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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.   

International tax planning for the Contract Manufactuere

International tax planning for the Contract Manufacturer

Fantastic tax savings for importers of contracted manufacturer of their products.  This new IRS law gives tax savings to small businesses.  Learn more on this link and send it to your CPA.

Small businesses are now reaping significant tax savings using their own contract manufacturing company.  Importers, exporters, and e-commerce business can use the same loopholes as big business. I wrote my book to teach you these tried and true strategies in an easy two-hour read.

International tax planning

Buy at Amazon for only $9.50.

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 2017 edition of  International Taxation in America for the Entrepreneur for $9.50 at Amazon on this link.

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 foreign 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 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 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 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.

Trust 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 cloud-based

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.

Be an IRS tax wizard with our new custom Google search, on this link.  This custom Google app to read 400,000 pages deep inside the IRS’s website and the tax court’s website.

International Tax Strategy for E-commerce and the Virtual Robot Store

If your CPA’s tax planning is similar to what you were told or read (on the internet) last century, then you are paying more than your legal obligation in taxes.     Think of the iPhone you had last Century?  Okay, you caught me.  There was no iPhone in the 1900s or even the first part of this Century.

Bank of America is showing us the future.  As you read below, not only will they make more money,  they will pay less in taxes.

Internet tax planning for the small business in the virtual world. Bank of America is creating a branch without people

Internet tax planning for the small business in the virtual world. Bank of America is creating a branch without people

Robots are better than employees.  No Obama Care insurance (or whatever is replacing it), no overtime, no sick leave or all of the other rules that states such as California impose.

I was at the main branch of Bank of America in Newport Beach, California.   I felt like I was sneaking into a museum after hours.

By the way, rent in Newport Beach is not cheap and the main branch is very large and impressive.   But, who is being impressed?  No one goes into the branch and when you do, you see rows and rows of empty desks.

B of A announced that they are opening branches without people.  ATMs will take your deposits, help you get a car loan or home loan and give you money.   You can talk to people face to face; they just will not be in the branch or even the state.   They can be an income tax-free state.   I assume that they will be working in a Bank of America virtual center.

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Tax Pirates Invade America

Wikimedia Commons, modified by Gretchen McCulloch

Wikimedia Commons, modified by Gretchen McCulloch

Avast me matey!   Tax pirates have found a new tax haven.

They exploit the IRS mistake on the Form W-9  and uses the Delaware LLC to evade taxes.  Wyoming and Nevada are also popular, as explained in this footnote1.

It started in 1996 when the IRS changed the law on limited liability companies (LLC).   The LLC is an invisible corporation. It does not file a tax return!
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International Tax Strategy for the Foreign Offshore Corporation Distribution of Appreciated Property to a U.S. Shareholder

Sometimes a foreign or domestic corporation will distribute property, rather than cash, to its shareholders.

The distribution of appreciated property will cause the corporation to realize and recognize gain equal to the difference between the adjusted basis of the property (also known as its tax cost) and its fair market value.   It can also cause the U.S. shareholder to recognize taxable income.

Here is what happens: 

The corporation is treated as if it sold the property at the time of the distribution[1].

This gain increases earnings and profits of both foreign corporations and domestic corporations[2].   When a corporation makes a distribution, the shareholder has dividend income if the corporation has earnings and profits. When a foreign corporation is involved, it goes from bad to worse.   Not only is the Federal tax rate up to 44%, but the punitive passive foreign investment company law may also apply. The longer the foreign corporation was owned the greater the amount due.

For example, Bob owns a British Virgin Islands corporation that owns other foreign corporations.  This is also known as a  holding company.  The cost of all the shares of the other foreign corporations was $10,000.  Now, those shares are worth $100,000.  

The BVI holding company distributes all of the shares of the other foreign corporation to Bob.   Section 311 of the U.S. tax code, treats the distribution as a sale to Bob.  The BVI holding company has $90,000 of tax accounting gain.  Under the U.S. tax law, this gain is taxable to Bob as ordinary income.

