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Archive for Exit Tax

The Exit Tax Is A Perfectly Bad Idea

This post is based on (but is NOT identical to) a July 17, 2017 submission in response to Senator Hatch’s request for Feedback on Tax Reform.

Why is the United States imposing an “Exit Tax” on their “non-U.S. pensions” and “non-U.S. assets”? After all, these were earned or accumulated AFTER the person moved from the United States?”

Part A – Why certain aspects of the Exit Tax should be repealed Read more

The Dual Citizen Exception To The Exit Tax

According to Treasury Department numbers, 2016 broke the record for annual U.S. citizenship renunciations with a grand total of 5,411 renunciations. As we’ve noted previously, possible reasons for the increase in renunciations include the global strengthening and influence of the Foreign Account Tax Compliance Act (“FATCA”) and President Trump’s election victory (the “Trump bump”). Read more

Dwindling Returns On Investment

Ron Oddo

Today, all owners face three significant headwinds that increase the difficulty of a successful business exit. One is our flat economy—today and for the foreseeable future. The second is the substantially higher tax bill that’s due upon the sale of a business. And last, but not least, is the long-term mediocre investment climate that depresses the amount of income owners can expect from their sale proceeds and other investments. Combined, these three headwinds wreak havoc on an owner’s ability to cross the finish line at all, let alone as they originally planned.

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Preventing A Huge Taxation On Your Business

Ron Oddo

Today, all owners face three significant headwinds that increase the difficulty of a successful business exit. One is our flat economy—today and for the foreseeable future. The second is the substantially higher tax bill that’s due upon the sale of a business. And last, but not least, is the long-term mediocre investment climate that depresses the amount of income owners can expect from their sale proceeds and other investments. Combined, these three headwinds wreak havoc on an owner’s ability to cross the finish line at all, let alone as they originally planned.

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The Economy Just Ain’t What It Used To Be

Ron Oddo

Today, all owners face three significant headwinds that increase the difficulty of a successful business exit. One is our flat economy—today and for the foreseeable future. The second is the substantially higher tax bill that’s due upon the sale of a business. And last, but not least, is the long-term mediocre investment climate that depresses the amount of income owners can expect from their sale proceeds and other investments. Combined, these three headwinds wreak havoc on an owner’s ability to cross the finish line at all, let alone as they originally planned.

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Choosing Between A ‘C’ OR ‘S’ Corporation – Selling Options For your Business

Ron Oddo

Usually, no other factors carry the weight of the tax issue or significantly differentiate the C from the S Corporation. Limited liability is attainable in both the C and S Corporation forms. Voting rights need not differ. An S Corporation conducts business, on a day-to-day basis, exactly as a regular corporation. The only difference between the C and S Corporation is the filing of a one-page IRS form (Form 2553) electing treatment as an S Corporation.

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Exit Planning: Two Baby Steps

Ron Oddo

In previous blogs, we attempted to dismantle the most common objections owners make to undertaking the planning necessary to exit their companies successfully. Those excuses to avoid exit planning are:

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Canada Pension Plan (And Other “Foreign Social Security”), The “Net Worth” Test, Form 8854 And Form 8938

John Richardson

Q. How does the inability of the state of Rhode Island to pay its employee pensions help us understand the “net worth” of a U.S. citizen wanting to renounce U.S. citizenship?

A. The answer (like most wisdom in the modern world) is explained in the following tweet.

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The “Exit Tax”: Dual US/Canada Citizen From Birth, No Canada Citizenship Today = No Exemption To US “Exit Tax”

John Richardson

Relinquishing US citizenship: South African Apartheid, the Accidental Taxpayer and the exit tax

The above references a “guest post” written by Dominic Ferszt of Cape Town South Africa. The post demonstrates how the “dual citizen from birth” exemption to the S. 877A “Exit Tax” relies on the citizenship laws of other nations. In some cases those laws of other nations are arbitrary and unjust. If these laws were U.S. laws, they might violate the equal protection and/or due process guarantees found in the United States constitution. For example, Mr. Ferszt describes how the “dual citizenship exemption” to the “Ext Tax” is dependent on South African “Apartheid Laws”. He describes a situation where a “black” U.S. citizen from birth is denied the benefits of the dual citizen exemption to the Exit Tax, which are available to a “white” dual citizen from birth. (During the “Apartheid Era” Blacks were not entitled to South African citizenship.)

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The US “Expatriation Tax” And The Incentive To Apply For A Green Card And/Or Remain In The USA

John Richardson

America doesn’t really need skilled immigrants, or does it?

Clearly a potential immigrant to the U.S. with assets in the home or a third country would have to have a special kind of insanity to subject himself to this system with all the paperwork and potential for double-taxation. And it would do this person absolutely no good whatsoever to become a U.S. citizen since this would change nothing. On the contrary, being a citizen would actually make it worse – one might shed a Green Card relatively easily (if done before the immigrant acquired too many assets in the U.S. or abroad) but U.S. citizenship is forever unless one renounces.

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The Impact Of Value Drivers On Sale Price

Did you ever wonder why one business has buyers lined up willing to pay top dollar while another sits on the market for months, or even years? What do buyers look for in a prospective business acquisition?

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Some Cautions Affecting Your Tax Situation

For this post, I will present some news about tax topics that may affect your current situation: earned income tax credit (EITC), delayed nonresident refunds, and expatriate income tax.

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