Silver Lining — Repatriation Tax and Expatriation: Now’s Your Chance!

As most of my readers are no doubt aware, The Tax Cuts and Jobs Act (“TCJA”) heralded numerous changes to the US tax law.   One of TCJA’s changes implemented new Internal Revenue Code Section 965, bringing the “deemed repatriation” or “transition tax” to the table.  This new provision is intended to help convert the US international tax system into what is called a “territorial system”, with the goal being to enhance the US as a jurisdiction to do business in such a way that US corporations will not be taxed when receiving future distributions of profits from their overseas subsidiaries.  In “transitioning” to this new model of taxation, US shareholders of certain foreign corporations must pay a one-time “deemed repatriation tax” on the past earnings that have been accumulating over the years by the foreign corporations in which they hold shares.  Because the tax is a…

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