Deemed dividends in cross-border Section 304 transactions

Article Abstract:

The IRS declared in Revenue Ruling 92-85 that a US corporation's deemed dividend payments to a foreign corporation were liable to federal income tax and withholding to the degree the dividends originated from the US. In addition, the IRS declared in Revenue Ruling 92-86 that a US corporation could calculate its foreign taxes paid under IRC Section 902 with regard to a deemed dividend distribution from its foreign subsidiary. Distribution from the subsidiary to the parent corporation was declared a distribution in redemption of related party stock as allowed by IRC Section 304(a)(1).

Dividends, Corporate distributions

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IRS clarifies reporting requirements and failure-to-file penalties for transfers to foreign entities

Article Abstract:

IRS Notice 97-18 clarifies some of the changes made to the reporting and penalty provisions under IRC sections 1491, 1492 and 1494 by the passage of the Small Business Job Protection Act of 1996. The Act appeared to expand the failure-to-file to 35% of the gross value of the property transferred to a foreign entity, but the Notice limits the penalty to the gross unreported value of the property. The Notice changes the filing date from the day of the transaction to the date that the transferor's tax return is due. Filing procedures were revised as well to reduce duplication.

Public Finance Activities, Corporate Tax Administration, United States, Tax administration, Information returns, Tax penalties, international

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Dual consolidated loss rules - final regulations

Article Abstract:

The IRS published final regulations for IRC Section 1503(d) governing the taxability of losses of dual resident companies (DRCs) and separate units of US-based companies regarded as DRCs. The final regulations will hold for taxable years after Sep 30, 1992, while the previous temporary regulations will hold for taxable years after 1986 and before Oct 1, 1992. The new rules do away with the stand-alone rule for DRCs and make many other changes such as restricting the recapture of losses for foreign-based DRCs.

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