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Section 1291 Taxation

All PFICs that do not presently have Mark to Market or Qualifying Electing Fund elections are taxed under § 1291 of the Internal Revenue Code. § 1291 taxation is very complex but the basic idea is that the taxpayer will be treated as if any gain in the investment were received equally over the period …

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Latest Regulations for controlled foreign corporations (CFCs)

The IRS on Monday gave proprietorship attribution rules for deciding the status of companies as controlled foreign partnerships (CFCs) and whether their shareholders are U.S. shareholders (T.D. 9908). The guidelines concluded the proposed rules (REG-104223-18) with two or three changes in light of in any event one remark. Before its annulment by the law alluded …

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Tools to help non-filers receive economic impact payments

The IRS provided tools for tax practitioners who can utilize them to connect and contact to taxpayers who don’t ordinarily document their tax returns and are able to get economic effect installments because of current COVID-19 emergencies. The IRS reported that such people will before long get economic effect installments whose installments were redirected to …

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GILTI rules address income subject to high foreign tax rate

To cater the provision of global intangible low-taxed income (GILTI), IRS issued an additional package Sec. 951A, which was added by the law known as the Tax Cuts and Jobs Act, P.L. 115-97. It requires 10% US shareholders of controlled foreign corporations (CFC) to include in their gross income as their share of the CFC’s GILTI …

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U.S Tax Impact from portability between non-US retirement plans

Transfer of funds from one pension plan to another may be treated a taxable event in the US (there is no official document to confirm the tax exemption). Introduction Numerous Americans are working abroad. A significant number of them will be involved in the retirement plan in a foreign work workplace which they believe is …

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Federal Stimulus FAQ

Update: The IRS has reversed their stance and senior citizens, Social Security recipients, and railroad retirees who are not otherwise required to file a return will not have to.  Update 2: IRS Reverses stance, introduces tool for non-filers (those who are below minimum filing requirements) to provide information where to send stimulus payments. Important – if you have …

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IRS adds waiver for 2020 Foreign Earned Income Exclusion (FEIE)

COVID-19 impacted the whole world badly in general and USA in particular. Due to this unprecedented situation where normal travelling and flight operations has been suspended across the globe, many countries taking special measures for immediate return of their citizens to their homeland. This situation forces the US citizens to return USA who otherwise expected …

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Tactics for Stretching Retirement Assets under the SECURE Act

As part of funding legislation for the federal government, President Trump signed a law of Setting Every Community Up for Retirement Enhancement (SECURE) Act on December 20, 2019. The law has many provisions relating to financial planning, especially retirement planning with IRAs and employer-sponsored plans. Among the provisions the most attracting is the curtailing of …

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COVID-19 pandemic prompts many tax changes

IRS introduced many relief measures for taxpayers to help them through the economic disruption caused by COVID-19. These measures includes legislative and administrative changes to provide many short term and few long term tax breaks to America’s taxpayers, e.g. tax credits and filing postponements. Below is details of changes helping individuals and businesses: FILING AND PAYMENT …

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IRS offers to settle microcaptive insurance cases

In September, the IRS announced that they would mail time-limited settlement offers to certain taxpayers under audit who had participated in abusive micro captive insurance transactions (IRS News Release IR-2019-157). Only Eligible taxpayers are notified through mail. Captive insurance management is one in which an insurance company insuring only the risk of its related companies. …

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Tax Reform for US Expats

The look and feel of iconic tax return form, the Form 1040 has been virtually recognized by everyone for many years. Although the form is complex yet consistent. With the passage of time it changed through Jobs act and tax cuts which recognize as the most significant tax reforms over a period of 30 years. …

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Requirement to File Informational Return Form 8621 Even If Below Filing Thresholds

While submitting the shareholder’s tax return (or, if applicable, partnership or exempt organization return), fill the Form 8621 as per instructions mentioned in it, attach it with return and file both by the due date, including extensions, of the return at the Internal Revenue Service Center where the tax return is required to be filed. …

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Domestic Streamlined Offshore & Certification Form 14654

Streamlined Program Overview The IRS streamlined program breaks down into two camps. 1. Streamlined Foreign Offshore Program (SFOP) 2. Streamlined Domestic Offshore Program (SDOP) – described herein The main difference between these two programs is that the first program bounds the taxpayer to comply non-residency test requirements. It has nothing to do with citizenship, or whether …

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