University of Southern California

LeventhalSchool of Accounting

ACCT 568T Taxation of Foreign Business Operations

Spring 2016

INSTRUCTOR

Dr. Shiing-wu Wang

Office: Acct 125

Tel: (213) 740-5012; Fax: (213) 747-2815

e-mail:

EMERGENCY INFORMATION

  • USC Emergencies: 213-740-4321
  • USC Public Safety—Non Emergencies: 213-740-6000
  • USC Emergency Information Line 740-9233
  • USC Information Line 740-2311
  • KUSC Radio 91.5

OFFICE HOURS

2 – 3:30 TTh

PREREQUISITES

ACCT 550t; ACCT 561T or LAW 601. This course has no co-requisites.

TEXTBOOKS

In class handouts

READINGS
  • The American Jobs Creation Act of 2004: Overview of Domestic & International Provisions, Deloitte 2004.
  • Analysis of the International Income Tax Provisions of the Conference Agreement on H.R. 4520, Washington International Tax Services, Deloitte, October 7, 2004.
  • Sullivan, Martin, Shifting of Profits to Tax Havens, Tax Notes, September 13, 2004.
  • Nonfiling Among U.S. Citizens Abroad, General Accounting Office, May 1998.
  • Comparison of the Reported Tax Liabilities of Foreign- and U.S.- Controlled Corporation, 1996-2000, General Accounting Office, February 2004.
  • United States Model Income Tax Convention of September 20, 1996
  • Nutter, S. Statistics of Income, Studies of International Income and Taxes, June 22, 2003.

COURSE DESCRIPTION

This course covers topics on taxation of cross-border transactions. Although the main focus will be on U.S. taxation on foreign operations of U.S. companies and citizens, U.S. taxation of U.S. operations of foreign companies and nationals will also be discussed. It includes, for example, choice of entity for foreign operations, foreign tax credit, source of income, allocation of income and expenses, etc. The purpose of the course is to provide an overview of the relevant tax issues related to foreign operations by U.S. entities and U.S. operations by foreign entities.

The materials used in this course include the tax law (the Internal Revenue Code), authoritative government regulations, and government background studies on taxation. In addition, we will discuss several case studies that put the tax rules into specific business contexts. Finally, there will be some exposure to current research on international taxation using studies issued by U.S. government agencies such as U.S. Treasury Department, General Accounting Office, etc.

GRADING POLICY

A possible total of 500 points can be earned in this course. A student’s grade will be determined by a curve based on the total points earned. The 500 points are assigned as follows:

Exam 125%125

Exam 225%125

Quizzes15%75

Research case I (individual case)10%50

Research case II (individual case)15%75

Class participation 10% 50

100%500

NOTES ON GRADING POLICY

1. NO MAKE UP TESTS WILL BE GIVEN.

2. All assignments, exams, and class participation will be evaluated on effectiveness of your communication. This includes grammar, spelling, organization, format and the other essentials of strong and effective communication.

3. All assignments are due on the dates indicated on the course syllabus. Late assignment will receive a grade of ZERO.

4. Class attendance is very important in developing a coherent view of the materials covered in the course. This is particularly true as there is no single text which ties all of the materials together. It is expected that each student will be prepared for each class and will participate through volunteering or by being called on to add to the discussion. Further, examples relating to materials discussed in each class will be used in the class and time will be given to solve the problems. It is essential for you to show reasonable effort in our practice.

5. We adhere to the USC Leventhal School of Accounting and Marshall School of Business grading standards for graduate programs. In general, final course grades at the graduate level in a core course average approximately B+ (3.3), but may vary based on class performance. For elective courses, the class average is usually higher--approximating 3.5. You must receive a C or better to pass a required class, and you must have an overall B average (3.0 minimum) in order to graduate from USC.

ACADEMIC CONDUCT

Students enrolled in any class offered by the Leventhal School of Accounting are expected to uphold and adhere to the standards of academic integrity established by the Leventhal School of Accounting Student Honor Code. Students are responsible for obtaining, reading, and understanding the Honor Code System handbook. Students who are found to have violated the Code will be subject to disciplinary action as described in the handbook. For more specific information, please refer to the Student Honor Code System handbook, available in class or from the receptionist in ACC 101.

Plagiarism – presenting someone else’s ideas as your own, either verbatim or recast in your own words – is a serious academic offense with serious consequences. Please familiarize yourself with the discussion of plagiarism inSCampusin Section 11 Behavior Violating University Standards Other forms of academic dishonesty are equally unacceptable. See additional information inSCampusand university policies on scientific misconduct,

SUPPORT SYSTEMS

Students whose primary language is not English should check with theAmerican Language Institute which sponsors courses and workshops specifically for international graduate students.

The Office of Disability Servicesand Programs certification for students with disabilities and helps arrange the relevant accommodations.

If an officially declared emergency makes travel to campus infeasible,USC Emergency Informationwill provide safety and other updates, including ways in which instruction will be continued by means of blackboard, teleconferencing, and other technology.

