D*********h
发帖数: 209 | 1 My company is treating the unrealized gain on 3rd party interest bearing
bank deposit in non functional currency as Subpart F income. Can anyone
share experience on FX g/l on bank deposit? I don't understand how can
UNREALIZED gain be taxed? Thanks |
y*******3
发帖数: 659 | 2 is this the so called mark to market accounting? |
l*******w
发帖数: 61 | 3 Wonder:
the company owns the bank deposit denominated in foreign currency?
or,
the company owns a CFC that has the bank deposit denominated in foreign
currency?
or,
something else?
【在 D*********h 的大作中提到】
: My company is treating the unrealized gain on 3rd party interest bearing
: bank deposit in non functional currency as Subpart F income. Can anyone
: share experience on FX g/l on bank deposit? I don't understand how can
: UNREALIZED gain be taxed? Thanks
|
D*********h
发帖数: 209 | 4 Yes, you are talking about SFAS 159. That's the accounting rule on treating
certain non-monetary instruments, such as stock, bond and foreign currency.
【在 y*******3 的大作中提到】
: is this the so called mark to market accounting?
|
D*********h
发帖数: 209 | 5 Sorry about my lack of explanation. So let's say a USCo is a US C-Corp.
USCo wholy owns a Chinese company,CHCo, which is a CFC. CHCo's functional
currency is RMB.Therefore, the CHCo financial statement is kept in RMB. CHCo
for operating purpose has USD deposited in a checking account in China.
Therefore the USD the CHCo is holding is a nonfunctional currency. Under
SFAS 159 or whatever local chinese/IFRS accounting rule the USD bank deposit
is marked to market periodically. So if USD appreciate against RMB, CHCo
will have a unrealized gain. JE as below,
A/R Bank Deposit USD 20 mil
Unrealized Gain 20 mil
My senior manager is telling me to treat this unrealized gain as Subpart F
Foreign Peronsal Holding Company Income. I am confused on why. I am reading
IRC 988 and related regs. I'll try to come back with some reasoning myself.
But I appreciate any guidance from experienced people.
【在 l*******w 的大作中提到】
: Wonder:
: the company owns the bank deposit denominated in foreign currency?
: or,
: the company owns a CFC that has the bank deposit denominated in foreign
: currency?
: or,
: something else?
|
D*********h
发帖数: 209 | 6 A CFC with a nonfuntional currency bank deposit which incurred unrealized
gain should be treated as Subpart F? that's the question |
t******l
发帖数: 2135 | 7 你老板是对的。你们公司肯定是做了Mtm selection, 这样就把unrealized gain 变成
税务上的realized.
CHCo
★ 发自iPhone App: ChineseWeb 7.8
【在 D*********h 的大作中提到】
: A CFC with a nonfuntional currency bank deposit which incurred unrealized
: gain should be treated as Subpart F? that's the question
|
l*******w
发帖数: 61 | 8 I don't have related practice experience, but your boss appears to be right
to me. See,
http://www.fenwick.com/FenwickDocuments/Outline-Taxation-of-For
Search "Interest Bearing Liabilities", page 49.
It feels a bit unnatural for me... but it's tax - it doesn't have to make
sense.
【在 D*********h 的大作中提到】
: A CFC with a nonfuntional currency bank deposit which incurred unrealized
: gain should be treated as Subpart F? that's the question
|
|
