Compliance and Quantitative Analysis
Compliance and Quantitative Analysis
U.S.-based multinational corporations must report foreign activity on an annual basis. WTP Advisors helps ensure accurate and timely reporting that provides valuable information for current and future year tax planning, and that helps tax directors manage their global effective tax rate.
We customize our processes to meet your needs, leveraging our proficiency with leading tax compliance systems while being attentive to your internal deadlines and requirements. Our work is supported by detailed documentation that shields clients from IRS/state audit exposure.
International Tax Compliance
U.S. tax compliance requirements become more complex and burdensome when a company is doing business internationally. Meeting those requirements ensures accurate federal income tax returns and, if one occurs, a successful IRS audit.
WTP Advisors helps clients meet their U.S. international tax compliance requirements with services including:
- Form 5471 compliance, including Schedule M for intercompany transactions
- Form 8858 for foreign disregarded entities
- Form 8865 for foreign partnerships
- Section 987 branch remittance gain or loss computations
- Section 367 reporting requirements
- Form 926
- Form 1118
Foreign Tax Credit Utilization
The foreign tax credit (FTC) generally eliminates double taxation on foreign earnings that are repatriated to the U.S., and is intended to enhance the global competitiveness of U.S. companies. WTP helps U.S. companies maximize the benefits of FTCs and lower tax expense with strategies and solutions 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 planning
- OFL and ODL studies
- Foreign E&P and tax pool studies
Foreign Earnings and Profits
Maintaining accurate foreign earnings and profits (E&P) and related tax pools is essential in determining a foreign subsidiary’s effective tax rate and preparing accurate tax returns and financial statements. With increased attention by the IRS in recent years, a number of foreign tax computations are dependent on E&P including:
- Foreign tax credit utilization
- Deemed paid foreign tax credits
- Subpart F inclusions
- Pass-thru taxation income inclusions
- Effective tax rate for financial statement purposes
WTP’s professionals, along with our global network, have the experience to assist clients with:
- Determining and maintaining accurate E&P and tax pools
- Working with foreign affiliates to gather information
- Analyzing E&P accounting methods and related tax elections
U.S. multinationals doing business outside the U.S. often intend to bring home all or part of their foreign earnings. In certain situations companies may instead wish to defer U.S. tax on earnings by keeping those earnings invested abroad—at least temporarily. Our experienced tax professionals work closely with clients to design tax-effective global cash management strategies that complement and integrate with their business strategies.
The allocation and apportionment of expenses impacts the calculation of the foreign tax credit, IC-DISC export tax incentives, and the domestic production activities deduction (DPAD). These tax benefits and others may be limited by the amount of income from U.S. and non-U.S. sources. The firm works closely with its clients to understand the factual relationship between its deductions and the various statutory groupings of income. Working within the IRS rules we help identify those apportionment methods that will produce the most favorable overall results.
Transfer pricing is a term used to describe all aspects of intercompany pricing arrangements between related business entities, including transfers of tangible goods, transfers of intellectual property, providing intercompany services, and financing transactions. Transfer pricing affects a multinational company’s tax planning and financial statements, and has a high profile with both the IRS and increasingly strict foreign tax authorities.
WTP and our global network of transfer pricing partners offers many services including:
- Developing economic comparables to support intercompany pricing and interest rates
- Preparing functional analyses
- Preparing Section 367(d) analyses
- Developing global transfer pricing policies
- Planning cost-sharing arrangements for joint U.S. and foreign research and development of intellectual property
- Preparing section 6662(e) transfer pricing documentation
Contact us to learn more about these services.