international tax: fatca, ovdi and other issues€¦ · 07/10/2014 · 11/18/2014 1 ws+b client...
TRANSCRIPT
11/18/2014
1
WS+B CLIENT CPE
INTERNATIONAL TAX:FATCA, OVDI AND OTHER ISSUESKimberlee S. Phelan, CPA, MBA, CGMA
November 19, 2014
WS+B CLIENT CPE
AGENDA
FATCA• Background of FATCA• Defining new language & definitions imposed by FATCA• Documentation requirements for U.S. companies• Compliance requirements for U.S. companies• FATCA timeline• Recommended plan of action for U.S. companiesOVDIBEPSOTHER INTERNATIONAL TAX ISSUES
11/18/2014
2
WS+B CLIENT CPE
FATCA
• Foreign Account Tax Compliance Act (FATCA)
• Provisions of FATCA became law in March 2010 (Chapter 4 of the Code)
• Focuses on reporting:• By U.S. taxpayers about certain foreign financial accounts and offshore assets
• By U.S. taxpayers about payments to foreign payees
• By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest
• Withholding is the cost of not documenting the FATCA status of foreign payees.
WS+B CLIENT CPE
FATCA (continued)
• At a high level, FATCA imposes a 30% withholding tax on what are classified as “withholdable payments” made to a foreign person, unless that person identifies its U.S. interest holders or owners, and discloses required U.S. tax information.
• FATCA further requires withholdable payments to be
reported annually to the Internal Revenue Service, regardless of whether withholding from the payment had been required or done.
11/18/2014
3
WS+B CLIENT CPE
FATCA (continued)
• Although it is structured as a withholding provision, FATCA itself is not actually looking to impose the withholding tax that its provisions call for. The FATCA regime uses withholding only as a penalty to force required information from foreign businesses, particularly focusing on their significant U.S. account holders and U.S. owners, who otherwise might not be reporting their foreign income or assets.
WS+B CLIENT CPE
FATCA (continued)
• The focus of nonfinancial businesses trying to be compliant should be on payee documentation and payment reporting, rather than on withholding.
• Most payments, especially payments to foreign payees, will be subject to some sort of reporting.
11/18/2014
4
WS+B CLIENT CPE
DEFINING TERMS
• Foreign Financial Institution (FFI)• Intergovernmental Agreement (IGA)• Global Intermediary Identification Number (GIIN)• Non-Financial Foreign Entity (NFFE)• Substantial U.S. ownership• FDAP income• Withholdable payment• Withholding agent (WA)• Effectively connected income (ECI)• Beneficial owner
WS+B CLIENT CPE
FOREIGN FINANCIAL INSTITUTION (FFI)
• Role of the IGA program• Model 1 IGA
• Reporting financial institutions satisfy their Chapter 4 requirements by reporting specified information about U.S. accounts to the government in their home country
• Subsequent automatic exchange of that information on a government-to-government basis
• Model 2 IGA• Reporting financial institutions satisfy their Chapter 4 requirements by reporting specified
information about U.S. accounts directly to the IRS in a manner consistent with the final regulations issued
• Supplemented by a government-to-government exchange of information upon request• FFI’s must register with IRS to obtain GIIN
• Countries that have signed IGA’s• http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx
11/18/2014
5
WS+B CLIENT CPE
NON-FINANCIAL FOREIGN ENTITY (NFFI)
• NFFE - a foreign entity excluded from the definition of FFI
• Active NFFE – conduct actual business activity other than holding assets that produce investment income• You are an active NFFE if:
• Less than 50% of your gross income for the preceding calendar year is passive income, and
• Less than 50% of the weighted average percentage of assets (tested quarterly) held are assets that produce or are held for the production of passive income
• Passive NFFE – any NFFE not otherwise excepted will be a passive NFFE• Must provide withholding agents with a certification regarding any substantial U.S.
owners
WS+B CLIENT CPE
NFFES (CONTINUED)
• Substantial U.S. ownership• Any specified U.S. person directly or indirectly owning 10% or greater of a passive
NFFE• Corporation – 10% or more of stock ownership (by vote or value)
• Partnership – 10% or more of profit or capital interest
• Trust – 10% or more of the beneficial interests of the trust, or ownership by a grantor in a grantor trust
11/18/2014
6
WS+B CLIENT CPE
NFFES CONTINUED
• Excepted NFFE – include the following:• Publicly traded NFFE’s (regularly traded in an established market)
• Territory NFFE’s (directly or indirectly wholly owned by bona fide U.S. territory residents in the NFFE’s country of organization)
• Active NFFE’s
WS+B CLIENT CPE
FDAP INCOME
• FDAP = payment that is Fixed or Determinable, Annual or Periodic U.S. source income
• U.S. source income – payment that is derived from sources within the U.S.
