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September 25, 2023

Accounting News Roundup: IRS Eyeing Stateless Income; Fat Friendly Offices in Our Future?; Frats Lobby for Tax Break | 07.25.13

Dell Considered Novel Tax Strategy in Buyout [DealBook]
The proposed strategy involved conducting the buyout through a newly created foreign entity that would have effectively owned Dell. Under United States tax laws, that foreign entity would have legally escaped United States corporate taxes because it would have been a partnership for United States tax purposes. At the same time, the foreign entity, whose jurisdiction was not specified, would have been treated under tax laws in that unspecified jurisdiction as a corporation and would have been subject to foreign taxes. Those two contrasting tax outcomes, embodied in one structure, would have created a “foreign hybrid,” able to navigate different national tax regimes and access offshore cash while paying little or no United States taxes. The “unprecedented” piece in the JPMorgan strategy was the proposal that Dell designate the foreign hybrid as a partnership, securities filings show. The foreign hybrid would have held a new entity called Denali, which would have held Dell shares, and Denali would have owned Dell’s foreign subsidiaries.

IRS pursuing 'stateless income' tax enforcement: official [Reuters]
The Internal Revenue Service is pursuing tax enforcement cases against companies over the issue of "stateless income," a senior agency official said on Wednesday in a reference to corporate profits that are not taxed by any country. Erik Corwin, an IRS deputy chief counsel, said there were international tax disputes with companies, "most involving consequences of complex restructurings designed either to create stateless income or to affect a tax efficient repatriation." "So those are a family of cases that are in the pipeline and being looked at," he told tax lawyers in a speech in Washington.

Fraternities Lobby for Tax Break Without Hazing Penalties [Bloomberg]
About 40 percent of U.S. senators, and 25 percent of U.S. representatives, belonged to fraternities or sororities in college. On April 24, more than a dozen of these grateful alumni extolled Greek life at an annual $500-a-plate dinner in a Washington hotel ballroom for “FratPAC,” the industry’s political arm. One by one, they took the podium and praised fraternities for teaching them loyalty, leadership, and practical skills. “We learned to tap a keg,” declared Representative Steven Palazzo, a Mississippi Republican and Sigma Chi brother, who then yelled a cheer as hundreds of FratPAC donors applauded. Many of the legislators also pledged support for FratPAC’s pet legislation: a multi-million-dollar tax break to let fraternities and sororities use charitable donations to renovate and help build chapter houses. “This time, we think we can get it done,” said Ohio Republican Steve Stivers, a Delta Upsilon alumnus, adding, “We need more Greeks in Congress.”

Louisiana To Offer 'Fresh Start' Tax Amnesty Program [Forbes]
KPE: "
This year, taxpayers in Louisiana will have the opportunity to participate in the state’s “Fresh Start” program. The state is offering tax amnesty for two months beginning September 23 and ending on November 22. The program is an opportunity for delinquent taxpayers to resolve their outstanding liabilities and with fewer penalties. The amnesty program is tiered in an effort to get taxpayers to settle up quickly. If you qualify and participate in 2013 during the September to November window, 100% of the penalties and 50% of the interest will be waived. Additional windows will be available during 2014 and 2015 but the penalty reductions are significantly reduced to 15% and 10% respectively."

Deloitte Warns That Offices May Need To Be Fitted Out For Fatter Workers [BIA]

Be Careful How You Praise People [HBR]
In an experiment, people who had been praised for their decision-making skills were 40% more likely to escalate their commitment to a bad decision (in this case, a bad hire) than people who hadn't been praised. But those who had been praised for their creativity, rather than their decision prowess, were 40% less likely to escalate their commitment than those who hadn't been praised, says Adam Grant of The Wharton School.

Taxes on Foreign Earned Income [TPC]
Did you know that a U.S. citizen's first $97,600 (for 2013) of foreign earned income is excluded?

Lance Armstrong Says Everyone Should Have Known He Was Doping [Gawker]

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