This post is a collection of questions and answers from Debra Rudd’s February 12, 2021 International Tax Lunch webinar on Asset Taxation During and After Expatriation. The below questions were asked by viewers of the webinar, and answered by Debra during the webinar. Some questions have been slightly edited for clarity. This post is not…
This post is a collection of questions and answers from Debra Rudd’s January 15, 2021 International Tax Lunch webinar on the Net Worth Test. The below questions were asked by viewers of the webinar, and answered by Debra during the webinar. Some questions have been slightly edited for clarity. This post is not legal advice….
Here is a simple explanation of “tested interest expense” — one of the variables you will compute when calculating how much global intangible low-taxed income will be included in a U.S. shareholder’s gross income because of IRC §951A(a). The example will show you how to prepare both forms, and what the numbers mean, including how…
On July 10, 2020 I will present a live Section 962 webcast that goes into excruciatingly painful detail about preparing a Section 962 tax return. This is the first draft of my notes for the part of the presentation that talks about where the rubber meets the road: the Section 962 Statement. I probably won’t…
When you expatriate, you are required to declare all of your assets and liabilities and compute your net worth. If your net worth is above $2 million, you are a “covered expatriate” and hilarity ensues. What goes on your balance sheet? Let’s talk about what goes on your Form 8854 balance sheet. What, specifically, is…
In late 2017 our Trusted Servants(TM) in Congress blessed us with a new tax law. Among other features, the new law contained a spectacular Come to Jesus that absolutely hammered our minimultinational clients. I speak, of course, of Section 965. Section 965 Consider a foreign corporation owned by an American living abroad. The foreign corporation…
Dadon v. United States: Full Case I have posted the full text of the case Dadon V. United States to make it easy to cross-reference to my previous blog post discussing what happened here. Don’t treat this version of the opinion as absolute Gospel. I might have messed something up converting the file for posting….
The World’s Worst Tax Strategy “How will they ever find out?” It’s a classic tax-planning strategy that works very well, until the day it doesn’t work. Then it fails spectacularly. Children do this all the time. They say “Dad said I could stay out until midnight!” to Mom and “Mom said I could stay out…
Covered expatriates are subject to exit tax. For most types of assets, a pretend sale applies, and the covered expatriate must pay tax on gains (after an exclusion is applied) from the pretend sale of all their worldwide assets. This is referred to as the mark-to-market regime. There are a few types of assets to…
All covered expatriates must pay exit tax. The exit tax is computed differently depending on the type of asset. Over the last two months, I discussed two types of exit tax: the mark-to-market regime, and the tax on specified tax deferred accounts. For most assets, the mark-to-market regime applies. Specified tax deferred accounts are an…
Recently the IRS announced that it will be rolling out a compliance initiative for expatriates. There is no information about how this program will work just yet. Here is what the IRS news announcement says, and this is all we have to go on at the moment: “U.S. citizens and long-term residents (lawful permanent residents…
The exit tax applies to everything a covered expatriate owns. The method of calculating tax, however, differs depending on the asset involved. For most types of assets, the mark-to-market tax applies. In the previous chapter, I discussed the rules for how to calculate the mark-to-market tax, the exclusion that applies, how to value your assets,…
Last month, I explained how to determine if you are a covered or non-covered expatriate. The major difference between covered and non-covered expatriates is that covered expatriates must pay exit tax, and non-covered expatriates do not. The exit tax applies to everything a covered expatriate owns. The method of calculating tax, however, differs depending on…
There are two types of expatriates: covered expatriates, and non-covered expatriates. Covered expatriates must pretend that they sold all their worldwide assets on the day before expatriation and pay tax on the pretend gains. There are a few types of assets to which other special tax treatments apply if you are a covered expatriate, as…
Last month, I discussed how long-term residents can become expatriates. Now I will overview the tax paperwork expatriates will need to file. All individuals who cease to be taxed as US persons file tax returns to signal that change in status to the IRS. Typically, this happens on a dual-status tax return: for part of…