U.S. Shareholders of Foreign Corporations – Transition Tax Due Date Quickly Approaching

OMA Connections Partner, MCM CPAs and Advisors, advises U.S. taxpayers with 10% ownership in specified foreign corporations that the installment of transition tax is due on or before April 17, 2018 or they lose the right to pay transition tax in installments over 8 years.

MCM wrote: “The Tax Cuts and Jobs Act (“TCJA”) transformed the U.S. corporate income tax system from a worldwide system to one that is more akin to a territorial system. Under the prior system, it was possible for U.S. shareholders to defer U.S. taxation of the foreign profits of foreign corporations. As a result, many U.S. based multinationals, as well as many U.S. individual shareholders, caused their foreign corporations to refrain from repatriating foreign profits.

“To transition from the old worldwide system to the new quasi-territorial system, TCJA also introduced a one-time mandatory transition tax on the previously untaxed income of any “deferred foreign income corporations” (DFICs). …”