s Tax Savings for Exporters Presented by Robert J. Misey, Jr. J.D., LL.M., M.B.A. Chair, International Department
Qualification as Export Property The property must be manufactured in the United States The export property must be held primarily for use outside the United States The property must have a maximum of 50% foreign content 1 2013 All Rights Reserved
Qualification as Export Property Property is manufactured within the United States if either conversion costs incurred constitute 20% of the cost of goods sold; there is a substantial transformation in the United States; OR the operations in the United States are generally considered to constitute manufacturing 2 2013 All Rights Reserved
Conversion Costs are 20% of Cost of Goods Sold dividend gold-plated packaging $10 Aco leisure suits $30 packaged suits $100 Exports 3 2013 All Rights Reserved
Substantial Transformation as Manufacturing dividend steel rods Aco Screws and nails Exports 4 2013 All Rights Reserved
Generally Considered to Constitute Manufacturing dividend sunglass components Aco sunglasses Exports 5 2013 All Rights Reserved
Destination Test: Sold for Use Outside the United States Exporter Toronto customer 6
Destination Test: Indirect Sales Count dividend Aco Buffalo distributor Toronto Customer 7
Content > 50% Export Price W dividend wood pulp PAPco $80 kryptonite Paper products exports $200 8
Structuring the Subsidiary of a Flow-Through S Corp dividends exports 9
Structuring the Brother-Sister of a Flow-Through dividends S Corp Exports 10
Structuring the Brother-Sister of a C Corporation dividends C Corp Exports 11
Structuring the Ownership by a Trust 1........ N beneficiaries Trust dividends Corp Exports 12
Structuring the Shares for a Key Employee BR Aco Exports 13
Tax Credits LLC F foreign customers 100,000 income 40,000 FITs 14
The Tax Credit Limitation Pre-credit tax on foreign-source taxable income 15
Source Sales of Purchased Inventory by Title Passage widgets widgets LLC distributor Where does title pass? foreign customers 16
Source Sales of Manufactured Inventory: Half by Title Passage; Half by Manufacturing Location LLC manufacturer widgets Where does title pass? foreign customers 17
Proof of Tax Credits Cash Basis Taxpayers Receipt from tax authority Accrual Basis Taxpayers Copy of return 18
Robert J. Misey, Jr. ROBERT J. MISEY, JR. is a partner with the law firm of and Chair of that firm's International Department. Mr. Misey concentrates his practice in the areas of international taxation and business. Mr. Misey s previous experience includes nine years as an attorney for the IRS. While he was with the IRS, he served as an international tax attorney in its Washington, D.C. national office, where he was a member of the APA team, and a trial attorney and international tax specialist in San Jose, California and the Southeast Region. He previously led the International Tax Services group for a region of a Big Four accounting firm. Mr. Misey has spoken on international taxation at continuing education programs in seventeen states and four foreign countries. He has published numerous articles and is a co-author to the treatise Taxation of International Transactions and Federal Taxation: Practice and Procedure. Mr. Misey received his Juris Doctor and Master of Business Administration degrees from Vanderbilt University and his Master of Laws in Taxation, with high distinction, from Georgetown University, where he was the graduate student editor of The Tax Lawyer. A member of the bar in California, Wisconsin, Kentucky and the District of Columbia, he can be reached at either (414) 298-8135 or. 19