• If a withholding agent is unable to determine the payment source at the time of payment, final FATCA regulations require the payment to be treated as U.S. source income
11/18/2014
7
WS+B CLIENT CPE
FDAP INCOME (CONTINUED)
• Withholdable FDAP income:• Wages
• Interest (including OID)
• Dividends
• Rents
• Annuities
• Pensions
• Withholding agent (WA) - all persons having control, receipt, custody, disposal, or payment of any withholdable payment
WS+B CLIENT CPE
NON-WITHHOLDABLE FDAP INCOME
• Two other categories of payment that, despite their nature as U.S.-source FDAP, do not generate a withholding obligation, although they are reportable, are payments under “grandfathered obligations” and “excluded nonfinancial payments.”
11/18/2014
8
WS+B CLIENT CPENON-WITHHOLDABLE FDAP INCOME(CONTINUED)• Grandfathered obligations
• Any obligation (not including equity instruments) outstanding on January 1, 2014 that is not materially modified thereafter
• Excluded nonfinancial payments – will cover a large class of active payments for most businesses and can include:• Services (if effectively connected to U.S. & already included in beneficial owner’s taxable income
for the year)• Beneficial owner = entity (person) that enjoys possession or benefits of ownership of a property even though its
ownership title is with another entity• Use of property (such as office & equipment leases and software licenses not classified as
purchases)• Transportation• Freight• Interest on outstanding A/P arising from the acquisition of goods and/or services
• STILL REPORTABLE
WS+B CLIENT CPEOTHER EXCEPTIONS TO WITHHOLDABLEFDAP INCOME
• Beyond the foregoing payment-specific withholding exceptions, other exceptions are based on the kind of entity to which the payments are made. As a broad generalization, FATCA withholding does not apply (although FATCA reporting may still apply) to foreign payees that turn over valid documentation certifying “compliant” Chapter 4 status.
11/18/2014
9
WS+B CLIENT CPEOTHER EXCEPTIONS TO WITHHOLDABLEFDAP INCOME
• Payments to a publicly traded corporation (non-FFI) or members of its expanded affiliated group are considered to be made to an “excepted NFFE,” and not subject to withholding (although remain reportable).
• To qualify for this publicly traded company or affiliate exception, a payee must have a class of stock that is regularly traded on an established securities market, or be a member of the expanded affiliated group of such a company.
WS+B CLIENT CPE
NON-FDAP INCOME
• Some payments are exempt from any withholding obligation by nature of the payment. Those payments are not FDAP, and are therefore not withholdable payments, and furthermore, are not reportable, thus making them the safest payments for which to ignore documentation.
• Most particularly, this is true of payments for the purchase of goods.
