Today’s post is for individuals living abroad who file their tax returns on June 15 and who have deemed repatriation income from their foreign corporations under section 965.
A quick introduction to section 965: In December of 2017, Congress passed laws that changed the US taxation of foreign income significantly. One of these laws is section 965.
There are many nuances to section 965, but here is the short version that covers what we need today: If you are a US citizen, green card holder, or other resident, or you are a US entity; and you own at least 10% of a foreign corporation, you might have a lot of income from the deemed repatriation of your share of the foreign corporations’ accumulated profits since 1986.... continue reading
Hello from Singapore by way of Jakarta, and welcome to the Friday Edition. It’s all alt-country1 and international tax here, folks.
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
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
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
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