Foreign us tax reporting

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OFFSHORE US TAX REPORTING For DISQUALIFIED ENTITIES

Brought to you by:

SLS GLOBAL LLC&

The Panama Insider ConsultingEmpower, Protect, Profit, Rest Assured

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Disclaimer

SLS GLOBAL LLC DOES NOT GIVE TAX ADVICE:

• What you are about to read is a body of research regarding tax rules, definitions, and regulatory issues copied straight from their various sources.

• P.I. Context- The Panama Insider’s comments about interpretation and what to watch out for when you structure an offshore asset protection plan are inserted on separate pages.

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Legality

ASK THE CPA: ‘Is it legal to send my money offshore?’

• He will tell you,• ‘It is not against the US law to have foreign accounts;

(It is used for asset protection and Financial Diversification).

• It is against the law to evade taxes.’

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P.I. ContextKeep an eye out for the ‘Legalese’ and ‘Word Magic’• If you do not report ‘non reportable and non-taxable’

assets, and if you do not hold title to (ownership) to the assets- then you can legally choose not to report them.

• When assets are properly layered in offshore structures that clearly break up the control and ownership, when one looks carefully at what the ‘law’ says you cannot do, one can better prepare for what they CAN DO.

• The Panama Insider will illuminate the path. SLS GLOBAL will execute the plan.

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Presentation OverviewP.I. Context:• Putting Into Context• Word Magic & Legalese• How We Structure It• Contextual Applications• Elite Privacy Structuring• To Report or • Not to Report• Don’t Disregard• Work Around• Transferring Assets• NONE OF IT MATTERS• Remember what’s

important.

Legal Mumbo Jumbo:• Legal Jargon• Defined• US Beneficiary• ‘per se’ corporation• Form 8832• Form 8858• Form 926• Form 5471• CFC & PFIC Defined• FBAR T90.22.1• TIEA agreements• More reading for the faint of

heart.

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Definitions Defined

Basic mill of the run requirements for basic run of the mill structures:

• Some of the other basic requirements are to file:• Form 5471, Information Return of US Persons with Respect to Certain

Foreign Corporations, • Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation

Engaged in a U.S. Trade or Business• Form 8858, Information Report with respect to Foreign Disregarded Entities,

Form 926 for US persons transferring property to a foreign corporation, Form 8865 for US persons transferring property to foreign trusts

• Form 3520/3520-A reports of foreign trust with US owner.

• View Source

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Elite Privacy Structuring

Set Up The Way The Super Rich Set Up:

• Our staff are experienced in using the tricks of the Super Rich to bypass several commonly accepted reporting, filing, and repatriation issues.

• Limit what you need to report based on quality layered structuring and tricks of the elite’s trade. Now you can play by the same rules and beat them at their own game.

• Reeducate CPAs to understand these less-frequently-understood ‘work around’ methods that the big boys use themselves helps you virtually eliminate taxes and only file as much as the elite file.

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P.I. ContextWhat you get with SLS GLOBAL LLC:

• We set up: NON-GRANTOR TRUSTS. • We do not set up Disregarded Entities, but rather, properly

structured ‘partnerships’. • The bearer of ‘bearer shares’ can be an unrelated holding

company with unique storage facility options. • We utilize loans, foreign cash cards, insurance wrappers,

employees, limited powers of attorney, and an experienced sovereign network.

• In order to paint a clear picture, a thorough consultation is first needed before any of this really matters or will make total sense. One size does not fit all. You are unique. The hand-holding you want is now here.

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P.I. ContextLegality of these tricks and tactics:• We help you utilize the techniques of the Super Rich to avoid repatriation

and taxable gains. If you want a plain vanilla structure, we can do that with ease and grace.

• We can help you with indefinite tax deferrals, revolving door loans, liquidity without repatriation, documented proof and authority and anonymous pre-paid debit cards.

• You will never have to expose yourself, and it will absolutely never come to that because you will have every right to retain your privacy.

• There is a degree of reporting that you can and should do; our job is to provide the resources you need to get the job done and give you the tools to make informed decisions about reporting as a US citizen.

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To Report or Not to Report?

What You Are About To Read:

• For those who want to be fully transparent, have full control & ownership, retain the minimum and common level of asset protection, are HAPPY paying full taxes, and do not want a sophisticated system, the following information from the CPA regarding Disregarded Entities DOES APPLY TO YOU.