Discrimination, sexual assault, and harassment are not tolerated by the university. You are encouraged to report any incidents to theOffice of Equity and Diversity to theDepartment of Public Safety,

This is important for the safety of the whole USC community. Another member of the university community – such as a friend, classmate, advisor, or faculty member – can help initiate the report or can initiate the report on behalf of another person.The Center for Women and Men 24/7 confidential support, and the sexual assault resource center webpage reporting options and other resources.

KEY DATES

January 11 / First day of Classes
January 18 / USC Holiday—Martin Luther King, Jr.
January 29 / Last Day to Drop without “W” Day
January 29 / Last Day to Purchase Tuition Insurance
February 15 / USC Holiday—Presidents’ Day
March 14-19 / SPRING BREAK
April 8 / DROP DAY—Last day to drop a class with mark of “W”
April 29 / Last day of Classes
May 4-11 / Finals Week (See syllabus for exact date/time for this course.
May 13 / COMMENCEMENT
Date / Topic / Textbook -
MS Chapter
Jan. 12 / Introduction / Ch. 1
14 / Double taxation and foreign tax credit overview
19 / Foreign earned income exclusion for citizens and resident aliens employed abroad / Ch. 2
21 / Foreign tax credit – individual
Nonfiling Among U.S. Citizens Abroad, General Accounting Office, May 1998 / Ch. 2
26 / Choice of entity and country / Ch. 8
28 / Foreign tax credit overview – Corporation
Indirect credit (§901) and direct credit (§902) / Ch. 3
Feb. 2 / Source of income / Ch.3
4 / Source of income / Ch.3
9 / Allocation and Apportionment of Expenses
(Reg. §1.861-8) / Ch. 3
11 / Allocation and Apportionment of Expenses
(Reg. §1.861-8) / Ch. 3
16 / Foreign tax credit – Corporation
Indirect credit (§ 902) / Ch.4
18 / Foreign tax credit – Corporation
Limitation (§ 904) / Ch.4
23 / Foreign tax credit – Corporation
Limitation / Ch.4
27 / Review
Mar. 1 / Exam 1 (In Class)
3 / Currency translation; earnings and profits / Ch.6
8 / Tax treaties
United States Model Income Tax Convention of September 20, 1996
Individual research case I due
/ Ch.12
10 / Controlled foreign corporation (CFC)
Subpart F / Ch. 5
Date / Topic / Textbook -
MOM Chapter
22 / Controlled foreign corporation (CFC)
Subpart F
Nutter, S. Statistics of Income, Studies of International Income and Taxes, June 22, 2003. / Ch.5
24 / Allocation of income and deductions (§ 482)
Transfer pricing / Ch.13
29 / Domestic International Sales Corporation (DISC) / Ch.7
31 / U.S. possessions
Apr. 5 / Citizens and resident aliens employed abroad – additional topics
Do repatriation Taxes Matter? Evidence from the Tax Returns of U.S. Multinationals, Office of Tax Analysis, U.S. Treasury Department, Washington, DC
7 /
Nonresident individual – U.S. income taxation
/ Ch. 9
12 / Foreign corporation – U.S. income taxation
Comparison of the Reported Tax Liabilities of Foreign- and U.S.- Controlled Corporation, 1996-2000, General Accounting Office, February 2004. / Ch. 10
Ch. 11 1101 - 1104
14 / Branch profits tax
Another Look at the Low Taxable Income of Foreign-controlled Companies in the United States, Office of Tax Analysis, U.S. Treasury Department, Washington, DC. / Ch. 10
19 / U.S. income tax withholding – foreign person
U.S. income taxation of foreign governments, international organizations and their employees
21 / Filing requirements
Repatriation of CFC earnings case due / Ch. 16
26 / Review
28 / Exam 2 (In Class)

STUDENT LEARNING OUTCOMES

Graduate Program Student Learning Outcomes

Below are the five Student Learning Outcomes developed for this program by the USC Leventhal faculty and administration and filed with the AACSB, the accrediting body for accounting and business schools:

  1. Technical, Conceptual, Problem-Solving Requirement

Students will be competent in and be able to apply discipline-specific knowledge and skills in the fields of accounting or taxation. This learning outcome includes the development of critical thinking and problem solving skills, as well as an understanding of the strategic role of accounting in business organizations and society.

  1. Professional Development Requirement

Students will be able to communicate clearly, and strategically, after considering the relevant audience, situation, and purpose of the communication. Students will develop the ability to work productively with others to accomplish established goals.

  1. Research/Life-Long Learning Requirement

Students will be able to use relevant research databases and academic/professional literature to gain new knowledge and analyze business situations.

  1. Ethical Principles and Professional Standards Requirement

Students will be able to apply ethical principles and professional standards in analyzing situations and making informed decisions.

  1. Globalization Requirement

Students will be able to demonstrate an international perspective and appreciation for diversity and cultural differences, along with their significance in global business.

This course will primarily deal with the Outcome #1, 2, 3 and 5. To a lesser extent, this course will deal with the Outcome #4.

1