Posted by justin on April 01, 2008 at 14:12:46:
not a domestic nonprofit and foreign one.
Offshore corp owning a US LLC - Posted by Justin
Posted by Justin on March 28, 2008 at 20:13:30:
Anyone have any information on having an offshore corp owning a LLC in the US? Specifically, if you are using a LLC to hold your rental commercial buildings should you just use the same LLC for property? Is it worth breaking them up into multiple LLC’s if all the LLC’s are owned by the same offshore corp?
How do taxes affect this kind of set up? Is there a way you can “hide” money in your offshore account and still use the money in the US without paying taxes. IE I heard you can “charge” your LLC a franchise tax or something which can be a set percent or dollar amount so you can get that as a business expense on the state side but on the offshore side its really tax free money.
Hogs Get Slaughtered - Posted by Jimmy
Posted by Jimmy on March 30, 2008 at 07:14:00:
our federal prisons are full of guys who promoted offshore arrangements to avoid income taxation. look up Jerome Schneider. he used to run full page magazine ads with him standing at the doorway of a private jet.
I’m a tax lawyer. here’s the straight dope:
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if your income is earned in the US, you are liable for income taxes here. period. if you wanna be an outlaw and not pay, fine. but you don’t need a stupid offshore entity to do that. just quit filing. you’ll get away with it for a few years. but the man will get you eventually. and then you’ll pay bigtime.
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there are legitimate reasons for establishing offshore entities. if your business involved growing tobacco in the Dominican Repub, and then shipping the leaf to a cigar factory in Nassau, and then importing the finished product here…you have legit reasons for operating the ofshore part of the operation from an FC.
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but understand this: the CFC rules (controlled foreign corporation) rules are designed to capture all of the taxable activity of these entities. if your FC is controlled by Americans, you fall right into the CFC rules. your income tax benefits go right out the window.
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want to sidestep the CFC rules with a foreign trust? guess what. Congress thought about that one a long time ago, too. look up the foreign grantor trust rules.
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here’s a ray of sunshine for you. if you are making millions of dollars, and if you have $200,000 or so to hire the best lawyers, you can put in place a very sophisticated arrangement that can provide shelter (or deferral) of income taxes. Marc Merric in Denver is pretty well-known in this arena. plenty more in NYC and Miami and LA.
but if you think you can buy some silly offshore shelf cmpany for $10,000, and immediately avoid exposure to taxes, you are as gullible as a hayseed at the county fair.
You can be certain that the IRS - Posted by Rich-CA
Posted by Rich-CA on March 28, 2008 at 23:14:36:
has examined all the different money hiding methods and made rules to cover them. I would think that offshore ownership might be a red flag for an audit. I do not know from experience but it does seem logical.
Re: Hogs Get Slaughtered - Posted by Justin
Posted by Justin on March 31, 2008 at 18:50:54:
hmmm i posted a reply yesterday dunno why it didnt work.
anyway i think you missunderstood me, I’m not trying to get away with not paying taxes, just avoid them as much as possible legally. The main reason for the offshore corp was more for legal issues like lawsuits and the tax part was second. Thats why I asked the questions in the order I did.
On a side note what do you think of having the offshore corp owned by a nonprofit instead of a trust like you mentioned?
Re: Hogs Get Slaughtered - Posted by Jimmy
Posted by Jimmy on April 01, 2008 at 05:25:40:
let’s see. offhsore entity owned by domestic non-profit…yep, Congress thought about that one 75 years ago. an animal known as UBTI. Unrelated Business Income Tax. another set of laws that makes perfect sense.
non-profits are not supposed to engage in taxable activities. that’s grossly unfair to other business which operate in the same biz and pay taxes.
if a NP does a small amount of business activity, the UBTI kicks in and equalizes things. if the NP does a lot of business, it risks losing its NP status. abd NP’s are closely regulated, far more so than regular corporations. Ask an accountant about the annual filings for a private foundation.