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To embed, copy and paste the code into your website or blog: Today, the Tax Trotter is pleased to present an article by her international tax partner Douglas S. Stransky. This article is the first installment in the 2-part post focusing on the Adams Challenge case. In today's blog, we look at the most draconian tax rule in the world and examine whether the rule is valid. In addition, we examine a recent United States Tax Court case where the court upheld this draconian rule against a UK company, Adams Challenge (UK) Ltd. v. Commissioner, 154 T.C. 37 (2020). United States tax law subjects a f...

The US Tax Court released its opinion on the deductibility of expenses in Adams Challenge (UK) Ltd v. Commissioner on January 21 2021. The IRS victory in this case has important consequences for foreign corporations with US operations that may be unsure whether they have a US trade or business and effectively connected income. Such taxpayers should file protective Forms 1120-F to ensure that they are entitled to claim deductions in the event the IRS asserts they have a US trade or business and effectively connected income. Background Adams Challenge involved a UK company that chartered a ves...