Individual Foreign Tax Credit: Advanced-Level Calculations And Planning, Identifying OFL And ODL Situations, Calculating Losses For Offsets, Available Elections, And Avoiding Adverse HTKO Results

Webinar: ID# 1026425
Recorded CD or On-Demand
About This Course:
This webinar will provide tax advisers with a thorough and practical guide to more advanced concepts in calculating and maximizing the benefits of foreign tax credits. The panel will go beyond the basics to discuss avoiding high-tax kickout (HTKO) treatment, using overall domestic loss (ODLs) and overall foreign loss (OFLs) to maximize foreign tax credit benefits and navigating OFL recapture and recharacterization rules. The webinar will feature concrete examples of the calculations and reporting of these advanced concepts.

The complexities of the foreign tax credit rules can present significant challenges to tax advisers, even those who have significant experience in the mechanics of completing Form 1116. Overall foreign or domestic losses, as well as income from HTKO countries, can have significant impact on currently available foreign credits as well as carry-forward amounts.

For advisers to taxpayers in either foreign or domestic net loss positions, determining how to best utilize the Section 904 foreign tax credit can be particularly difficult. An OFL occurs when a taxpayer’s foreign deductions exceed foreign income. Taxpayers in an OFL position may use the OFL as a deduction to offset current U.S. source income; however, this may impact the treatment of subsequent foreign income once the loss has been eliminated.

Foreign tax credit calculations and planning become even more complicated when a taxpayer is in an ODL position. ODLs occur when a taxpayer’s domestic losses exceed net foreign income. Taxpayers with an ODL may use the loss to offset taxable foreign income; however, an ODL can only be created in a credit year, and subsequent year’s domestic income is subject to recapture as foreign-source. Tax advisers must understand the OFL and ODL rules to avoid costly tax mistakes.

Listen as our experienced panel goes beyond the basics to provide practical guidance to some of the most complex foreign tax credit calculations and considerations.
  • Outline

    • Identifying and calculating OFLs
    • Identifying and calculating ODLs
    • Using OFL and ODL offsets
    • Subsequent year recaptures of offset amounts
    • HTKO rules and calculations

  • Benefits

    The panel will discuss these and other important and complex topics:
    • Challenges in determining whether a taxpayer has an OFL or ODL
    • What is the impact of a prior year decision to deduct foreign taxes during an OFL year on claiming credits for indirect foreign taxes and repatriation of foreign-source income?
    • What do advisers serving clients in ODL situations who have used the ODL to offset foreign-source income need to know about subsequent year recapture of domestic income?
    • How do the grouping rules work in determining whether foreign-source income is “high-taxed” and subject to HTKO treatment?
How To Access Course And Materials

Handout materials and the phone number for live presentations are made available to you one day prior to the event via email from the presenter. Copies of the presentations are included with recorded versions.

If you order a recorded version of the webinar, CDs will be mailed out approximately 10 days after the live event. Shipping is included in the price of recorded versions.

Continuing Education Credits Available

This program has been approved for 2.0 CPE hours through Strafford Publications. To obtain CPE credit, attendees must participate in the live event (recorded versions do not qualify for credit), return an Official Record of Attendance to Strafford affirming their participation (including the CPE code announced during the program), and pay a processing fee of $35 per person.

Strafford will mail a certificate of credit within approximately two weeks of receiving your completed Official Record of Attendance, provided all required conditions have been satisfied.

Strafford is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.
Individual Foreign Tax Credit: Advanced-Level Calculations And Planning, Identifying OFL And ODL Situations, Calculating Losses For Offsets, Available Elections, And Avoiding Adverse HTKO Results
Available on CD or On-Demand formats
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