This week the IRS published Revenue Procedure 2022-38, setting forth inflation adjusted items for 2023. In the international arena, some of the important inflation adjustments include: $190,000 --- Code § 877(a)(2)(A) --- The average annual net income tax that must be imposed for the five taxable years ending before the date of the loss of United States citizenship (or cessation of long-term permanent residency) for an individual to be considered a “covered expatriate” under Code § 877A(g)(1). This amount is up from $178,000 in 2022. $821,000 --- Code § 877A(a)(1) --- The amount that can be ex ..read more

Yesterday the IRS published a new practice unit discussing the FBAR. This new practice unit has been added to our Practice Units By Topic page ..read more

The IRS publishes PDF files of the income tax treaties that the U.S. has entered into with other countries.  I don’t usually use the IRS versions of the treaties.  I have previously noted inaccuracies in them.  In addition, the IRS versions do not incorporate the protocols into the main text of the treaty. However, a client recently had a question about the Sweden-U.S. Income Tax Treaty and had emailed me a copy of the IRS version.  I was looking at this version of the treaty and trying to read Article 19, paragraph 4.  I could not find the verb in the sentence.  ..read more

When I review a Form 5471, I look for many different things.  I created a chart that describes some of the high-level things I look for with respect to each schedule on Form 5471.  The chart can be found here ..read more

Yesterday the IRS published a new practice unit titled “IRC 958 Rules for Determining Stock Ownership.” The direct and indirect ownership rules in Code §958 are important for purposes of determining, among other things: Whether a U.S. person is a U.S. shareholder of a foreign corporation (Code § 951(b)), Whether a foreign corporation is a controlled foreign corporation, (“CFC”) (Code § 957(a)), Whether a person is related to a CFC (Code §954(d)(3)), and Whether the U.S. person is required to file Form 5471 as a Category 4 or 5 filer (Code §6038). The practice unit discusses the downward attr ..read more

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the first quarter of 2022. The number of published expatriates for the quarter was 568. See the chart below for the quarterly expatriates from 2011 to the first quarter of 2022. The 8-quarter moving average has how now dipped significantly below 1,000 names per quarter. For our prior coverage of expatriation, see all posts tagged Expatriation ..read more

Continuing our series on Famous Tax Quotes (quotes from court opinions and rulings with language that is colorful or that concisely states an important tax principle), today's tax quote deals with a domestic corporation which, in a “sixty-day letter” of protest to a deficiency redetermination, asked that foreign taxes be allowed as a credit rather than as a deduction. A redetermination of tax liability by [the IRS] is, for practical purposes, an amendment of the taxpayer’s return * * *.  We believe that the letter of protest asserting an election which was filed shortly after the redete ..read more

Today we updated our zip codes app to include 2019 data that was recently published by the IRS.  This app allows you to find the average adjusted gross income (“AGI”) for any zip code in the US, and provides a bunch of IRS data for that zip code. We also created some additional interactive “heat” maps based the zip code data.  Below is an image of a heat map showing the percentage of tax returns filed that include farming activities.  One map that I found particularly interesting was qualified dividend income as a percent of total income.  All of the maps can be found here ..read more

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