Abstract
The title of this article notwithstanding, the United States does not in fact tax the U.S. branches of foreign banks;' branches are not regarded as distinct entities for most federal income tax purposes. Rather, the United States taxes foreign corporations (including banks) that are engaged in a trade or business within the United States on taxable income that is effectively connected with the conduct of that U.S. trade or business.
In addition to exploring the nature of a branch for federal income tax purposes, this article considers in some (but by no means comprehensive)detail certain selected aspects of the concept of "effectively connected income," the rules under Regulations section 1.882-5 for determining the deductible interest expense of a foreign bank, and the relationship between the interest allocation rules and the branch profits tax and branch level interest tax.
Recommended Citation
Reich, Yaron Z.
(1995)
"U.S. Federal Income Taxation of U.S. Branches of Foreign Banks: Selected Issues and Perspectives,"
Florida Tax Review: Vol. 2:
No.
1, Article 1.
Available at:
https://scholarship.law.ufl.edu/ftr/vol2/iss1/1