TOPIC # $1$ REPATRIATION

$$

$$ As a general rule income earned in business activities conducted entirety outside of the United States, by a corporation which is formed outside of the United States but is owned $100\%($a Subsidiary$)$ of a U$.$S$.$ corporation, is not subject to tax in the United States until that income has been repatriated back to the parent corporation doing business in the United States.$$ I would like you to explore the definition of Repatriation of Income.$$ When and how does Repatriation of Income occur?

$$ You might explore the following situations, as well as related situations that will occur to you, to determine when Repatriation has occurred. The point of these situations is to put your mind to work in analyzing which details might be relevant and which details remain irrelevant in defining when Repatriation has occurred:

$$

$1.$ The foreign subsidiary sends cash to its parent company, in the United States.

$2.$ The foreign subsidiary buys Bitcoin in an electronic transaction registering the Bitcoin account in the name of the parent company.$$ But the passwords are known only by two people and both of them are employed by the subsidiary and work and live outside the United States.

$3.$ The foreign subsidiary buys a warehouse inside the U$.$S$.$ to temporarily store product owned by the foreign subsidiary until it accumulates into a sufficiently large bundle to minimize shipping costs to the foreign country.$$ The warehouse is owned only by the foreign subsidiary.

$4.$ The foreign subsidiary buys a condominium inside the borders of the foreign country in which the foreign subsidiary operates.$$ An audit of the usage of this condominium reveals that officers or representatives of the U$.$S$.$ parent corporation slept in this condominium $57$ nights in the last year.

$5.$ The U$.$S$.$ parent needs cash but doesn$$t want a repatriation to occur.$$ So the U$.$S$.$ parent borrows money from its foreign subsidiary, at a commercially reasonable interest rate with a signed and fully secured promissory note.$$ And an audit one year later reveals that the parent corporation has repaid the entire principal amount of the loan, plus interest.

$6.$ The U$.$S$.$ parent needs cash but doesn$$t want to risk an event of repatriation.$$ So the U$.$S$.$ parent arranges a loan from a U$.$S$.$ lender and pledges its stock in the foreign subsidiary as security for the loan.

$7.$ A newly hired CFO of the foreign subsidiary wire transfers $$1,000,000$ to the U$.$S$.$ parent corporation.$$ When the U$.$S$.$ parent corporation discovers the $$1,000,000$ sitting in its bank account, it immediately wire transfers $$1,000,000$ back to the foreign subsidiary with a note saying $$to correct the inadvertent error of an inexperienced CFO.$$

$8.$ The U$.$S$.$ company is trying to obtain oil drilling permits on land owned by the U$.$S$.$ company. It knows the results of the next presidential election could have a major impact on the availability of drilling permits. The U$.$S$.$ Company directs its foreign subsidiary to make substantial contributions to one or more Political Action Committees planning to sponsor presidential campaign advertising in targeted markets.

$$

Now using these examples and any others that occur to you, please describe in as much

detail as possible how far a U$.$S$.$ company can go to make use of unrepatriated money to the benefit of the U$.$S$.$ Company? Where does the law draw the line between repatriation and non$-$repatriation.