Bear Douglas
Bear Douglas

New Interest Expense Allocation Rules
Internal Revenue Code ("Code") section 864(e), implemented through Temp. Treas. Reg. Sec. 1.861-11T, requires all members of a "domestic affiliated group" to be treated as one corporation for purposes of allocating interest expense between domestic and foreign source income. Therefore, by applying this rule, the foreign-source income derived from a foreign entity that incurs its own interest expense can be reduced twice: once by the foreign entity's own actual interest payments and second by the imputed interest paid by the domestic group that is apportioned to the asset that earned the foreign-source income.
The new rule under Code section 864(f)(1) creates a new comparison of the "worldwide affiliated group's" third-party interest, which is apportioned to foreign-source income based on a ratio of foreign assets to total assets, less the third-party interest incurred by the foreign members that would be allocated to foreign sources under the new rule's principles (an example to this rule is provided below). As such, there will be no apportionment of domestic group interest to the foreign-source income if the foreign members incur their pro rata portion of the worldwide affiliated group's debt.
Note that intercompany debt will not be taken into account for purposes of this rule.
The composition of the worldwide affiliated group starts with the same affiliated group under Code section 1504(a), and adds to it foreign corporations that are: (1) CFCs and (2) are owned by the domestic group members in the aggregate at a level that meets the 80 percent vote and value test of Section 1504(a)(2), as modified by certain look-through rules.
Therefore, the new rule does not remove the exclusion of foreign corporations generally, but only adds the group of foreign corporations that are CFCs of which are 80 percent owned by the domestic group. Intercompany stock will not be taken into account under the new rules for purposes of determining assets.
For example, Assume a worldwide affiliated group consists of X, Y, and Z (the CFC). Each has $100 of third-party interest expense, and each is of equal size for purposes of the interest allocation regimes.
Under the current regime, Z would be allocated one third or $66.66 ($200 interest expense of the domestic affiliated group multiplied by 1/3) of the domestic interest, and thus its income would be burdened by $166.66 of interest expense for purposes of the Code section 904 computation (its $100 of third-party interest expense and its $66.66 allocated portion of the domestic interest expense).
The new regime would tentatively allocate to Z $100 of the worldwide interest ($300 of total interest expense of the worldwide affiliated group multiplied by the ratio of which the foreign assets of Z bear to all of the assets of the worldwide affiliated group), but since Z incurred $100 of the worldwide interest, in the end no additional interest will be allocated and Z 's income will be burdened only by its own $100 of interest expense for purposes of the Code section 904 computation.
The election to allocate interest on a worldwide basis is a one-time election and may be made only by the common parent of the domestic affiliated group that is part of the worldwide affiliated group, and may be made only for the first taxable year beginning after December 31, 2008 in which a worldwide affiliated group exists that includes the domestic affiliated group and a foreign subsidiary that could be in the worldwide affiliated group.
The election must be made by the due date (including extensions) for filing the federal tax return for the first year to which the election applies.
DISCLAIMER: This article does not, and is not intended to, constitute legal, tax, or accounting advice. You should consult an attorney, tax advisor, or accountant for individual advice regarding your own situation. Furthermore, this article is not intended or written to be used, and it cannot be used, for the purpose of avoiding tax-related penalties under the Internal Revenue Code.
About the Author
Mr. Stransky is a partner in the Boston law firm of Sullivan & Worcester LLP. He specializes in international tax planning for U.S. companies with foreign investments. Mr. Stransky can be reached at dstransky@sandw.com or you can find further information at Sullivan & Worcester
Day 3: Which of these bands, artists, composers and/or comedians do you like (ones that start with "C")?
C. J. Bolland
Cage the Elephant
Cake
The Call
Cameo
Candyman
Cannibal Corpse
Captain Clegg & the Night Creatures
Caramell
The Cardigans
Care Bears on Fire
Carl Douglas
Carla Marshal
Carnival in Coal
The Cat Empire
Cat Stevens
Catherine O'Hara
Chad Kroeger of Nickelback (solo)
The Champs
Charlie Clouser
Charlie Daniels Band
Charm City Devils
Chatham Baroque
Cheap Trick
Chickenfoot
Chris Cornell
Cinderella
Cindy Crawford
The Clash
Claude Debussy
The Cliks
Clutch
Cocteau Twins
Coheed & Cambria
Coldplay
The Commitments
Considering Lily
Corelli
Corrosion of Conformity
Counting Crows
Cracker
Cradle of Filth
Crash Test Dummies
Crazy Frog
Cream
Creedence Clearwater Revival
Crowded House
The Crystal Method
The Cure
Cyndi Lauper
the casualties
cheap sex
thats all i can think of off the top of my head.
