April 28, 2017 - Phil Hodgen

Snatch Form 2555 Victory from the Jaws of Procrastination Defeat?

Snatching Victory from the Jaws of Defeat

You messed up, and time has gone by. You wanted to claim the foreign earned income exclusion on a tax return, but the filing deadline for that tax return was more than a year ago.

You are very late. Maybe you filed a tax return and missed making the claim for the foreign earned income exclusion. Maybe you did not even file a tax return at all.

Let’s talk about how you can claim the foreign earned income exclusion. To do this we will talk about the rules, and a recent Tax Court case that demonstrates the rules in action.... continue reading

Friday Edition
April 27, 2017 - Phil Hodgen

Redfield v. Commissioner (U.S. Tax Court Memorandum Opinion, 26 April 2017)

This Tax Court Memorandum opinion is currently only available on (extremely overpriced and God-awful UI) Lexis via Tax Notes Today. (How do you take something terrible and make it worse? Lexis Advance is your answer).

I do not see the opinion anywhere on the Tax Court’s website. In order to make it available to everyone, I am posting it here.

The opinion demonstrates the procedural aspects for filing a late Form 2555.

RespondentUNITED STATES TAX COURTFiled April 26, 2017

Damon Aaron Redfield, pro se.

Jeffrey E. Gold and Stephen C.... continue reading

Americans Living Abroad
April 25, 2017 - Phil Hodgen

U.S. Resident Status After Expatriation?

Becoming a Tax Resident Again

Sometimes people who expatriate — give up their U.S. citizenship or green cards — want to visit the United States. This might be for business reasons, family reasons, or just to have some fun.

Here’s how to keep that hard-won status of “not a U.S. taxpayer”, even if you return to the United States after expatriating.

Reader C inspired the topic in an email to me:

It was my understanding that once I have given up my citizenship I would be treated like any other foreigner ie I could stay in the US for up to 60 days assuming I had the appropriate visitors visa.

... continue reading
April 20, 2017 - Haoshen Zhong

PFIC Problems when Pooling Stock Reward

Pooling your stock reward

We got a fairly complex question about a US person pooled his stock reward with his coworkers. By doing so, the US person created a potential PFIC problem.

This post is a brainstorming session on how the US person might get out of his PFIC problems.

The scenario

Here is the scenario:

I am a manager of a private foreign business. In advance of an upcoming IPO, the private foreign business offered its managers the chance to buy shares in the top level parent corporation.

For the purpose of pooling our resources, the managers formed a foreign corporation (manager holding company) and bought shares of the parent corporation in the name of the manager holding company.

... continue reading
April 14, 2017 - Phil Hodgen

Nonresident? Have a U.S. LLC? There’s a New Form to File

New This Year: Form 5472 for U.S. LLCs

Nonresidents (human and otherwise) who own assets in the United States may face a new paperwork requirement, starting this year.

Nonresidents who own 100% of U.S. limited liability companies are now required to file Form 5472.

Form 5472 tells the U.S. government the name of the ultimate beneficial owner, and reports transactions between the LLC and related people.

This new requirement exists so the U.S. government can collect information about you, in order to share it with the government of your home country.

For most people, the first time they will need to file this form is in 2018, for the 2017 calendar year.... continue reading

Friday Edition