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Provocative International Tax News

Best Country for Tax Inversion and Starting an Offshore Business? I looked at tax rates,  the type of commercial laws and supply of English speaking well educated work force.  Here is where to save taxes.  Learn how small international business are avoiding taxes with my book, International Taxation in America for the Entrepreneur.

International tax planning

Small business are now reaping big tax savings.  Importers, exporters and e-commerce business can use the same loopholes as big business. I wrote my book to teach you these loopholes in an easy two hour read.

But, I did more.  I had an audiobook created.  It downloads onto your smartphone so that you can listen while you are commuting.   Get the 2016 edition of  International Taxation in America for the Entrepreneur for $9.50 at Amazon on this link.  

id theft, identity theft IRS refund, IRS refund, brian dooley,

Tax planning and saving taxes does not work when you IRS deposits are stolen. Use the “Safe Lock” to protect yourself.

Protect your tax refund from ID thieves with the free “Safe Lockon this link.  Until the Obama’s Attorney General Holder was robbed twice, the Administration did little.  Then they got Michelle’s Obama’s social security number.

Local drug gangs have turned into tax refunds thieves.   60 Minutes reported that they have “laptop parties” where they get together and chit chat as they steel your money.   Often they have a friend or a mole working at a doctors office. The mole gets your information.

saving taxes, how to save taxes, tax planning,

Saving taxes with an IRS approved tax plan is called a private letter ruling.

International Gift Tax Plans with this IRS internal letter on this link. Fantastic legal tax avoidance for the foreign person with family in the U.S. is explained in this letter.

  • Avoiding state income taxes this new IRS  designer  Nevada trust.  IRS tells how to use your Nevada corporation as your trustee to legally stop paying state taxes on your investment income. Here’s what’s happeningon this link.

New- Saving international taxes with this letter from the U.S. Department of the Treasury letter to the U.K. tax authorities on tax planning in the U.S. for UK and EU companies.

Tax planning, with the Supreme Court common tax laws

Tax planning with Supreme Court common tax laws

18th Century Supreme Court case destroys IRS tax penalty law. Using this case, the Tax Court gave the IRS a big defeat.  Here is what happen.   The Supreme Court is the “law of the Land”.  It rules over the IRS and Congress.   

It works both ways.  The blog on this link explains the most missed Supreme Court Doctrine use by the IRS to blow up this offshore plan.

international tax planning, international, tax, planning,

International tax planning and international tax savings with this Treasury Department report. 

The U.S. Department of the Treasury (a branch of the White House) issued a secret report on tax savings international tax plans that the IRS cannot stop.

They reported the successful foreign tax plans of international businesses. We have obtain a copy.  It is on this link.   Here you will learn the legitimate foreign tax plans that Congress likes. 

offshore trust, foreign trust, nevada trust, estate planning trust, esbt,      Since the Middle Ages, the wealthy have capitalized on trusts to avoid paying taxes. During the Great Crusades, upon the death of a knight, his entire estate went to the king. 

Nine hundred years later, things have not change much except the ‘king” takes only half.

Trust are the most effective tax tool. International tax planning should start with a Nevada trust to own the foreign company.  Learn trust tax planning and asset protection on this easy to read blog post.    It has  the blueprint for successful trust tax planning.   IRS memo on  assets protection and tax planning with an offshore trust.  Get it now on this blog post.

internet tax planning, saving taxes, cloud tax planning ,

Saving taxes with the cloud based

Cloud tax planning: Learn how businesses are using the cloud to save taxes on this link.  E-commerce businesses are avoiding state income taxes and in some cases deferring U.S. taxes.

Be an IRS tax wizard with our new custom Google search, below .  I personally programmed this custom Google app to read 400,000 pages deep inside the IRS’s web site and the tax court’s web site.

Tax Planner Goof Lost $7 Million Interest Expense for Foreign Corporation

tax planning, saving taxes, how to save taxes, tax court

Tax Court explains great tax planning in this case.

Wow, these guys missed the concept of “bona fide” debt.  If their is no debt, then, of course, there is no interest expense.

It is worse in this case.  A foreign corporation had loaned the money (in question) to its U.S. subsidiary.  When related party debt exists, the Tax Court allows the  more IRS leeway in attacking the taxpayer.

Foreign lenders have a special tax break.  It is called “portfolio debt”.  Interest income paid on portfolio debt is U.S. tax free.

Because the parties were related, the payment was reclassified as a dividend (and not interest). This made the payment a taxable dividend.   The tax planning was so bad, that the Tax Court sustained an IRS penalty.

So, what is this concept of “bona fide debt”?

