U.S. citizens are subject to tax on their worldwide income no matter where in the world they reside […]
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Category: Blog
U.S. Taxation of Foreign Nationals Working in the U.S., Including Planning Opportunities
As multinational corporations continue to expand their operations globally, they must navigate a complex web of tax regulations and laws. It is essential that they take a comprehensive approach to tax planning and not make decisions solely based on the U.S. tax implications. […]
U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas
U.S. citizens and U.S. tax residents (“U.S. Persons”) are taxed in the United States on their worldwide income no matter where in the world they reside. The U.S. taxes based on citizenship, which is different than almost all other countries in the world that tax based on residence.
This often catches U.S. Persons who have never lived in the U.S. or have lived abroad for a number years by surprise. Any U.S. Person living abroad with income for tax year 2022 above the following thresholds must file a U.S. tax return:
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Tax Implications of Exiting a Controlled Foreign Corporation
The income of a foreign corporation is not subject to federal corporate income tax unless the foreign corporation has income that is effectively connected with a U.S. trade or business (or permanent establishment as provided in an applicable tax treaty) or consists of certain types of U.S. source fixed or determinable annual or periodic income (“FDAP”). A foreign corporation’s income from operations outside the U.S. is not subject to U.S. corporate income tax unless special rules apply. […]
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Tax Implications of Exiting a Domestic C Corporation
Wealthy international families are choosing U.S. situs trusts over the typical offshore trust jurisdictions. In choosing a trust jurisdiction, the extremely wealthy seek the best security, most privacy, best income, lowest taxes, and lowest costs. While the extremely wealthy often utilize these trust structures, they are in no way limited to the extremely wealthy and are often used by high-net-worth individuals (i.e., more than a million in assets). For many, it is also important to diversify their asset holdings outside their country of residence. Powerful trust laws, tax savings, asset protection and privacy, as well as solutions to political and regulatory concerns, all combine to make the U.S. the trust situs of choice. […]
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Why Are the Global Elite Using U.S. Trusts? (It’s not to get their head on Mt. Rushmore)
Wealthy international families are choosing U.S. situs trusts over the typical offshore trust jurisdictions. In choosing a trust jurisdiction, the extremely wealthy seek the best security, most privacy, best income, lowest taxes, and lowest costs. While the extremely wealthy often utilize these trust structures, they are in no way limited to the extremely wealthy and are often used by high-net-worth individuals (i.e., more than a million in assets). For many, it is also important to diversify their asset holdings outside their country of residence. Powerful trust laws, tax savings, asset protection and privacy, as well as solutions to political and regulatory concerns, all combine to make the U.S. the trust situs of choice. […]
Getting the Tax on Qualified Small Business Stock Correct
With the reduction of the corporate income tax rate from 35 percent to 21 percent and the ability to exclude a significant amount of gain on the sale of Qualified Small Business Stock (“QSBS”), many startups choose to organize as C corporations. Many practitioners believe that gain recognized above the excludible amount is not eligible for regular long-term capital gains and is taxed at a 28 percent tax rate. This is simply not the case and this misinterpretation has cost founders and other investors significant amounts in additional tax. It is important that the tax advisor has a thorough understanding of the QSBS rules including the applicable tax rates for certain gain recognized on the sale of QSBS stock. […]
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Clowns of the CRUT (Part 2 of 2)
This is Part 2 of the newsletter on charitable remainder unitrusts (“CRUT”) which is a common planning technique for the charitably inclined high net worth family. As compared to immediate taxation on the gain on the sale of a highly appreciated asset with after tax proceeds being subject to tax annually, the CRUT can allow for superior returns where the distributions to the lifetime beneficiaries will occur over a sufficient period of time even though the remainder is distributed to charity. This is the power of tax free diversification paired with tax free growth inside the CRUT. […]
Clowns of the CRUT (Part 1 of 2)
A charitable remainder unitrust (“CRUT”) is a common planning technique for the charitably inclined high net worth. The CRUT allows for the tax-free liquidation of a highly appreciated asset, the tax-free growth of the assets inside the CRUT, with the income building inside the CRUT being taxed to the extent of distributions to the lifetime beneficiary. As compared to immediate taxation on the gain on the sale of a highly appreciated asset with after-tax proceeds being subject to tax annually, the CRUT can allow for superior returns where the distributions to the lifetime beneficiaries will occur over a sufficient period of time even though the remainder is distributed to charity. This is the power of tax-free diversification paired with tax-free growth inside the CRUT. […]
New Precedent of Finland Supreme Court – Criminal Penalties for Unreported Foreign Investment Income
On February 27, 2023, the Supreme Court of Finland set a new precedent (KKO:2023:15) in their ruling concerning the application of penalties for tax evasion (tax fraud), when private individuals fail to report investment income from foreign sources on their Finnish income tax returns. […]