• If you plan to retain a measure of privacy, are willing to separate ownership from control in order to legally create the non-reportability of assets, don’t want to pay a penny more than you have to in taxes, and DO want a water-tight solution, then the following is an academic exercise so that you can know how to better find a competent CPA if we do not handle the referral. You’ll also better comprehend the core differences in the structures we can design with you vs. the status quo your are now trying to escape.

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What is a Disregarded Entity?

• Definition: A disregarded entity is a business entity that is separate from its owner but which chooses to be disregarded as separate from the business owner for federal tax purposes. The IRS says,

• "If a “disregarded entity” is owned by an individual, it is treated as a sole proprietor. If the “disregarded entity” is owned any other entity, it is treated as a branch or division of its owner."

• A sole proprietorship is not a disregarded entity, because the business is not separate from the owner.

• Liability Issues for a Disregarded EntityA disregarded entity is considered the same entity as the owner for tax purposes, but not for liability purposes. For more information on this subject, read this article in which attorney Robert Warwick discusses disregarded entity tax and liability issues.

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What are Tax and Liability Issues for a Disregarded Entity?

• The concept of "disregarded entity" is confusing, and the IRS does not address liability issues of disregarded entities. Attorney Robert Warwick answered questions about disregarded entities:

• Answer: • What business entities are considered "disregarded

entities"?For income tax purposes I would define a disregarded entity as a legal entity that is ignored for federal (and many state) income tax purposes. The most common disregarded entity that I deal with is a single member limited liability company ("LLC").

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P.I. CONTEXT

Don’t Disregard the alternative to a Disregarded Entity:

• A Disregarded entity means:

• Single Owner, treated the same for taxes but w/o the same liabilities as a direct ownership.

• Disregarded means ‘tax neutral’ meaning YOU would have to pay, file, report, and be transparent.

• Not required to file an annual tax information form, for now.

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Disregarded Entity

Don’t be a ‘per se’ corporation:

• A U.S. person may form an IBC LLC under a law that is noton the ‘per se’ corporation list under the U.S. Treasury Regulations, and file an election with Form 8832 to treat the IBC or LLC as a disregarded entity for income tax purposes.

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Disregarded Entity ‘per se’

• A list of entities in each country that aretreated as "per se" corporations for income tax purposes are stated atTreasury Regulation Section 301.7701.2.b.8.

• For legal purposes, the IBC or LLC is a corporation. However, by electing to treat the IBC as a disregarded entity, it is disregarded for federal income tax purposes.

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US Tax Forms

Form 8832: Obsolete, or filed to Set a Precedence

• Election to be Taxed as a Disregarded EntityThere is no penalty for not filing this form, but filing it on a timelybasis can alleviate many of the tax problems that are caused because ofbeing a shareholder, officer or director of a foreign corporation.

• A foreign limited liability company and foreign corporation will betreated as a foreign corporation for U.S. tax purposes unless the ownersmake an election to be treated as a partnership (where there are multipleowners) or as a disregarded entity (for one owner). Making the election byfiling this form is optional ……..

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US Tax Forms

Form 8832: Obsolete, or filed to Set a Precedence

• …. but if the form is not filed within 75 days after the formation of the entity, the default treatment will be to treat it as a foreign corporation. A

later conversion from a foreign corporation will require dissolution of the corporation (with possible taxes on any unrealized gains).

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P.I. Context

This is a scare tactic: Sounds like you’re damned if you do, damned if you don’t… For the untrained eye…

The question is: ‘Can they really get a judgment, reach a verdict, collect?’

1. We know that there are a lot of ‘tax problems’ caused by bearer shares, being an officer, member, or director vs. being an owner with full control. In other words, ‘non-taxability, grey areas, do not collect, can’t prove it’s his because it’s not or he doesn’t control it, where’s the money, do not pass go.’

2.How convenient that you are given the ‘option’. You have a choice, and a supposed deadline.

3. By reporting the partnership, you set a precedence for the structure to be recognized as a partnership. You also establish your intention to be compliant. However, it does lead the wolves closer to the hen house, doesn’t it. Consider #6.

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P.I. Context4. The requirement to dissolve the corporation is totally outside the US Jurisdiction to

enforce. If it is a partnership and you had minimal ownership, how could they enforce this? However, if you dissolved your personal holdings and sold to the other partners, or say an alternate company was ready to take over and buy out the operation, this could be legal and private. Our job is to analyze your situation and tolerance anticipating future events and being PT- Prepared Thoroughly.

