General - legislative framework solvent source
Alongside the law has a long line of Regulations (Treasury Regulations). In addition to income tax used to publish all kinds of expert report -
Revenue Rulings, Private Letter Rulings, Notices, Announcements, Revenue Procedures
· The US is the legal system of the "Common Law" - a parallel court system. Standard system and a set of special courts for taxes to select the taxpayer.
· The method aims to certainty and hence a complex regulations. The tax system has a number of general doctrines (such as artificial transaction, etc.) but usually the legislature is trying to prevent undesirable consequences by legislation or amendment. However the tax system tends to examine (even in the courts) the significant economic consequences of the transaction.
· At the same time the federal system many states have imposed their own income tax, federal systems or are not identical to each other. There are also a number of cities that impose income tax on who lives or works in their field.
· In most countries, the United States has no VAT but sales tax is imposed.
General - tax rates and the tax base
Tax rates
· Tax rates - ordinary income to 38.6% (the rates are expected to decline in the coming years), 35% of the companies.
Capital gains tax - up to 20% of individuals (18% in special cases).
Estate tax rate of 55% (the rate should be reduced in the coming years ... maybe)
Tax base
· Everything is taxable unless Congress otherwise said, nothing is deductible unless Congress otherwise permitted.
· A much broader tax Israeli tax base, strong emphasis in recent years on the timing of income and expenses (the capitalization front expense).
· Residents and citizens (even if not residents), US taxable income worldwide.
· After the regular tax liability calculation has to calculate the tax liability even by AMT, and pay the higher tax. The tax base - wider AMT.
· Obligation to submit a general tax reports. A complex series of reports from the payer crossbones with receiving reports. QI see the phenomenon of foreign banks.
Taxation of US overseas operations
· American taxpayer subject to tax on worldwide income, including income from foreign sources.
· The taxpayer receives a tax credit (or deduction, the election), complex credit method includes 9 baskets income.
· American system includes a long list of the following sections to prevent rejection of the tax by investing through foreign companies which are not themselves subject to tax in the United States - CFC are the main ones.
US taxation of foreign operations
· Who are not citizens or residents of the United States are not taxable in the United States, but in two cases - FDAP and - ETB.
· FDAP - refers to passive income from US sources - dividends royalty interest, etc.. Taxation is in the form of withholding tax at the rate of 30%.
· ETB - intention in doing business in the US. Such a person must also be taxable branch on ECI.
· Capital gain - in principle alien does not have US capital gains tax on the sale of US assets in two exceptions - the income is business income or property being sold is a right in land.
Taxation of Mergers and Acquisitions
· In - 1916 was enacted Chapter mergers and acquisitions in the US. Since then he has undergone many changes. Today it is in the US Code Section 368. In addition, section 351 allows transfers to companies controlled by transferring, Section 721 similarly allows transfer partnerships and Section 355 deals with the issue splits.
· "Tax Free Transaction" is actually a transaction tax deferral until "exercise". Section 368 contains 7 buildings of mergers and acquisitions that can be made tax deferral.
· Important buildings and most useable mergers and acquisitions are - "A, B, C Reorganizations".
· In addition there are sections that allow air through subsidiaries. In general rationale is to give maximum business flexibility, while maintaining the potential for US tax.
Taxation of Partnerships Llc - Check the Box
· US partnership tax rules are flexible and far more complicated method here, and involve common reference legal personality, and transparent body.
· In recent years, the politics of enacting laws LLC (Limited Liability Company).
· With the advent of - LLC were forced to US income tax authorities largely Flex general classification of legal personality, the new rules are called CHECK THE BOX and the principle of allowing the taxpayer, subject to many exceptions, select the type of legal entity for tax purposes.
