A Practical Guide to U.S. Taxation of International Transactions.

MICHAEL S. SCHADEWALD AND ROBERT E. MELDMAN, A Practical Guide to U.S. Taxation of International Transactions, Third Edition (Chicago, IL: CCH, Incorporated, 2000, pp. xii, 500).

Tax practitioners and students can use Schadewald and Meldman's text as both a basic reference book and

graduate international tax textbook. The book contains four parts: Basic Principles; U.S. Taxation of Foreign Income; U.S. Taxation of Foreign Persons; and International Tax Practice and Procedure. Published in May 2000, this edition includes current law through early 2000, and updates the two previous editions of the book. This edition is more extensive than the earlier editions having 130 pages more than the first edition.

Part I (Basic Principles) discusses such basic international taxation issues as jurisdictional issues, an overview of the U.S. jurisdictional system, definition of resident and nonresident aliens, and the foreign earned income exclusion. The final section of Part I introduces the reader to some of the basic international tax policy issues facing U.S. taxpayers.

Part II (U.S. Taxation of Foreign Income) covers basic international tax issues for U.S. taxpayers conducting business abroad. Part II's first two chapters cover the direct foreign tax credit, the deemed paid foreign tax credit, and the various foreign tax credit limitations. The foreign tax credit material includes more than just the traditional compliance issues. For example, the deemed paid foreign tax credit coverage includes not only calculation of the deemed paid credit, but also the filing requirements, and planning for the repatriation of foreign earnings as dividend payments. Chapter V focuses on transfer pricing. The text discusses both alternative transfer-pricing methods as well as information on the IRS reporting requirements, calculation of the transfer-price penalties, preparing transfer-pricing documentation, and developing a transfer-pricing strategy.

Part III addresses taxation of foreign persons and contains two chapters: foreign persons investing in the U.S., and dealing with foreign persons conducting U.S. business activities. Part IV discusses international tax practices and procedures, covering such topics as international examinations, IRS procedural tools in the international area, conclusion of an international examination, the appeals division, and the competent authority process. The authors cover these topics more thoroughly than do other introductory international taxation books.

Nine of the thirteen chapters include sample IRS tax forms, and also 35 different forms and schedules. Excerpts from two IRS publications are also included along with the complete U.S. Model Income Tax Treaty.

The book is well written and has sufficient detail to satisfy most tax practitioners, yet not so difficult as to place it beyond graduate tax students. Each chapter contains many references to the Internal Revenue Code and the Treasury Regulations. The text contains many well-written examples that are easy to follow and help explain tax law details. Faculty members who use this book in an academic setting may desire to supplement the materials with: (1) a selection of landmark cases in the international taxation arena and (2) a set of good international taxation problems.

This book would be a good starting point for faculty who teach introductory international taxation courses when combining the book with the aforementioned cases and problems. The level of topical coverage provides adequately the depth needed in an introductory course, yet, unlike some other texts, does not overwhelm the student. Many students may find the authors' comments about why particular topics are important in an international tax setting helpful in researching similar materials and cases.

In summary, although this book was originally written as a reference book for tax practitioners, it can also be a useful text for a faculty member who is teaching a survey-type international taxation course. This type of course is often found in graduate taxation programs offered by law schools and accounting programs.