Preface and Acknowledgments, xxi
Chapter 1: Residency, 1
' 1.01 Overview of Taxing Structure for Individuals, 1
Cook v. Tait, 265 U.S. 47 (1924), 2
' 1.02 Overview of Taxing Structure for Domestic and Foreign
Corporations, 3
' 1.03 The Residency Scheme--In General, 4
' 1.04 Citizenship, 5
' 1.05 Residency, 5
' 1.06 The Green Card Test, 6
' 1.07 The Substantial Presence Test, 6
' 1.08 The 30-Day De Minimis Rule, 7
' 1.09 The Tax-Home Exception, 8
Weible v. United States, 244 F.2d 158 (9th Cir.
1957) 9
' 1.10 Exempt and Other Special Categories of Alien
Individuals, 12
' 1.11 Residency Commencement and Termination, 14
Problem 1, 15
Chapter 2: Source Rules, 17
' 2.01 Introduction, 17
' 2.02 Source Rules for Interest, 20
' 2.03 Exceptions to the Interest Source Rule, 21
' 2.04 Source Rules for Dividends--Generally, 21
' 2.05 Dividends from United States Corporations, 22
' 2.06 Dividends from Foreign Corporations, 22
' 2.07 Source Rules for Personal Services Compensation, 22
Revenue Ruling 87-38, 1987-1 C.B. 176, 24
' 2.08 Source Rules for Rents and Royalties, 26
Boulez v. Commissioner, 83 T.C. 584 (1984), 27
' 2.09 Source Rules for Dispositions of United States Real
Property Interests, 30
' 2.10 Source Rules for Sales of Personal Property, 31
' 2.11 Sales of Inventory Property, 31
' 2.12 Sales of Noninventory Property, 32
' 2.13 Section 862--Income from Sources Without the United
States, 35
' 2.14 Source Rules for Other Income, 35
Revenue Ruling 89-67, 1989-1 C.B. 233, 36
Problem 2, 38
Chapter 3: Section 911 Exclusion, 41
' 3.01 Taxation of Americans Abroad--Introduction, 41
' 3.02 Eligibility for the ' 911 Exclusion, 42
' 3.03 The Tax Home Standard, 43
' 3.04 Bona Fide Residence Test , 44
Jones v. Commissioner, 927 F.2d 849 (5th Cir.
1991), 47
' 3.05 Physical Presence Test, 53
Gelhar v. Commissioner, T.C. Memo 1992-162, 55
' 3.06 The Foreign Source Earned Income Limitation: ' 911(b)
Generally, 57
Revenue Ruling 80-254, 1980-2 C.B. 222, 58
' 3.07 Deferred Payments, 58
' 3.08 Amounts Received from a Sole Proprietorship or
Partnership, 59
' 3.09 Limitation on the Amount of the Exclusion, 60
' 3.10 Employer-Provided Housing Exclusion, 60
' 3.11 Self-Provided Housing, 62
' 3.12 Computing the Foreign Earned Income Exclusion, 62
Problem 3, 65
Chapter 4: Foreign Tax Credit, 67
' 4.01 Introduction, 68
' 4.02 Credit Versus Deduction, 68
' 4.03 Persons Eligible to Take the Credit, 69
' 4.04 Creditable Taxes--General Principles, 69
' 4.05 Requirements for Credit, 70
Nissho Iwai American Corp. v. Commissioner, 89
T.C. 765 (1987), 71
Revenue Ruling 90-107, 1990-2 C.B. 178, 72
' 4.06 Taxes on Business Income, 73
' 4.07 Taxes on Dividends, Interest, Other Passive Income,
and Compensation, 75
' 4.08 Taxes "In Lieu Of" Income Taxes: ' 903, 75
' 4.09 The ' 904 Limitation upon the Amount of Taxes Which
May Be Credited--In General , 76
' 4.10 The Separate Computations of the Overall ' 904
Limitation, 77
' 4.11 Carryback and Carryover of Excess Taxes Paid: '
904(c) 80
' 4.12 Corporations Eligible to Utilize the Foreign Tax
Credit--Domestic Stockholders in Foreign Corporations: ' 902, 81
First Chicago Corp. v. Commissioner, 96 T.C. 421
(1991), 82
' 4.13 Calculating the Taxes Deemed Paid by Domestic
Corporations, 86
' 4.14 The ' 78 Gross-Up, 87
' 4.15 Two Variations on the ' 904 Limitation: Capital Gains
and Losses, 87
' 4.16 Recapture of Foreign Losses: ' 904(f), 89
Problem 4, 91
Chapter 5: Tax Treaties--An Overview, 93
' 5.01 Overview, 93
' 5.02 Negotiation of Treaties, 94
' 5.03 Ratification of Treaties, 94
' 5.04 Interpretive and Supplementary Materials, 95
' 5.05 Relationship of Tax Treaties to United States Federal
Law, 96
' 5.06 Tax Treaties and Double Taxation, 97
' 5.07 Persons Eligible for Treaty Benefits, 97
' 5.08 Saving Clauses, 98
' 5.09 Anti-Treaty Shopping Clauses, 99
' 5.10 Nondiscrimination Clauses, 100
Revenue Ruling 91-58, 1991-2 C.B. 340, 101
' 5.11 Competent Authority Procedures, 102
United States-Canada Income Tax Treaty, 103