11/18/2014
10
WS+B CLIENT CPE
DOCUMENTATION
Documentation requirements:• If WA is unable to document the FATCA status of a foreign payee, the
WA is required to withhold 30% on certain U.S. source payments made to the foreign payee
• Establish a procedure for obtaining payee certifications, reviewing and determining the acceptability of those certifications, and recording information received in setting up a new account, as well as dealing with any changes that may arise
• Helpful to supplement Form W-8 with documentary evidence
WS+B CLIENT CPE
DOCUMENTATION
Documentation process:1. Identify the payee2. Establish & document payee’s FATCA status3. Due diligence4. Presumption rules5. Changes in circumstances6. Record retention
11/18/2014
11
WS+B CLIENT CPE
IDENTIFY THE PAYEE (VENDOR)
• Generally the payee is the person to whom payment is made, regardless of beneficial ownership of the payment
• Distinction from the rules of Chapter 3 (generally require identification of a beneficial owner to determine the withholding status of a payment)
WS+B CLIENT CPE
IDENTIFY THE PAYEE (CONTINUED)
Exceptions to the rule:1. Payments to foreign flow-through entities
• Payee = partners or beneficial owners
2. Payments to a U.S. person acting as an agent or intermediary (for a foreign person)• Payee = foreign person (if the WA has actual knowledge that the person receiving the
payment is acting as an intermediary or agent of the foreign person)
3. Payments to disregarded entities under U.S tax rules or to branches• Payee = owner of the entity
4. Payments to a foreign branch of a U.S. person. • Payee = U.S. person, unless it is a foreign branch of a U.S. financial institution acting
as a qualified intermediary with respect to a payment
11/18/2014
12
WS+B CLIENT CPE
ESTABLISH PAYEE FATCA STATUS
• Document payee FATCA status through Forms W-8• Must not have reason to know that any of the information, certifications, or
statements in the documentation is unreliable or incorrect• Have payees sign Forms W-8 (2014)• Documentary evidence & examples• Classifications of payees & related documentation to establish FATCA status:
• New U.S. payee• Pre-existing U.S. payee• New foreign individual payee• Pre-existing foreign individual payee• Foreign entity payee
WS+B CLIENT CPE
DUE DILIGENCE
• Importance of receiving the correct form and knowing that it is correctly filled out• Consideration in advance of necessary advice that will need to be given to
foreign payees filling out new forms• Anticipate high initial error rate• All Forms W-8 and W-9 must be signed under penalties of perjury by a person
who is authorized to sign the form• If a WA knows or has reason to know (based on information in its files or
records) that the FATCA classification on a withholding certificate is invalid, the WA may be liable for any withholding required under FATCA due to the invalid classification, as well as any penalties and interest on the withholding• IRC §1441-7(b)
11/18/2014
13
WS+B CLIENT CPE
PRESUMPTION RULES
• Not intended to excuse withholding, but simply to direct a withholding agent to one or the other of the withholding and documentation regimes (FATCA, Chapter 3, or backup W/H)
• Presumption rules are relied upon in the absence of a valid withholding certificate and vary depending on the presumed entity type of the payee
• RULES:• Determine status as individual or entity (and subsequently trust, estate, corporation, or
partnership classification)• Determine U.S. or foreign status (default = if payment cannot be associated with a withholding
certificate or documentary evidence, payment is presumed to be made to a U.S. person)• Determine Chapter 4 status of the payee and determine whether withholding under Chapter 4 is
required for the entity in the absence of documentation• Generally, if a foreign entity has not provided a valid withholding certificate or documentary evidence and the
entity cannot be presumed to be a U.S. entity, the entity will be presumed to be a nonparticipating FFI subject to 30% withholding on withholdable payments
WS+B CLIENT CPE
CHANGES IN CIRCUMSTANCES
• Includes any change that would affect the payee's FATCA classification (ex: addition of a U.S. address or U.S phone number in the payee's file)
• A withholding certificate or documentation affected by such changes becomes invalid on the date the WA knows or has reason to know that circumstances affecting the correctness of the certificate or documentation have changed
• WA may rely on prior FATCA classification of the payee for up to 90 days after they become aware of a change
11/18/2014
14
WS+B CLIENT CPE
RECORD RETENTION
• Generally, a WA must retain each Form W-8, written statement, or copy of relevant documentary evidence for as long as it may be relevant to the determination of the WA's tax liability
• Must note the date on which documentary evidence was received and reviewed
• Withholding records are considered tax records and are also subject to the general record retention requirements
WS+B CLIENT CPEAPPLICABILITY OF NEW FORMS W-8BEN-E & W-8BEN
• Challenges in obtaining a compliant form• Resistance from foreign payees• Duration of validity• Alternative documentation
• articles of incorporation, letters from a foreign government, certain filings on government agency websites (equivalent to SEC), opinions of regulated professionals (i.e. - attorneys), & etc.
• Other W-8 Forms:• W-8ECI• W-8IMY
• Form W-9 distinguished
11/18/2014
15
WS+B CLIENT CPE
COMPLIANCE
• Due diligence to identify FATCA status of foreign payees
• Duty to obtain, inspect, & approve documentation
• Duty of continuous monitoring for changes in status and changes in types of payments
WS+B CLIENT CPE
COMPLIANCE (CONTINUED)
• All foreign entities receiving FATCA payments will need to provide some type of documentation attesting to or demonstrating their FATCA compliance, to avoid 30% withholding.
