Tag Archives: save taxes

How to Save Taxes with the New IRS Foreign Check-the-Box Rules for Offshore Companies

Offshore Trust International Tax Strategy and Planning is a sophisticated concept used by the wealthy. Learn more in my book, International Taxation in America, available at Amazon.

Offshore Trust International Tax Strategy and Planning is a sophisticated concept used by the wealthy. Learn more in my book, International Taxation in America, available at Amazon.

Just how do you save taxes with an offshore company?  It depends on who owns the company.

If the company is owned by a non-public business, this blog will help you. Publicly-traded companies, such as Google and Apple, have different tax laws. This is because they pay little of their profits to their owners.

Offshore companies and foreign limited liability companies can maximize the foreign tax credit for privately-owned American businesses–but only if they are careful. First, let me update you.

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Tax Court Bust Novice Tax Planner’s Management / Consulting Fee Income Shifting

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Tax Court explains great tax planning in this case.

As you may know from my other blogs, I am a fan of Great Tax Planning.  Yet, so many highly educated individuals fall prey of novice tax planners.  Take Dr. Wiley Elick and his wife Sharon for example.  Dr. Elick is a successful pediatric dentist.

Of course, he wants to save taxes.  He was informed of the tax savings of an ESOP (a type of retirement plan funded by your corporation’s stock instead of money).  

His medical corporation could not have the ESOP. In many states, only doctors can own the shares of a medical corporation.  So, he formed a new corporation. The dental practice paid the new corporation a management fee. The Doctor wanted to move the profit from his dental practice to his management company.   The ESOP cost reduced the taxable income of the management company.

Novice tax planners use “management fee” method to shift income. They believe that if they have a written management agreement that a management fee is allowed.   They do not know that management service must occur. The tax court looks at the hours of management services.

(Update: recently it (management fee and consulting fee) tax planning went criminal. Here is what happen: Mr. Albert S.N. Hee was a successful businessman Hawaii. His corporation paid family members consulting and management fees for work they never did. His family members paid income tax on the fees. Mr. Hee is going to prison because his corporate tax return was false. Merely showing the management/consulting fee on the return was a crime.)

As in this case, the Judge saw that the new corporation never provided any management services.   In other words, the management company did nothing.

It gets worse.  The amount of the management fee was decided by Doctor.  The fee was not based on hours spent or the value of the services.  I have a link to the case below.  The fee changed each year.  The fee was based on the profit of the dental practice.

 Here is a link to the court case.

To have a great tax plan, I suggest working with the IRS National Office.  They are pro small business.  If  Dr. Elick applied for an IRS private letter ruling, the National Office would have perfected his tax plan.   The ruling process reviews your plan. If it is not going to work, they IRS will guide you on how to perfect your tax plan.  Many people fear getting a ruling will cause a tax audit. None of my clients have had a tax audit because they applied for a ruling.  Learn more about our private letter ruling services with this link.

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

How to Bluff Your Way Through an Audit

Here is a fun video.  Remember, always go for a refund during an IRS audit!!

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Want to learn about good and legal tax planning?  Then get these books.

How Non-Residents Save Taxes using the U.S. as a Tax Haven

Saving taxes, tax planning, nominee corporation

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Nevada is becoming a popular tax haven.  While Americans use Nevada to avoid their state income taxes, non-residents use Nevada prevent their home country and U.S. taxes.

The most popular tax haven entities are the Nevada limited liability company and the Nevada trust.   This blog will talk about the Nevada LLC for international tax planning.  To learn about saving taxes with the Nevada “foreign” trust, please see the blog on this link.

European have an advantage when investing in the United States.  They are allowed the tax savings found in  U.S. tax treaties.   When they make their investments through a Nevada limited liability company (“Nevada LLC”), they pay no tax in Europe and little tax to the U.S.

Europe sees the Nevada LLC as an offshore tax haven company.   The IRS treats the Income earned by the LLC as earned by the foreign owner.   If the income is from a foreign source or gains from the U.S. stock markets, the income is exempt from U.S. taxation.

For example, Mr. O’Toole forms a Nevada LLC to own inventory.  It is warehoused in California.  The merchandise is sold to non-U.S. customers. The bank accounts are in the U.S.  The profit can be exempt from  U.S income taxes.
Essential in the tax planning  is:
1. to have the sales office outside of the United States “negotiate and conclude” the sales contract to the customer and
2.  to have the change of ownership of the merchandise occur outside the U.S.

The proceeds from the sale can be deposited into a bank located in the U.S or into a foreign bank account.  Lastly, always apply for private tax ruling for the IRS.  Learn more on this link.

Unfortunately, this is a blog post, and I do not have space include all the U.S. tax haven plans.   If you would like to brainstorm your international tax planning, then, please call me, Brian Dooley, CPA, MBT at 949-939-3414 for a free one-hour consultation with you and your CPA.  Consultation is limited to Americans, Canadians and citizens of Western Europe.

Or, if you need more international tax information or international tax planning ideas, then get my easy to read book, International Taxation in America for the Entrepreneur.   The audiobook version is ideal for when you are driving. 

Ancient American Tax Laws Create New Tax Planning for Ecommerce

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E-commerce’s innovation has left gaps in U.S. tax laws.  The tax savings for electronic commerce are enormous.  Congress’s ineptness in using ancient tax laws for today’s virtual world and E-commerce creates an environment where the tax laws do not fit.

Look at this change.  In 1910, electricity was not in the White House.  Cars were laughed at, with jokes like, “Get a horse!”    Phones were rare, and there was no air travel.    It is these concepts of the World that exist in the American international tax law.

Our ancient tax laws have created new tax planning for E-commerce cloud base businesses and artificial intelligent (AI) software.  And get ready for the tax haven boon with 3D printing software.

Saving taxes has never been easier for the E-commerce business.  By mere locating a cloud computer in a tax low tax or no tax country, an E-commerce business can save taxes.  Learn how cloud computer tax planning is using innovation to avoid taxes.

Below you can watch the CPAs International Tax Conference on E-Commerce and learn why these ancient tax laws are allowing significant tax savings for small businesses with their foreign corporations.

Don’t have time to watch and listen on the web (the play time is about 40 minutes)?  Then visit our iTunes page on the link.  
Get my book International Taxation in America for the Entrepreneur (at Amazon on this link) to learn more. The Kindle edition is on sale for $9.50.

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