5. A properly constructed Nevis LLC has a dissolution clause allowing for the change of one’s relationship, percentage ownership, responsibilities etc- EVEN AFTER A CREDITOR OR DURESS ARE ESTABLISHED. This is legal in Nevis, where the company is domiciled. The US IRC cannot collect what is no longer ‘yours= the ‘tax problems’ mentioned above.

6. The Statute of Limitations for a Nevis LLC is 1 year.

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P.I. Context

Something To Consider: The Back Door Out

• Under the final regulations, a business entity that is not specifically classified as a corporation is an eligible entity that can elect its classification for federal tax purposes under certain circumstances.

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P.I. ContextElite Privacy Tactics: Work Around

• Make yourself a very tough target. Don’t be bate.• Make yourself a visible pauper on paper.• Relinquish ‘ownership’ or ‘control’.• Use a combination of structures and control vs. ownership.

• Use a facilitator to set up the structures. Create arm’s length distance. – Limit what the lawyers know.– Limit what the CPA knows.– Break the paper trail.– The facilitator can help open the bank account in the name of the corporation rather

than ‘on your behalf’. The facilitator could hold limited power of attorney and be your boots on the ground.

• Use jurisdictions with foreign languages.

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US Tax Forms

Form 8858:

• Information Return of U.S. Persons with Respect to Foreign Disregard

• This form was introduced for the 2004 tax year so that the IRS could have assurance that U.S. persons with foreign disregarded entities were reporting the income from those entities. It is to be filed with the income tax return of the U.S. person (or corporation) that is ashareholder or partner of a foreign entity that is treated as a dis-regarded entity. A $10,000 penalty is imposed for each year of each controlled foreign corporation or controlled foreign partnership for a failure to file this form within the time prescribed.

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Liability Issues for a Disregarded Entity

US Beneficiary: Form 926We can work around this using skillfully constructed layers.

• A disregarded entity is considered the same entity as the owner for tax purposes, but not for liability purposes. For more information on this subject, read this article in which attorney Robert Warwick discusses disregarded entity tax and liability issues

• When assets are transferred to the IBC, directly or indirectly, by a U.S. person or by a foreign trust that includes a U.S. beneficiary, a Form 926 is required to be filed.

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Liability Issues for a Disregarded Entity

Avoid the CFC Regulation and Ignore This Form:

• If the IBC is treated, for tax purposes, as aCFC, a Form 5471 is required to be filed. However, assuming that the corporation is treated as a disregarded entity for tax purposes, a Form 5471 is not required to be filed.

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PI ContextWhat is a CFC= Controlled Foreign Corporation?

• CFC: A foreign corporation is a CFC if at least 50% of either the total voting power or total value of the stock of the foreign corporation is owned by U.S. persons, each of whom owns at least 10%. Stock held by family members is grouped together for the 10% test.

The consequences to a US resident or citizen of owning stock in a CFC is that they are taxed on their share of the corporation's "Subpart F Income" whether or not this income was distributed. This includes interest, dividends, rents, royalties, and business income derived from transactions with related parties.

In other words, the CFC is treated as a pass-through (like an LLC or S-Corp in the US) for passive income to limit retained earnings and a US shareholder must report these income items on their US tax return each year. View Source.

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P.I. ContextHow do I avoid a CFC issue?

• When a creditor comes knocking and has a summons from the Nevis judge saying to show your cards, you should have less than 50% voting power and less than 10% shares.

• There needs to be other partners (preferably individuals protected by a corporate wrapper).

• Give a small percentage of voting power to your advisor so that not one side has a full 50%.

• We can review in detail how this elite layered privacy system works inside of your HTBGO membership.

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Passive Foreign Investment Company

What is a PFIC?• PFIC: A foreign corporation with one or more U.S. shareholders (regardless of the

% owned) is a PFIC if 75% or more of its income is passive income or if at least 50% of its assets would be invested in instruments which produce interest, dividends and/or capital gains.

The consequences to a U.S. resident or citizen of owning stock in a PFIC can be severe. Certain "excess distributions" characterized as ordinary income even if they would otherwise qualify for capital gains treatment. Moreover, tax due with respect to excess distributions or gain from the sale of PFIC stock is subject to an interest charge to reflect the deferral since the income was earned by the PFIC. In addition, shares of PFIC stock are not entitled to a Section 1014 step-up in basis at death.