11/18/2014
16
WS+B CLIENT CPE
COMPLIANCE (CONTINUED)
• Chapter 3 and Chapter 4 require a withholding agent to file a return (which is characterized as an income tax return) on Form 1042 each year. Reg. §1.1474-1(c)(1).
• Withholding agents are also required to file an information return (Form 1042-S) reporting payments to each relevant payee, and to provide a payee statement (a copy of Form 1042-S) to each payee. Reg. § 1.1474-1(d)(1).
• Potential penalties include those for failure to file an income tax return (§ 6651) and substantial understatement (§ 6662); failure to file an information return (§6621) and failure to provide a payee statement (§ 6623).
WS+B CLIENT CPE
COMPLIANCE (CONTINUED)
• It is important to be aware that information reporting on Form 1042-S and Form 1042 is still required for payments made during calendar year 2014. U.S.-source FDAP payments are reportable, regardless of whether they are subject to FATCA withholding.
• Although Notice 2013-43 has deferred until July 1, 2014 any obligation to withhold from payments, it did not modify the obligation to report the FATCA character and status of payments made after January 1, 2014.
11/18/2014
17
WS+B CLIENT CPE
COMPLIANCE (CONTINUED)
• Form 8804/8805 – applicable to U.S. partnerships with foreign partners. Under §1446 (Chapter 3), withholding on partnership’s allocated ECTI is at the highest marginal rate (e.g., 35% for corporate foreign partners)
• Form 8804-C – a type of withholding certificate that may be used by a foreign partner to certify entitlement to a lower rate of withholding under certain defined circumstances.
WS+B CLIENT CPE
COMPLIANCE (CONTINUED)
• Remitting amounts withheld to the IRS – normally done through the EFTPS system. Penalties can apply if taxpayers do not remit through this system.
• Important to make sure payments are classified properly with respect to tax period and type of tax.
• To avoid penalties, make payments timely and make them in the correct amount.
• WAs should have appropriate internal controls in place to execute the remittance function.
11/18/2014
18
WS+B CLIENT CPE
FATCA TIMELINE
• Effective July 1, 2014 (subject to exceptions), Chapter 4 withholding becomes mandatory on withholdable payments to undocumented foreign payees.
• Focus is largely on U.S.-source FDAP income paid to foreign persons.
• Notice 2014-33 (May 2014)• Calendar years 2014 and 2015 regarded as “transition period”
• IRS intimates that it will soft-pedal the Chapter 4 penalty provisions provided taxpayers make a good faith effort to comply.
• But it is not entirely clear what this means.
WS+B CLIENT CPE
FATCA TIMELINE (CONTINUED)
• Aside from certain carve-outs, the regulations require withholding (in the absence of proper documentation) from payments made on or after July 1, 2014, under all new obligations to whomever paid, from all payments to documented nonparticipating FFI’s, and from payments under preexisting obligations made to passive NFFE’s that have documented at least one substantial U.S. owner.
11/18/2014
19
WS+B CLIENT CPE
FATCA TIMELINE (CONTINUED)
• Although payment exceptions reduce withholding for a nonfinancial withholding agent with properly documented payees, payments under• new accounts (new vendors, suppliers, and service providers),• new obligations (new contracts, Statements of Work, accounts, or orders
originated after June 30, 2014), or• preexisting arrangements that are materially modified after June 30, 2014,are fully subject to withholding from July 1, 2014, unless exempt status for the payee has been previously documented or the payment otherwise qualifies for a withholding exception. As entities come to the end of their transition periods, they become fully subject to withholding from those dates, which can vary depending on the kind of entity and the reason for the transition delay.
WS+B CLIENT CPE
RECOMMENDED PLAN OF ACTION
• The heart of the FATCA compliance exercise is to have in hand, before making a withholdable payment, either documentation establishing that the payee is not subject to Chapter 4 withholding, or analysis establishing that the payment itself is exempt from withholding.
• Documenting the entity is only one part of the total FATCA exercise. Payees and payments still must be reported.
11/18/2014
20
WS+B CLIENT CPERECOMMENDED PLAN OF ACTION (CONTINUED)You Should:
1. Take an inventory to identify all payment streams that might result in a payment going to a foreign payee.
2. Take an inventory of the foreign entities identified as payees. In this inventory, the objective is to make sure that you can identify the actual legal entities that are being paid, and in what capacity they are being paid.
