INTERNATIONAL ASSET PROTECTION TRUSTS (IAPT),
FOREIGN FOUNDATIONS
AND
INTERNATIONAL BUSINESS CORPORATIONS (IBC)
ARE TAX NEUTRAL
INTERNATIONAL ASSET PROTECTION TRUSTS
An IAPT formed by a U.S. person which through any conceivable reading of the document, can benefit a U.S. person is tax neutral.
Internal Revenue Code §679 states:
“Foreign trusts having one or more United States beneficiaries.
(a)(1) In general.
A United States person who directly or indirectly transfers property to a foreign trust … shall be treated as the owner... if for such year there is a United States beneficiary of any portion of such trust.”
Any machinations done in an attempt to hide the true person who transfers assets to the IAPT or the true beneficiary of the IAPT is unlawful.
INTERNATIONAL BUSINESS CORPORATIONS
The U.S. tax and reporting obligations associated with a foreign corporation apply, including rules pertaining to Controlled Foreign Corporations (CFC), and to a lesser extent Foreign Personal Holding Companies (FPHC) and Passive Foreign Investment Companies (PFIC).
Collectively, the above rules are referred to as the “anti-deferral rules” and are applicable, if the IBC has a certain percentage of actual or deemed owners that are “United States person.”
A CFC is a foreign corporation of which one or more U.S. shareholders own, during the taxable year, more than 50% of (1) the total combined voting power of all classes of stock of such IBC entitled to vote or (2) the total value of the stock of the IBC. A U.S. Shareholder is a U.S. citizen who owns stock directly, indirectly, or constructively. This means you are the owner if (i) you own the IBC directly or (ii) indirectly (the IBC is in someone else’s name but you “somehow” can at your option obtain that ownership).
Direct and indirect shareholders of a CFC must include in their income their share of the CFC’s “subpart F” income, which generally includes passive income such as dividends, interest, royalties, rents and annuities, as well as any increased investment in U.S. property.
You must report the income whether you repatriate it or leave it in the corporation's foreign bank account.
Any machinations done in an attempt to hide the true person who owns the IBC is unlawful.
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