Video: Foreign Taxes

In this lesson, Nick Palazzolo, CPA, dives into the intricacies of foreign taxes and international taxation strategies, such as the shifting of profits to low-tax countries. He clarifies how multinational corporations can work within the regulations using the competent authority process to pre-approve cross-border transactions with the IRS, thereby avoiding double taxation and ensuring fair tax revenue distribution. Nick also explains the advanced pricing agreement program, a proactive measure for taxpayers to establish acceptable transfer pricing methods for transactions between related parties. Expanding on the taxation of foreign income, he breaks down the differences between foreign branch income versus foreign subsidiary profits, and how these are handled in terms of U.S. taxation, including the concept of repatriation. Lastly, Nick outlines various types of income that, despite being earned abroad, may be subject to U.S. taxes.