|
|
|
|
|
Can't Escape U.S. Taxes
|
|
|
|
Monday June 12, 2006
Vol. 8 No. 115 |
|
In Today's Letter: Comment: U.S. Taxes & Foreign Trusts
Offshore: Far East Tax Havens
Wealth: Best Value in Stocks Today
Privacy & Rights: Professional Snoops
|
You Can't Escape U.S. Income Taxes - Even With an Offshore Trust
Dear A-Letter Reader:
Unlike almost every other nation, the United States taxes all world wide income of its citizens and those with permanent U.S. resident status, regardless of where they live in the world. (Many nations exempt their citizens from taxes if they live abroad). U.S. Internal Revenue Code (IRC), sec. 61 states: "Except as otherwise provided... gross income means all income from whatever source derived." The IRS and U.S. courts interpret this as including income of every nature wherever it is earned in the world, and that includes offshore trust income.
For tax purposes, the IRC defines a "U.S. person" as any individual who is a U.S. citizen, a U.S. resident alien deemed to be a permanent resident or a U.S. domiciled corporation, partnership, estate or trust.
Under U.S. tax law, foreign asset protection trusts are 'income tax neutral,' as are domestic U.S. trusts. That means the trust itself is not liable for taxes on its income. But all trust income is treated as the grantor's personal income, reportable annually as gross income on IRS Form 1040 and taxed accordingly at personal income tax rates. The fact that a grantor's trust is located offshore does not negate the U.S. grantor's personal obligation to report trust income.
EDITOR'S NOTE: If you want to know more about foreign trusts, The Sovereign Society currently offers a special "Offshore Trust" report. Click here for more information.
It's virtually impossible for a U.S. person to avoid taxation on the income of a foreign trust that has any U.S. persons as beneficiaries. IRC section 679(a)(1) states: "A U.S. person who directly or indirectly transfers property to a foreign trust... shall be treated as the owner [of the property] if for such year there is a U.S. beneficiary of any portion of such trust during any taxable year."
Long before changes in U.S. tax law spoiled the party, no-tax and low-tax haven nations vigorously promoted the creation of offshore asset protection trusts and corporations. Informed Americans flocked to such places to do business, taking advantage of the unusually generous treatment the IRS then applied to offshore trusts. In those quaint days before the IRS caught on, deferred income and interest were allowed to accumulate tax-free as long as it remained in the foreign trust. Taxes came due only when income distributions were made to beneficiaries. The number of Americans using these tax avoidance devices grew, and the tax Nirvana's days soon were numbered. It couldn't last, and it didn't.
Today, without crossing the line into tax evasion, there is not much a foreign trust can achieve in the way of income tax savings that can't be done just as well with a domestic trust.
But an offshore trust does provide some major benefits that a domestic trust can't offer, including long distance asset protection and reduced estate taxes.
That's the way that it looks from here.
BOB BAUMAN, Editor
|
|
|
|
Hong Kong: The Jewel of the Orient
Much of the wealth of Asia is harbored on this tiny, subtropical island. And with good reason. Ultra-low taxes, secure private banking, minimal regulations, and investment & lifestyle opportunities that the emperors themselves never dreamed of...
Now, the freest economy on earth can help you achieve financial freedom. Find out how by clicking below:
LINK: http://www.isecureonline.com/reports/190SHGKG/E190G625/
|
|
|
|
Two Leading Far East Offshore
For prime investment and banking opportunities, investors and high net worth individuals increasingly look to the Far East for their financial needs, especially Europeans who want to escape from the clutches of the EU tax directive. Both Hong Kong and Singapore, are leading low tax jurisdictions of choice, according to The Asia Times Online. Hong Kong and Singapore, rivals for offshore business, both rank among the world's freest economies. The Heritage Foundation calls Hong Kong "a model of economic freedom," and said "Singapore's investment laws are clear and fair, and they pose few problems for business." And we agree, Hong Kong and Singapore are excellent venues to take advantage of Chinese and Asian financial opportunities. Hong Kong is also ranked as one of the top four Asset Havens in the world by The Sovereign Society. Click here for more information.
|
|
|
|
The Best Value in Stocks Today
Arguably offering the best absolute and relative bargains in the world after a five-year period of uninspiring returns, global blue-chip stocks are ripe to post their first major rally since 2003. That's especially the case with U.S. large-caps, stuck in a performance rut since 2004. Unlike high-flying small-cap stocks, which came crashing to Earth in May's sell-off, global large-caps declined far less and offer superior values. Many of these companies trade at or near their 52-week lows, harbor billions in free cash-flow, trade at low price-to-earnings ratios and in some cases, are supported by heavy insider buying. The Sovereign Society will introduce the best and most affordable index to play this compelling theme - denominated in euro - in July's Sovereign Individual. Compared to the benchmark MSCI World Index, the leading global barometer measuring global stocks since 1969, our investment recommendation trades at a 35% discount based on relative valuations and offers 32% greater dividend income.
ERIC ROSEMAN, Investment Director
on behalf of The Sovereign Society
|
|
|
|
Occupation: Professional Email Snoop
Talk about a strange job. Apparently now that most businesses can't function without email, businesses need employees to police those outgoing emails. According to a new report, 4 out of 10 large businesses (with 1000 or more employees) in the U.S. and U.K. already employ workers who do nothing but scan outgoing emails. That means 38% of British and U.S. companies pay workers just to spy on their co-workers' communications. These companies make an investment in "snooping" staff to stop employees from emailing confidential or embarrassing content from the company. It seems like these large companies are forming their own mini-versions of the NSA to police communications. Click here for more information.
|
|
|
|
The Next Few Months May Be Your Best Chance to Escape to a Safe Haven With the Number One Device Used Worldwide to...
- Immunize your investments against downturns or bear markets...
- Access investments, unavailable in your home country, that offer safe income and principal...
- Protect your wealth from personal injury, malpractice, environmental or employee lawsuits...
- Save your loved ones' inheritance from claims and excessive estate taxes or government confiscation...
- And more...
To learn more about the most effective asset protection device ever designed, click below.
LINK: http://www.isecureonline.com/reports/190STRUD/E190G623/
|
|
|
|
|
 |
 |