 Author
Tax Policy Group, Deloitte Tax LLP
New Foreign Tax Credit Regs Address Structured Passive Investment Arrangements – The IRS released temporary regulations addressing the requirement for a payment of foreign taxes to be "compulsory" in order to be creditable, by treating taxes attributable to certain highly structured passive arrangements as noncompulsory. Rules Finalized on Phantom REMIC Income Allocable to Foreign Partners – The IRS adopted 2006 temporary regulations that require U.S. partnerships to withhold tax, under sections 1441 and 1442, on foreign partners' shares of "phantom income" from a domestic partnership's residual interest in a real estate mortgage investment conduit. Guidance on Transfers from a Qualified Plan to a Foreign Trust Includes Transition Relief – The IRS recently ruled that a transfer from a plan qualified under Internal Revenue Code section 401(a) to a nonqualified foreign trust constitutes a taxable distribution; but in light of the potentially severe negative consequences for qualified plans that previously made transfers to nonqualified foreign trusts, the Service has provided some fairly generous transition relief. Housing Stimulus Legislation On Tap in House – The House of Representatives is slated to consider Senate-approved comprehensive housing stimulus legislation (H.R. 3221) the week of July 21 with a 10-year, $14.5 billion tax incentives package that is partially offset by revenue raisers. Senate Subcommittee Considers Role of Tax Haven Banks in U.S. Tax Evasion – The Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations held a hearing to examine how financial institutions located in offshore tax havens may be engaged in banking practices that could facilitate, and in some instances have resulted in, tax evasion and other misconduct by U.S. clients.
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