U.S. citizens that live and work outside the U.S. often participate in foreign retirement plans. Similarly, non-U.S. citizens that move to the U.S. and become U.S. tax residents, after working outside the U.S., have often participated in foreign retirement plans.
A question that sometimes arises is whether the income accruing annually in the foreign retirement plans must be included on the individual’s U.S. tax return. The rule for this situation was concisely stated in Rev. Proc 2002-23:
Under the domestic law of the United States, an individual who is a citizen or resident of the United States and a beneficiary of a [foreign] retirement plan will be subject to current United States income taxation on income accrued in the [foreign retirement] plan even though the income is not currently distributed to the beneficiary, unless the plan is an employees’ trust within the meaning of section 402(b) of the Internal Revenue Code and the individual is not a highly compensated employee subject to the rule of section 402(b)(4)(A).
Thus, as long as the foreign retirement plan is an employees’ trust and the individual is not a highly compensated employee, then no inclusion is required. On t
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JK Harris & Co. – “the nation’s largest tax representation firm” – is in bankruptcy. It may stop trying to restructure its business to liquidating its business instead.
This case shows how hard it can be to settle tax disputes for “pennies on the dollar”. JK Harris advertised that it could resolve people’s tax debts for “pennies on the dollar.” It appears that it had its own problems: the cost of large settlements related to multiple claims that it misled consumers. In many cases, attorneys general complained that the company told consumers it could resolve their tax problems, and took their payments, when no such relief was possible for those particular clients.
Its own employees have now become creditors for unpaid wages. No doubt it has payroll tax problems with the Internal Revenue Service because if it didn’t pay wages, it probably didn’t pay payroll taxes. It probably won’t qualify for a settlement involving pennies on the dollar.
C
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Garrett, one of our key contributors, has been getting bombarded about cash flow so I decided to take a load off his shoulders and do a series showing how to create cash flow with Rule #1 stocks.
The secret to creating cash flow with long term investments is to reduce basis. Basis is the amount of money we have in the investment at any given time. Rule #1 strategy requires that we buy a business when its on sale. That means we’ve purchased it below its value. By doing so we expect that some day soon Mr. Market will reprice our investment to near its value and our basis will instantly be half of its selling price. That’s the first level of protection and the beginning of creating a great cash flow.
The next step is to further reduce the basis over time. This is done with DIVs (dividends), DERs (derivatives) and BBs (buybacks). Of these, the BBs are the simplest since we have nothing we have to do to get the benefit except buy the right company with the right kind of CEO.
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As the year winds down and the dust begins to settle it’s getting pretty clear which businesses came out winning and which businesses won’t even be walking away with a consolation prize this holiday season.
Front and center in the headlines: Amazon.com’s continuing dominance in online sales fueled by a series of incredibly strategic partnerships, a competitive pricing structure, and its respected brand name, in contrast to the dismal performance and equally dismal announcement of store-closings by retail behemoths, Sears Holdings and Kmart.
But even in the best of times the year-end holiday season tends to have a cathartic effect, weeding out some under-performers while causing others to change their offerings. To get
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In the Liner divorce case, the court awarded 1/2 of the equity in the husband’s premarital residence to the wife. As a general rule, assets owned by one spouse prior to the marriage are treated as separate property and are not divided in the divorce. There are some exceptions, including the division of appreciation of the property if the non-owner contributes to the appreciation. This case did not involve appreciation. Rather, the wife was awarded 1/2 of the house primarily because she made non-financial contributions to the ongoing maintenance and management of the residence.
This case demonstrates the importance of entering into a prenuptial agreement or an asset protection trust prior to marriage. Assets that you transfer into an asset protection trust prior to the marriage will belong to the trust and will not be subject to division in the event of a divorce.
Treas. Reg. §1.897-1(c) defines the term “United States real property interest” (“USRPI”) to mean any interest, other than an interest solely as a creditor, in either: (i) real property located in the United States or the Virgin Islands, or (ii) a domestic corporation unless it is established that the corporation was not a U.S. real property holding corporation within the period described in section 897(c)(1)(A)(ii).
Treas. Reg. §1.897-1(d)(2) provides that an interest in real property other than an interest solely as a creditor includes a fee ownership, co-ownership, or leasehold interest in real property, a time sharing interest in real property, and a life estate, remainder, or reversionary interest in such property.
The term also includes any direct or indirect right to share in the appreciation in the value, or in the gross or net proceeds or profits generated by, the real property. A loan to
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