Law360 Quotes Peter Barnes and Kirsten Burmester: Applying Foreign Tax Credit To Repatriation A Daunting Task

Applying the foreign tax credit to amounts repatriated under the Tax Cuts and Jobs Act, P.L. 115-97, will require analyzing hundreds of pools of income subject to different rates, tax practitioners told Law360.

. . .

It can be tempting to think of a company’s deemed repatriated earnings as one amount of income subject to the dual rates, but that isn’t the case, according to Peter Barnes, a senior fellow at Duke University School of Law. The amount “comes from literally hundreds of pools of earnings,” said Barnes, a former tax executive with General Electric Co.

“The nuts and bolts of foreign tax credit planning and compliance got even more complicated,” said Barnes, who is also Of Counsel at Caplin & Drysdale.

 . . .

Kirsten Burmester, a member of Caplin & Drysdale, focused on the need to identify active and passive income before adjusting the foreign tax credit amount.

“It’s not as simple as taking the aggregate amount of what was deemed repatriated and applying the haircut,” she said. “There doesn’t seem to be a lot of guidance as to how to apply it between the two baskets of income.”

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Excerpt taken from the article “Applying Foreign Tax Credit To Repatriation A Daunting Task” by Molly Moses for Law360.