A Deep Dive Into the IRS Form 5741 Attribution Rules, Form 5471 Category of                                               Filers, and the Safe Harbor Rules

A Deep Dive Into the IRS Form 5741 Attribution Rules, Form 5471 Category of Filers, and the Safe Harbor Rules

Tax Law
 By Anthony Diosdi This article will attempt to explain the attribution rules for stock ownership for individuals and entities regarding the filing requirements of the Form 5471. Form 5471 is used by certain U.S. persons who are officers, directors, or shareholders in respect of certain foreign entities that are classified as corporations for U.S. tax purposes. The Form 5471 and schedules are used to satisfy the reporting requirements of Internal Revenue Code Section 6038 and 6046 along with the applicable regulations.Substantively, Form 5471 backstops various international provisions of the Internal Revenue Code such as Sections 901/904 (Foreign Tax Credit), Section 951(a) (Subpart F and Section 956), Section 951A (GILTI), Section 965 (transition Tax), Section 163(j) (interest deduction limitation), and Section 482 (transfer pricing). International information returns that often are associated…
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Are You Ready for the Tax Extension Deadline?

Are You Ready for the Tax Extension Deadline?

Tax Law
Many people have April 15th entered into their consciousness because it is thought of as "Tax Day.”  However, October 15th may sneak up on them when they have asked for an extension on filing their income taxes.  You must pay an equal amount of attention to your income taxes, even when you do not have to file them on the standard day. October 15th may be here before you know it. If you owe taxes to the IRS, you would need to pay even more in interest and penalties if you miss the October 15th deadline. In addition, the IRS would view your taxes as very late, and it may prompt them to ask even more questions if they have them. This is the time to contact an experienced professional…
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An In Depth Look into U.S. Estate, Gift, and Generation-Skipping Tax Treaties

An In Depth Look into U.S. Estate, Gift, and Generation-Skipping Tax Treaties

Tax Law
By Anthony Diosdi  The United States imposes estate and gift taxes on certain transfers of U.S. situs property by “nonresident citizens of the United States.” In other words, individual foreign investors may be subject to the U.S. estate and gift tax on their investments in the United States. The U.S. estate and gift tax is assessed at a rate of 18 to 40 percent of the value of an estate or donative transfer. An individual foreign investor’s U.S. taxable estate or donative transfer is subject to the same estate tax rates and gift tax rates applicable to U.S. citizens or residents, but with a substantially lower unified credit. The current unified credit for non domiciliaries  is equivalent to a $60,000 exemption, unless an applicable treaty allows a greater credit. U.S.…
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How Digital Evidence Can be Obtained from Computers, Smartphones, and Social Media Platforms

How Digital Evidence Can be Obtained from Computers, Smartphones, and Social Media Platforms

Tax Law
By Anthony Diosdi Whether criminal or civil, digital evidence impacts just about all areas of the legal profession. This article is designed to provide attorneys and other legal professionals with an overview on how to obtain phone, social media, and other records. Hopefully this article will educate its readers on how digital evidence may be obtained from computers, cell phones, and social media platforms. This article will also discuss the proper forensic practices to preserve digital evidence.Creating and Storing Digital EvidenceWe will begin this article by talking about the creation of digital data or evidence and where digital data is stored. Digital data is created whenever someone sends an email, drafts a document on a computer or a portable device, makes a call on a smartphone, posts on social media,…
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RSUs and the Expatriation Tax

RSUs and the Expatriation Tax

Tax Law
By Anthony Diosdi A restricted stock unit (“RSU”) is a form of stock based compensation used to reward employees. Restricted stock units vests at some point in the future. Unlike stock options, RSUs have some value upon vesting. That is, unless the underlying stock becomes worthless. An RSU is a grant whose worth is based on the value of the company issuing the stock. Until a grant of RSUs vest, there is no U.S. tax consequence. In other words, until an RSU vests, it is nothing more than an unfunded promise to issue a share to the holder of the grant until some point in the future. The U.S. Tax Consequence of the Vesting of an RSUOnce an RSU vests, the recipient is taxed on the value of the shares…
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RSUs and the Expatriation Tax

