Are you involved in offshore or foreign corporate ownership and investments? Do you have real property, assets, or foreign bank or investment accounts? U.S. taxpayers with offshore business interests, holdings, investments, and bank accounts need an experienced U.S. international tax attorney as well as integrative business, legal, and accounting services.
Taxation complexities for foreign investments, accounts, and assets have significantly increased over the past several years. Managing those assets amidst aggressive moves by the IRS and changing international political winds and economies has become much more challenging.
U.S. taxpayers with portfolios that include foreign corporate ownership and investments are not only required to understand and comply with the complexities of U.S. laws and state and federal tax compliance. They must be able to comply with and manage the implications of international taxation, tax treaties, and FinCEN filing responsibilities.
Your integrative business team must be able to balance the requirements of your portfolio from a business, legal, tax, and accounting perspective in order to minimize the impact of taxation and risk while positioning these assets to generate the maximum amount of retained earnings.
Focus upon transactional planning – the process of structuring your assets and investments while carefully managing when gains or losses are realized, where gains and losses are realized, and how the structure of entities provides significant advantages and protections for your accounts and assets.
Many U.S. taxpayers avoid the structure of a C Corporation out of concerns related to “double taxation” (the requirement to pay corporate taxes as well as associated personal income taxes). However, implementing a strategic fiscal year for that C Corporation (instead of a calendar year) would allow its owners to accelerate or decelerate gains and losses to defer taxation on gains to a subsequent tax year, or offset income from the current year.
The ability to shift gains and losses across the boundary of a calendar year, combined with U.S. tax laws and treaties designed to limit double taxation, can provide the ability to reduce the impact of taxation in each given tax year while increasing retained earnings.
A well-conceived and executed accounting strategy should capture crucial information and data at every step in the process in order to minimize tax exposures and comply with international, federal, state, and local tax exposures and filing responsibilities.
Consider the simple difference in the way offshore investments are structured and accounted for, compared to the Generally Accepted Accounting Principles (GAAP) we adhere to here in the United States. The reports provided by offshore investments and mutual funds do not provide the granular detail necessary to establish the valuation of each asset at the beginning and end of each tax year in order to determine appropriate capital gains and losses.
Generally speaking, in many cases outside the United States, income is not realized until the underlying stock or asset is sold or transacted. Here in the United States, one must often determine the value of an asset at the beginning of the tax year and contrast it with the value of that asset at the end of the tax year to determine gains or losses, even though the underlying asset or investment itself has yet to be transacted.
Reports provided to investors by offshore investments often lack the information required to comply with IRS reporting and taxation. This requires U.S. accountants to invest substantial (read: expensive) amounts of labor to research and “restructure” the information in order to determine offshore gains and losses from the perspective of U.S. tax laws.
U.S. taxpayers with portfolios that include foreign corporate ownership and investments should consult with an experienced international tax attorney in order to comply with all U.S. and international tax and reporting requirements. When that tax attorney is part of an integrative business, legal, tax, and accounting team, the U.S. taxpayer is able to most effectively plan and structure their investments and holdings to maximize protections, income, and retained profitability, while reducing the impact of taxation upon their diverse portfolio.
We invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.
Let’s discuss your unique circumstances, the structure of your complex portfolio, and how we can work together to protect your interests and minimize taxation while maximizing retained income and earnings.
