§1.904-4(f)(1)(i) provides that foreign branch category income means the gross income of a United States person (other than a pass-through entity) that is attributable to foreign branches held directly or indirectly through disregarded entities by the United States person.
What is foreign branch category income?
Foreign Branch Category Income. Foreign branch category income consists of the business profits of U.S. persons that are attributable to one or more qualified business units (QBUs) in one or more foreign countries. Foreign branch category income doesn’t include any passive category income.
What constitutes a foreign branch?
A foreign branch is another location of your company that operates entirely in another country. Think of it as an extension of your main office, similar to adding on an extension to your current office, but on a global scale. A subsidiary, on the other hand, is a new business in a foreign country.
What is considered a foreign branch for tax purposes?
All the facts and circumstances are to be analyzed to determine whether the activities of a U.S. person outside the United States constitute a foreign branch. … 1.367(a)-6T(g) also states that any U.S. person, including a corporation, partnership, trust, estate, or individual, may be treated as having a foreign branch.
How is foreign branch income taxed?
US tax law imposes a 30% branch profits tax on a foreign corporation’s US branch earnings and profits for the year that are effectively connected with a US business, to the extent that they are not reinvested in branch assets.
What is qualified foreign source income?
Foreign source income is the sum of unqualified dividends, qualified dividends and capital gains. TT wil ask for the amount of QDI (qualified dividends) only if the following holds: – You have foreign qualifying dividends or long-term capital gains totaling more that $20,000, OR.
How do you determine foreign source income?
Income is considered foreign-source if the location of the activity for which the payment is being issued is outside the U.S. A clear indication of the location of the activity is necessary on all supporting documentation for the payment to be correctly classified.