Andrew Mitchel LLC

International Tax Blog - New and Interesting International Tax Issues

Software Classification Flowchart


Today our sister website ( published a new flowchart dealing with rules for classifying transactions related to computer programs under Treas. Reg. § 1.861-18.  The flowchart is available for purchase as a PDF file.

The flowchart addresses the four types of transactions in the regulations, including services, know-how, copyright rights, and coyprighted articles. now has a total of 14 flowcharts, including:

  1. Section 152: Dependents (Free)
  2. Section 302: Distribution in Redemption of Stock (Free)
  3. Reg. 1.861-18: Classification of Transactions Involving Computer Programs
  4. Sections 871(h) & 881(c): Portfolio Interest Exception
  5. Section 877A(g): Covered Expatriate Under Section 877A(g)
  6. Section 954(d): Foreign Base Company Sales Income
  7. Section 954(e): Foreign Base Company Services Income
  8. Section 956: Investments in U.S. Property
  9. Section 2501: U.S. Gift Taxes on “Cross-Border” Gifts
  10. Foreign Trust & Gift Reporting Under Sections 6048 & 6039F
  11. Section 7701(b): U.S. Individual Income Tax Residency
  12. Permanent Establishment: Article 5 of the OECD Model Income Tax Treaty
  13. Limitation on Benefits: Article 22 of the U.S. Model Income Tax Treaty
Tags: Charts - Flowcharts