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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Wednesday, December 17, 2003 - Vol. 5 No. 149
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In This Issue:
* COMMENT: Year End Tax Tips for U.S. Expats
* OFFSHORE: EU Hates Tax Competition. Nauru Out. Henley's New Hong Kong Office. Swiss Terror Denial. Man Optimistic.
* WEALTH: E-gold Fraud Alert. IRS Rules on Reincorporation. Russian Currency Restrictions. Offshore Scams Are Everywhere.
* PRIVACY & RIGHTS: Free Speech Crushed by Bush.
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Our Guest Commentator is Marcel Filipe, international tax lawyer in Florida and a member of the Sovereign Society Council fo Experts.
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COMMENT: Year End Tax Tips for U.S. Expats
Dear A-Letter Reader:
If you are a US citizen or resident alien currently living abroad or with foreign investments, or if you've simply had a profitable year, here are some valuable, last minute 2003 tax planning tips.
1) If you own an offshore business and live abroad, be certain to utilize fully the Foreign Earned Income Exclusion of $80,000 by making an end of the year salary payment to yourself, instead of paying yourself dividends. That's because those working abroad earning salary up to $80,000 may be exempt from all US income taxes –even if you were abroad less than 330 days. The test is whether you had a "bona fide foreign residence" at any time during 2003. This fact question is decided in each case, but the IRS looks at whether you established legal residency and declared income in another country; plus where your home and personal effects are located. Claim the $80,000 exemption by filing IRS form 2555 together with your IRS 1040 tax return.
2) If you are own an offshore company that is a "Controlled Foreign Corporation" (ask your accountant or tax advisor), AND the company has had passive income this year (interest, dividends, capital gains) consider paying as many expenses as possible by December 31st, since all net passive income of the company will be attributed to you whether or not you take a dividend or not. The same rule applies to offshore trusts funded by you.
3) If your US business has a foreign subsidiary, and as a group you have been active internationally, make sure you document the extent of the foreign subsidiary's involvement in those offshore activities. All payments for the subsidiary's sales/services should go to an account in the name of the subsidiary.
4) Make sure you keep records of all foreign taxes paid. You might be able to take a tax credit/deduction against income for these expenses.
5) If you bought real estate in a country where the local practice is to "under declare" the purchase price, you don't need to use the "declared" price for US tax purposes.
6) If you sold your main home this year and moved abroad you can still take advantage of the $250,000/$500,000 capital gains tax exclusion for real estate sales. The only exception: if you surrendered your US citizenship, in which case you may be classified as a "tax motivated expatriate." Long-time non-citizen US permanent residents aliens can trigger these rules simply by moving offshore.
7) If you own a corporation and are considering paying year-end salaries, ask your tax advisor to determine whether paying a dividend (now taxed at 15%) might be better in your case.
Other options may be available to you. Do a year-end check up with your tax advisor for more specific options.
Marcell Felipe JD, Miami, Florida E-mail: mfelipe@marcellfelipe.com
Web site: http://www.marcellfelipe.com
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* OFFSHORE *
E.U. WANTS TO CRUSH OFFSHORE COMPETITION
Tax evasion used as a cover for an EU/ world high tax cartel.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=14442
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NAURU SAYS ITS OUT OF TAX HAVEN BUSINESS
Pacific Island does what the OECD tells it to do. LINK:
http://www.theage.com.au/articles/2003/12/16/1071336921915.html
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HENLEY & PARTNERS OPENS HONG KONG OFFICE
Complete services now available in Far East offshore haven.
LINK: http://www.henleyglobal.com/hongkong.htm
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SWISS DENY SOFT ON TERRORISM CHARGE ZURICH: At issue is alleged terrorist funds. LINK:
http://www.swissinfo.org/sen/swissinfo.html?siteSect=105&sid=4554452
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MANX FINANCIAL SECTOR OPTIMISTIC
DOUGLAS, Isle of Man: After troubled 2003, better times seen. LINK:
http://www.iomonline.co.im/ViewArticle2.aspx?SectionID=872&ArticleID=711240
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* WEALTH *
BEWARE OF FRAUDSTERS USING E-GOLD's NAME
Those with e-gold accounts have been receiving fraudulent e-mails requesting information. See "Fake E-mails purporting to be from e-gold" at LINK: https://www.e-gold.com/unsecure/alertdetail.html#email
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U.S. IRS SETS RULES FOR OFFSHORE REIN CORPORATION
Pre-notification for offshore changes, foreign acquisition.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=14443
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NEW RUSSIAN CURRENCY RESTRICTIONS
MOSCOW: Exchange controls, offshore bank accounts covered.
LINK: http://www.prime-tass.com/news/6/opened/20031215/339281.asp
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OFFSHORE SCAMS ARE EVERYWHERE
* Australian uncovers bank scam; bank doesn't care. LINK:
http://www.theage.com.au/articles/2003/12/16/1071336936782.html
* Nigerian bank scam comes to the Scottish Highlands.
LINK: http://news.bbc.co.uk/1/hi/business/3323835.stm
* Gullible investors defrauded of $67 million by Hawaii scam.
LINK: http://starbulletin.com/2003/12/16/news/story9.html
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* PRIVACY & RIGHTS *
BUSH GOVERNMENT CRUSHES FREE SPEECH James Bovard gives a chilling account of police state tactics used to curb dissent and prevent public expression of opposition to the president.
LINK: http://www.amconmag.com/12_15_03/feature.html
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER. *
Bob Bauman, Editor * Daniel Aponte, Jr. Research Asst.
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