This is ACC 317 week 7 discussion questions. I just need 2 paragraphs for this q

Question

This is ACC 317 week 7 discussion questions.

I just need 2 paragraphs for this question.

"International Taxation" Please respond to the following:

From the e-Activity, describe the tax benefits offered in conducting business internationally for the corporation selected. Recommend at least one (1) tax benefit that the U.S. could offer corporations to transfer business back to the U.S. to help reduce unemployment. Provide support for your response.

Tax treaties help determine how income will be taxed. Identify one (1) benefit offered as a result of a tax treaty, and determine the manner in which this might help reduce taxes owed. Provide support for your response.

Explanation / Answer

Taxable Presence Outside of the United States A first consideration for any U.S. Multinational is whether the company's expansion outside of the U.S. will give rise to a taxable presence in the local country. Similar to the state tax concept of "nexus," in the cross-border context a "permanent establishment" can be created in a local country when the enterprise reaches a certain level of activity. This concept is not defined in the Internal Revenue Code but is the product of the relevant tax treaty between the United States and the local country.

The first, and most important, decision is what to do regarding profits and cash from overseas operations. Are you planning to bring profits back to the United States right away or will you seek a deferral strategy that will leave cash and profits overseas for the time being?. A deferral structure is preferable when you want to keep profits offshore for a significant time and the foreign tax rate is lower than the U.S. tax rate. In order to defer U.S. tax, the foreign entity must be treated as a corporation for U.S. tax purposes. The goal is to move as much income as possible to this entity, and to defer U.S. tax until earnings are brought back here. Transfer pricing rules are designed to ensure that the transfer of goods from the U.S. company to the foreign company are priced fairly so the U.S. collects its fair share of taxes on the profit. If the Internal Revenue Service challenges your pricing, you could face significant penalties.

Tax incentives for a U.S. company doing business overseas.

If you are selling products overseas that are manufactured in the U.S., you may be able to take advantage of an Interest-Charge Domestic International Sales Corporation (IC-DISC). You set up a separate corporation that makes an IC-DISC election and is, by law, exempt from federal income tax. A commission agreement is entered into between the related exporter and the IC-DISC. The related exporter pays the commission to the IC-DISC, which gets a 35 percent tax deduction. The IC-DISC then pays the commission to its shareholders, who are individuals, as a qualified dividend, which is taxed at 20 percent. The overall savings is 15 percent.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.