Caitlynn Grijalva

1204911522
Part I
1. Corporate entity thats registered and conducts usiness in a di!!erent jurisdiction or
country than the controlling o"ners
2. #.$. corporations are suject up to a %5& ta' rate on all their inco(e
%. $hi!ting pro!its !ro( high)ta' to lo")ta' jurisdictions through the pricing o! intellectual
property rights* goods* + services sold et"een a!!iliates,
a. -ultinationals have un!air advantage over #.$. do(estic corporations
. #nited $tates is losing illions o! ta' dollars annually
4. .estricts the types o! inco(e "hose ta'ation (ay e de!erred/addresses ta' avoidance
techni0ues eing utili1ed y (ultinationals in ta' havens, "as enacted to deter #.$.
ta'payers !ro( using C2Cs located in ta' havens to accu(ulate earning that could have
een accu(ulated in the #.$.
5. 3esigned to si(pli!y ta' rules !or deter(ining "hether an entity is a corporation*
partnership* sole proprietorship* ranch or 3.4 !or ta' purposes/eli(inated (ulti)
!actor test !or deter(ining classi!ication
5. -ajor type o! ta'ale $upart 2 o!!shore inco(e that consists o! dividends* royalties*
rents + interest, the payor C2C is organi1ed + operating in the sa(e !oreign country as
the related C2C recipient
6. 7a'ale o!!shore inco(e o! personal property (ust e oth produced outside the C2Cs
country o! organi1ation + distriuted or sold !or use outside that sa(e country, "ould not
e ta'ed i! the C2C itsel! "ere a (anu!acturer + added sustantive value to the goods
8. 9pples !irst tier o! operations is in Ireland* the lo"er tiers are placed in various countries
in 4urope + 9sia
a. #se the signi!icantly lo"er ta' rates o! the various countries, especially Ireland
. 3ont estalish ta' residency
c. Cost)sharing agree(ent
Part II
9. 7o sho" ta' e'pense, the average ta' rate o! their total earnings, ho" (uch o! their ta'es
they are putting o!! !or !uture years, reasons "hy the co(pany (ay not :no" ho" to ta'
certain earnings
10. 24.4&* 24.2&* 25.2&
11. Inco(e ta' e'pense divided y pre)ta' inco(e
12. 7he e!!ective ta' rate appears to (e to e neutral/% ecause in 2010 they recorded their
e!!ective ta' rate as 2%& "hile the gloal average "as 24.6&
1%. 7he total a(ount o! !ederal* state* and !oreign inco(e ta' e'pense o! that year
14. Current is "hat the co(pany is e'pensing at that e'act year* "hereas de!erred is "hat the
co(pany is e'pensing in !uture years
15. Provision !or inco(e ta'es; 14*0%0 (illion
15. 4'pected ta'; 2ederal inco(e ta'<%5&=>Pre)ta' inco(e ;19*516
16. 7hey dont pay #.$. inco(e ta'es on their !oreign earnings until they are repatriated
18. 12& then under 2&* in order to :eep their usiness "ith 9pple
19. 2012? 1*59% (illion@%5.8 illion; 4.5&
2011? 9%5 (illion@24 illion; %.9&
2010? 40% (illion@1% illion; %.1&
20. 2012? 1*20% (illion@%5.8 illion;%.%&
2011? 659 (illion@24 illion;%.2&
2010? 282 (illion@1% illion;2.6&
7hey are appro'i(ately the sa(e as the !oreign ta' rate
21. 9 (ajority o! their preta' earnings "ould e recorded as Irish susidiaries
22. 7rans!er o! title "as (ade "hile products are shipped to their country o! sale/allo"s
the( to use their ta' rates instead o! the #.$.
24. 2012? 56512 (illion@<12258A1059= (illion;2%.2&
2011? %8%15@<5882A699= (illion;20.1&
2010? 24498@<%%825A540= (illion;16.8&
25. $ince they hardly pay ta'es !or their !oreign susidiaries* #.$. raises their ta' rates
25. 40.4 illion, 1*59% (illion@40.4 illion;4.2&
26. Bo intention to repatriate any o! the !unds
29. Per!or(ing "ell
%0. 9 situation in "hich a ta'payer elieves its interpretation o! earnings recognition is less
strong than "hat the interpretation o! the I.$ is li:ely to e
%1.Ces/its clai(ing signi!icantly higher ta' ene!its than recogni1ed
%2. Its pro(oting do(estic jo gro"th and generating ta' revenue !or !ederal and state
govern(ents
%5. I "ould choose an e!!ective ta' rate o! so(e"hat D than 25.2& ecause according to the
three previous years* the trend see(s to e increasing slightly
%6. I! they used cash !ro( overseas then the #.$. ta' rates "ould di(inish the !unds* issuing
det has (uch lo"er interest rates proving ene!icial to the shareholders
40. In #.$. an:s and are centrally (anaged to pro(ote e!!iciency + o!!er the opportunity to
earn higher returns
41. 7hey are (ost suitale !or capital preservation and protection against currency
!luctuations
Part III
4%. 2/Ee!ore I thought they "ere in a "ay Fcheating the syste(G* ut no" that I understand
ho" they decided !or their inco(e to e ta'ed* I "ould do the sa(e i! I "as in their
position, they are si(ply (a'i(i1ing their pro!it "hich is the goal !or any co(pany
44. 2/9pple is oviously so(e"hat outside the spirit o! #.$. ta' regulations
45. 2/only so(e"hat help!ul ecause to (e they "ere 2/so(e"hat inco(prehensile ut
that (ay e ecause I have never truly loo:ed over ta' disclosures e!ore + need practice
45. 4/so(e"hat inade0uate, the testi(ony really allo"ed to see the ene!its