United States: Tax

US corporate executives relocating abroad face complex tax obligations that extend beyond borders. From worldwide income taxation and foreign tax credits to state residency issues and potential expatriation taxes, understanding these planning areas is essential for avoiding costly penalties and optimizing your tax position.

Recent US court rulings have confirmed that foreign tax credits cannot offset the Net Investment Income Tax for American citizens living abroad, creating an additional layer of taxation even when income is already taxed in their country of residence. These decisions raise critical questions about the long-term viability of maintaining US citizenship for entrepreneurs and business owners who have permanently established their lives outside the United States.

The US Court of Federal Claims recently addressed a critical question for Canadian exempt organizations earning US-source income: can they rely on fiscal transparency rules to claim treaty benefits through investment vehicles? The court's ruling in The South Saskatchewan Community Foundation Inc. v. United States examines when charitable organizations may look through intermediary entities to access tax exemptions under the US-Canada tax treaty, with significant implications for cross-border investment

A Connecticut Supreme Court decision demonstrates how a $13 million estate tax dispute reinforces a critical planning lesson: formal declarations of domicile carry limited weight when contradicted by an individual's actual living patterns. The case examines how spending more time in Connecticut than Florida, despite obtaining a Florida driver's license and voter registration, led to a substantial tax liability.

California's proposed Billionaire Tax Act would impose a onetime 5% excise tax on individuals and trusts with assets exceeding $1 billion, creating unprecedented challenges for estate planners. The retroactive application and anti-abuse provisions raise critical questions about the treatment of grantor trusts, non-grantor trusts, and beneficiary interests that deviate significantly from established federal wealth transfer tax principles.

The Financial Accounting Standards Board issued Accounting Standards Update 2026-03, Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions, on September 9, 2026. While the update is aimed at investment company accounting, it could benefit estate planners and valuation professionals who regularly defend marketability discounts on closely held and restricted stock.

The IRS has released new guidance on the Section 45Z Clean Fuels Production Tax Credit, introducing significant changes that affect how American farmers, ranchers, and fuel producers can access benefits from the domestic biofuels market. Notice 2026-53 provides updated emissions rate tables and addresses critical modifications mandated by the Working Families Tax Cuts, including special provisions for manure-derived fuels and regenerative agricultural practices.

US corporate executives relocating abroad face complex tax obligations that extend beyond borders. From worldwide income taxation and foreign tax credits to state residency issues and potential expatriation taxes, understanding these planning areas is essential for avoiding costly penalties and optimizing your tax position.

The Maritime Administration (MARAD) has published a notice of proposed rulemaking that would substantially revise the regulations governing the Capital Construction Fund (CCF) Program, found at 46 CFR Part 390. Published in the Federal Register on September 22, 2026, this is the first comprehensive update to the CCF regulations since MARAD first introduced them in 1976.

The IRS has intensified scrutiny of partnership basis-shifting transactions that manipulate inside and outside basis rules to generate tax savings. While recent regulations were withdrawn under the Trump Administration, the agency maintains its position through Rev. Rul. 2024-14, which identifies three transaction types that fail the economic substance doctrine.

The U.S. Treasury and IRS have issued proposed regulations addressing a new category of income excluded from deduction eligible income under section 250(b)(3)(A)(i)(VII), which was introduced by the One Big Beautiful Bill Act. These regulations clarify how income from sales of intangible property and certain depreciable assets will be treated under the foreign-derived deduction eligible income regime, with significant implications for software transactions and related party transfers.

The US Department of Treasury defends its authority to regulate stock-based compensation in cost-sharing arrangements under IRC § 482, arguing the regulations fall within statutory bounds and are necessary to ensure arm's-length results between related parties. The government's response to McKesson Corporation's summary judgment motion addresses challenges based on the Loper Bright decision and notably abandons its six-year statute of limitations defense.