TAX 9869 Lecture Notes - Lecture 49: Withholding Tax, Capital Gain

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17 Jul 2020
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KNOW: When there’s a reduction in US net equity- when your value of investment goes
down, treated as though you made a distribution
Exception to branch profits tax= in the year that the foreign corporation exits its US
trade/biz and doesn’t reinvest/use the funds for the next 3 years in a US trade/biz, then
in that year, you don’t have to pay BP tax
o Way of getting out of BP tax in that year
Blocker structures
o US pship has a US trade/biz and ECI
o US partner, but also have a foreign partner
o FP also treated as engaged in the US trade/biz because a partner in a
partnership treated as engaged in US trade/biz
o FP has to file US tax return bc has to disclose his ownership
That is something that foreign partners don’t want to do
Instead of investing directly, they create a blocker, and then the FP is a
partner in the blocker
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