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.1Recap
Let’s recap. A minimultinational is a small business that:
“Small” is relative. A minimultinational might have sales in the hundreds of millions or the hundreds of thousands.2
This series is for owners of minimultinationals.... continue reading
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
What do I mean by American minimultinational?
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.
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
Nonresidents often show up and sign contracts to buy U.S. real estate in their own names. Then, before the sale is complete, they set up a holding structure. They transfer the purchase contract to the holding structure, and the purchase is complete.
As I wrote a few weeks ago, transferring a purchase contract from a nonresident individual to a holding structure is a “disposition” of U.S. real estate. The result?
I received an email from Scott, a good friend who, well, does taxes in Mexico.
He had a question about an American couple in Mexico who are setting up a S de RL (Sociedad de Responsabilidad Limitada), which is similar to a U.S. LLC. One of the features of this type of entity is that it must have two owners. H and W. How convenient.
Mexico has community property laws for married couples, and Scott tells me that this S de RL is a community property asset of H and W.
Will this entity (S de RL) be treated as a corporation, partnership, or disregarded entity for U.S.... continue reading