Topic Thread

  • 1.  international taxation

    Posted 10-10-2018 12:38
    Need urgent assistance with a client tax return. 

    A client holds a CFC in Russia. His retained earnings are 1.7million. He held 50% of profit participation. 75% of the vote. 

    His proportionate returns earnings 850k. Therefore section 966a. Goes on line 21. The after calculating 965c which came to 600k. When the client gets dividends from the CFC he will be subject to. 13% tax in Russia. 

    In addition the client has a 988 fax loss of 200k on the debt to the CFC. 

    Question 1. 

    How to calculate foreign tax credit on 965 gain. If any. Tax will be paid only if and when there is a dividend of the retained earnings. 

    Question 2. 

    Does 988 loss directly offset the resulting 965 gain or the 965 tax has to be treated separately from other items on the tax return.

    Marina Lerner,CPA ,CrFA ,DAMBA ,CHS-V, CFF
    McLan Accounting,LLC
    4121 18th Ave,Brooklyn,N.Y. 11218
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