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Disposing of a Foreign Disregarded Entity: Tax Challenges and Reporting Requirements

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A

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Monday, June 23, 2025

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, May 30, 2025

or call 1-800-926-7926
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This course will identify specific tax issues surrounding the sale of a foreign entity. Our panel of foreign tax veterans will explain steps that taxpayers can take to lessen the taxes paid when selling stock or assets held overseas, including critical elections. The panel will also review required, but sometimes overlooked, U.S. information reporting obligations.

Description

Calculating and reporting the gain or loss from the sale of a business is complicated. Selling a foreign entity adds additional reporting requirements and complexity. Paramount to the calculation is the nature of the business and how it is held. Like sales of U.S. businesses, whether the business is a DRE, corporation, branch, or another entity affects the calculations and tax considerations. This webinar focuses on the potential U.S. tax implications arising from a sale of foreign disregarded entity.

On top of the familiar issues like the character and source of gain, there are unique tax issues like Code Section 469 passive loss considerations, Overall Foreign Loss, reporting, election, and tax considerations practitioners should be aware of when taxpayers dispose their overseas businesses. In addition to a multitude of complex tax considerations, information reporting obligations must be considered. For example, there can be additional reporting obligations on Form 8594 to report an asset sale by category under Section 1060 or Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs). International tax practitioners need to be familiar with the numerous tax challenges surrounding the disposition of foreign holdings.

Listen as our panel of international tax reporting experts points out how to minimize the taxes paid on the disposition of a foreign entity and comply with reporting obligations for international tax advisers and taxpayers doing business abroad.

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Outline

  1. Dispositions of a foreign disregarded entity
  2. Specific tax considerations by entity type
  3. Income tax considerations
    1. Section 1060 asset sales
    2. Section 469 passive loss limitations
    3. Foreign tax credit limitations
  4. Examples

Benefits

The panel will review these and other critical issues:

  • The manner in which the following tax items are determined:
    • The character of the gain arising from the sale transaction, as either long-term capital gain or ordinary income,
    • The manner of bifurcating the gain between those two categories,
    • The tax rate applicable to each type of income category, and
    • The source of the resulting long-term capital gain and ordinary income for purposes of applying the foreign tax credit provisions of U.S. tax law for income taxes paid to Spain in connection with the transaction.
  • The extent to which Mr. A may deduct the deferred losses from the Resort V business that have been reported on U.S. Federal income tax returns filed for each year in which Resort V was owned against the gain arising from the sale of the shares of S Co in view of the limitations imposed by the Passive Activity Loss rules under Code §469.
  • The extent to which Mr. A may deduct the deferred losses from the Resort V business that have been reported on U.S. Federal income tax returns filed for each year in which Resort V was owned against the gain arising from the sale of shares of S Co in view of the limitations imposed by the foreign tax credit rules under Code §904 and its regulations.

Faculty

Brewer, Alexis
Alexis Brewer
International Tax Associate
BDO USA

Ms. Brewer is an International Tax Associate at BDO USA.

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Lacatusu, Ioana
Ioana Lacatusu
Managing Director, International Tax
BDO USA

Ms. Lacatusu is a Managing Director, International Tax at BDO USA.

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Seade, Jerry
Jerry Seade, JD
Partner, International Tax Services
BDO USA

Mr. Seade is a Partner, International Tax Services BDO USA. 

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Attend on June 23

Early Discount (through 05/30/25)

CPE credit processing is available for an additional fee of $39.
CPE processing must be ordered prior to the event. See NASBA details.

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Early Discount (through 05/30/25)

CPE credit is not available on downloads.

CPE On-Demand

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