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Foreign Tax Credit Planning (Sec. 338)
Short Description:
Our valuation analyses establish the stepped-up inside basis of the assets to provide the starting point for the U.S. tax earnings and profits calculation.
Section 338 elections are typically used for U.S. dividend planning. The stepped-up tax bases are used for increased depreciation and amortization deductions in the computation of U.S. earnings and profits. U.S. earnings and profits decrease while foreign taxes stay the same. As a result, foreign tax credit is accelerated. Our valuation analyses establish the stepped-up inside basis of the assets to provide the starting point for the U.S. tax earnings and profits calculation.