By
Gary Scott
If you are considering investing
in or having an overseas business here is a tip about international perfected
foreign trusts from tax attorney Carlos Kepke. This tip on international perfected
foreign trusts is of considerable interest as it deals with reducing U.S. income
tax.
International Perfected Foreign
Trusts Tip
"There are few international
vehicles left that can help defer U.S. tax, but international perfected foreign
trusts in certain circumstances can.
"Let me first explain that
international perfected foreign trusts are those that have a foreign relative
as a grantor (the person who formed the trust) or a U.S. citizen or resident who
has died. Under U.S. tax law non U.S. grantors of non U.S. trusts never have a
U.S. tax liability. However if a U.S. person grants a foreign trust, they remain
responsible for income earned by that trust as long as they live. The beneficiary
is not responsible for tax on the income. Thus when the grantor passes, so to
does U.S. tax liability. Once this trust is perfect it essentially is free from
U.S. tax.
"Such international perfected
foreign trusts can, in some instances, be used to help reduce United States ("U.S.")
income tax of a U.S. corporation.
"An example of this could
take the form of a U.S. corporation contracting with a foreign corporation ("F.C.")
owned by a perfected foreign trust for the F.C. to undertake a feasibility study
concerning the business activities of the U.S. corporation (e.g., a study as to
the feasibility of the U.S. corporation opening new markets outside of the U.S.).
The U.S. corporation would pay F.C. handsomely but fairly for the study and take
a U.S. income tax deduction for such payment. F.C. would receive the payment and
pay no tax on it. F.C. could subcontract out the performance of the study at a
price ensuring a healthy profit for F. C.
"The keys to this international
perfected foreign trusts tax tip are:
#1: The feasibility study must actually be performed.
#2: The international perfected
foreign trusts that owns F.C. must in law be deemed unrelated by ownership to
the ownership of the U.S. corporation. [This can usually be accomplished by being
sure that the foreign trust is perfected.]"
This international perfected
foreign trusts tip is very general in nature and if you feel that it applies to
you, you should consult your legal consul or contact Carlos Kepke at carloskepke@webtv.net
Until next message may all your
international business and investing be good!
Gary
P.S. Learn more about offshore
trust tax tips in the correspondence course International Business Made EZ at
GaryScott.com
Real international business is
fun and can bring tax advantages and asset protection. Gary and Merri Scott gain
tax advantages as they enjoy developing their healing center in Ecuador
