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May 25, 2018 - Phil Hodgen

Build Your Holding Structure Before You Sign a Purchase Contract

Hello from Singapore by way of Jakarta, and welcome to the Friday Edition. It’s all alt-country1 and international tax here, folks.

Go fire up Ribbon of Highway by Christy Hays on Ye Olde YouTube (or here on Spotify) then sit back and give this a read.

Build Your Holding Structure Before You Sign a Purchase Contract

For our literary purposes, you are a nonresident and noncitizen of the United States. You sign a contract to buy U.S. real estate, then think of tax planning and come to see me.

You decide on some kind of holding structure to own the real estate.... continue reading

Friday Edition
May 22, 2018 - Debra Rudd

How to Apply the Gain Exclusion for Covered Expatriates

We often mention that covered expatriates, who are subject to a deemed sale of all their worldwide assets (with a few exceptions), are permitted to exclude the first $700,000 or so of gains that arise from the deemed sale.

For someone hiring us to prepare their tax return, that is typically all they really want to know – “my exit tax is lower because I get to exclude some of this pretend income”.

It is rare that we talk about how to apply the gain exclusion, because that is the behind-the-scenes work that we do for our clients when preparing their tax returns.... continue reading

Expatriation
May 17, 2018 - Haoshen Zhong

How a Green Card Holder Might Avoid Section 965 and GILTI

How a green card holder might avoid section 965 and GILTI with a treaty election

Today’s post is a (sort of) followup to Phil’s Friday Edition post on 2018-03-16.

Here is the 1 paragraph summary to Phil’s post: In the 1990s, the IRS adopted regulation section 301.7701(b)-7, stating that if a US resident elects income tax treaty benefits for a nonresident, then he calculates tax as a nonresident, but he remains a US resident for all other purposes of the Code. In 2008, Congress changed the Code to say that if a green card holder elects income tax treaty benefits for a nonresident, then he ceases to be a US resident.... continue reading

Minimultinationals
May 11, 2018 - Phil Hodgen

Withholding when Nonresidents Own U.S. Rental Real Estate

Proving the Obvious

In a quick email exchange I had with Susan Brown Otto (hi Susan) we touched on a topic that deserves attention. The topic is not terribly difficult, but its existence points to a meta problem.

Susan’s question/comment was about the non-requirement of withholding that is required when nonresidents own U.S. rental real estate . . . sometimes. It’s counterintuitive, because the IRS loves withholding.

So often in tax law there is an answer that you know, intuitively, but you can’t put your finger on exactly why the answer is true. This is dangerous territory for tax advisors. I have done this: blurt out an answer only to find out my memory was faulty.... continue reading

Friday Edition
May 8, 2018 - Debra Rudd

How Expatriation Works: Just The Basics

How expatriation works is something we talk about with clients all the time, and it’s worth devoting a little blog space to a general description of the basic mechanics every once in a while.

Imagine we are now boarding an airplane and zooming up to 30,000 feet. Let’s see how the expatriation process works from 6 miles up.

But first… Some warnings

From this far up, we can see the mountains and oceans and rivers, but not the cars or trees or houses or people.

Because we are taking a very high-level view, we must ignore the details, the nuances, and all the little things that make this topic so complicated.... continue reading

Expatriation