cfo2go

Facebook Co-Founder Gives Up U.S. Citizenship (12.05.2012)

John W. Mohr — Sat, 12 May 2012 07:01:56 +0000

Saverin, 30, joins a growing number of people giving up U.S. citizenship ahead of a possible increase in tax rates for top earners. The Brazilian-born resident of Singapore is one of several people who helped Mark Zuckerberg start Facebook in a Harvard University dormitory and stand to reap billions of dollars after the world’s largest social network holds its IPO.
continue here

Go away Americans (09.05.2012)

John W. Mohr — Wed, 09 May 2012 11:12:15 +0000

That’s what some of the world’s largest wealth-management firms are saying ahead of Washington’s implementation of theForeign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts, Deutsche Bank AG, Bank of Singapore Ltd. and Group Holdings Ltd. (DBS) all say they have turned away business. Continue here

Offshore irrevocable life insurance trust?

John W. Mohr — Sat, 03 Mar 2012 12:55:19 +0000

In a recent private letter ruling, the IRS ruled that assets in an asset protection trust were not includable in the grantor’s gross estate even though the grantor was a beneficiary of the trust. Accordingly, a U.S. taxpayer can use an offshore irrevocable life insurance trust to legally avoid all future U.S. taxes, protect trust property against creditors, and also enjoy trust assets.

New York, NY (PRWEB) June 1, 2010 — The IRS recently provided some clarity and reassurance to U.S. taxpayers who want to be beneficiaries of a self-settled, irrevocable, discretionary asset-protection trust. In Private Letter Ruling (PLR) 200944002, the IRS ruled that assets in an asset protection trust were not includable in the grantor’s gross estate even though the grantor was a beneficiary of the trust.

In these times of eroding property rights, punitive tax rates, and financial insecurity, a U.S. taxpayer can use an irrevocable life insurance trust to protect trust property against creditors, legally avoid all future U.S. taxes, and also enjoy trust assets. Generally, a carefully-designed irrevocable life-insurance dynasty trust (or GST trust) provides tax-free growth of policy assets, and proceeds of the life insurance policy are paid to the trust free of income and estate taxes. Previously, it was uncertain whether the person who settled and funded a trust could also be a trust beneficiary without loss of estate-tax advantages. Based on the new IRS ruling, the grantor (or settlor) of the trust may be a discretionary beneficiary (i.e., subject to the discretion of the trustee), but trust assets will not be taxed in his estate when he dies. In other words, a U.S. taxpayer can fund an irrevocable trust that buys a life insurance policy insuring his life, the policy assets can grow tax-free, he can benefit from trust property during his lifetime, and when he dies, the insurance policy proceeds are paid to the trust free of income and estate taxes.”

IRS: Tax Law Changes for 2011 Federal Tax Returns (09.02.2012)

John W. Mohr — Sat, 18 Feb 2012 09:12:41 +0000

IRS: Five Tips for Recently Married or Divorced Taxpayers with a Name Change (03.02.2012)

John W. Mohr — Sat, 18 Feb 2012 09:10:11 +0000

IRS: Get Your Prior Years Tax Information from the IRS (27.01.2012)

John W. Mohr — Sat, 18 Feb 2012 09:07:21 +0000

IRS: Bartering Tax Center (17.02.2012)

John W. Mohr — Sat, 18 Feb 2012 05:45:19 +0000

IRS: Pub 972 Child Tax Credit (13.02.2012)

John W. Mohr — Mon, 13 Feb 2012 16:12:42 +0000

The purpose of this publication is:
This credit is for people who have a qualifying child as defined later. It is in addition to the credit for child and dependent care expenses (on Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46) and the earned income credit (on Form 1040, line 64a; or Form 1040A, line 38a).

The maximum amount you can claim for the credit is $1,000 for each qualifying child.

Click here to go to the publication at the IRS website.