F.Y.I. … PFIC regulations were enacted by US Congress at the request of the US Mutual Fund industry who was losing business to foreign investments. View Source

• Note: Take care of this issue with real estate, farm land, or reforestation investments.

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Transferring AssetsLet’s use a loan instead of worrying about this:

• Making matters more challenging, there are a number of State and Federal laws regarding Fraudulent Conveyance that limit the transfer of money and assets out of the US. These apply when you transfer assets for less than fair market value and/or to defeat current or reasonably anticipated creditors.

With that said, the complexity of international planning is when and how much of the international businesses income is taxable in the US. Even if you choose to have your entity disregarded for US tax purposes (ie. pay tax as if the business was in the US), there are elections to make, forms to file and what would usually be taxed as capital gains might be converted to ordinary income. View Source

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US Tax FormsForm TD F 90-22.1:

• Report of Foreign Bank and Financial AccountsU.S. persons who have direct or indirect authority over, or a financialinterest in a foreign financial account may be required to report certaininformation about each account on or before June 30th of the year

following the preceding calendar year. The report is not required if theaggregate value of all foreign financial accounts is less than $10,000 atall times during the preceding calendar year. (There are other tricks too.)

• A willful failure to file the form is subject to severe civil and criminal penalties. According to the instructions to the form, Civil and criminal penalties, including in certain circumstances a fine of not more than $500,000 and imprisonment of not more than five years, are provided for failure to file a report, supply information, and for filing a false or fraudulent report.

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P.I. ContextMaking Sure They Can Never Collect or Prove Willful failure:

• Avoid fraudulent reporting.

• Avoid ‘willful failure’.

• Be able to supply information. Have proof ready.

• Have family’s personal assets wrapped in a domestic LLC.

• Liquidate your IRA before they do it for you.

• Keep cash reserves outside the jurisdiction.

• Live physically outside the jurisdiction.

• Have a second passport, possibly in a different name as

your insurance policy.

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P.I. CONTEXT

Why none of this really matters anyway:

‘People must be educated to trust foreign banks.’- Peter Macfarlane

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P.I. Context1. With a corporate bank account, the bank will never divulge

any information about the account without a duly signed local judges court order.

2. The number of obstacles and hoops that your creditor would have to go through are almost insurmountable. You’d have to be a REALLY big fish to make it worth their while. And if you are a really big fish, you have the resources to become untouchable. We’ll show you how.

• The only major variable is your big mouth.• Asset protection works if you work it.

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US Tax FormsForm TD F 90-22.1: TOUGH TO PROVE ‘Willful Failure’

• However, because the penalties were imposed for a willful failure to fileand because willfulness is difficult to prove and because the penaltieswere so extreme, they were never imposed.

• The Congress then introduced a smaller penalty of up to $10,000 for a non-willful failure to file the form, effective for filing dates after October 22, 2004.

• There is no specific penalty for a failure to file the form on a timely basis and it is not clear if the non-willful penalty will be imposed for a late filingof the form for years after 2003.

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P.I. ContextRecap: What’s the fuss about? Asset Protection Works!• The precedence penalty for willful or non-willful failure was $10,000 because this is

difficult to prove.

• That is only after you admit to having direct or passive authority over the bank account. Then they have to prove how much stake you have in the IBC, and they can’t do it, so a settlement would have to be reached.

• BE SET UP AT LEAST ONE YEAR IN ADVANCE OF ANY MAJOR REPATRIATIONS. Fund things properly from the beginning with loans.

• The bank will not tell without a court order from the IBC’s jurisdiction.

• You want to bank with a country that does not have a TIEA Agreement (Tax Information Exchange Agreement) to ensure that they can never be strong armed.

• It is always better to move. Better lifestyle choices, quality of memories, and peace of mind.

• We will help you do the ‘treaty shopping’ as it is called.

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P.I. ConclusionsWhat is a TIEA Agreement? How Would One Affect Me?

• Read this article now:• Sovereign Professional Opinion on the US- Panama

TIEA agreement.• A List of TIEAs worldwide: click here.• For example: US- Panama TIEA document. • Conclusion: Smoke & Mirrors when one is

properly structured and watches their mouth. • Also, use the multiple flags theory. Do not

bank in the same jurisdiction as the IBC= Water Tight

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P.I. Conclusions

Live Happy, healthy, free, and stress free. Get out of dodge!

