San Francisco Tax Blogs | Diosdi, Ching, & Liu, LLP

12Apr 2023 by Anthony Diosdi

The 2023 Tax Guide for Cryptocurrency and NFTs

Tax Law

By Anthony Diosdi Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Virtual currency is a digital representation of value, other than a representation of the U.S. dollar or a foreign currency, that functions as a unit of account, a store of value, and a medium of exchange. Cryptocurrency allows parties to transact directly without an intermediary using blockchain technology, a shared distributed ledger that verifies, records, and settles transactions on a secure, encrypted network. Although some major retailers accept cryptocurrencies like Bitcoin and Ethereum, cryptocurrency is not money. Money means coin and paper money that Congress declares is legal tender. Because cryptocurrencies are sometimes other than money, what they are varies depending on the perspective from which they are viewed. For example, the Securities…

06Apr 2023 by Anthony Diosdi

TAXATION OF THE MODERN DAY CROSS-BORDER MERGER AND ACQUISITION

Tax Law, Uncategorized

In today’s global economy, corporations have operations all over the world. Typically, a U.S. parent corporation owns a group of subsidiary corporations formed within and outside the United States. In such a scenario, the foreign subsidiaries are largely held by one foreign parent corporation. In larger multinational corporations, frequently there are multiple foreign parent corporations. This article discusses a number of key tax considerations specific to cross-border reorganizations. This article does not provide an exhaustive overview of all tax considerations but rather provides commentary on the most overlooked and misunderstood factors involved in the taxation of an international corporate reorganization. Section 368(a)(1) corporate reorganizations Any discussion regarding the taxation of crossborder mergers and acquisitions must begin with Section 368(a)(1). In the domestic context, Section 368(a)(1) provides for nonrecognition of gain…

04Apr 2023 by Anthony Diosdi

Once the U.S.-Hungary Income Tax Treaty Terminates- Can Hungarian Owned Entities be Treated as “Equivalent Beneficiaries” For Tax Treaty Purposes?

Tax Law

By Anthony Diosdi On July 8, 2022, the Biden administration announced that it will terminate the U.S.-Hungary Income Tax Treaty that was enacted in 1979. The provisions of the tax treaty will no longer apply after January 1, 2024. According to a July 8 article in the Wall Street Journal, the Treasury Department explained its action based on long-standing concerns with Hungary’s tax system and the treaty itself, and a lack of satisfactory action by Hungary to remedy these concerns in coordination with other EU member countries that are seeking to implement the OECD Pillar Two global minimum tax proposal. The treaty termination will apply to U.S.-source dividends, interest, and royalties for payments made on or after January 1, 2024. A new U.S. income tax treaty with Hungary was agreed…

31Mar 2023 by Anthony Diosdi

U.S. Taxation of International Cloud Computing and Digital Transactions

Tax Law

By Anthony Diosdi New technology and new transactions often raise difficult issues of tax policy and administration in part because existing rules were developed to deal with other situations. The dramatic expansion in electronic commerce facilitated by the use of the Internet and other technology is subjecting existing tax principles to new pressures. One area of concern is the application of source rules to electronic commerce transactions. Suppose, for example, that a corporation delivers software or a digital product to a customer on the Internet. The customer can download the product and use it commercially. Depending upon the nature of the transaction and the property interests involved, the income to the corporation might appropriately be characterized as a rent or royalty for the use of technology, profit from the sale…

31Mar 2023 by Anthony Diosdi

Tax Planning for Inbound Licenses of Intellectual Property in a Post 2017 Tax Cuts and Jobs Act World

Tax Law

By Anthony Diosdi The U.S. is the world’s largest recipient of foreign direct investment. Much of this investment is in the form of foreign owned intellectual property. Creators of foreign owned intellectual property typically will transfer some or all of their intellectual property rights through an inbound U.S. licensing agreement. Under U.S. domestic laws, a foreign person generally is subject to 30 percent U.S. federal tax on the gross amount of U.S. source income received from a licensing agreement. This is because all persons (“withholding agents”) making U.S.-sourced fixed, determinable, annual, or periodical or (“FDAP”) payments to foreign persons generally must report FDAP payments, such as royalties. Withholding agents are permitted to withhold at a lower rate if the beneficial owner of the intellectual property certifies their eligibility for the…

15Mar 2023 by Anthony Diosdi

Can Your Self-Directed IRA Hold Stock Options?

