock plans. An analysis of US and foreign tax law should be made when determining the optimum method to be followed. IRC sections dealing with deductions, withholding obligations, information return obligations, as well as foreign tax laws should be considered. It may be more beneficial to set up stock plans applicable only to employees from specific countries.

Stock options

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The General Signal Corp. case and welfare benefit fund deductions

Article Abstract:

The General Signal Corp. case involved the interpretation of section 419A(c), which limits additions to qualified asset accounts that affect the deductions that employers can take for contributions to voluntary employee beneficiary associations and other types of welfare benefit funds (WBFs). The Tax Court decision rejected General Signal Corp.'s position, holding that the company's contribution did not create a funded reserve for postretirement benefits.

Cases, Tax deductions, Voluntary employees' beneficiary associations

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