| ABSTRACT (Key Points & Discussions) | - General discussion of terms and relevance of Max Baucus November 19, 2013 staff discussion draft of reform of U.S. international tax rules.
- Option Y proposal - minimum tax of 80% of U.S. statutory rate on CFC income on low taxed income.
- Option Z proposal - all CFC income subject to minimum tax regardless of foreign rates, with differences between active and passive income.
- The proposals impose high levels of minimum tax on a broad base, trying to avoid income-shifting at the risk of burdening U.S.-based multinationals.
- Author discussion of suggested modifications to these options.
- Proposal singles out CFC income from serving U.S. markets for adverse treatment.
- Proposal to override check-the-box regulations for entities owned by CFCs.
- Proposal for a current-year item-by-item foreign tax credit for taxes attributable to taxable Subpart F income, and creates new separate baskets and complexity.
- 20% transition tax on mandatory deemed repatriation of pre-effective-date earnings accumulated by CFC's.
- Proposal to expand disallowance of deductions for related-party base erosion payments for inbound structures, including hybrid instruments/transactions, hybrid entities, conduit financing arrangements, or preferential taxation in hands of the recipient.
- Overall, the Baucus proposal is too harsh, but does advance the debate on these issues.
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