Uncovering the covered asset acquisition rules

On Aug 10, 2010, Pres Obama signed legislation to provide education and Medicaid funding to the states. This funding is partially paid for through changes to the foreign tax credit (FTC) rules and other international tax provisions of the Internal Revenue Code that are estimated to raise approximate...

Full description

Saved in:
Bibliographic Details
Published in:Tax Executive 2010-09, Vol.62 (5), p.277
Main Authors: Kaplan, Joshua S, Farrell, Jeffrey W, Shein, Caren S
Format: Article
Language:English
Subjects:
Asset acquisitions
Double taxation
Earnings
Fair market value
Federal legislation
Foreign source income
Foreign source income taxation
Foreign tax credit
Foreign tax credits
Income taxes
Internal Revenue Code
Jurisdiction
Laws, regulations and rules
Profits
Section 901(m)
Tax exemption
Tax legislation
Tax planning
Tax rates
Taxable income
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:On Aug 10, 2010, Pres Obama signed legislation to provide education and Medicaid funding to the states. This funding is partially paid for through changes to the foreign tax credit (FTC) rules and other international tax provisions of the Internal Revenue Code that are estimated to raise approximately $10 billion over the next 10 years. One of the most significant of these changes is the addition of new section 901(m) to the Code, which limits a taxpayer's ability to claim FTCs related to a "covered asset acquisition" (CAA). Section 901(m) generally applies to a CAA that occurs after Dec 31, 2010, but a transition rule exempts certain unrelated party transactions negotiated or announced but not completed by year-end. This article discusses the new CAA rules and highlights some of the open questions that the Treasury Department and Internal Revenue Service will optimally address in future guidance. In addition, this article considers the potential effect of section 901(m) on future tax planning.
ISSN:0040-0025