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Jello Shot number 1.
Capital gains tax on real estate investments will more than double for some nonresidents if a new tax law is enacted.
Who specifically is at risk?
Nonresidents who use “disregarded entities” in their holding structures. This means a corporation which has elected (using Form 8832) to be ignored for U.S. income tax purposes.
Who REALLY needs to worry?
All of the folks on my mailing list who are trust officers — you people will have many, many structures that need to be examined and updated. Get ready. It’s going to be a fire drill.
Why does this risk exist?
The Federal government is proposing new tax laws which will largely eliminate our ability to use disregarded entities in holding structures for U.S. real estate investments by nonresidents.
What to do?
Take inventory. Are you at risk? If so, create your blueprint for what to do if/when this tax law is enacted. Watch Congress and the President and see whether the proposal becomes law.
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