Transfer Pricing & M&A
Traditionally, this was the most effective way to transfer IP rights to a subsidiary.
What is cost sharing?
A tax system where dividends from foreign affiliates are generally not taxable until received
What is a deferral regime?
Subpart F is an example of this type of regime.
What is an anti-deferral regime?
The minimum tax imposed on CFC foreign earnings
What is GILTI?
It reduces tax liability dollar for dollar
What is a tax credit?
This is the amount that the noncontributing participant must pay for existing IP in a cost share.
What is the buy-in payment?
10% or more
What is the minimum amount of ownership necessary to take advantage of the §245A DRD?
Passive type income (such as dividends and interest) that is taxable as Subpart F
What is FPHCI?
Taxable income calculated under U.S. principles as a basis for GILTI
What is tested income?
Compulsory foreign taxes that meet a three part test (realization, gross receipts, net gain)
What is a creditable foreign tax?
The mechanism for deciding how participants in a cost share will share costs and benefits
What is the RAB share?
The one-time tax imposed on all pre-2018 E&P of certain foreign corporations
What is the §965 transition tax?
Sales-type income that ends up being treated as Subpart F
What is FBC sales income?
An entity‘s tax basis in its tangible assets that produce either tested income or deduction eligible income (DEI)
What is QBAI?
The maximum amount by which FTCs may reduce U.S. taxable income
What is the section 904 limitation?
The amount that one cost share participant must pay another to “true up“ its share of R&D development costs
What is the cost share payment?
The gain is treated as a dividend; if a loss, basis must be adjusted downward by prior §245A deductions.
What happens to gain or loss on sale of foreign corporate stock?
Services-type income that is taxable as Subpart F
What is FBC Services income?
10% of QBAI
What is deemed ordinary return?
The categories of income for which a separate §904 limitation must be computed
What is a foreign tax credit basket?
This is needed in order to transfer foreign corporate stock to a foreign corporation tax-free.
What is a GRA?
These amounts are not taxable when distributed because of §959.
What is PTEP?
Pro rata share of gross FBC income less allocable deductions
How is the Subpart F inclusion calculated?
13.125%
What is the tax rate on FDII, and the effective tax rate on GILTI if foreign tax is paid?
80%
What percentage of GILTI taxes are creditable?