Fight Club and Outbound Trust Migrations

Webinar on April 24, 2015 I am doing a webinar on April 24, 2015 for noncovered expatriates and how to handle the tax side of things when you give up your U.S. citizenship. Take a look at the agenda and sign up here. Greetings from Washington DC Sorry. I jumped on a plane and didn’t […]

Fight Club – Statistics and Income Tax

Travel I ran into a friend tonight who subscribes to this list (hi, Jimmy) and he expressed surprise that I was in the USA. Yep. And it makes me itchy if I’m not flying somewhere frequently. I am at home nonstop through May 17 — because of family stuff, mostly my wife’s business is in […]

Donald Rumsfeld, Unicorns, and Tax Homes for Digital Nomads

Greetings again, digital nomads. This week we’ll go back to basics: the foreign earned income exclusion. Form 2555.

I’m going to show you an element that is almost universally ignored by everyone. They’re probably right to ignore the problem, but it is important to know that a problem exists, and why you can safely ignore it. This week’s episode is buried, in other words, somewhere in Donald Rumsfeld’s brain. I aim to take an known-unknown and make it a known-known, so you can then ignore it with impunity.

Choosing among alternate realities (the consultant edition)

This week’s Edition is triggered by an email I received from a reader. This is a nonresident and noncitizen of the United States who works in the United States from time to time – a consultant.

I have a US company – an LLC. I am considering a “check the box” election to convert the LLC to an S corporation, owned by a non-US company that I control. What are the pros and cons of this corporate status?

N.B. I am calling him a consultant because, well, we are hiding his identity. You can find him on the internets quite easily. But, boiling away the specifics, the reality is that he is performing a service, doing so in the USA, and getting paid. Exactly what is done is irrelevant.

Hi, it’s Friday (and aren’t PFICs a PITA?)

Let’s take a common situation: you are a U.S. citizen living abroad, married to a non-U.S. citizen. You buy mutual funds for investment, because that’s what sane people do when they invest their money. These are foreign mutual funds because, after all, you live abroad.

What happens if you give those foreign mutual fund shares to your non-U.S. citizen spouse?

Why you can’t take a tax deduction for that (FIRPTA edition)

We (the team here at HodgenLaw PC) will be presenting a series of four webcasts for the California Society of Certified Public Accountants. I am preparing the first set of webcasts on a topic I really like – U.S. real estate investments by nonresidents. Shameless sales promotion: you should sign up for the CalCPA webcast.

This week’s Friday Edition is spawned by me being hip-deep in that topic.

TL;DR

Nonresidents who own vacation homes in the United States cannot take tax deductions for any of the costs of ownership.

MacBook Pro + Bank Account = PFIC

The Passive Foreign Investment Corporation and Controlled Foreign Corporation rules are the government’s countermeasures against a logical tax strategy–tax deferral.

If your business operates through a foreign corporation … you probably have a latent Passive Foreign Investment Corporation on your hands, or (“less bad”) you probably have a Controlled Foreign Corporation.

The Buckets and Pipes Theory of Tax Planning

Saturday morning in Singapore I will be talking to about 30 entrepreneurs about tax stuff – a bit for themselves, but mostly about their businesses. And that means talking about cross-border tax strategies. “Can I do what Apple does?”

The answer is yes. It’s just not cost-effective until you are operating at scale. For younger companies, the better strategy is to optimize for simplicity. Spend less money on tax brains and pay a bit more in tax. Stay away from the shiny.

Simplicity will make your business nimble, and your time and attention will be directed toward what really matters: creating customers. An entrepreneur’s time and attention is worth far more than taxes saved.

You don’t get wealthy by paying less tax. You get wealthy by creating customers. Look at Apple. Of course Apple is saving tax with clever international tax strategies. But first, painfully and over a long time, they created customers.

Singapore for a Weekend Mastermind

I’m headed to a weekend mastermind group sponsored by Dynamite Circle (I am a member), which is a service provided by Ian and Dan of Tropical MBA.

It’s worth your while reading the TMBA blog and listening to the podcast. Even if you do not fit the “location independent lifestyle” or “digital nomad” profile, there are useful things to learn.

Dan and Ian have done something impressive. They transformed themselves from from two random guys standing around in a parking lot in North San Diego County to the owners of very real and profitable businesses. The best part? These are businesses that they can operate from anywhere on the planet that they want to be (Ian = Austin and Dan = Philippines right now).

Attending the mastermind will be a group of 30 entrepreneurs who have reached a certain level of success.

I’m showing up. I have something to share, and something to learn.

Wherein I Violate the First Rule of Fight Club

Let’s imagine a future risk. Five years from now you will be sued. Extremely generic business litigation. Nothing special, except if you lose the lawsuit your company will be wiped out. High stakes, normal risk.

You will be considerably less stressed as you go through the lawsuit if you know that a few million dollars sits in a bunker, safe, waiting for you after the dust has settled – even if you lose the lawsuit.

How do you go from cocktail party conversation to done? Today I am going to cover the first hurdle. You can’t move forward until you solve this hurdle.