Section 956 and the Section 245 DRD: Avoiding Multiple Layers of Taxation
Published by Tax Notes
There is an increased likelihood of double taxation when operating activities under a corporate structure. In an effort to alleviate this, Congress has implemented various deductions that help reduce or eliminate double taxation on corporate earnings when distributed as dividends to other corporations. One such “dividends received deduction”, found in section 245 is intended to eliminate double taxation on US source earnings that have already been subject to US tax. However, the interaction of section 245 with another provision, section 956, may in fact result in unintended double taxation.
A&M Tax professionals Alon Kritzman, Kenneth Brewer, and Logan M. Kincheloe advance arguments for a favorable outcome and ask the Government to resolve the issue as a matter of certainty.
