Discussion Questions 7, 8, & 9

Week 7 Discussion

"The Importance of Controlled Foreign Corporations" Please respond to the following:

· Imagine you are an international tax consultant advising a client on the benefits of establishing a controlled foreign corporation (CFC). Analyze two (2) categories of foreign base company income. Next, create a scenario suggesting how a U.S. domiciled multinational entity (MNE) can use a CFC to defer income using one (1) of the categories you analyzed.

· Suggest at least two (2) advantages of using a CFC over a branch operation. Provide at least one (1) example for each suggested advantage.

Week 8 Discussion

"Foreign Tax Currency and Transfer of Property to Foreign Corporations" Please respond to the following:

· Go to the IRS Website, located at http://www.irs.gov, to search and read Notice 2014–21 (IRS Virtual Currency Guidance). Based on your review of Notice 2014-21, identify two (2) tax consequences that may result from dealing in convertible virtual currency then provide one (1) scenario to support the potential tax consequences.

· Imagine you are a CPA representing a client preparing for the formation of a foreign corporation. Create a plan for the client to transfer property into the foreign corporation that

· will generate the least tax consequences. Explain the main reasons why you believe your plan would be effective.

Week 9 Discussion

"Tax Arbitrage and Economic Substance".  Please respond to the following:

· The ability to arbitrage the differences between international tax systems is a very important aspect of international tax planning. Imagine you are an international tax advisor providing tax-planning advice to a client with operations in different international tax jurisdictions. Propose one (1) arbitrage transaction to the client using hybrid entities and one (1) using source of income that will reduce the tax liability of the client.

· Recommend a defense on each transaction where the IRS pursues the business purpose or economic substance to reject the arbitrage transactions.