Legislative language for Administration's "excess returns" proposal raises issues

Washington National Tax Services
The Obama Administration recently released legislative language for five revenue-raising proposals in the international tax area from its fiscal year (FY) 2012 Budget. The proposal that has generated the most interest and uncertainty since the Administration released its Budget in February would create a new Subpart F category of income for "excess returns" on transfers of intangibles to a controlled foreign corporation (CFC) from a "U.S. related person." The legislative language answers many of the questions observers had raised about the proposal, but some uncertainties remain.

This provision would be effective for tax years beginning on or after January 1, 2013, which is a year later than the effective date proposed for this provision in the FY 2012 Budget.

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