Outbound sales by a U.S. corporation into a foreign country require considerable up-front planning to ensure the best possible tax treatment. U.S. sellers must look closely at their business objectives and their individual tax picture when determining the appropriate structures to use in classifying outbound sales, according to attorneys David Buss, David Hryck, and Robert Rothman in a recent issue of TAXES: The Tax Magazine. Practitioners must begin with two fundamental questions:
- Will the earnings from foreign sales be repatriated or will they remain abroad for a significant period of time?
- Is the effective tax rate in the foreign country lower or higher than in the U.S.?
Buss, Hryck and Rothman walk practitioners through potential answers to each of those questions and how those answers will affect the tax planning process. They use specific scenarios to demonstrate the planning techniques that must be used.
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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.
Read this article from CCH’s Journal of Taxation of Financial Products.