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offshore tax planning, offshore tax strategies, controlled foreign corporation,

Tax Planning Small Business Are Taxed at 14%

Government Report Shames Businesses Paying More than 14% in Taxes.    Hard to believe that Senator Bernie Sanders  (who paid tax at 13%) released the report.  It states that a business that plans its taxes are taxed at 14%. Here’s what’s going on.    

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- Department of the Treasury letter to the U.K. tax authorities on U.S.  tax planning for UK and EU companies. Here is the letter from the U.S. to the U.K. 

Be an IRS tax wizard with our new custom Google search, on this link.  This custom Google app to read 300,000 pages deep inside the IRS’s website and the tax court’s website and it is free!.  Find the answers to your tax question quickly and accurately.

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

They reported the successful foreign tax plans of international businesses. We have obtained 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 changed much except the ‘King” takes only half.

Trusts are the most efficient tax tool. International tax planning should start with a Nevada trust to own the foreign company.  Learn trust tax planning and asset protection in this easy to read blog post.    It has the blueprint for successful trust tax planning.   IRS memo on asset 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 offshore cloud computer. 

Cloud tax planning. Learn how businesses are using the cloud to avoid taxes on this link.  E-commerce companies are avoiding state income taxes and in some cases deferring U.S. taxes.
Is the U.S. a tax haven for citizens of the UK, Sweden, Belgium, Canada, Luxembourg, and Austria?  Yes, says the IRS in its Publication.  Learn the magic Tax Treaty words for these lucky citizens of The UK, Sweden, Belgium, Canada, Luxembourg, Austria on this link.

Five Best Tax Saving And Smart Planning Tips For Small Business Owners

No,  this is not another blog about lame tax ideas.   Big Business has many tips that are not known by most CPAs.   The best five tax planning tips are:
1.  Use more than one entity.  Have one use the accrual basis of account.   This allows you to avoid taxes on prepayments  (more on this link) and expense costs before they are paid.   Have one entity be a corporation.    Corporations can be taxed as a separate entity (which means they pay their own taxes) or a pass through (by election subChapter S of the tax code).

Each of these corporate taxation methods has a unique advantage.   For a start-up, the separate entity has the benefit of allowing you be late on paying income tax on the profits.  Thus, you have more money to invest in growth.

Have one corporation doing business in a tax-free state such as Nevada.

2.  If you have only part-time employees or no employees fund your business  with the little-known tax savings of a solo 401K plan  (more on this link).  This works only if you have no full-time employees.  Big businesses use the ESOP retirement plan.  It is a fantastic tool but most small business can not afford the annual compliance cost.

3.  If you make sales via your website, place your website on a server in a tax-free state (learn more here) Also, have the server and website owned by a corporation in the same state.  If your website sells a service or another intangible item, use a tax haven corporation to own the site.  The server needs to be in the same country as the corporation.

4.  Use an irrevocable non-grantor trust to own any passthrough entities.   Of course, have the trust in a tax-free state such as  Nevada.   A non-grantor trust has almost no audit risks.  This type of a trust files its own tax return (Form 1041) and pay its own taxes.  By moving income to this return, you have a lower “adjusted gross income.”

A lower adjusted gross income allows you larger itemized deductions and more tax credits.  It also reduces your chances of a tax audit.

5.  Don’t rely upon year-end planning.  It is a suckers move.  Usually, you end up spending money to be able for a deduction.  Big Business plans a year in advance and not a month before year end.  Each time they add a product or service, they think about tax planning.   The most effective tax planning looks at income and not expenses.

If you need help creating a strategic tax plan, then contact me, Brian Dooley, CPA, MBT at 949-939-3414.  A recent Government study showed that tax planning businesses are taxed at 14%.  For every one dollar spent in tax planning,  ten dollars are saved in taxes.

 

 

Learn How to Pay Less Tax with Tax Talk on Blog Tax Radio

Listen to provocative and innovative tax planning on my radio show, Tax Talk. We support a subscription-free internet content supported by advertising.  

