Monthly Archives: November 2018

Part 28 – From @HelenBurggraf: Concern as Brady tax bill fix legislation lacks called-for fixes for US expats including @USTransitionTax

Posted by Citizenship Solutions on Thursday, November 29, 2018

Part 27 – While addressing some Sec. 965 @USTransitionTax concerns, there is NO EVIDENT CONCERN from @WaysandMeansGOP ‏for the injustice inflicted on Americans abroad

Introduction – “Indifference being the worst form of abuse”


A quick summary of this post:
On November 26, 2018 the House Ways and Means Committee under the leadership of Chairman Brady announced a bi-partisan bill which contains a number of “Technical Fixes” to the December 22, 2017 Tax Cuts and Jobs Act. While specifically addressing the Sec. 965 transition tax, the bill contains neither mention nor relief for Americans Abroad who are at risk of having their retirement pensions confiscated by the U.S. Government. (While the transition tax may actually be beneficial for Homeland Americans, it is simply devastating for Americans abroad.)
In other words: The proposed legislation is NOT neutral. By specifically addressing the Sec. 965 transition tax and NOT providing relief for Americans abroad, it has exacerbated a difficult situation. My understanding is that many Americans abroad have requested filing extensions to December 15, 2018. The failure of this proposed bill to provide relief means that many Americans abroad with small businesses are in an untenable situation where compliance may well be impossible.
My analysis and discussion follows …
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Part 26 – 2018 The @USTransitionTax in Review: As the year winds down lawyer @MonteSilver1 organizes the "Transition Tax" lawsuit – Monte has supported you! It's time for you to help Monte support you!


2018 has been a difficult year for Americans living outside the United States who operate small businesses through corporations. The tax compliance community is still interpreting Section 965 of the Internal Revenue to require them to “turn over” a percentage of their assets to the U.S. government.
For those who don’t understand what the “transition tax” is:


Okay, sorry the text in the above image is a little small. But, my point includes, that the “transition tax” is: (1) retroactive taxation (2) on income that was specifically NOT subject to U.S. taxation at the time that it was earned (3) without any triggering event whatsoever (4) that is an attempted tax grab before the host country can tax it (5) in a way that absolutely results in double taxation (6) that is in effect a confiscation of the “pensions” of Americans abroad. Yes, it’s true and NO U.S. TAX PROFESSIONAL HAS EVEN ATTEMPTED TO SUGGEST THAT POINTS 1 – 6 ARE FALSE.
The purpose or this post is to:
1. Review what has happened during the last year; and
2. Strongly encourage you to support Monte Silver (a U.S. tax lawyer based in Israel) in his organizing a lawsuit against U.S. Treasury for not having complied with various statutes in the implementation of this law. See Silvercolaw.com or contact Monte at ms@silvercolaw.com
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Considering renouncing US citizenship? #citizide – There are times when US citizenship can save you from foreign taxes!

Should other nations be permitted to impose taxation on U.S. citizens or corporations?
At first blush, the question sounds absurd. Is there something about being a U.S. citizen that should exempt individuals from taxation in or by a another country? Some time ago, this question was explored in a discussion on a Facebook group. Interestingly, most participants thought the discussion was absurd and did not take it seriously. But truth can be stranger than fiction. When it comes to taxation there can be some benefits to being a U.S. citizen. In fact, in certain cases, U.S. citizenship can act as a “cloaking device” – a device that shields you from taxation in another country.

The two certainties are “death and taxes” …

It’s in the area of “death” where U.S. citizenship can be helpful. Sometimes it can be to your benefit to die as a U.S. citizen. Sometimes U.S. citizenship can be helpful when somebody dies leaving you part of their estate.
What follows are some categories where U.S. citizenship can protect you from taxation. These possibilities should be considered prior to renouncing U.S. citizenship.
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Part 25 – Reflections on the "S Corporation" exemption to the Sec. 965 @USTransitionTax – Hat Tip to @SCorpAssn

Beginnings …
A recent comment at the Isaac Brock Society includes:

It’s too bad I didn’t put my Canadian corporation in an S Corp before I knew I was a US taxpayer. I must have misplaced my crystal ball at the time. As I had when I sold my house in Canada.
What a clusterfu@k!

On November 15, 2018 I did a second interview (first interview October 16, 2018 here) with Monte Silver and his Sec. 965 advocacy. The video was featured on a post at CitizenshipTaxation.ca.


