American Jobs Creation Act of 2004

On October 22, 2004, President Bush signed into law H.R. 4520, the American Jobs Creation Act of 2004 (AJCA). This is a very large tax bill in terms of the number of tax law provisions and the size of the explanation. Some commentators have stated that this is the largest tax law in a number of years and the most significant for American corporations. It also makes substantial changes in various sections of the international provisions of the U.S. tax law.

The genisis of this law was to repeal the Extraterritorial Income Exclusion, which the World Trde Organzation insisted was in violation of the WTO trade agreement to which the US is a party. Retaliatory sanctions were in place in the form of excise taxes on USA exports to the European Union. However, in the legislative process, the bill was modified and amended to include many other international tax and business tax law changes.

In the coming months, I will do my best to explain the most significant parts of this new law and those explanations will be summarized in the JacobsReport -- my free email newsletter. My commentary will focus on the international sections of the tax law -- which apply to

New Disclosure Rules for Tax Shelter Transactions
controlled foreign corporations,
foreign financial account disclosure,
foreign tax credit simplification and reform,
repeal of the Extraterritorial Income Exclusion,
the use of offshore entities to hold deferred compensation assets,
reinvestment incentives to bring tax deferred income back to the US from offshore entities,
repeal of the overlapping provisions of the foreign personal holding company rules and the passive foreign investment company rules where these entities are also controlled foreign corporations,
the treatment of dividends paid by foreign corporations in relation to the 15% maximum rate on qualified dividend income,
the tax rules for individual and corporate expatriation, and
leasing transactions with offshore entities

Meanwhile, here are some the best Internet information resources I have found thus far. As I discover new and significant information about the AJCA, I'll post the links on this page.

I welcome suggestions from readers for other Internet information resources on the AJCA. You can send suggestions via email to jacobs @ offshorepress.com

Vern Jacobs

<>Conference Committee Report for HR 4520
http://waysandmeans.house.gov/Links.asp?section=1639

The House Ways and Means Committee on October 7 released the managers' statement on the conference committee report (H.Rept. 108-755) of H.R. 4520, the American Jobs Creation Act of 2004.

http://waysandmeans.house.gov/media/pdf/hr4520/hr4520conreptmgrsstatement3.pdf

<>BNA Summary of the American Jobs Creation Act (82 pages)
http://www.bnatax.com/tm/eti_tm_summary.htm<>

<>Commerce Clearing House Highlights of the American Jobs Creation Act http://tax.cchgroup.com/Tax-Briefings/2004-American-Jobs-QTF-Card.pdf

<>Heritage Foundation Commentary on the American Jobs Creation Act
http://www.heritage.org/Research/Taxes/wm359.cfm

<>Deloitte Overview of the American Jobs Creation Act of 2004 (53 pgs – PDF) http://www.deloitte.com/dtt/cda/doc/content/US_Tax_ETI041008.pdf

<>Oklahoma Society of CPAs on the American Jobs Creation Act

(Prepared by the AICPA) http://www.oscpa.com/?828

<> Thompson Hine Law Firm -- Summary (7 pages - PDF)
http://www.thompsonhine.com/news/nl/tax_october2004.pdf

<> Ernst & Young -- International Tax Alert (29 page - PDF)
http://www.ey.nl/