Friday, July 23, 2010

M&C Spots 457A Trap for Multinational Corps

Multinationals view 457A as irrelevant for US employees serving foreign parents -- this view may cause lost deductions -- should re-evaluate -- M&C ARTICLE HERE.

"Many multinationals have adopted the view that the harsh income inclusion rules of Code section 457A are essentially irrelevant. Basically, this attitude stems from the belief that that the company's US employees providing services abroad to related foreign entities are doing so as employees of a US-based company pursuant to the terms and conditions of a secondment agreement. This article points out that while a secondment agreement, that is properly worded and implemented, may act as an effective shield against Code section 457A, it may also inflict a detrimental blow to the US company's subpart F income. Accordingly, any US company that seconds its employees to related foreign-based entities should re-evaluate that arrangement to assure that it is obtaining the desired tax outcome."

6 comments:

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yes this article points out the secondment agreement, that is properly worded and implemented, may act as an effective shield against Code section 457A. Thank you for your very helpful information.

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