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January 22, 2016 - Phil Hodgen

Nonresident investors, U.S. real estate, and secrecy

Hi from Phil, and welcome to the Friday Edition. Every other week you get something about International Tax from me. And every now and then, a Jello Shot from a random airport somewhere. If you want these to stop, just click the unsubscribe link at the bottom of this email.

Nonresidents, Secrecy, and U.S. Real Estate

Your U.S. government (say that in your best reverberating sports stadium announcer’s voice, the way the guy says “Your Los Angeles Dodgers”) is on the move again.

More “transparency for thee, but not for me” stuff from Your Public Servants.

This time, it is aimed at nonresidents who buy U.S.... continue reading

March 29, 2015 - Phil Hodgen

Non-U.S. Software Company, U.S. Customer, and Withholding Tax

I received an email via Hackernews and figured I would answer it here, because this is a common question. This is likely to be the first of many discussions of this topic. For what it is worth, my username on HN is philiphodgen.
Question
Lightly edited (and ignoring the "how much would it cost to hire you?" question), here is what X.Y. (not his real initials, of course) on HN asked:
I am a $COUNTRY resident running a Hong Kong based software business, and a US based client tells me he needs to withhold 30% foreign taxes on the payments made to my company. I am sure this is not the first time you have seen this, and I wonder what's the typical procedure in this case. (There are no mentions of taxes in our contract, it is first time both parties have engaged in this type of transaction.)

February 9, 2015 - Phil Hodgen

Nonresidents, Real Estate, and Managing Tax Risks like an Investment Analyst

Our clients are wealthy individuals and families. People.
People die.
Even people who own U.S. real estate.
This episode of the Friday Edition is about an investment risk that pretends to be a tax problem. Sometimes this investment risk is best managed with ideas from a tax lawyer. But not always.

September 11, 2013 - Phil Hodgen

Electing Resident Alien Status Under Section 7701(b)(4)

[Note:  I am preparing the course materials for an all-day program I am teaching for the California Society of Certified Public Accountants on the taxation of multinational families.  This is a portion of the handout I am writing.]

You do not have a green card, and you were not in the U.S. enough days to meet the substantial presence test.  You want to be a U.S. resident for income tax purposes.  Here is how you do it, by making a special election under Section 7701(b)(4) of the Internal Revenue Code.

Why

This election is used by nonresident aliens who become residents of the United States after the middle of the year, and do not hold a green card. ... continue reading

June 13, 2013 - Phil Hodgen

Step up in basis for nonresident’s assets in irrevocable trust

What “basis” is

One of the continuing mysteries of life involves the concept of “basis”. Think of basis as your acquisition cost. This is essential in calculating your capital gain tax after selling an asset. Capital gain is the difference between the sale price and your acquisition cost. The higher your basis — or acquisition cost — for an asset, the lower your capital gain (and therefore capital gain tax) will be.

Here is an example:

A person bought a piece of land 20 years ago for $100,000, and now it is worth $1,000,000. If that person sells the real estate today, the capital gain would be $900,000 ($1,000,000 received from sale minus $100,000 acquisition cost).

... continue reading