The Internal Revenue Service has released the summer 2006 issue of the Statistics of Income Bulletin, taking a closer look at corporations claiming the possessions tax credit and the use of estate tax provisions. The bulletin includes in-depth looks at:
- Sole proprietorship returns for 2004;
- Foreign-controlled domestic corporations for 2003-04;
- U.S. possessions corporation returns for 2003;
- Special estate tax provisions for family-owned farms and closely held businesses; and,
- Studies of international income and taxes, and federal estate tax returns for nonresident aliens for the 2003, 2004 and 2005 tax years.
Among the bulletin’s more interesting notes, for the 2003 tax year, the IRS found that there were 58,945 domestic corporations controlled by a foreigner, which accounted for 1.1 percent of all U.S. corporations. However, those businesses generated $2.6 trillion of total receipts, accounting for 12.4 percent of the receipts reported on all corporation income tax returns. That calculation made sense, considering that many of the trends from the SOI’s 14 studies of international income and taxes showed an increase in the amount of foreign activity of both U.S. citizens and the amount of U.S. activity of foreign persons. The IRS also found that in 2003, the number of corporations claiming a possessions tax credit continued its decline from the 1990s -- a slide coinciding with increased legislative restrictions on the use of the credit. In 2003, about 19 pharmaceutical and medicinal manufacturers reported possessions tax credits of $600 million, just over half of the total credit dollars claimed by 136 U.S. corporations. And the bulletin reported that about 1,800 estates, or 1.7 percent of the 2001 estate tax decedent population, elected to use at least one of the provisions available to decedents who died in 2001, if estates met certain requirements. Downloads of the complete bulletin, as well as information on how to order a hard copy, are available at www.irs.gov/taxstats/article/0,,id=162576,00.html.
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