RSUs and the Expatriation Tax

Tax Law
By Anthony Diosdi A restricted stock unit (“RSU”) is a form of stock based compensation used to reward employees. Restricted stock units vests at some point in the future. Unlike stock options, RSUs have some value upon vesting. That is, unless the underlying stock becomes worthless. An RSU is a grant whose worth is based on the value of the company issuing the stock. Until a grant of RSUs vest, there is no U.S. tax consequence. In other words, until an RSU vests, it is nothing more than an unfunded promise to issue a share to the holder of the grant until some point in the future. The U.S. Tax Consequence of the Vesting of an RSUOnce an RSU vests, the recipient is taxed on the value of the shares…
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Planning for Foreign Investors Investing in U.S. Real Estate to Eliminate                                                      the U.S. Estate and Gift Tax

Planning for Foreign Investors Investing in U.S. Real Estate to Eliminate the U.S. Estate and Gift Tax

Tax Law
 By Anthony Diosdi In the individual foreign investor setting, inbound tax planning often requires a balancing of U.S. income tax considerations and U.S. federal gift and estate tax considerations. While U.S. federal income tax rates on the taxable income of an individual foreign investor are the same as those applicable to a U.S. citizen or resident, the federal estate and gift tax as applied to individual foreign investors can and often results in a dramatically higher burden on a taxable U.S. estate or donative transfer of a foreign investor than for a U.S. citizen or domiciliary. As a result, for many individual foreign investors, the most important U.S. tax consideration is the U.S. federal estate and gift taxation. The United States imposes estate and gift taxes on certain transfers of…
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IRS Aims to Clear Backlog by 2023

IRS Aims to Clear Backlog by 2023

Tax Law
Like most companies and government agencies, the Internal Revenue Service (IRS) fell behind on its work during the height of the COVID-19 pandemic. The agency is trying to overcome a significant backlog, and its goal is to do so by 2023. Currently, the IRS has 11 million returns from 2021 to process and millions more filed in 2022. While many people have received refunds, others are waiting. If you have not yet filed your taxes for 2022, now is the time to do so, and you should always have help from a skilled San Francisco tax attorney. The IRS hired additional staff and has additional funding to catch up and get on top of its tax return processing for 2022. No matter whether the IRS is on top of its…
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The Taxation of RSUs in an International Context

The Taxation of RSUs in an International Context

Tax Law
By Anthony Diosdi The following is a general summary of the cross-border tax consequences associated with the grant of restricted stock units (“RSUs”). A restricted stock unit (“RSU”) is a form of stock based compensation used to reward employees. Restricted stock units vests at some point in the future. Unlike stock options, RSUs have some value upon vesting. That is, unless the underlying stock becomes worthless. It is common for U.S. multinational corporations to assign U.S. employees to overseas affiliates for short or long term assignments. These employees may have received RSU grants before their foreign assignment began. This can trigger income and social security tax consequences related to the RSUs in multiple jurisdictions. The rules relating to the taxation of RSUs in an international context are often complex and…
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The Tax Consequences Associated With Making Loans or Advances to a Foreign Corporation

The Tax Consequences Associated With Making Loans or Advances to a Foreign Corporation

Tax Law
By Anthony Diosdi Once a foreign corporation is established, it must decide how to raise funds. Like domestic corporations, foreign corporations often raise capital through issuing stocks or through borrowing. The investor who acquires stock holds an equity interest in the corporation while the lender holds a debt or creditor interest in the foreign corporation. In either case, the investor or lender expects a return on the investment. Shareholders may receive that return from dividends paid on stock and from profit upon later sale of the share. On the other hand, lenders receive their return on their investment in the form of interest payments. Many U.S. investors do not wish to hold an equity investment in a foreign corporation because of the harsh GILTI or subpart F income tax consequences…
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