Tax Law

By Anthony Diosdi The growth of 401(k) plans and other defined contribution plans (as opposed to traditional defined pension plans) has generated additional opportunities for employees and retirees to use IRAs. To postpone taxation of the account balance in such a plan, the individual must rollover some or all of the account balance to an IRA or other qualified plan. This has resulted in the growth of “self-directed” IRAs. Since 1974, the IRS has permitted individuals to totally “self-directed” investments made within their IRAs. Self-directed IRAs are held by a trustee or custodian. They permit investment in a broader range of investments than is permitted by traditional IRAs. Although a self-directed IRA allows individuals to invest in numerous illiquid assets, investments in some assets are prohibited. These include but may…

15Mar 2023 by Anthony Diosdi

From Investment Vehicles to Treaties- What Foreign Investors Need to Know About Cross-Border Estate Planning

Tax Law, Uncategorized

By Anthony Diosdi Foreign investors generally have the same goal of minimizing their tax liabilities from their U.S. real estate and other U.S. investments, as do their U.S. counterparts, although their objective is complicated by the very fact that they are not domiciled in the U.S. The U.S. has a special estate and gift tax regime that is applicable to foreign investors that are not domiciled in the U.S. This article summarizes the basic estate and gift tax issues that affect foreign investors investing in the U.S. This article also discusses international tax planning opportunities that may be available to individuals that are not-U.S. citizens.An Overview of the Estate and Gift TaxU.S. Federal law imposes a transfer tax upon the privilege of transferring property by gift, bequest or inheritance. During…

14Mar 2023 by Anthony Diosdi

Criminal Tax Law in San Francisco, California: What You Need to Know

Tax Law

If you are facing criminal tax charges in San Francisco, California, it is crucial to have a knowledgeable and experienced criminal tax attorney on your side. Diosdi Ching & Liu, LLP is a law firm that has extensive experience representing clients in criminal tax cases. Our attorneys are well-versed in the intricacies of tax law and have a deep understanding of the criminal justice system. In San Francisco, criminal tax charges can arise from a variety of circumstances, including tax evasion, failure to file tax returns, and fraud. If you are under investigation for a criminal tax matter, it is critical to take action quickly to protect your rights and interests. Our criminal tax attorneys will work closely with you to develop a strategy that addresses your specific needs and…

10Mar 2023 by Anthony Diosdi

How to Calculate the Tax on Sale of a Partnership Interest of a Foreign Investor

Tax Law

By Anthony Diosdi Foreign investors generally have the same goals of minimizing their income tax liabilities from their business investments, as do their U.S. counterparts, although their objective is complicated by the very fact that they are not U.S. persons. That is, foreign investors must be concerned not only with income taxes in the United States, but also income taxes in their home country. Further, the United States has a special income tax regime that is applicable to foreign persons. Specifically, if the foreign investor derives certain types of passive income, it is typically taxed at a flat 30% rate (without allowance for deductions), unless an applicable U.S. tax treaty reduces this statutory rate. In contrast, if the U.S. activities of the foreign investor rises to the level of constituting…

10Mar 2023 by Anthony Diosdi

Form 5472- The Hidden Reporting Requirement for Foreign-Held Disregarded Entities

Tax Law

By Anthony Diosdi There is a perception by many countries that the United States is the world’s largest tax shelter. This is because unlike many countries, the United States does not require public disclosure of ownership of its entities, (in particular Limited Liability Companies (LLCs)), or publishing of year-end financial statements for public viewing. The lack of transparency has allowed nonresidents of the United States to form a domestic shell to avoid paying foreign income taxes, hide money or commit other acts of wrongdoing. Historically, nonresidents established shell companies in the United States as domestic disregarded entities.On December 13, 2016, the Treasury Department and the IRS issued final regulations regarding new reporting requirements for domestic disregarded entities wholly owned by a nonresident of the United States. For the purposes of…