Page 265 - International Taxation IRS Training Guides

IRS Objective: Understanding US MNE’s

Planning Strategies (Cont’d)
Tax

prior to TCJA, foreign subsidiaries were presumed to
 In general,
repatriate all The
earnings to USP for US GAAP purposes.
future tax
on such earnings was included for book purposes

even though not However, an MNE could
yet subject to tax.

assertion (IRA)* that its
make the indefinite reinvestment
earnings
were indefinitely reinvested if USP had specific plans

for As such, an MNE could

reinvestment of those earnings.

defer
and plan when GAAP financial statements included the tax
on foreign subsidiary earnings.
liability

noted in Topic III, post-TCJA, MNEs will still assert IRA or it
 As
may
be required to report certain tax expenses in its US GAAP
financial
statements that otherwise would be deferred (e.g.,
deferred tax
liability for foreign withholding taxes, deferred taxes
movements related to withholding tax
on foreign currency
and deferral of foreign earnings for state tax purposes.)
liability

*Formerly known as permanently reinvested income or “PRI” 12