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EU Market Entry Seminar | US International Tax Lawyer & Attorney

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On February 8, 2018, Mr. Eugene Sherayzen, an international tax lawyer, co-presented with three other attorneys in a seminar titled “EU Market Entry: Business and Tax Considerations” (the “EU Market Entry” seminar). The EU Market Entry Seminar was co-sponsored by the Business Law Section and International Business Law Section of the Minnesota State Bar Association. The three other speakers were a business lawyer from Germany, a tax lawyer from Lithuania and a business lawyer from the United States.

Mr. Sherayzen began his part of the EU Market Entry Seminar with the explanation of the main purpose of tax planning. He asserted that tax planning should not be done only to reduce costs, but to maximize the real profits of a business transaction.

Then, the tax attorney proceeded with the explanation of the main international tax planning strategies with respect to outbound business transactions. In particular, he discussed in detail the following strategies: (1) overseas profit tax reduction; (2) U.S. tax deferral; and (3) Prevention of double-taxation. Each of these strategies was accompanied by three to four relevant tactics. The tax attorney focused especially on U.S. tax deferral as the “heart” of the U.S. tax planning.

The next part of the EU Market Entry Seminar was devoted to the classification of international business transactions. Mr. Sherayzen grouped different types of international business transactions into three categories: (1) Export of Goods and Services; (2) Licensing & Technology Transfers; and (3) Foreign Investment Transactions (including Foreign Direct Investment and Foreign Portfolio Investment).

The final part of the EU Market Entry Seminar consisted of applying the aforementioned tax strategies to each of the three groups of international business transactions and determining which strategies were likely to perform better than others with respect to a particular group of international business transactions. For example, Mr. Sherayzen stated that overseas profit tax reduction and prevention of double-taxation were easier to implement for international business transactions that involved export of goods or services; the U.S. tax deferral would be much more difficult to implement in this context and it would require extensive tax planning.

Mr. Sherayzen concluded the EU Market Entry Seminar with an introduction to the audience the concepts of GILTI (Global Intangible Low-Tax Income), BEPS (Base Erosion and Profit Shifting) rules, CbC (country-by-country) reporting and FDII (Foreign Derived Intangibles Income). These concepts were integrated within the discussion of the effectiveness of certain tax strategies with respect to the second and third categories of international business transactions. For example, the tax attorney discussed how the new GILTI rules affect the ability to achieve U.S. tax deferral.

New Deduction Phase-outs for 2013 Tax Returns

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Upper-income US taxpayers should be aware that new deduction phase-out IRS rules in effect for 2013 tax returns to be filed in 2014 may increase their tax liabilities or reduce refunds. Two new important changes for high-earning individuals or couples are the new itemized deduction phase-outs and personal and dependent exemption deduction phase-outs. Because of these changes in the deduction phase-out rules, along with other new IRS rules that we have covered in previous articles, the necessity for proper tax planning will only increase in future years.

This article will briefly explain the changes in the deduction phase-out rules; it is not intended to convey tax or legal advice. Please consult a tax attorney if you have further questions. Sherayzen Law Office, PLLC can assist you in all of your tax and legal needs.

New Itemized Deduction Phase-Out Changes

Under the new US tax rules, the amount of itemized deductions that high-earning individuals or couples may take on Form 1040 is subject to a phase-out limitation. Specifically, allowable itemized deductions will be reduced by 3% of the amount of adjusted gross income (AGI) above the certain income thresholds (however, this reduction will not exceed 80% of the original total amount of a taxpayer’s itemized deductions).

The income thresholds are the following: $250,000 for single individuals, $300,000 for married filing jointly couples, $150,000 for married filing separately couples, and $275,000 for heads of households. As an example, consider a married couple filing jointly with AGI of $500,000, and $50,000 of original itemized deductions for Schedule A. Because their AGI is $200,000 over the income threshold, their allowable itemized deductions will be reduced by 3% of the excess ($200,000 multiplied by 3%, equaling $6,000). Thus, their allowable itemized deductions will be reduced to $44,000.

New Personal and Dependent Exemption Deduction Phase-Out Changes

While under the general IRS rule, the amount that taxpayers may deduct for each applicable exemption increased from 2012 (at $3,800) to 2013 (now $3,900), certain taxpayers may lose some or all of the benefit of their exemptions if their AGI exceeds certain thresholds under the new Personal Exemption Phase-out (PEP). Under this rule, the dollar amount of each personal exemption must be reduced from its original value by 2 percent for each $2,500 or part of $2,500 ($1,250 for married filing separately) that AGI is above the above specified income thresholds.
For 2013 tax year returns, the phase-out starts at the following amounts: $250,000 for single individuals, $300,000 for married filing-jointly couples and qualifying widowers, $150,000 for married filing separately returns, and $275,000 for heads of households. If taxpayer’s AGI exceeds these applicable amounts by more than $122,500 ($61,250 for married filing separately returns), their deductions for exemptions amount will be reduced to zero.

Contact Sherayzen Law Office for Help With Your Tax and Estate Planning

Combined with the new 3.8% Medicare surtax on investment income and the new 0.9% Medicare surtax on salaries and self-employment income earned by certain high-earning individuals, and the increased threshold amount for Schedule A itemized medical expense deductions, the new phase-out rules detailed in this article will dramatically impact many taxpayers. Professional tax planning may help lower your future tax liabilities.

This is why you need to contact the experienced tax law firm of Sherayzen Law Office to help you create a thorough tax plan aimed at taking advantages of the various provisions of the U.S. tax code.