• Getting set up overseas is hard at first, but you ease into it and one day soon, magically realize that none of that mess applies to you anymore. Vote with your feet and leave for greener pastures. Be the change you wish to see. Give the world the best you’ve got, and the universe will graciously mirror you.

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P.I. Conclusions

Get Legit:

• Legitimize every offshore interaction by voting with your feet and moving. Get out of the jurisdiction you don’t like anymore. Remove your transactions from their jurisdiction. Live where they speak another language. Earn extra income with cash based businesses. Treaty Shop. Get a life! Create real value. There is a massive difference between the pontifications of politicians vs. the day to day mechanics of how things really work.

• Get off the hamster wheel and make life happen again! We’ll show you how.

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Contact Details:SLS Global LLC

• Customer Support: +1 818 937 4012

• Senior Management Panama: +01 507 6752 9586

• E-mail: [email protected]

• Address: Plaza Neptuno, Planta Baja, Suite 392, Ave. Ricardo J. Alfaro, El Dorado,

Panama City, Republica de Panama

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More on Disregarded Entities

Plain Vanilla Structure: • For the faint of heart who want a simple 100%

above board tax paying plain vanilla structure that gives you access to a world of better investments and is much better than what the plain vanilla offshore tax advisors will sell you, the cost is $5k plus an HTBGO Elite Membership of either $1420 or $2000.

• We are not the cheapest. We are the most resourceful.

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Is a sole proprietorship a disregarded entity?

• No, because a sole proprietorship is not a legal entity separate from its owner. A sole proprietorship may operate under a trade name but, absent formation of a legal entity under state law, the sole proprietorship and its owner/ operator are legally the same.

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P.I. Context• Ok, for US state law. When you introduce an

IBC from a different country, the tax laws of that jurisdiction supersede those of the creditor’s. In order to collect, the case must first be proven in the home court of the country where the IBC was incorporated.

• This is all fine in theory, but in practice you could experience seizure of assets or face incarceration before due process. Have a thorough plan and know who to call.

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Q: I read somewhere that some S corporations are disregarded entities. Is that true?

• No. Although an S corporation is not itself generally subject to income taxes, the S corporation determines its own income, deductions, credits, etc. (often collectively referred to as "tax attributes") and then allocates the tax attributes among its owners (or to its sole owner) in proportion to share ownership.

• In contrast, with a disregarded entity no tax attributes are determined at the entity level.

• Unlike a disregarded entity, an S corporation is required to file an annual information tax return.

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Q: If a business is disregarded as separate from the owner for tax purposes, what about liability? Does that mean the owner is liable for business debts/lawsuits?

• Liability for business debts and lawsuits generally depends on legal status, which is based on state law. Most states, if not all, provide for the formation of LLCs (as noted above, a single member LLC is the most common domestic disregarded entity). An LLC is a legal entity which can own property, make contracts and sue and be sued in its own name; the owner(s) of the LLC generally does not have personal liability for the LLC's obligations.

• Federal income tax treatment, on the other hand, is determined by federal law, i.e., the Internal Revenue Code, which ignores a single member LLC's separate existence and treats its activities as those of its owner. Most states that impose income taxes follow the Internal Revenue Code and disregard the single member LLC for state income tax purposes while recognizing its separate existence for other purposes.

A disregarded entity, rather than its owner, may be required to pay taxes other than income taxes, for example property taxes on property owned by the entity.

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How Does a Disregarded Entity Pay Income Taxes?

• An individual owner of a disregarded entity reports the tax attributes of the business directly on Schedule C of his or her income tax return, whereas each individual owner of an S corporation (even if there is only one owner) receives a Schedule K-1 from the corporation and reports his or her allocation on Schedule E of his or her income tax return.

• A provision in the tax law permits an otherwise disregarded entity to elect to be taxed as a regular corporation or as an S corporation. But, if the election is made, the entity would no longer be disregarded.

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Contact Details:SLS Global LLC

• Customer Support: +1 818 937 4012• Senior Management Panama: +01 507 6752 9586

• E-mail: [email protected]

• Address: Plaza Neptuno, Planta Baja, Suite 392, Ave. Ricardo J. Alfaro, El Dorado,

Panama City, Republica de Panama

Date post:	13-Jan-2015
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Foreign us tax reporting

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