If you have not watched the November 15 interview, I suggest that you begin by watching the video (click on the above tweet). The most significant part of the interview is where Sec. 965(I) is discussed. Interestingly Sec. 965(I) provides a transition tax exemption to individuals who are the shareholders of an “S Corp”. To understand the mechanism for the exemption, click on the link in the following tweet:


This interesting exemption is available only to individuals who are shareholders of S corporations and not to other individuals. The interview also included some discussion of the fact that “S Corp” shareholders have the benefit of lobbying from a powerful lobbying association – S-Corp. The interview ended with Monte Silver describing the probability that the Sec. 965 transition tax issue is headed to the courts.
But, in the “Pay To Play Casino” that America has become:


Why are individuals who are the shareholders of an S corporation, which owns the shares of a CFC, more equal than those individual shareholders who own the shares of a CFC directly?
Let’s see …
Purpose of this post …
The purpose of this post is to explore the following issues/questions:
1. What exactly is an S Corporation?
2. How the requirements of an S Corporation reflect that that S Corps are the “small business corps” of America
3. How the S Corporation is taxed and why that taxation is consistent with the S Corporation as an entity for small business
4. An interesting history of the S Corporation
5. Why most Americans abroad are like most small business owners in America (and presumably should have similar tax treatment)
6. How the S-Corp association lobbying in DC has likely resulted in favourable “transition tax” treatment for S-Corps
7. The argument that – with respect to the “transition tax” that Americans abroad with small businesses should be treated the same way as shareholders of U.S. S-Corps
8. Should Americans abroad who don’t renounce U.S. citizenship consider using U.S. Corps to own and operate their businesses abroad?
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Part 24 – When it comes to the treatment of individuals: @USTransitonTax Code Sec. 965(i) proves that "Some individuals are more equal than other individuals"

Prologue – October 16, 2018 – Monte Silver explains the “Transition Tax” in general …


Internal Revenue Code – Section 965(i) begins with …
https://www.law.cornell.edu/uscode/text/26/965

(i) Special rules for S corporation shareholders
(1) In general
In the case of any S corporation which is a United States shareholder of a deferred foreign income corporation, each shareholder of such S corporation may elect to defer payment of such shareholder’s net tax liability under this section with respect to such S corporation until the shareholder’s taxable year which includes the triggering event with respect to such liability. Any net tax liability payment of which is deferred under the preceding sentence shall be assessed on the return of tax as an addition to tax in the shareholder’s taxable year which includes such triggering event.

Only “some” individuals are subject to the Sec. 965 US “Transition Tax” – how “some individuals are more equal than others” …


The complete second interview with Monte Silver – The unfairness to Americans abroad is compounded…

By allowing an exemption (continued deferral to S corps, Congress is granting a benefit to one group of individuals and not to another group of individuals.

Posted by Citizenship Solutions on Friday, November 16, 2018

Considering renouncing US citizenship? Thinking #citizide? Abandoning your #GreenCard? @Expatriationlaw webinar explaining the S. 877A Exit Tax

The general message …


More details – hope to meet you online on December 6, 2018

Considering renouncing U.S. citizenship? It has become somewhere between difficult and impossible for U.S. citizens to…

Posted by Citizenship Solutions on Wednesday, November 14, 2018

Part 23 – It's time for #Americansabroad to support the fight against the @USTransitionTax and #GILTI

Part 1 – Understanding the “Transition Tax” issue and what it means for Americans Abroad
As reported at Tax Connections:


Part 2 – The “Transition Tax” Battle continues …

It has become clear that a lawsuit will be necessary to stop the application of the "Transition Tax" and GILTI to the…

Posted by Citizenship Solutions on Tuesday, November 13, 2018

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Considering renouncing US citizenship? Thinking #citizide? @Expatriationlaw moderates a "Retain or Renounce" conversation among a lawyer, a financial planner and an accountant

As 2018 comes to a close, the “Retain or Renounce” discussion intensifies. American Citizens Abroad (ACA) writes that …


The @citizide twitter account frames the question as follows …

In an #FBAR and #FATCA world #Americansabroad ask: “To retain or renounce US citizenship, whether tis better to live free ..” – #citizide explore this question

The hashtag #citizide has been established in the twittersphere …
The “Retain or Renounce” question is discussed by a wide range or professional advisers …

U.S. citizens living outside the United States are considering whether to: "Retain or renounce?" This is a decision that…

Posted by Citizenship Solutions on Monday, January 15, 2018

To hear the snippets of the discussion continue on …
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