Gift Tax Archives | SF Tax Counsel

20Sep 2019 by Pat Geddie

The IRS Offers Settlements for Owners of Micro-Captives Insurance Companies

By Anthony Diosdi Once upon a time, there was a type of insurance company known as a micro-captive insurance company. The use of micro-captive insurance companies were a very effective vehicle for transferring wealth out of an operating business so that wealth was not trapped and exposed to higher taxation by the IRS. By paying premiums to a micro-captive insurance company, wealth was effectively transferred out of the operating business and into the captive. The premiums of the policies were paid with pre-tax dollars by the business. Because micro-captive insurance companies had the benefit of being able to accrue reserves tax-free and other tax advantages available only to insurance companies, micro-captive insurance companies offered huge tax benefits. For example, Internal Revenue Code Section 831(b) permitted micro-captive insurance companies to claim…

30Aug 2019 by Pat Geddie

Be Careful When Receiving a Gift From a Foreign Corporation or Partnership

Gift Tax

By Anthony Diosdi The Small Business Job Protection Act of 1996 created reporting requirements for U.S. persons that receive large gifts after August 20, 1996 from foreign persons (including foreign corporations). Federal law requires gifts or bequests valued at more than $100,000 from a nonresident alien or foreign estate to be disclosed on an IRs Form 3520. Federal law also requires gifts valued at more than $16,076 from foreign corporations or foreign partnerships (adjusted annually for inflation) to be disclosed on an IRS Form 3520. Besides the IRS reporting requirements of a Form 3520, anyone receiving a gift from a foreign corporation or foreign partnership should know that Internal Revenue Code Section 672(f)(4) broadly authorizes regulations to recharacterize gifts or bequests, directly or indirectly, from partnerships or foreign corporations, as…

05Aug 2019 by Pat Geddie

There May By 50 Ways To Leave Your Lover But Only 1 Way To Make a Transfer To a “Ding,” NING,” “WING,” Or “SDING”

Gift Tax

By Anthony Diosdi Introduction The passing of the Tax Cuts and Jobs Act resulted in a significant tax increase for many in high income tax states. It also elevated the need of many residents of high tax states to utilize planning opportunities to reduce their overall tax liabilities. An incomplete gift non-grantor trust (hereinafter “ING”) formed in a state such as Nevada, Delaware, Wyoming, or South Dakota- that is, a “NING,” “DING,” “WING,” or “SDING,” may offer a planning opportunity to reduce state income tax liabilities. As a general rule, states impose income tax based on residency. For example, a Maryland resident is subject to Maryland income tax and a California resident is subject to California income tax. The same can be said of an ING. An ING is subject…

11Apr 2019 by Pat Geddie

Can a Non-U.S. Citizen/Non-Domiciliary be Subject to a U.S. Gift Tax for Gifting Money to a U.S. Family Member?

Gift Tax

By Anthony Diosdi Any individual who is a non-U.S. citizen/non-U.S. domiciliary is subject to special transfer tax rules. A non-U.S. citizen/non-U.S. domiciliary is subject to a U.S. federal estate tax only with regard to the decedent’s assets which were situated within the United States upon his or her death (i.e., real estate located in the United States, or stock in a domestic corporation). Unlike U.S. citizens and U.S. domiciliaries, the estate of a person who is neither a U.S. citizen nor a U.S. domiciliary is only allowed a $13,000 estate tax credit, which results in an estate tax exemption of only $60,000 of United States situs assets. A person who is a non-U.S. citizen/non-U.S. domiciliary is also subject to U.S. gift tax with regard to inter vivos transfers of real…