What if Bob had the BVI holding company make an election to be treated like a U.S. LLC (this is known as the “check the box” election)?

The result is the same. U.S. tax law treats that election as a liquidation of the BVI holding company followed by a distribution of its assets to the shareholder.

By the way, Congress purposely wrote this law to be unfair by not including the corresponding provision that permits a corporation to recognize the loss on the distribution of property.

This is important: The gain is based on the value of the asset distributed and not the value of the property received by the shareholder. 

The court case of Pope & Talbot v. Commissioner demonstrates this tax trap.[3]  The corporation distributed appreciated property to a limited partnership, which in turn distributed limited partnership interests to the company’s shareholders.

The corporation argued that, in calculating the gain recognized, the IRS should have determined the fair market value of the distributed property by aggregating the market value of the limited partnership interests the shareholders received instead of calculating the fair market value of the distributed property.

The Ninth Circuit affirmed the Tax Court and held that the fair market value is not determined by the property interest received by each shareholder.    Accordingly, the minority ownership discount can’t be used to reduce the taxable income.

Code Section 311’s disallowance of the recognition of a loss in non-liquidating distributions is a dangerous tax trap.   For example, an offshore company has two assets.  Both are worth $1,000.  One asset costs $100 and the other $1,900. The corporate distributes both assets.   The loss of $900 can’t offset the gain of $900. 

Thus, the corporation and/or its U.S. shareholder have $900 taxable income.


[1] Code Section 311(b) for non-liquidating distributions and Code Section 336 for liquidating distributions.

[2] Code Section 312(b)(1).

[3] 162 F.3d 1236 (9th Cir. 1999)

Airbus & Virgin’s SpaceShips Abandons EU VAT for Tax Haven USA?

EU value added tax planning starts in the US.

EU value added tax planning starts in the US.

Airbus announced that it is going to America.  America is the best  (VAT) value added tax haven in the World.  Airbus is joining BMW and Mercedes in California. 

The value added tax (VAT) is an abusive tax.  It destroys a business’s working capital preventing growth, innovation, and jobs.  Virgin Air’s SpaceShip is ready to launch from New Mexico.

The UK and EU VAT is helping the USA boom.  Why is Virgin Air building its Spaceships the U.S?     Well, the VAT adds to the cost of supplies and parts.  Plus, the VAT  is paid with after income tax working capital (money).  Paying with after-tax dollars increases the VAT to 30%.   If you are spending a $1Billion,  you save $300 million over the cost in the U.K. or the EU.  

  • Many people wonder why the VAT destroys growth.   If you need to purchase $1,000 inventory in the US, you will need to make $1,400 and pay income tax of $400.    In the UK and the EU,   you will need $1,700 to buy the $1,000 inventory.   If the VAT is $200,   the after income tax cost is $1,200 (compared to $1,000 in the U.S).
  • The EU business will need to earn $1,700 paying income tax of $500 to have the after income tax money of $1,200. If you are Airbus or Virgin Air and you are spending billions of dollars paying the VAT.
  • The Financial Times of London reported that the VAT had destroyed what remains of Greek Small Business.  The EU announce $2 trillion in bailouts to save  Greece and Spain is looking for the same.
  • England is not safe from VAT tax haven USA.   Virgin Air’s  SpaceShip I and II were built in California (more on this link).  Yes, anti-business state California is better than the U.K.
  • Avoiding value added tax in the United States.

    Virgin Air Spaceship is in value added tax haven U.S.

    1. Virgin Atlantic’s Space Ship II has joined Space Ship I in California. The VAT destroys business like no other tax; it seizes working capital that is required for growth.  What costs $1.30 billion in the U.K. costs $1 billion in California.
    2. If your business needs inventory, you can simply buy more of it in the United States.  More inventories mean more profits.  More profits allow for more growth. 

    Want to take your tax planning to the next level, then contact me, Brian Dooley, CPA, MBT [email protected]