licensed tax practitioner
Instructions: For this assignment, you are a licensed tax practitioner being solicited for advice on particular matters. Please give a thorough analysis of the problem, discussing only issues relating to topics covered in Weeks 3 and 4. Ignore all other issues. Please cite all code sections, cases and regulations relevant to receive full points. Below the Syllabus of the material I need to cover .
Here the questions please answer around 350 words per question
1. Your client initially established its business in London as a public limited liability company. In 2013, they decided to expand their business to the U.S. and plan to open an office in California. They are not sure whether they should form another LLC, a partnership or a corporation for their California office.
1A. What would be your advice?
1B. Would your answer be the same if your client was a European public limited liability company?
2. Your client is a foreign partnership that opened a U.S. office in 2013. Under the foreign partnership all three partners have limited liability. They want to be treated as a partnership for U.S. tax purposes.
2A. What would be your advice?
2B. Would your advice be the same if there is only one individual owner of the foreign entity?
3. ABC is a domestic US corporation. In February 2012, it purchased 25% interest in JBL a foreign entity treated as a partnership since 2000. In March 2012, JBL filed Form 8832 to elect to change its status to a corporation. In January 2013, JBL sold its remaining 75% to ABC Corporation.
3A. Discuss the tax consequences of transactions for both ABC and JBL.
3B. Prepare a handwritten Form 8832 to be filed for tax year 2013. You will not receive full credit for question item 3b if you fail to submit a handwritten Form 8832.
Here the syllabus to use to understand what we covered
1. How are foreign entities classified for U.S. tax purposes?
a. IRC §7701 – Lexis Nexis – USCS-Title 26;Internal Revenue Code Annotated, IRC §7701 – http://www.lexis.com/research/xlink?app=00075&view=full&searchtype=get&search=26+USCS+%A7+7701
3. Reading Assignment – B7.02A Kunz & Peroni Treatment of Foreign entities
4. What is a separate entity for U.S. tax purposes?
5. When is an entity considered a “domestic” entity?
6. When is an entity considered a “foreign” entity?
7. How are dual chartered entities treated for U.S. tax purposes?
8. Classification of business entities:
c. Disregarded entities
d. Optional – See Treas. Reg. § 301.7701-1(b) re: Treas. Reg. §§ 301.7701-2 and 301.7701-3
9. Deemed Corporations
a. Familiarize yourself with the rules for certain countries. Or at least be aware that those rules exist
10. Grandfather rule
a. Termination of the grandfather rule (4 events)
11. Eligible entities
a. Default election
b. Election status for entities in existence before 1997
c. Retesting for eligible entities
12. Elections by eligible entities
a. When must an eligible entity elect its status?
b. Mechanics of the election
c. When eligible entities can be considered as a domestic corporation – Section 7874(b)
d. Potential collateral consequences of a foreign entities’ election
13. Review IRS Form 8832 and its instructions
a. Required signatures
b. Effective date of the election
i. Effect of election in the middle of a tax year
c. 60-month limitation on changes
i. Exception when there is a change on ownership composition
d. Protective election
e. How do you file a late election?
f. Correction of election errors
14. Foreign entity treated as a partnership
a. Effect of sale of partnership interest
b. Grandfather rule
c. When a single partner purchases the interest of other partners
d. Division of partnership interest
e. Safe harbor
15. Collateral consequences when a foreign entity changes its status
a. Foreign corporation becomes a foreign partnership
b. Foreign partnership becomes a foreign corporation
c. Foreign corporation becomes a disregarded entity
d. Foreign disregarded entity becomes a corporation
16. Change in the number of members
17. Anti-abuse rules
18. Read the three assigned regulations. If you have the time, read the regulations with annotations
19. Read the assigned article – International Tax Planning for US Outbound Acquisitions
a. Lexis Nexis – USCS Title 26 – IRC Annotated
b. Matthew Bender – Lexis IRC Code Explanations
c. Of the two materials (a) is more through but if you are in a bind try (b) it is usually a shorter discussion
d. If you have additional time or if you want to learn more about these code Section, read through some or all of the Regulations. If this sounds overwhelming, breathe.
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