3. Take an inventory of your own corporate structure and payments that are made within it. A multinational corporate group may have foreign subsidiaries that will require documentation with respect to U.S. group members’ payments to them. Like the Chapter 3 rules, FATCA does not have an exception for payments within a group.
WS+B CLIENT CPE
OVDI
Offshore Voluntary Disclosure Initiative
1. 2009 and 2011 Programs Closed
2. Ongoing OVDI with no deadline, but not guarantee of continuation of program
3. Streamlined Program
11/18/2014
21
WS+B CLIENT CPEBEPS –BASE EROSION PROFIT SHIFTING
1990s• Preferential Tax Regimes• Opaque Tax Havens• Lining up OECD Members
Early 2000s• OECD Global Forum on Taxation• Global Forum on Transparency and Exchange of
Information
WS+B CLIENT CPEBEPS –BASE EROSION PROFIT SHIFTING
The Last Decade• Naming and Shaming (Starbucks, Apple)
• Paying a “Fair Share” (Moral Taxes)
• Developing Countries
11/18/2014
22
WS+B CLIENT CPEBEPS –BASE EROSION PROFIT SHIFTING
Key Pressure Points• International Mismatch in Entity and Instrument
Characterization• Application of Treaty Concepts to Profits Derived from the
Delivery of Digital Goods and Services• Tax Treatment of Related Party Debt Financing, Captive
Insurance, and other Intra-Group Financial Transactions• Transfer Pricing and Changes to Digital Economy• Effectiveness of Anti-Avoidance Measures• Harmful Preferential Regimes
WS+B CLIENT CPEOTHER INTERNATIONAL BUSINESS ISSUES Understand the Market Overseas Structure / Choice of Entity Immigration Planning / Expatriates
and Gross-Up Explore Grants / Incentives VAT / Sales Tax Integrate Systems Use Local Consultants Plan for Exit Understand Treaties Customs Duties Foreign Currency Risk Transfer Pricing
Local Staff and Directors Local Taxation and “Social” Taxation Banking Compliance and Withholding Logistics / Production Cultural Differences Cash Flow Planning / Repatriation of
Profits Managing World-Wide Effective Tax
Rate Permanent Establishment Liability Exposure Tax Consolidation
11/18/2014
23
WS+B CLIENT CPEFOREIGN CORPORATIONS –EARNINGS STRIPPING §163(j)
Anti-earnings stripping rules §163(j) • Safe Harbor - Sect. 163(j) applies only if the ratio of debt-to-equity
exceeds 1.5 to 1• Limits deductions for any “disqualified interest” paid or accrued during the taxable
year Any interest paid to a “related person” if no U.S. tax imposed on such interest;
“Related” under § 267(b) or § 707(b)(1)
Any interest paid to a third party subject to a “disqualified guarantee” when no U.S. “gross basis tax” is imposed on such interest (beware “Comfort letters”)
• Form 8926
WS+B CLIENT CPE
TRANSFER PRICING -§482
MOST IMPORTANT INTERNATIONAL TAX ISSUE FOR BUSINESSES
Goal: Clearly reflect income of affiliated corporations engaged in inter-company transactions.
Standard: Arm’s-length price (or market value) standard for evaluating transfer prices
Practical difficulty: Market values are highly judgmental and depend on the facts and circumstances.
11/18/2014
24
WS+B CLIENT CPE
TRANSFER PRICING-METHODS
Tangible Property• Comparable uncontrolled price method (CUP)
• Resale price method (RPM)
• Cost plus method (C+)
• Comparable profits method (CPM)
• Residual profit split method (RPSM)
• Comparable profit split method (CPSM)
• Other unspecified methods
WS+B CLIENT CPE
TRANSFER PRICING-METHODS
Intangible Property• Comparable uncontrolled transactions method (CUT)• Comparable profits method (CPM)• Residual profit split method (RPSM)• Comparable profit split method (CPSM)• Other unspecified methods
Services• Cost• Cost-Plus• Services Cost Method for traditional Low-Margin Services
11/18/2014
25
WS+B CLIENT CPEOUTBOUND TRANSFER OF INTANGIBLES §367(d) General rule
U.S. transferor treated as having “sold” intangible property
In exchange for deemed annual payments
That are contingent on productivity, use, or disposition of intangible property
WS+B CLIENT CPEREPORTING OF OUTBOUND TRANSFERS OF PROPERTY OR INTANGIBLES
Form 926 US persons who transfer money or certain other tangible or even intangible property to
a foreign corporation may be required to file Form 926
The penalty for noncompliance may be 10% of the value of the transfer up to $100,000, unless there is reasonable cause.
