damit der interessierte nutzer, der vielleicht nicht täglich mit komplexen internationalen steuerfragen konfrontiert ist, einmal einen eindruck gewinnt von der art und weise, wie steuerfragen in den usa "abgehandelt" werden - man beachte auch den humorigen hinweis auf "high fee lawyers!!!" - hier eine frage mit der entsprechenden, recht kompetenten antwort aus dem land der unbegrenzten möglichkeiten:


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QUESTION: I have a client that has a controlled foreign corporation
(CFC) owned thru a US LLC here in California. The CFC is based in
China and meets the same country manufacturing exemption (from subpart
F income) for foreign base company income. The US LLC is pure holding
company. It is owned 51% by US residents, & 49% by non US (Chinese non
resident aliens) who happen to be related to the US residents (brother
& mother in law)

I have recently received advice to do the following:

1) Have 50/50 ownership between US/non US residents (because), under
Section 956, the 318 family attribution rules do not apply to
nonresidents. By doing this it would get out of stringent CFC rules
and Subpart F. Not sure if it relieves 5471 requirement. If you can
respond on this it would be great. Also, there may be some recapture
problems on sale of the foreign entity on Section 1248.

2) Startup a new offshore entity in low tax jurisdiction with US treaty
benefits (BVI or Ireland) and transfer intellectual property(IP) to
this entity to create a licensing mechanism and thus keep about 10 to
15% of gross income in these jurisdictions (outside of China and the
US). The main issue here is one of valuation of the IP and transfer
pricing, but I want to make sure that there are no other issues with
relation to transferring IP offshore.

3) Create portfolio interest loans with Chinese nonresident aliens that
are not effectively connected with US business.

These all sound pretty good, but I am aware that the IRS doesn't always
follow their own rules (when they want) to crack down on areas they do
not like -- so any advice here would be appreciated.

I have been unhappy dealing with a couple of international tax
consultants and attorneys that seem to run up high fees with
borderline tax gimmicks. My client is relatively conservative and
doesn't want any future hiccups.

REPLY: If a foreign corporation is owned at least 50% by non-resident
aliens (NRA), it can not be a controlled foreign corporation. The
constructive ownership rules that treat taxpayers as owning stock held
by related persons does not include stock held by a related NRA. The
exception from the IRC 318 constructive ownership rule for stock held
by a NRA individual is in IRC section 958(b)(1) and I was not able to
find any reference to this in IRC 956. As for whether U.S. stock
holders of a non-CFC must file the Form 5471, that depends mainly
on whether they are officers or directors of the corporation. This
requires a meticulous reading of the instructions to the form with
respect to who must file the form.

IRC section 1248 requires U.S. persons who invest in a foreign
corporation to treat proceeds from a sale or exchange as a dividend
(non qualified) to the extent of the earnings and profits of the
corporation, but only if the foreign corporation was a CFC during the
previous 5 years and the shareholder owned 10% or more of the stock.

Regarding the transfer of intellectual property (IP) to a new foreign
corporation in a country that has a tax treaty with the U.S., I
can't comment on the utility of the arrangement because I'm not
conversant with the tax treaties the U.S. has with different countries
and how those treaties deal with IP. However, you might want to take a
good look at IRC section 367(d) and IRC 936(h)(3)(B) which deal with
imputed royalty income on the transfer of IP to a foreign corporation.
I have no direct experience with this issue, but I suspect that the use
of an intermediate foreign corporation to hold the IP assets and lease
them to the operating FC would not alter the deemed royalty rules
under 367 and 936.

As for the suggestion that your client create "portfolio interest
loans" that would be tax exempt for non-resident aliens, I fail to see
the purpose or the benefit. There are ample sources of U.S. debt
obligations that are tax free to foreign persons, so I would question
the motive for creating such an arrangement. For further details on
this see http://www.irs.gov/publications/p519/ch03.html and note the
comments about portfolio interest loans between related parties.

These comments are subject to the disclaimer below and my comments are
not intended to constitute a complete discussion of the issues raised.


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manchmal ist's halt bei uns in "good old europe" eben doch nicht sooooo ungemütlich, wie es zuweilen scheint 8-)


wohl bekomm's


ffbkdavid@creatrustconsult.com

www.creatrustconsult.com