Foreign Tax Credit

Publisher
WiseGuides, Inc.
2796 Greenspire Ln
Akron, Oh 44333
Copyright © 2010

Field of Study: Taxes
Level: Basic
Recommended CPE Credit 4 hours
Prerequisites: None
Advanced Preparation: None
Type of Delivery: Self-Study
Expiration: Course expires 1 year after purchase
Course Update: May, 2010
Accreditation: NASBA, IRS, CTEC, OTPB
Guarantee/Complaint Resolution

Course Outline


Lesson 1 - What is the Foreign Tax Credit
Learning Objectives 1
Overview
What is Foreign Tax Credit
Choice of Credit or Deduction
Taxes Not Allowed as Credit
Excess Credit
Why Choose the Credit
Credit for Taxes Paid/Accrued
Foreign Tax Redeterminations
Notice to the IRS
Failure-to-Notify Penalty
Foreign Tax Refund
Time Limit on Refund Claims


Lesson 2 - Who Can Take the Credit
Learning Objectives 2
U.S. Citizens
Resident Aliens
Nonresident Aliens
Joint Return
Partner or S Corp Shareholder
Beneficiary
Investment Co. Shareholder
Controlled Foreign Corporation


Lesson 3 - What Foreign Taxes Qualify
Learning Objectives 3
General Rule
Tax Must be Based on Income
Taxes in Lieu of Income Taxes
Taxes on Excluded Income
Not Qualifying for Credit
Taxes on Certain Dividends
Taxes on Foreign Oil Income


Lesson 4 - Figuring the Credit
Learning Objectives 4
Exemption From Limit
Limit on the Credit
Separate Limit Income
Passive Category Income
General Category Income
Allocation of Foreign Taxes
Partnership or S Corp
Determining Source of Income
Source of Labor
Geographical Basis
Certain Property
Sources Outside the U.S.
Apportioning Interest Expense
State Income Taxes
Not Definitely Related
Itemized Deduction Limit


Lesson 5 - Capital Gains and Losses
Learning Objectives 5
Capital Gains and Losses
Adjustments
Capital Gain Rate Adjustment
Net Capital Loss
Allocation of Foreign Losses
Recapture of Foreign Losses
Recapture Provision
Dispositions
Recapture
Tax Treaties


Lesson 6 - Carryback and Carryover
Learning Objectives 6
Unused Foreign Tax
Bankruptcy or Insolvency
Time Limit
Taxes Credited or Deducted
Married Couples
Allocations
Method of Allocation


Lesson 7 - How to Claim the Credit
Learning Objectives 7
Form 1116
Records to Keep
Alternative Minimum Tax
Foreign Exchange Rates
Rate of Exchange
Simple Example


Lesson 8 - Comprehensive Example
Learning Objectives 8
U.S. Citizen - Foreign Income
Robert's Business Expenses
Robert's U.S. Taxable Income
Robert's Foreign Income
Robert's General Limitation
Form 1116, Line 4
Robert's Passive Income
Part II, Form 1116
Part III, Form 1116
Part IV-Summary of Credits
Robert's Unused Taxes

Course Objectives

Lesson - 1
After completing Lesson 1, you will be able to:
  • Identify the benefits of electing the foreign tax credit
  • Identify circumstances when a taxpayer may not claim the foreign tax credit
  • Identify when a redetermination of a taxpayer's U.S. tax liability is required
Lesson - 2
After completing Lesson 2, you will be able to:
  • Identify taxpayers who can claim the foreign income tax credit even though they did not directly pay or accrue the tax
Lesson - 3
After completing Lesson 3, you will be able to:
  • Identify when foreign levies qualify as an income tax
  • Identify taxes that qualify for the foreign tax credit
  • Identify economic benefits
Lesson - 4
After completing Lesson 4, you will be able to:
  • Identify passive income
  • Identify which source of income is not determined by where the services were performed
  • Define Section 901(j) income
  • Identify which itemized deductions are definitely related to a specific class of gross income
  • Identify factors determining the source of fringe benefits
  • Figure foreign source compensation when working both inside and outside the U.S.
Lesson - 5
After completing Lesson 5, you will be able to:
  • Define "predominant use" for purposes of the recapture rules for property used outside the U.S.
  • Identify the countries that are part of the tax treaty that prevents double taxation of the same income by the U.S. and the treaty country
Lesson - 6
After completing Lesson 6, you will be able to:
  • Determine how to treat the unused foreign tax paid or accrued in the tax year
Lesson - 7
After completing Lesson 7, you will be able to:
  • Identify where to claim a credit for the foreign taxes paid
  • Identify the four parts of Form 1116
  • Properly use the conversion rules with regard to the exchange rate
Lesson - 8
After completing Lesson 8, you will be able to:
  • Determine which forms to use for the foreign tax credit and the foreign earned income exclusion
  • Determine what category the income should be included in