Minimultinationals Chapter 02: It’s All Taxable to You

All of the profits generated by a minimultinational enterprise will be exposed in real time to the U.S. tax system. Chapter 2 explains why.

We will talk about how the U.S. taxes those profits in future installments of this book. Different business structures have different tax results.1

What’s a minimultinational?

Let’s recap. A minimultinational is a small business that:

• Has U.S. owners; and
• Generates its profits outside the United States.

“Small” is relative. A minimultinational might have sales in the hundreds of millions or the hundreds of thousands.2

Who this is for?

This series is for owners of minimultinationals.... continue reading

Exit Tax Book Chapter 3: How a Green Card Holder Becomes an Expatriate

Last month, I talked about citizens and how they can renounce their US citizenship. This month, I am focusing on another group of people who can become expatriates, known as long-term residents.

“Long-term resident” is a special term under US tax law. It looks and sounds very similar to “lawful permanent resident”, which is a term that is used to describe a type of US immigration status.

Everyone who has the immigration status of being a lawful permanent resident is automatically a US resident for tax purposes, and must pay tax on their worldwide income. Someone who has had that status for “too long” (as defined by the Internal Revenue Code) becomes a long-term resident.... continue reading

Exit Tax Book Chapter 2: How a U.S. Citizen Becomes an Expatriate

Last month, we covered a general overview of the exit tax, expatriation, and the distinction between covered and non-covered expatriates.

For the February issue, we will focus on the ways in which a US citizen can expatriate, and on what date that expatriation becomes effective.

Who is a US citizen?

The Internal Revenue Code, or tax law, definition of a US citizen points to the definition from immigration law. This is the tax law definition of a US citizen: 1

Every person born or naturalized in the United States and subject to its jurisdiction is a citizen. For other rules governing the acquisition of citizenship, see Chapters 1 and 2 of Title III of the Immigration and Nationality Act (8 USC 1401-1459).

Minimultinationals Chapter 01: Overview of the Series

American minimultinationals are small (for various definitions of “small”) business enterprises subjected to the U.S. tax system.

There are many ways that a minimultinational becomes exposed to the U.S. tax system. Doing business in the United States is an obvious way. If you have an office or employees in the United States, some portion of your business profits will be taxed.

I focus here on businesses that operate mostly or entirely outside the United States but are owned by U.S. citizens or residents. This factor alone–ownership by a U.S. person–means that the business profits will be exposed to U.S. income tax, even if the business never operates in the United States.... continue reading

American Minimultinationals: An Introduction

What do I mean by American minimultinational?

Multinational

A multinational business operates in multiple countries, exposed to multiple tax-hungry governments. Apple. General Motors. Exxon.

A minimultinational is a multinational business, but smaller.

• Do you have 100 people in a cubicle farm working on your international tax stuff? You’re a multinational.
• Is that thought ludicrous bordering on insane? You’re a minimultinational.

American

An American minimultinational is one that is owned by a U.S. citizen or resident.

Merely by having a U.S. citizen or green card holder as an owner, a business that operates 100% outside the United States is a multinational business.... continue reading