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Beginning in tax year 2018, IRS partnership tax audit adjustments will be assessed at the partnership level, not the partner level, and the partnership will owe the tax, penalties and interest.

­­­For foreign investors to make the best use of ever-evolving U.S. tax laws, which got a major overhaul in 2017 with the passage of the Tax Cuts and Jobs Act, proper tax planning, tax projections and documentation are all required.

Transfer pricing is a term to describe methods of pricing transactions between related entities located in different countries. Transfer pricing is one of the focused campaigns at the IRS Large Business and International (“LB&I”) Division.

The US taxes foreign non-resident individuals and foreign entities on two type of income. First, effectively connect income (ECI) is active business income that is subject to US income tax.

Purpose of Form 5472 In transactions between unrelated third parties, the prices charged between the parties is controlled by market forces.   However, with transactions between related parties, there is no corresponding conflict of interest between the parties to ensure that market prices are used. The IRS developed Form 5472 to collect information and identify potential…

The Tax Cuts and Jobs Act (“TCJA”) changed the law on the deductibility of interest expense for foreign inbound investors in United States real estate. Prior to the TCJA, the tax law had a provision called the earnings stripping rules. These were intended to prevent related parties from using excess leverage to convert what should…

By Brad Wagner, CPA. Wagner, Kaplan, Duys, & Wood, LLP, Bethesda, Maryland Foreign inbound investors in U.S. real estate anticipate owing Federal income tax on the profits from the rental and sale of their properties. However, many do not realize that there are state and local taxes that will be incurred. This is because, many foreign…

In December 2017, Congress passed the Tax Cuts and Jobs Act (“TCJA”) and the President signed it into law on December 22, 2017. The tax act has made significant changes that affect foreign investors in United States real estate (“FIRPTA”) utilizing the blocker corporation structure.