This course will provide taxpayers and their advisors guidance on the sourcing of income across jurisdictions for U.S. tax purposes. Learn how the sourcing rules affect taxpayers, how taxpayers should source income, exceptions to the general rules, and how cloud and digital transactions are sourced under the proposed regulations.
The Internal Revenue Code provides rules that determine whether income is from U.S. or foreign sources. The determination of income as U.S. or foreign source can affect whether foreign persons or companies will be subject to tax and withholding in the U.S. The sourcing of income can also affect whether U.S. persons will able to offset their U.S. tax liability with a foreign tax credit.
It is therefore critical for taxpayers and their advisors to be able to determine the source of income for U.S. tax purposes. Like many of the rules found in the Internal Revenue Code, the sourcing rules are full of exceptions and special rules. This course will help taxpayers and advisors navigate through the nuances in the sourcing rules.
This course will also cover recently released IRS regulations addressing cloud and other digital content transactions. In today’s digital world companies that may not physically be in another jurisdiction, including the U.S. could still have income sourced in that other jurisdiction if they have local clients. The sourcing rules under the code do not address digital transactions directly so taxpayers and their advisors were left to determine how to source such transactions by analogy. Fortunately, proposed regulations give taxpayers clarity on how such transactions are treated.
Publication Date: May 2020
Designed For
CPAs, enrolled agents, tax preparers, attorneys and advisors who assist their clients with tax related issues, internal tax staff and tax directors.
Topics Covered
- Overview and Background
- Direct Sourcing Rules
- Distinguishing between Types of Income
- Sourcing of cloud and digital content transactions for U.S. tax purposes
Learning Objectives
- Identify the source of income under U.S. tax rules for income such as interest, dividend, services, rents, royalties, and sales
- Recognize how to classify income by character and type
- Identify how to treat digital and cloud transactions and how those transactions should be sourced for U.S. tax purposes
- Identify examples of dividend income
- Describe produced inventory property
- Describe the four categories of digital content transactions
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
John Samtoy
John Samtoy is an international tax partner at HCVT LLP. John specializes in international tax consulting and compliance services serving high net worth individuals, closely held businesses, and private equity clients across a variety of industries. John’s experience includes serving multinational clients coming into the US through investment, expanding business operations, and immigration. John experience also includes working with US corporations and individuals that are establishing a presence or working overseas.
He has advised clients on structuring investments into the US, pre-immigration planning, international family wealth planning, structuring for international operations, foreign investment in real property (FIRPTA), and export planning including advising on IC-DISC structures. John is also experienced in various areas of international tax compliance including the foreign asset disclosure requirements, foreign trust and estate reporting, withholding tax reporting, and the automatic exchange of information agreements including US FATCA and Common Reporting Standard (CRS) due diligence and compliance.