A Practical Guide To U.S. Taxation Of International Transactions

By Robert E. Meldman and Michael S. Schadewald
Published by CCH and Kluwer Law International; 499 pages
Reviewed by Deborah Sandorfy

With global commerce no longer merely an emerging area in the financial world, accountants need to be aware of the tax ramifications of international transactions. Practitioners must have access to clear and concise information about new areas they encounter or a quick reference for familiar issues. Authors Meldman and Schadewald set out to provide practitioners in the international tax arena a desk reference that provides a practical command of the tax issues and how those issues are resolved, and they have done an excellent job.

This volume essentially covers the areas of international taxation common to U.S.–based tax practice, and it is more useful as a reference guide than as a text for straight reading. The book first introduces two fundamental principles of international taxation (tax jurisdiction and source of income rules), then details various aspects of both outbound and inbound transactions. The next part deals with practice and procedure, and another section reproduces relevant IRS forms and publications and the U.S. model treaty.

The main text covers diverse topics thoroughly yet concisely, containing helpful footnotes to both the IRC and the CFR. The outbound section includes topics that are the bread and butter of expatriates, such as foreign tax credits, transfer pricing, and tax treaties; it also covers Subpart F, Planning for Foreign Operations and Currency Translation. The inbound area discusses foreign persons both investing and doing business in the United States. The text is supplemented with useful examples and tables.

As an example of the book’s practicality, its section on FIRPTA, an area familiar to this reviewer, presented a good overall discussion in a few concise pages. Everything that should have been included was present, plus one or two new tidbits. The section on interest-charge DISCs, an area unfamiliar to this reviewer, contained a clear, concise explanation of the mechanics of the interest charges and taxation of a DISC and its shareholders.

The book is not without a major deficiency: Recent laws now make the entire chapter on FSCs almost obsolete. There is always this pitfall when investing in a book that is likely to have data that is subject to frequent law changes. Rarely will entire chapters become obsolete overnight, but practitioners are duty-bound to keep abreast of recent changes in pertinent areas of tax law. Some reference texts have the ability to be updated via page inserts or online updates of the latest tax law changes. This shortcoming notwithstanding, I found A Practical Guide to U.S. Taxation of International Transactions to live up to its title, and I would recommend it is an addition to any tax practitioner’s library.