Is your CPA or attorney even aware of the concept?
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Using Foreign Trust to Protect Your Assets and Avoid Taxes

offshore trust, foreign trust, nevada trust, estate planning trust, esbt,Way before trusts were a key vehicle for estate and income tax planning, trusts protect assets. When I say “Way before…”, I mean a 1,000 years before. Trusts started with the Great Crusades (there was more than one Crusade and they last for almost three centuries).

Despite their importance, the tax code does not define a trust. The IRS has a hint of a definition on a regulation.

This regulation defines the term “trust” an “arrangement” whereby trustees take title to property for the purpose of protecting or conserving it for beneficiaries under the ordinary rules applied in chancery or probate courts.

So, let us stop here with the words “take title to property”. A nominee takes title to property and is not a trustee. You can learn how to save taxes with a nominee arrangement on this link.

America has trusts because our mother country is England. Trusts were “invented” during the Great Crusades. Knights went off to the Middle East. If they returned, it was after many years. If you died, the King took all your land to restributed it to another knight or lord. To protect the wife and children, the knight would place the title of the land in the name of his best friend. Often the King would not know that the knight died because he did not return.

The duties of his best friend were decided by court cases over the last ten centuries.

Under IRS regulations, the classification of an arrangement as a trust is resolved by examining whether the arrangement protects assets under the law of equity for beneficiaries. As you can see, protecting assets is a key part of a trust.

All trusts can protect assets for everyone except for the settlor. When the settlor includes himself as a beneficiary, the trust is called a self settled trust. A few states and a few countries have a law that allows a self-settled trust asset protection to the settlor.

IRS CONCERN ABOUT FOREIGN TRUSTS. THEY JUST AREN’T SURE WHY.

While the trust is a well-recognized estate-planning creature of the legal system, the IRS has expressed its concern about trust arrangements that abuse the tax system. The IRS fears that some trust arrangements are not acceptable and they avoid taxes. The IRS collects information on Form 3520-A. This form tells the IRS nothing.

Oh yes, the IRS knows that the Form is useless. The American Institute of CPAs sent the IRS a long letter with suggested improvements. The IRS promptly put the letter in the “circular file” aka trash can.

INTENT OF CONGRESS — IS TO  ALLOW FOREIGN  TRUSTS

While the IRS has concerns about the misuse of trusts, and in particular foreign trusts, Congress responded in 1974 and 1976 by deciding, essentially, that foreign trusts will not be prohibited.
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Foreign Investors Learn Why a Corporation is U.S. Death Tax Trap

The problem for the non-resident alien is that their estate tax exemption is $60,000 and not $5.3 million (as it is for Americans).   And there is one more problem… the U.S. estate tax planner.  While the U.S. has an tax on the estate, other countries tax the recipient.  This tax is called an “inheritance tax”.

Thus the  American tax planner also must know “international inheritance tax planning” for the foreign country of the investor.

They advise the nonresident  alien (the term for estate and gift taxes is “non domiciled“) to own their U.S. investments and U.S. real estate through a foreign corporation (such as a Panamanian company or a British Virgin Island company).  

Since the 1950’s, this tax plan has failed.  The U.S. courts have ruled for the IRS (more on these cases on this link).  These court cases focused on  the power to revoke (section 2038) and the right to the corporate dividends (section 2036).  These tax laws  required the assets owned by the foreign entity to be included in the deceased’s U.S. taxable estate

The best estate tax planning method for the foreign investor involves a trust.   Here is a link  on the basics.  In Europe and the United Kingdom are subject to an inheritance tax.  Estate taxes and inheritance differ.  This difference challenges international inheritance tax planners. 
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Controlled Foreign Corporation’s Offshore Income Taxed at 15% to 20%.

I am back from the course on avoiding International Tax malpractice that I taught a seminar  for the California CPA Society.    Here is what CPA’s are doing:  Their clients pay more than the legal tax.  Yep, many CPAs think all the offshore income is taxable and this was the theme of the seminar.

When the income is taxable, they make it worse by using a 44% tax rate instead of a 15% to 20% rate.

If you want to save taxes like Google and Apple, you need to do what Donald Trump stated; you need to  work very hard to pay the lowest tax.     You have to do it because your CPA is too busy with tax returns and financial statements to research what you will find in this blog.

The rest of this blog explains how to get the low tax rate on your offshore income earned by your foreign corporation.

Here is the first thing a CPA misses:  They starts international tax planning using  international tax laws.  However,  domestic corporate tax law is the foundation of international tax law.

It is old fashion 1954 domestic corporate tax law.  Which by the way is no longer taught in CPA tax courses.  Think of IBM.  It makes money and pays a corporate tax.  It pays a dividend.  For the last ten years dividend income has been taxed at between 15% to 20%.  This is known as a “qualified dividend”.
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