There is now also a 40% penalty under IRC Section 6662(j) imposed on any underpayment resulting from undisclosed foreign financial assets.
Due by the extended due date of the income tax return and filed with that return.
11/18/2014
26
WS+B CLIENT CPECHOICE OF ENTITY ELECTION TO “CHECK THE BOX”
Form 8832 Non per se corporation
Default versus Election
• Default: One Owner = Disregarded Entity; Two or More Owners = Partnership
• All Members have Limited Liability = Default to “Association”, taxable as a corporation
Why Important?
• Flow through of income and tax credits
• Repatriation of profits
• Taxation in host country
WS+B CLIENT CPE
ENTITY CLASSIFICATIONS
Types of Entities:
Partnership
Hybrid Entity
ReverseHybrid Entity
Branch
Disregarded Entity
Corporation
11/18/2014
27
WS+B CLIENT CPE
SOURCE OF INCOME
Interest §862(a)(1)• The residence of the payor will generally determine the classification.
Dividends §862(a)(2)• The residence and, in limited cases, the source of the income of the corporate payor will generally
determine the classification.Personal services §862(a)(3)
• The place where personal services are performed generally determines the classification. Rents and royalties §862(a)(5)
• The location or use of the property (or the interest in the property) controls the classification.Real property §865(b)
• The location of real property sold or exchanged determines the source.Sale of personal property
• Generally, where the passage of title occurs determines the source of income from the sale of inventory property. §865(b)
• Income from the sale of other personal property (e.g., capital assets) is generally sourced to the residence of the seller. §862(a)(4)
WS+B CLIENT CPE
FIRPTA WITHHOLDING
FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT (FIRPTA)• FIRPTA treats gains and losses from U.S. real property interests as
effectively connected income (whether or not engaged in a U.S. trade or business) but withholding applies. Includes sale of stock of U.S. Real Property Holding Corporation Any transfer (taxable or nontaxable) by a foreign person of stock
in a domestic corporation triggers obligations under FIRPTA• Exceptions apply (e.g., publicly traded stock in certain cases)• Filings for exceptions must be done prior to transfer to avoid
withholding tax exposure• Transferee of U.S. real property generally must withhold 10% tax
Exceptions apply, but must complete exemption forms prior to closing
Forms 8288 / 8288-A /8288-B
11/18/2014
28
WS+B CLIENT CPE
FIRPTA EXAMPLE
WS+B CLIENT CPE
FIRPTA EXAMPLE 2
Domestic Stock Presumed to be USRPI
11/18/2014
29
WS+B CLIENT CPE
FOREIGN TAX CREDITS
Minimization of Double Taxation
Claiming the Credit• Evidence of Foreign Taxation
• Cannot claim excess of Treaty-Allowed Rate
Form 1118 – Claimed by Basket of Income
Deemed Paid Credit
AMT Limitation
WS+B CLIENT CPE
TREATY-BASED RETURNS
Position Overrules or Modifies the IRC Purpose: Reduce withholding or eliminate double taxation Form 8833 – Penalty for failure to disclose
• $10,000 for a C Corporation• $1,000 for other taxpayers• PER DISCLOSURE
Permanent Establishment Residency
11/18/2014
30
WS+B CLIENT CPETREATY-BASED RETURNS –STATE IMPLICATIONS
States are NOT required to follow US Income Tax Treaties
Permanent Establishment versus Nexus
Non Income-Based Taxes (Texas, Ohio, Michigan, Washington)
Federal Taxable Income versus other basis of taxation
WS+B CLIENT CPE
FOREIGN CURRENCY
Functional Currency Requirement Character of Gain/Loss
• Generally, follow the underlying transaction• Ordinary versus Capital
Blocked Currency Balance Sheet (spot rate) versus Income Statement
(weighted average rate)• Fluctuation = Separate Balance Sheet Account (no income
statement impact)
11/18/2014
31
WS+B CLIENT CPE
FINAL THOUGHTS. . .
For Every International Tax Issue there is a Solution which is
Quick
Easy,
Inexpensive,
and
WRONG