UH Law Center tax professors outline Tax Cuts and Job Act's ramifications on foreign investments

University of Houston Law Center Professor of Practice Denney Wright ’93 addresses an audience of tax attorneys at a recent discussion.

University of Houston Law Center Professor of Practice Denney Wright '93 addresses an audience of tax attorneys at a recent discussion.

June 1, 2018 — University of Houston Law Center Professor Bret Wells and Professor of Practice Denney Wright '93 examined how U.S. tax reform has altered international investments recently at the Law Center.

More than 40 Law Center alumni and tax practitioners attended the presentation.

Among a number of topics, Wells discussed how the Tax Cuts and Jobs Act provided revisions to Section 965 of the U.S. tax code with a transition tax.

"The transition tax is a brand new tax that applies to a specified foreign corporation," Wells said. "If a U.S. person owns a specified foreign corporation, which is any company that has a 10 percent U.S. shareholder, then any amount of the earnings and profits from 1986 to 2017 are going to be subject to a one-time transition tax.

"If those earnings were invested in active business assets, then the rate is at 8 percent. If the corporation had large or excessive financial assets, then the one-time transition tax is 15.5 percent."

Wright provided additional comments on tax reform's effects on energy investments.

"The good news as an energy tax lawyer is not a lot changed in energy-specific sections and provisions," Wright said. "There are lower tax rates for individuals, but for corporations it's dramatically lower at 21 percent."

Attendees received 1.5 hours of Texas continuing legal education credit.

The Law Center hosted a previous session on tax reform in March, with two more planned in the 2018 fall semester.

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