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Multijurisdictional tax (Inbound taxation and Outbound taxation assignment) - Essay Example

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Multijurisdictional tax (Inbound taxation and Outbound taxation assignment)

IBM Corporation pays a regular quarterly dividend on the stock. Your previous research concluded that Joe T. is a nonresident alien of the US. 1. Is the income received US source income or foreign source income? What statute did you rely on for your conclusion(s)? Facts Joe T. is a non resident alien of the United States who has invested in 1,000 shares of common stock in IBM Corporation. IBM is registered in Delaware, United States and does most of its business within the United States. The stock owned by Joe T. represents less than 1% of the overall value of IBM Corporation. Interpretation Joe T. is a non resident alien in the United States which means that Joe T.’s income derived from sourced within the United States are liable to taxation. Since IBM Corporation executes most of its business from within the United States, so under Sections 861(a)(2) and 862(a)(2), the dividends released by such businesses are considered as income being derived from within the United States. ...
, since dividends from purchased stock do not fall under any exception based category under Section 871(1), so income derived from such sources is liable to tax. 2. If the income is US source income, is it taxable income to the individual (i.e., is there an exemption or exclusion available)? What statute did you rely on for each of your conclusions? Facts Joe T. is a non resident alien of the United States who has invested in 1,000 shares of common stock in IBM Corporation. IBM is registered in Delaware, United States and does most of its business within the United States. The stock owned by Joe T. represents less than 1% of the overall value of IBM Corporation. Interpretation Most forms of income derived from sources within the United States are liable to taxation even if a non resident alien owns benefits from such sources. However, under certain circumstances exceptions may be provided to foreign investors in the United States as per taxation on income. No deductions may be taken on a foreign investor’s income from sources within the United States if it is covered by either Section 873 or Section 882(c). Income derived from a United States trade or business is exempt for taxation for foreign individuals but this applies to gross income only which does not apply to Joe T.’s case. On another note, dividends are clearly mentioned as being taxable for foreign persons under Section 871(a)(1) which makes Joe T.’s income liable to taxation. Exceptions to the current rule exist if the source of the income derived from the United States is either interest from a bank or other fiscal institution (under Section 871(i)) or if it is portfolio interest (under Section 871(h)). Joe T. may be provided with some relief, but not a complete exemption, under US Model Treaty ...Show more

Summary

TX 604 Spring 2013 Assignment 4 Inbound & Outbound Due Date: April 15th @4:00pm Email to sthoma1@bentley.edu Inbound Taxation Please read the following fact patterns and answer the questions that follow. John Doe, Flick’s tax director has contacted you. Some of the officers of one of Flick’s foreign subsidiaries have been calling him to ask a variety of US tax questions based on their (the officers – not the subsidiary) increased activity in the US…
Author : consuelo23
Multijurisdictional tax (Inbound taxation and Outbound taxation assignment) essay example
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