Category Archives: For Attorneys and CPA’s

This category contains articles that are crucial to attorneys and CPA’s with international clients.
The articles focus on both inheritance tax issues and income tax issues. Each article is written by
Brian Dooley, CPA and MBT.

Foreign Investors Learn Why a Corporation and Family Limited Partnership 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 a 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 “nondomiciled“) 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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Protecting Yourself from the New IRS Big Brother SuperComputer & Its “Artificial Intelligence”

big brother, IRS spying, IRS audit,

IRS spying includes license plate recognition. Stores, tolls, hotels and any other place that has a surveillance camera has been added to IRS Big Data Supercomputer.
Learn how to protect yourself with this episode of Tax Talk.

The Internal Revenue Service is using and storing license-plate recognition on its new Supercomputer and cell phone tracking (a new stealth program called “Stingray”).

The website of “TLOxp” is on the left.  I just had a demonstration and it is really Big Brother.  Tolls and parking lots (with a camera) feed pictures of your license plate  into this computer. 

The Government uses Stingray  to trick your cell phone to ping off a device other than a cellphone tower.  This technology can record numbers for a phone’s incoming and outgoing calls.

Then, the IRS supercomputer can cross-reference this information with your cell phone records, your Facebook postings and Instagram’s.

Bloomberg News reported that the IRS and other government agencies have been collecting this data since 2012, when the IRS installed its Supercomputer.

The IRS Robot is farming EBay, LinkedIn, and Facebook, Yelp and all social media. It saves your Internet searches.  In  some cases, the robot saves your emails.  

 It has access to every social media posting going back to 2008.  Deleting your posts does not make them go away. They are stored up to six years on this Big Data Supercomputer (six years is the maximum period for a tax audit).

 The IRS has bragged that their computer can make DNA blueprint of each of our behavior.

The IRS  Supercomputer reads all 200 million e-Filed returns in just ten hours.   

Learn how to protect yourself and how to “game” the IRS robot auditor with this episode of Tax Talk. 

Saving Taxes When a Foreign Holding Company (a CFC) owns Foreign Investment Funds (PFIC) using Form 8621

Seems almost impossible when two anti-taxpayers international tax laws can save you taxes. This is what happens with the Congress does not understand basic accounting.    For every debit (which in accounting is a plus “+”) there is a credit (which is minus “-“),

This axiom is the foundation of all income tax loopholes because this tax is a tax on accounting income.

When a holding company owns investment funds,  U.S. tax law collapses.  A few years ago, Congress could leave well enough alone.  Instead, they enacted a vague law requiring the income under the passive foreign investment company (“PFIC”) tax law to be reported by the U.S. shareholder of a foreign holding company.

The most popular foreign investment funds have been the Vanguard Investment funds managed from Dublin, Ireland.   These funds fit the definition of a PFIC.

From “reporting” the tax law vaguely implies that the shareholder pays tax on the PFIC’s income (if any and this if any has it’s on tax planning on this link).

The U.S. shareholder has to IRS Forms to file.  They are Form 5471 and Form 8621.  These two forms don’t integrate with each other.

I talked to the IRS International attorney in charge of form 8621 and PFIC taxation regarding this.  He knew of the problem but had no plans to fix this.   And why?  My guess is that it can’t be fixed because the two tax laws do not integrate.

Thus, your international tax accountant has many options in your tax planning when he prepares your Form 5471 and Form 8621.  Too many for me to fit them all into a blog.  One option allows you to convert ordinary income (called Subpart F income) into long term capital gain income.

However, a video will help your the tax preparer of your Form 8621.  I used this video for my international tax class for the California Society of CPAs.  This means that unless you are an international tax  CPA, you will find it boring and while debit and credits are boring. they are the focal point of tax loopholes.

If you need help in preparing your Form 5471 or Form 8621, then call me Brian Dooley, CPA, MBT at 949-939-3414.

By Far, the Best International Tax Planning Book on the Planet

Here are the first few chapter of my easy to read book International Tax Planning in America for the Entrepreneur.   The book is a quick two-hour read. 

The book explains the unique tax savings for the web base business, tax planning for importers and exporters and the best tax structure for the foreign investor coming to the U.S. 

You can get the book on Amazon on this link.  The Kindle is only $9.50.  The book is also available in paper and audiobook. 

International Taxation in America for the Entrepreneur is the fastest tax answering publication in America. Both the  Kindle and PDF edition have our exclusive quick search function. Just type your topic and find the answer to any international tax planning question.  The audiobook is perfect for those on the road and traveling. 

No other foreign tax book is updated via the internet. You can be assured that you have the best foreign tax planning book on the market.

Cross Border families have special needs because America’s laws differ from every other country. The multi-national family risks paying taxes in more than one country.  

 A cross-border business has a similar problem.  Multi-national businesses often experience double taxation on one item.  American tax laws are different from the rest of the World.    

Using  “plain English” my book provides solutions to issues regarding cross border taxation.  For those looking for advance tax planning, the hundreds of footnotes and hyperlinks to court cases and tax planning articles are just a mouse click away.

Please take a five minute test drive of the audiobook, below.