The goal of the U.S. International Tax Planning for the Canadian and U.K. Investor is to a double tax issue. On one side, there is income tax. On the other hand, there is inheritance tax (for the U.K. citizen), estate tax in the U.S. (which will be repealed but only for a few years) and the Canadian deemed sale at death tax.
We all want the American 20% long-term capital gain tax rate. However, this means the foreign investor can’t own the U.S. real estate in a corporation. Both a domestic corporation and a foreign corporation incur two U.S. income taxes. For the domestic corporation, the second tax is called “the accumulated earnings and profits tax”.
For the foreign corporation, the tax is called the “branch profits tax”. Foreign shareholders of a corporation owning U.S. real estate are subject to the U.S. estate tax (but not the gift tax).
U.S. International Tax Planning for the Canadian and U.K. Investor uses a Nevada Trust
Wealthy Americans have the same tax problem. They solve the problem by using a special type of a trust. Here is a short video on reducing U.S. taxes with the use of a trust. If you want to learn more about a Nevada Self-directed trust for your tax planning, then contact me, Brian Dooley, CPA,MBT at [email protected]
A Nevada is one of the few states that have a special trust law. It is called a “self-directed” trust. As the name implies, you can direct the trustee. The IRS has issued favorable rulings on this type of trust.