Week 4 & 5 Discussion Questions

WEEK 4 DISCUSSION

"The Role of Treaties on International Tax Transactions" Please respond to the following:

· Go to the Internal Revenue Service (IRS) Website, located at http://www.irs.gov/Individuals/International-Taxpayers/The-U.S.-Model-Income-Tax-Convention-and-Model-Technical-Explanation. Locate the “U.S. Model Income Tax Convention” used to negotiate treaties with other nations and review Article 5: Permanent Establishment, Article 7: Business Profits, and Article 22: Limitation on Benefits in the model. Next, examine how current U.S. multinational corporations can use provisions of treaties to lower taxes. Speculate how the Internal Revenue Service (IRS) can apply Article 22: Limitation on Benefits to reduce abuse of current treaty provisions. Provide examples to support your response.

· Imagine you are a CPA representing clients with investments in foreign financial institutions and non-financial foreign entities. Provide your client with at least two (2) ways to avoid penalties under the Foreign Account Tax Compliance Act (FATCA).

WEEK 5 DISCUSSION

"Managing Foreign Tax Credits"  Please respond to the following:

· Go to the IRS Website, located at http://www.irs.gov, and research the latest IRS “Publication 514” Foreign Tax Credit for Individuals. Based on your research, analyze at least two (2) requirements of a foreign tax levy to qualify for the foreign tax credit.  Next, predict two (2) potential impacts of the foreign tax credit on dual capacity taxpayers.

· Imagine you are a tax advisor assisting a client with international tax planning, and the client has excess foreign tax credits. Propose a scenario to reduce your client’s tax liability by changing U.S. Source income into foreign source income in a way that will not generate any additional foreign tax. Provide specific examples of how your client can use tax laws to reduce source income and identify the applicable tax laws that support your recommendation.