![]() |
|
Cherished Teddies Douglas Jack In The Box 3s2 175 US $4.99
|
SALE 1995 HERSHEYS Co Classics Ltd Edition 935 of 2400 US $5.95
|
lot of 2 Collectible Bears one Russ other Douglas Cuddle Tags US $3.99
|
|
Lot of 4 VTG Bears North American Bear Company Lindbeargh Bearbanks Napoleon US $149.99
|
BROADWAY BEARS Teddy Bears Playbill 2011 WICKED SPIDER MAN FENCES Mint] US $9.99
|
2 Bears With Bench US $30.00
|
|
Douglas Bearbanks VIB North American Bear Company US $34.99
|
Bearington Plush 14 Bear Bonnie and Blue Eyes Cat NEW US $23.99
|
New RUSS Berrie Teddy Bear Beige Called Douglas Large US $36.49
|
|
Cherished Teddies DOUGLAS Jack In Box 950661 US $19.95
|
Douglas Cuddle Toys Laurel The Teddy Bear Fully Jointed Plush Toy Tush Hang Tags US $7.22
|
Cherished Teddies Douglas RETIRED NIB US $22.95
|
|
BEARINGTON BEAR DOUGLAS FIR LIMITED EDITION US $19.99
|
Gortons fisherman TEDDY BEAR by DOUGLAS CO rare 18 EXC US $19.99
|
Company Classics Hersheys Teddy Bear Plush MIB Limited US $30.00
|
|
Boyds Signature Collection Bear 15 inch Douglas Albert Retired With Tags US $55.00
|
Blue BABY BEAR 11 Floppy Plush by Douglas o1 US $7.99
|
RUSS BEARS FROM THE PAST DOUGLAS 12 PLUSH US $12.00
|
|
New Douglas 6 Vanilla Ice Cream Teddy Bear US $9.99
|
Tan Curly Teddy Bear Douglas Plush Stuffed Animal Red Satin Ribbon US $10.72
|
Deb Canham Douglas Bear US $98.79
|
|
Retired Douglas Company Classic Jointed Bear w Dog LE US $44.99
|
RUSS BERRIE BEAR Douglas NWT Plaid Ribbon 15 US $31.99
|
DOUGLAS CUDDLE TOY GOLDIE GOLDEN BEAR 12 NWT D11 US $22.09
|
|
DOUGLAS PLUSH 9 BLACK BEAR STUFFED ANIMAL TOY US $8.79
|
MIB CRACKER JACK LTD ED BEAR DOUGLAS COMPANY 1998 US $53.00
|
r BLOND DOUGLAS BEAR WITH TAG SUPER SOFT AND CUDDLY LOOKS GREAT NO WEAR US $14.99
|
|
Bearington Collection 10 Plush Kylie Teddy Bear NEW US $14.99
|
Gund Plush 12 Cuddly Cubs Corey Brown Bear NEW US $13.95
|
BOYDS BEARS FRIENDS THE PURRSTONE COLLECTION CHESTER BIRDBREATH 371006 US $9.99
|
|
Russ Berrie DOUGLAS Bear 11 Inch SUPER SOFT 35647 US $68.40
|
Douglas Cuddle Toys JUMBO TEDDY BEAR 21 inch US $212.40
|
Douglas Peachy Pink Small Baby TEDDY BEAR Rattle Plush US $22.99
|
|
Boyds Bear Holiday Christmas Set Noah Pinesly Snowman FiFi NWT 3 Bears Teddy US $19.95
|
Douglas Co CUDDLE TOYS Moveable BROWN BEAR 14 Korea US $13.59
|
New Douglas 15 Lil Jake Cream Teddy Bear US $34.99
|
|
RETIRED OREO COOKIE PANDA TEDDY BEAR MADE BY COMPANY CLASSICS US $19.99 |
Lucky Draw Cowboy Bear by Douglas US $13.39
|
Bearington Collection 10 Plush ILLIE WILLIE GET WELL SOON Bear NEW US $10.99
|
|
PIERRE retired plush SNOWMAN Teddy Bear by Douglas Cuddle Toys US $18.74
|
Cherished Teddies Figurine DOUGLAS US $6.99
|
TEXACO JOE Retired Douglas Company Classics Limited Edition Teddy Bear US $74.99
|
|
Bearington Bear Douglas Fir 14 $2995 BS 173015 US $29.95
|
BOYDS BEARS DOUGLAS WITH TAG US $19.95
|
VIRGINIA Douglas Limited Edition Teddy Bear with Log Cabin Quilt US $74.99
|
|
SASHA unique Douglas dressed Teddy Bear with clogs US $41.24
|
MS BEARMAN OF BOARD plush teddy 1985 Frank Sinatra 20 US $24.99
|
Bearington Bears Plush 5 KIRBY Grasshopper NEW US $5.19
|
|
CHERISHED TEDDIE DOUGLAS SIGNED BY PHILLMAN 950661 US $49.31
|
RUSS BEARS FROM THE PAST DOUGLAS 15 LIGHT BROWN US $18.00
|
LL BEAN PLUSH BEAR WITH FANNY PACK LL BEAR US $39.99
|
|
Douglas Brown Bear 9 Inch Cuddle Toy Plaid Ribbon GUC US $9.99
|
ROSE pink mohair limited edition Jaymar teddy bear US $35.99
|
Deb Canham 2010 Christmas Douglas Teddy Bear Ltd US $40.00
|
|
CAMPBELL SOUP BEAR ★ LTD EDI 1221 2400 ★THE CLASSIC COLLECTION ★ MINT ★ US $24.95
|
Gund Plush 135 Nighty Night Cream Dream Bear NEW US $27.99
|
Cherished Teddies Douglas Lets Be Friends US $13.12
|
|
Boyds Bearstone NEVILLECOMPUBEAR 1E NIB US $23.95
|
BOYDS BEAR ORNAMENT DOUGLAS SAVE A TREE25508 NWT US $10.00
|
WEATHER GORTONS FISHERMAN TEDDY BEAR PLUSH STUFFED ANIMAL REMOVABLE RAIN GEAR US $12.99
|

US $4.99









