Government Affairs Group Seeks Guidance on New Repatriation Provisions of Jobs Act
Government Affairs Group Seeks Guidance on New Repatriation Provisions of Jobs Act
- AuthorsBryant, Bo
- Institutional AuthorsMcDonald's of Greater Washington
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2005-626
- Tax Analysts Electronic Citation2005 TNT 7-26
To: Barbara Angus
Company:
Phone:
Fax:
From: Bo Bryant
Company: McDonald's Federal Government Relations
Phone: 202-887-8900
Fax: 202-887-8907
E-Mail: bo.bryant@mcd.com
Date:
Pages including this
cover page: 2 pp
Attached is the updated summary we left for Greg and others yesterday.
Thanks.
Request for Guidance Regarding IRC Section 965(b)
Sec. 965(b) provides a limitation of $500 million unless the applicable financial statement provides a "specific amount" of "earnings permanently reinvested outside the United States".
The terms used in Sec. 965 were derived from APB 23. Prior to enactment of FAS 109 in 1992, APB 23 governed the accounting treatment and disclosure of undistributed earnings of foreign subsidiaries. FAS 109 clarified that the undistributed earnings of a foreign subsidiary creates a temporary difference and such basis difference is required to be disclosed.
In practice, the amounts shown as "earnings permanently reinvested" or "basis difference" convey the same information.
For example, the components of "basis difference" may be made up of permanently reinvested earnings of $4.2 billion as well as book losses and previously taxed income which reduce the amount to, say, $3.2 billion. These adjustments are necessary to properly reflect earnings permanently reinvested pursuant to FAS 109. Thus, the basis difference that would be shown in the financial statement of $3.2 billion relates entirely to undistributed earnings considered permanently reinvested.
Companies that have shown "earnings permanently reinvested" pursuant to APB 23 in their financial statements often net these same components (depending on each company's facts) and are thus effectively disclosing the basis difference related to earnings permanently reinvested.
From a practical perspective, disclosing the "basis difference" in a financial statement is essentially the same as disclosing "earnings permanently reinvested".
Guidance should provide that the reference to "specific amount under Sec. 965(b) is satisfied either by reference to "earnings permanently reinvested" or "basis difference". In practice, these terms convey the same information.
- AuthorsBryant, Bo
- Institutional AuthorsMcDonald's of Greater Washington
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2005-626
- Tax Analysts Electronic Citation2005 TNT 7-26