Portland Chapter update.

• Position: Chapter News

January Meeting

The January 14 meeting of the Portland Chapter began with a federal audit roundtable workshop moderated by Chapter member Brad George of Oregon Steel Mills. Members exchanged information about their current audit status, the kinds of issues being raised by the IRS, and effect of some of the new audit initiatives. While there is much room for improvement, the consensus among the participants was that some of the IRS's process improvements have contributed positively to the audit process. There is evidence of a greater willingness and ability on the IRS's part to settle issues at the exam level.

The dinner speakers for the evening were Stuart M. Ison and John S. MacArthur of Ernst & Young. Ernst & Young has recently opened an office in Portland after being absent from the city for a number of years. Messrs. Ison and MacArthur discussed "Recent International Tax Developments Affecting U.S. Multinational Corporations."

Mr. MacArthur addressed the membership first saying that it could be a wild year legislatively for U.S. tax matters. President Bush's Economic Stimulus Plan, as well as international tax reform resulting from the WTO's pressure to repeal the ETI regime, could provide some radical changes in the area of U.S. taxation of multinational companies. Mr. MacArthur pointed out that the dividend exclusion provisions and retention of the 30 percent withholding tax on dividends paid to foreign recipients tilts the United States tax system toward U.S. investment. The speaker added that the bill is an "economic stimulus" bill, not a "reconciliation" bill, although recent articles in the Wail Street Journal indicated the bill could change direction. Mr. MacArthur went on to discuss the excludable dividend account (EDA) in some depth and suggested that the dividend exclusion may put market pressure on publicly held companies to pay dividends.

Mr. Ison went on to cover some of the global competitiveness proposals, such as repeal of CFC rules on foreign base company sales and income and look-through treatment of payments between related CFCs and FPHCs. He also discussed the Boeing Co. case where taxpayer argued that R&D should be allocated and apportioned based upon product groups, but the government argued that R&D should be allocated and apportioned based on SIC categories. The Ninth Circuit ruled in favor of the government. The case was argued before the U.S. Supreme Court on December 9, 2002. (Editor's Note: The Supreme Court...