Credits and Incentives |
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Foreign Tax Credit
The foreign tax credit (FTC) is intended to enhance the global competitiveness of U.S. companies by eliminating double taxation on repatriated foreign earnings. With careful planning, you can maximize your use of FTCs and lower tax expenses.
Clifton Gunderson offers a wide array of FTC strategies and solutions designed to maximize the use of FTCs including:
- Fair market value and alternative tax book value for interest expense apportionment
- Expense apportionment (861–8)
- Headquarters expense apportionment
- Foreign source income maximization
- Foreign title passage
- OFL studies
- E&P studies
IC–DISC Export Incentives
Today’s Interest–Charge Domestic International Sales Corporation (IC–DISC) offers exporters permanent tax savings resulting from a reduction in the tax rate on qualified dividends.
The Clifton Gunderson team provides comprehensive IC–DISC services from entity creation to maximizing available tax savings.
Three services help you maximize tax savings:
- Identifying all qualified export gross receipts
- Expense Apportionment Methodology (861–8)
- Transaction–by–transaction analysis
Our professionals employ powerful tools to maximize the tax savings available under the administrative pricing rules, including transactional analysis. We deliver a complete and detailed audit trail from your books and records through the preparation of IRS Form–1120 DISC.
Our professionals assist you in using these and other planning solutions to meet your tax needs:
- Assistance in choosing an optimal holding structure
- Organizing a corporation
- Providing board resolutions and DISC export agreements to document the DISC activities
- Annual accounting services
Extraterritorial Income Exclusion (ETI)
While the Extraterritorial Income Exclusion was repealed over a two–year period starting in 2004, you may still be able to gain substantial tax savings by amending prior year tax returns and claiming an optimized ETI exclusion.
Specialized software allows our professionals to optimize the selection of various administrative pricing methods. In many cases, we have identified additional tax savings associated with prior year tax returns prepared by others, and helped prepare claims. When necessary, we can support claims through the IRS administrative processes.
Domestic Production Activities Deduction (DPAD)
Created by the American Jobs Creation Act of 2004, the domestic production activities deduction (DPAD) is a powerful tax incentive for U.S. production activities. The common link between the DPAD and the foreign tax credit limitation is the consistent application of Section 861–8 allocation and apportionment regulations.
Using proprietary software, our team provides you with tools to balance the benefits of foreign tax credit utilization and maximize the DPAD. Our data processing and tax domain experience allow us to provide exceptional value tailored to meet your needs.
Expense Apportionment (861–8)
The allocation and apportionment of deductions affects the calculation of the foreign tax credit, various export tax incentives and the domestic production activities deduction (DPAD). These and other tax benefits are limited by the amount of income from U.S. and non–U.S. sources.
We can work closely with you to understand the factual relationship between deductions and the various statutory groupings of income (FTC and DPAD). We can then work within the statutory and regulatory guidelines to systematically identify methods of apportionment that will produce the most favorable overall results.
Proprietary software allows us to assist in optimizing a wide range of allocation and apportionment methodologies that are consistent with client facts. Some examples include:
- Fair market value asset base for interest expense apportionment
- Alternative book value method for interest expense apportionment
- R&D sales and optional gross income bases
- Divisional apportionment
- Activity–based costing