Directors: Hopefully you are not working on an employment contract

John W. Mohr — Sun, 05 Feb 2012 08:59:15 +0000

Companies that currently employ directors on parallel or employment-only contracts should contract their managing directors on a statutory management contracts only to avoid costly audit and tax costs.
On 09 December 2010 the Czech Supreme Administrative Court (NSS) entered yet an additional opinion (nr. 3 Ads 119/2010-58 ) addressing the standing of directors and board members in commercial companies vis a vis disability payments and income tax. This opinion resolved that:
1. A single manager may not be engaged to the firm as an employee if the manager’s duties include responsibilities reserved to the director under §134 and §135 of the Commercial Law. (These speak to the responsibility of the director for the commercial, accounting and statutory management of the company.) The opinion specifically precluded the existence of a parallel employment and director’s relationship.2. The preclusion of an employment relationship also precludes the manager’s the right to receive state disability benefits – a benefit reserved to employees since 01.01.2009. (The manager does remain covered under the pension insurance plan in those months where s/he earns in excess of the statutory minimum – 6.300 Kc in 2011.)3. In the case that a manager-employee exercises activities reserved to the director, the employee contract risks being voided and related expenses (disability withholding, wages) being deemed tax non-deductible(!)4. Parallel contracts are possible only insofar as the employment contract does not extend into areas of responsibility reserved to statutory management. For practical purposes, this is a non-starter. (Imagine: Director with a janitorial employment agreement ….?)
Small companies: A practical problem demands a practical solutionThe problem here is one of both regulatory compliance and profitability. We seek to maximize the value of our company’s assets by shrewdly reducing or eradicating uncompensated risk and avoiding disruptions to our carefully-planned operations. We seek to avoid tax-nondeductible expenses unless they achieve comparatively higher revenues.
Most small companies with whom I work have a single manager who carries out the functions of the statutory executive as well as a host of additional employment activities. Often, this person is the sole shareholder. Sometimes the subsidiary of a small multinational corporation with a limited budget appoints a manager to fulfill both statutory and other management activities. In both cases I have encountered parallel contracts (statutory plus employment) and employment-only contracts where the manager has also been appointed director. This is not optimum.
Small companies need simple solutions. The only reasonably simple solution is a statutory management contract, only, approved by the shareholder meeting (or sole shareholder decision in the capacity of same). The director should countersign all manager-employee contracts and contracts negotiated by them, in writing.
If the company is not managed by a single sole shareholder/director, then the company should split the functions of director and manager-employee into the hands of 2 or more persons in written contracts. Manager-employee contracts in particular should specifically exclude the responsibilities of directors listed in §134 and §135 of the Commercial Law, except perhaps insofar as their role is merely to carry out the decisions of the director. In such a case, the company should also establish internal procedures to ensure that this division of responsibility is sufficiently documented. It might be practical and cost-effective to appoint the local manager-employee’s boss at the foreign parent as the director, to sign or co-sign all key decisions and contracts and use the local management to carry out their decisions. What does HQ think?
Whatever the case, it is important to establish the director of the company as the primary decision-maker in corporate management. To the extent we can do this we avoid disruptions to business and maximize our opportunities to succeed. If these issues affect your situation, consider engaging advisors that can help you put in place a practical solution that addresses the legal, tax and operational questions in play. John W. Mohr is director of CFO2GO entrepreneurial advisory, delivering online and outsourced accounting, domiciliary and financial advisory services to internationally-financed businesses and expats in the Czech Republic. www.cfo2go.eu john.mohr@cfo2go.eu

Own or control a foreign company? IRS is expecting a tax return …

John W. Mohr — Sat, 04 Feb 2012 16:09:02 +0000

Most Americans do not realize that if they own or control more than 10% of a foreign company they may need to file a detailed information return on the company with the IRS every single year as part of their US1040. Failure to file – even if the company earns no profits – can result in $10.000-50.000 penalties per year. Read more here in the article by Vernon K Jacobs, “Tips for Preparing the Form 5471 for Controlled Foreign Corporations,” published in the February 2009 issue of The Tax Advisor.