United States-Canada Protocol to the Income Tax
Treaty--1995, 111
Technical Explanation of United States Model Income Tax
Treaty, 115
United States Model Income Tax Treaty, 117
Problem 5, 127
Chapter 6: Tax Treaties and Passive Income,
129
' 6.01 Introduction, 129
' 6.02 Dividends, 129
' 6.03 Interest, 130
' 6.04 Royalties, 131
' 6.05 Gains from the Disposition of Property, 131
' 6.06 Income from Real Property, 132
' 6.07 Residual Income Clauses, 132
Technical Explanation of United States-Canada Income Tax
Treaty, 132
Technical Explanation of the Protocol to the United
States-Canada Income Tax Treaty--1995, 143
Problem 6, 155
Chapter 7: Tax Treaties and Business Income,
157
' 7.01 The Taxation of Business Profits--Generally, 158
' 7.02 Carrying on a United States Business, 158
Revenue Ruling 58-63, 1958-1 C.B. 624, 159
' 7.03 Fixed Place of Business, 160
Unger v. Commissioner, 936 F.2d 1316 (D.C. Cir.
1991), 162
' 7.04 Duration of Permanent Establishment, 164
' 7.05 Use of Another's Fixed Place of Business, 165
' 7.06 Use of Agents, 165
' 7.07 Dependent Agents, 166
Revenue Ruling 90-80, 1990-2 C.B. 170, 167
' 7.08 Agents Versus Purchasers, 168
Revenue Ruling 76-322, 1976-2 C.B. 487, 168
' 7.09 Agents Versus Lessees, 170
' 7.10 Scope of Business Profits Article, 170
Revenue Ruling 86-156, 1986-2 C.B. 297, 171
' 7.11 Business Profits Attributable to a Permanent
Establishment, 173
' 7.12 Determination of Income Attributable to a Permanent
Establishment, 174
' 7.13 Allocation and Apportionment of Expenses to a
Permanent Establishment, 177
' 7.14 Dependent Personal Services--Employees, 178
Revenue Ruling 86-145, 1986-2 C.B. 297, 180
' 7.15 Independent Personal Services--Independent
Contractors, 181
' 7.16 Computation of United States Tax Liability Under a Tax
Treaty, 182
' 7.17 Disclosure of Treaty-Based Return Positions, 183
Technical Explanation of United States-Canada Income Tax
Treaty, 184
Problem 7, 189
Chapter 8: Nontreaty Persons--Investment Income,
191
' 8.01 General Taxing Pattern Applicable to Foreign Persons
191
' 8.02 Taxation of Nonresident Individuals, 191
' 8.03 Taxation of Foreign Corporations, 193
' 8.04 Income Described in '' 871(a) and 881(a)--In
General, 194
' 8.05 Withholding of 30 Percent Tax at Source, 195
' 8.06 The Portfolio Interest Exception, 195
Problem 8, 197
Chapter 9: Nontreaty Persons--Existence of a Trade or
Business 199
' 9.01 Trade or Business Status--Generally, 199
Revenue Ruling 88-3, 1988-1 C.B. 268, 201
Revenue Ruling 58-63, 1958-1 C.B. 624, 202
' 9.02 Performance of Services, 202
Johansson v. United States, 336 F.2d 809 (5th
Cir. 1964), 203
' 9.03 De Minimis Exception for Nominal Services, 204
' 9.04 Real Property, 204
' 9.05 Election to Be Taxed on a Net Basis, 205
Revenue Ruling 92-74, 1992-2 C.B. 156, 206
' 9.06 Dispositions of United States Real Property Interests,
208
' 9.07 Sales Activity, 209
' 9.08 Purchasing Activity, 210
' 9.09 Representative Office Activity, 211
' 9.10 Partnerships, 211
' 9.11 Use of Dependent and Independent Agents, 212
' 9.12 Licensees and Lessees, 212
Problem 9, 213
Chapter 10: Nontreaty Persons--Trade or Business
Income, 215
' 10.01 Overview of the Taxation of Effectively Connected
Income, 215
' 10.02 Determination of Effectively Connected Income--In
General, 217
' 10.03 Fixed or Determinable Income and Certain Other United
States Source Income, 217
' 10.04 The Asset Use Test, 218
' 10.05 The Material Factor Test, 219
' 10.06 All Other United States Source Income, 220
' 10.07 Effectively Connected Foreign Source Income, 221
Revenue Ruling 75-253, 1975-1 C.B. 203, 223
' 10.08 Foreign Source Income Attributable to a Domestic
Office or Place of Business, 224
' 10.09 United States Office or Other Fixed Place of
Business, 226
' 10.10 Real Property Income Deemed Effectively Connected,
227
' 10.11 Allocation and Apportionment of Expenses--In General,
227
' 10.12 The Allocation Process, 229
' 10.13 The Apportionment Process, 230
Stemkowski v. Commissioner, 690 F.2d 40 (2d Cir.
