Recent developments under Section 304

Article Abstract:

The deemed-paid credit provisions of IRC 902(a) allow the acquisition of stock in a wholly-owned subsidiary of a related controlled foreign corporation under IRC 304 as an alternative to a dividend. Prior to Revenue Ruling 91-5, the selling corporation was required to own 10% of the purchaser's stock; however, the Revenue Ruling cited the legislative intent of IRC 304 in order to permit the tax credit. Moreover, under the revenue ruling and IRC 304(a)(1), the sale of stock qualifies as a capital contribution by the purchasing related corporation. Examples of how alternative ownership regimes apply under this law are presented.

Stock transfer

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Tax planning for U.S. multinationals

Article Abstract:

Multinational corporations (MNCs) had their tax rate and foreign tax credit usage reduced by the Tax Reform Act of 1986. However, there are several methods that MNCs may use to reduce both US and foreign taxes. One of these is an exemption on business income that comes from within a US possession such as Puerto Rico. Others include the use of domestic international sales corporations and controlled foreign corporations to conduct foreign business, various incentives offered in the integration of Europe and the use of joint ventures between MNCs.

Methods, International business enterprises, Multinational corporations, Tax planning

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Tax sparing: a timeworn mechanism in Australia's bilateral treaties with its trading partners in Southeast Asia?

Article Abstract:

Providing tax preferences to transanctions flowing from developing to developed countries has arguably outlived its usefulness in the Asian region in view of its rapid economic growth and increases in foreign direct investment. Since tax sparing is a form of tax expenditure, it appears strange for capital-exporting countries to incur such expenditures to promote private investment in newly industrializing countries and at the same time giving them foreign aid.

Interpretation and construction, Australia, Tax treaties

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