Taxation of Foreign Business Operations

Course Syllabus Taxation of Foreign Business Operations 2015 USC / PwC Tax Technical Immersion Program Fall 2015

Instructor

Dr. Shiing-wu Wang Office: Acct 125 Tel: (213) 740-5012; Fax: (213) 747-2815 e-mail: [email protected] USC Emergency Line, (213) 740-4321; USC Info Hotline, (213) 740-9233, USC Info Line, (213) 740-2311; 91.5 FM-KUSC Radio

Office hours

By appointment

Textbooks

International Taxation in a Nutshell, Richard Doernberg. West, 9th Edition. (ISBN 978-0-314-27531-8)

Readings

 Sullivan, Martin, Shifting of Profits to Tax Havens, Tax Notes, September 13, 2004.  Nonfiling Among U.S. Citizens Abroad, General Accounting Office, May 1998.  Comparison of the Reported Tax Liabilities of Foreign- and U.S.- Controlled Corporation, 1996-2000, General Accounting Office, February 2004.  United States Model Income Tax Convention of September 20, 1996  Nutter, S. Statistics of Income, Studies of International Income and Taxes, June 22, 2003.

Course description

This course covers topics on taxation of cross-border transactions. Although the main focus will be on U.S. taxation on foreign operations of U.S. companies and citizens, U.S. taxation of U.S. operations of foreign companies and nationals will also be discussed. It includes, for example, choice of entity for foreign operations, foreign tax credit, source of income, allocation of income and expenses, etc. The purpose of the course is to provide an overview of the relevant tax issues related to foreign operations by U.S. entities and U.S. operations by foreign entities.

The materials used in this course include the tax law (the Internal Revenue Code), authoritative government regulations, and government background studies on taxation. In addition, we will discuss several case studies that put the tax rules into specific business contexts. Finally, there will be some exposure to current research on international taxation using studies issued by U.S. government agencies such as U.S. Treasury Department, General Accounting Office, etc.

Assessment

Although no grade will be assigned in this course, quizzes and tests will be given to monitor student’s progress. In addition, a global tax project will be assigned to understand the effect of U.S. and student’s home country tax system on international commerce. The quizzes, tests, and project will be announced in advance. Date Topic Textbook - Chapter

Aug. 25 Introduction Ch. 1

27 Double taxation and foreign tax credit overview Ch. 1

Sep. 1 Foreign earned income exclusion for citizens and resident aliens Ch. 7 employed abroad

3 Foreign tax credit – individual Ch. 7

Nonfiling Among U.S. Citizens Abroad, General Accounting Office, May 1998

8 Choice of entity and country

10 Foreign tax credit overview – Corporation Ch. 3 Indirect credit (§901) and direct credit (§902)

15 Source of income Ch. 3

17 Source of income Ch. 3

22 Allocation and Apportionment of Expenses Ch. 3 (Reg. §1.861-8)

25 Allocation and Apportionment of Expenses Ch. 3 (Reg. §1.861-8)

29 Foreign tax credit – Corporation Ch. 8 Indirect credit (§ 902)

Oct. 1 Foreign tax credit – Corporation Ch. 8 Limitation (§ 904)

6 Foreign tax credit – Corporation Ch. 8 Limitation

8 Currency translation; earnings and profits Ch. 11

13 Exam 1 (In Class)

15 Tax treaties Ch. 5 United States Model Income Tax Convention of September 20, 1996

20 Controlled foreign corporation (CFC) Ch. 10 Subpart F Date Topic Textbook - MS Chapter

22 Controlled foreign corporation (CFC) Ch. 10 Subpart F

Nutter, S. Statistics of Income, Studies of International Income and Taxes, June 22, 2003.

27 Allocation of income and deductions (§ 482) Ch. 9 Transfer pricing

29 Export incentives - Domestic International Sales Corporation Ch. 7 pp. 206 - 208 (DISC)

Nov. 3 U.S. possessions

5 Citizens and resident aliens employed abroad – additional topics

Do repatriation Taxes Matter? Evidence from the Tax Returns of U.S. Multinationals, Office of Tax Analysis, U.S. Treasury Department, Washington, DC

10 Nonresident individual – U.S. income taxation Ch. 4

12 Foreign corporation – U.S. income taxation Ch. 4

Comparison of the Reported Tax Liabilities of Foreign- and U.S.- Controlled Corporation, 1996-2000, General Accounting Office, February 2004.

17 Branch profits tax Ch. 4 pp. 104 - 109

Another Look at the Low Taxable Income of Foreign-controlled Companies in the United States, Office of Tax Analysis, U.S. Treasury Department, Washington, DC.

19 U.S. income tax withholding – foreign person Ch. 6

U.S. income taxation of foreign governments, international organizations and their employees

24 Filing requirements Ch. 6 Global tax project due

Dec. 1 Exam 2

3 Exam 2 STUDENT LEARNING OUTCOMES Graduate Program Student Learning Outcomes

Below are the five Student Learning Outcomes developed for this program by the USC Leventhal faculty and administration and filed with the AACSB, the accrediting body for accounting and business schools:

1. Technical, Conceptual, Problem-Solving Requirement Students will be competent in and be able to apply discipline-specific knowledge and skills in the fields of accounting or taxation. This learning outcome includes the development of critical thinking and problem solving skills, as well as an understanding of the strategic role of accounting in business organizations and society.

2. Professional Development Requirement Students will be able to communicate clearly, and strategically, after considering the relevant audience, situation, and purpose of the communication. Students will develop the ability to work productively with others to accomplish established goals.

3. Research/Life-Long Learning Requirement Students will be able to use relevant research databases and academic/professional literature to gain new knowledge and analyze business situations.

4. Ethical Principles and Professional Standards Requirement Students will be able to apply ethical principles and professional standards in analyzing situations and making informed decisions. 5. Globalization Requirement Students will be able to demonstrate an international perspective and appreciation for diversity and cultural differences, along with their significance in global business.

This course will primarily deal with the Outcome #1, 2, 3 and 5. To a lesser extent, this course will deal with the Outcome #4.