1982) , 231
Problem 10, 234
Chapter 11: Nontreaty Persons--Inventory Income;
Branch Profits Tax, 237
' 11.01 Sales of Inventory Property, 237
' 11.02 Section 863(b)--Source Rules for Taxable Income, 239
' 11.03 Production and Sale of Inventory Property Involving a
Foreign Jurisdiction, 240
' 11.04 Branch Profits Taxes--In General, 241
' 11.05 Branch Profits Tax on the Dividend Equivalent Amount,
241
' 11.06 Special Rules for Year of Termination of United
States Trade or Business, 243
' 11.07 Secondary Withholding Tax and Branch Profits Tax 244
Problem 11, 245
Chapter 12: Nontreaty Persons--United States Real
Property Interests, 247
' 12.01 Background, 247
' 12.02 Tax Consequences of Treating Income as Effectively
Connected to a United States Trade or Business, 248
Revenue Ruling 90-37, 1990-1 C.B. 141, 249
' 12.03 Direct Investment in United States Real Property, 250
' 12.04 United States Real Property Interests, 250
' 12.05 Dispositions, 252
' 12.06 Indirect Investment--Interests Held Through Domestic
Corporations, 253
' 12.07 United States Real Property Holding Companies, 253
' 12.08 Indirect Investment--Interests Held Through Foreign
Corporations, 256
' 12.09 Coordination of ' 897 with Nonrecognition Rules, 257
Revenue Ruling 84-160, 1984-2 C.B. 125 , 258
Problem 12, 260
Chapter 13: Foreign Personal Holding Companies,
263
' 13.01 Foreign Personal Holding Companies, 263
' 13.02 The Gross Income Test, 264
' 13.03 Foreign Personal Holding Company Income, 265
' 13.04 Stock Ownership Test, 266
' 13.05 Deemed Dividend of Undistributed Foreign Personal
Holding Company Income, 268
' 13.06 Undistributed Foreign Personal Holding Company
Income, 270
' 13.07 The Dividends-Paid Deduction, 270
' 13.08 Deemed Dividends and the Indirect Foreign Tax Credit,
271
Revenue Ruling 74-59, 1974-1 C.B. 183, 272
' 13.09 Shareholders Required to Include the Deemed Dividend
in Income, 274
Problem 13, 275
Chapter 14: Controlled Foreign Corporations,
277
' 14.01 The Advantages of Tax Deferral, 278
' 14.02 The Intent Behind, and Overview of, the Controlled
Foreign Corporation Provisions, 278
' 14.03 The United States Ownership Standard for Purposes of
Controlled Foreign Corporation Status, 280
' 14.04 Amount of Imputed Income; Determining Ownership for
Purposes of Income Inclusion , 281
' 14.05 Section 951 Inclusion and Computation: Subpart F
Income and Earnings Invested in United States Property, 283
' 14.06 Subpart F Income; Foreign Base Company Income, 284
' 14.07 Foreign Personal Holding Company Income, 284
Revenue Ruling 82-209, 1982-2 C.B. 157, 285
' 14.08 Foreign Base Company Sales Income--In General, 288
' 14.09 Exempted Manufacturing and Same-Country Activities,
288
' 14.10 Foreign Base Company Services Income, 290
' 14.11 Allocation of Deductions to Base Company Income:
Rules and Limitations, 290
' 14.12 Special Exceptions to Foreign Base Company Income 291
' 14.13 Basis Adjustments, 292
' 14.14 Exclusions from Gross Income--Previously Taxed
Earnings and Profits, 292
' 14.15 Controlled Foreign Corporation Interaction with the
Foreign Tax Credit--' 902 Implications, 293
' 14.16 Disposal of Stock of Controlled Foreign
Corporations--' 1248, 294
' 14.17 Shareholders and Transactions Subject to ' 1248, 295
' 14.18 General Limitation on Amount of Gain Recaptured, 295
Problem 14, 297
Chapter 15: International Taxation and Tax Policy,
299
' 15.01 Report of Treasury Department, Selected Tax Policy
Implications of Global Electronic Commerce (November 21, 1996),
299
Worldwide
Leadership
