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Fixing U.S. International Taxation$
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Daniel N. Shaviro

Print publication date: 2014

Print ISBN-13: 9780199359752

Published to Oxford Scholarship Online: April 2014

DOI: 10.1093/acprof:oso/9780199359752.001.0001

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The Main Building Blocks of U.S. International Taxation

The Main Building Blocks of U.S. International Taxation

(p.31) 2 The Main Building Blocks of U.S. International Taxation
Fixing U.S. International Taxation

Daniel N. Shaviro

Oxford University Press

This chapter reviews the basic U.S. international tax rules. It identifies five basic concepts needed to grasp the basic elements of how the U.S. taxes the income of multinational firms. First, there are the rules for determining corporate residence. Second are the rules for determining so-called source of income. Third are the rules concerning foreign tax credits. Fourth is deferral, or the lack of current inclusion for foreign source income that U.S. companies earn through foreign subsidiaries (referred to as “CFCs,” controlled foreign corporations, in the Internal Revenue Code). Deferral generally ends when the U.S. parent repatriates or otherwise realizes the underlying CFC income, such as by receiving a dividend or selling CFC stock. Fifth, if one chooses to list it separately from deferral rather than as part of the same broader concept, is subpart F of the Code. This is the rubric for a set of rules that potentially limit the scope of deferral by providing deemed dividend treatment for certain types of CFC income, thus making such items currently taxable to the U.S. parent.

Keywords:   international tax policy, corporate tax, income tax, multinational firms, controlled foreign corporations, tax credits, deferral, corporate residence, income source, tax law

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