iF YOU OWN A FOREIGN CORPORATION BETTER FILE BEFORE THE IRS DISCOVERS YOU HAVE NOT TO AVOID HUGH PENALTIES

 If you own 10% or more of a foreign corporation you may be obligated to file form 5471 with your tax return. This includes foreign etntities that own real estate or businesses.  If US persons own 50% or more you may also be subject to the GILTI TAX  which can cause you to pay US income taxes on your share of the corporate income even though it is not distributed to you. The penalty for failing to file this form is $10,000 per year but if you file before the IRS discovers your error, there is a procedure where that penalty can be waived.

We can help you compete this complex form (even if you prepare your own tax return) and with catching up with the IRS to avoid penalties. EMAIL US FOR HELP   

Reducing or Eliminating 951a GILTI Tax on Conrolled Foreign Corporations

Many clients want to reduce or eliminate the new tax for 2018 and beyond on the undistributed earnings of their controlled foreign corporations (over 50% ownership in the hands of US taxpayers). This replaces the old regime where profits left in foreign corporations (except in certain specific types of situations) are not taxed until distributed as dividends or wages.

The new  IRS Section 951a is complex and often hits  US owners of small foreign corporations. The tax on the earnings which are deemed distributed actually is assessed on the 1040 (or other US tax form) of the owner of the corporation though a deemed distribution (Subpart F) which is included with the shareholders other income.  READ MORE ABOUT HOW TO AVOID  OR REDUCE THE GILTI 951A TAX HERE

If you own a controlled  foreign corporation we can provide you with guidance and help you eliminate or reduce this new tax on deemed distributions of its profits.  Email us at taxmeless@gmail.com with your questions or for help.   Don Nelson, Tax Attorney

NEW GILTI TAX ON CONTROLLED FOREIGN CORPORATIONS FOR 2018

If you own more than fifty percent of a foreign corporation holding real estate or operating a business

abroad, you now have to plan for the new GILTI tax (acronym)  IRC Section 951A resulting from the Tax Bill enacted in late 2017.   This tax applies to both large and small foreign corporations. In the past unless you had certain types of income, any net profits left in the corporation were not taxed on your personal return (or US corporate return if the foreign corporation is owned by your foreign corporation).  Now it is probable if there is a profit you will have to pay tax on the profits remaining at year end in your foreign corporation.

READ MORE ABOUT THE GILTI TAX  HERE IN AN EXCELLENT ARTICLE BY AN EXPERT - CPA  KYLE LODDER

Contact us at ddnelson@gmail.com if you want to plan for the tax, the impact of the tax, or avoiding it before the end of 2018.  Time is limited and after year end there is nothing you can do.

NEW 2018 GILTI Tax On US Owners of Controlled Foreign Corporations

For 2018 and beyond if you own 10% or more of a Controlled Foreign Corporaton (More than 50%

owned by US taxpayers) you must pay a GILTI tax (that is the real nickname of this tax) on part of the corporations net income even though it is not distributed to you.  This is a modification of the Subpart F rules which causes owners (US corporations, individuals, partnerships, etc) to pay tax on earnings of controlled foreign corporations. The rules are complex and may catch many expatriate small business owners by surprise  This tax is different than the Section 965 tax you paid one time for 2017.

If you want to know more the IRS draft form and initial draft instructions are below which can be downloaded in pdf format:

INSTRUCTIONS FOR FORM 8992 -draft

FORM 8992 - draft

If you want to take steps to deal with this tax before year end or need other assistance email us at ddnelson@gmail.com