PFIC Testing for Foreign Portfolio Companies

Funds with U.S. investors, U.S. family offices, and individual U.S. investors (collectively, “U.S. Investors”) must be cognizant of whether their foreign investment in private companies is an investment in a passive foreign investment company (“PFIC”). Typically, a foreign portfolio company would be classified as a corporation for U.S. income tax purposes unless an election was made to have it taxed otherwise. The issue with PFICs is that unless certain elections are made, distributions from a PFIC may be subject to an excess distribution regime resulting in a punitive tax and interest charge. In certain bad circumstances, the punitive tax and interest charge can be the amount of the distribution. […]

Read More… from PFIC Testing for Foreign Portfolio Companies

Importance of Semiannual and Annual OZ Testing

Fund managers must ensure their qualified opportunity funds (“QOF”) meet the requirement that 90 percent of the QOF’s assets are held in qualified opportunity zone (“QOZ”) property. Failure to meet the test can result in significant penalties to the QOF that can have a significant impact on the investment return to its investors. […]

Read More… from Importance of Semiannual and Annual OZ Testing

FATCA Compliance for Offshore Funds

It is important that fund managers understand their responsibilities under the Foreign Account Tax Compliance Act (“FATCA”). FATCA imposes a 30% withholding tax on U.S. source payments to foreign financial institutions (“FFI”) that do not comply with requirements to identify their U.S. account holders, as well as to non-financial foreign entities that do not identify their substantial U.S. owners, unless an exception applies. For offshore funds, understanding their FATCA reporting requirements is of the utmost importance to avoid withholding tax. […]

Read More… from FATCA Compliance for Offshore Funds

Streamlined Coordinated Services – Immigration and Tax

Transitioning key talent from one country to another presents complex issues for the multinational corporation. Global mobility requires coordination of services between in-house legal, human resources, and other divisions in multiple countries. The typical approach is to hire one of the large immigration firms and the big accounting firms to handle the immigration and tax work, believing this is the best way forward. We have seen too often under this model that the services are not customized and collaborative to the multinational corporation or the employee transitioning to work in a new country. […]

Read More… from Streamlined Coordinated Services – Immigration and Tax

Not Over Taxing Gains on QSBS (Qualified Small Business Stock)

The exclusion from gain applicable to the sale of qualified small business stock (“QSBS”) is a key benefit in selecting C corporation status for startups and other businesses. QSBS stock allows the noncorporate taxpayer to exclude from gain the greater of $10 million or ten times the taxpayer’s basis in the stock (“QSBS Eligible Exclusion Amount”). Properly excluding this gain from tax is an important tax savings opportunity and significantly increases the noncorporate taxpayer’s return on investment. […]

Read More… from Not Over Taxing Gains on QSBS (Qualified Small Business Stock)

Power of the CRUT and Importance of Correct Tax Reporting to Receive the Desired Benefits

Family offices and private clients (“Clients”) have complicated investment and estate planning structures that require professionals to understand how to handle the needs from legal, accounting, and tax reporting. One of the planning tools frequently implemented for these Clients is a charitable remainder unitrust (“CRUT”). The CRUT allows for the tax-free liquidation of a highly appreciated asset, the tax-free growth of the assets inside the CRUT, with the income building inside the CRUT only being taxed to the extent of distributions to the lifetime beneficiary. This is a powerful tool if the tax reporting occurs correctly. We have noticed a gap between the estate planning and the tax reporting often resulting in phantom income being taxed to the detriment of the beneficiaries. […]

Read More… from Power of the CRUT and Importance of Correct Tax Reporting to Receive the Desired Benefits

Customized Mergers and Acquisitions Due Diligence Services

In the acquisition of a business, it is important the buyer has a clear understanding of the target’s financial, commercial, operational, technical, human capital, and tax condition. Too often, certain parts of the due diligence do not receive the attention required, either because the firm performing the due diligence does not have the necessary background, or there is a lack of coordination among professionals in different fields of expertise. This is a critical opportunity for the buyer to learn of issues with the target as the nonidentification of key issues will have a financial impact down the road for the buyer. […]

Read More… from Customized Mergers and Acquisitions Due Diligence Services

Tax Preparation for Clients with International Assets and Businesses 

U.S. tax reporting for U.S. persons with businesses or assets outside the U.S. is complex, legal intensive, and there are many traps for the unwary that can carry serious penalties. The tax preparer must understand the forms to prepare, understand the rules as the tax preparation software has not caught up to the complexity of the reporting, and be prepared to take legal positions to obtain the best result for the client. Too often, tax preparers do not have the necessary background to handle the tax reporting for international clients. […]

Read More… from Tax Preparation for Clients with International Assets and Businesses 

Customized Tax Preparation as Key Strategy for Tax Savings

We routinely see mistakes in the reporting on tax returns provided by the previous tax preparer and the tax planning strategy provided in a legal memorandum, thus missing the tax savings desired. This can result for many reasons such as the client did not provide the memorandum to the tax preparer, the tax preparer did not understand how to report the tax strategy, practically the tax strategy did not work, or that the tax preparer and attorney advisor did not work together collaboratively. Our approach is to not make it the responsibility of the client to ensure the tax strategy is carried out, but to have advisors with legal backgrounds at the table with the tax preparer collaborating together to ensure the desired result is carried out. […]

Read More… from Customized Tax Preparation as Key Strategy for Tax Savings

Customized Fund Administration Services

Fund managers frequently experience a lack of coordination between their legal, accounting, and fund administration services.  Often fund managers receive a preset of services that are not customized to their fund, are faced with minimum service prices, and experience long response times from each set of professionals.  We provide cohesive services amongst professionals customized to the needs of our clients.  This provides our clients with the best services that are tailored to our clients’ needs. […]

Read More… from Customized Fund Administration Services