Each episode as a 60-second commercial by the company hosting our radio show.

The first episode is the new IRS designer trust… designed by the IRS to screw your state out of state income taxes.  California tax planners and New York tax planners can use this new Nevada self-directed trust to save state income taxes.

Next, Protecting yourself from the IRS’s Big Brother Supercomputer exposes the IRS “financial DNA” of each of us stored in its new Big Data computer.

Find Additional Business Podcasts with Provocative Tax Planning on BlogTalkRadio.

If you need to up the quality of your tax planning, then contact me, Brian Dooley, CPA, MBT, at [email protected]

Saving Taxes with the Controlled Foreign Corporation (CFC) Overlap Rule for Passive Foreign Investment Company (PFIC)

Tax Planning with PFIC – CFC Overlap Rule

The 1997 Tax  Act added a provision that treats a PFIC that is also a CFC as not a PFIC with respect the U.S. shareholders of the CFC.[1]   This rule is found in tax code section 1297(d).

The rule applied to the portion of the shareholder’s holding period after December 31, 1997, during which the corporation was a CFC and the shareholder was a U.S. shareholder.

The tax law provides

“(d) Exception for United States Shareholders of Controlled Foreign Corporations-

“(1) In general”
“For purposes of this part, a corporation shall not be treated with respect to a shareholder as a passive foreign investment company during the qualified portion of such shareholder’s holding period with respect to stock in such corporation.”

“(2) For purposes of this subsection, the term “qualified portion” means the portion of the shareholder’s holding period—”
“(A) which is after December 31, 1997, and”
“(B) during which the shareholder is a United States shareholder (as defined in section 951(b)) of the corporation and the corporation is a controlled foreign corporation.”

Congress added this provision to reduce the complexity caused by the interaction of these two anti-deferral regimes.[2]

This means that shareholders of a controlled foreign corporation do not file the PFIC form 8621.  Also, the harsh, very harsh, anti-taxpayer PFIC laws do not apply. This new law started on January 1, 1998.

form 8621, pfic, overlap, overlap rule, CFC,

Tax Planning CFC and PFIC Overlap Rule on Form 8621.

I have inserted the portion of Form 8621 that explains this law.  

Please note, that the shareholder of the foreign corporation does file a simplified  Form 8621 completing only the five easy lines on Part I.

If you are a CPA and need help, then give me a call.  If you are not a CPA, then have your CPA call me.

Please do not call me if you do not have a CPA.

FOOTNOTES:

[1] I.R.C. § 1297(e).

[2] 1997 House Report, supra note 302, at 533.

Avoiding FBAR Penalties with the Vanguard Investment Series plc (an Irish Domiciled UCITS Fund)

The Bank Secrecy Law regarding foreign accounts and the newer Treasury Department regulations have one thing in common.  They are not worldly.

One would think that the Government would think that foreign accounts would have a different legal structure than American accounts.   But, nope, they did not. Thus, the Vanguard Irish index funds may not be a foreign investment account that must be reported on the FBAR form.

I know that sound impossible.   Surely, they are foreign… they are domiciled and formed under the laws of Ireland and the European Union (E.U.)

Thus, the question is are they a “financial account”.  They seem like they are since one invests in the funds for a financial return.   But, Ireland, the U.K. and the E.U. have a different legal system.     The U.S. Government just simply ignored this fact.

Vanguard index funds are in the form of an exchange traded fund (ETF).  The SEC’s website makes clear that an ETF is not a mutual fund.

Also, this Vanguard Irish ETF does not sell to the public (which you will soon read why this is important).  You must purchase or sell your share directly from a broker that buys the shares in large blocks  (such as 25,000 or 50,000 shares at a time).

Once you buy the shares, your shares are held by an independent depository and not by your broker.

The depository arrangement is also important in determining the FBAR reporting requirement.  This arrangement means that you do not have an account with a financial institution.  

A depository is a type of nominee that holds your assets and follows your instruction.  A depository is your agent.  Learn more about tax planning with a nominee on this link.