PFP2406. Where’s my Passport? Navigating the Wilds of Cross Border Tax Planning

In the complex landscape of international taxation, understanding the nuances of US inbound and outbound transactions is crucial for taxpayers aiming to optimize their tax strategies. Through four detailed case studies focusing on real-world, cross-border scenarios, we will explore the tax implications for foreign persons entering the US market (inbound transactions) and for US entrepreneurial shareholders/owners of US entities as they expand their businesses into a foreign market (outbound transactions). These scenarios will highlight key considerations such as the selection of appropriate entity structures, e.g., branches or subsidiaries, each with its distinct tax considerations. We will review the US estate tax considerations of non-US persons investing in US real estate. The tax challenges and opportunities for Americans living outside the US (CFC and GILTI) will also be analyzed. By dissecting real-world examples, this session aims to provide practical insights and guidance on navigating the intricate web of tax obligations and opportunities in cross-border business and investment activities.

Learning Objectives:

• Recognize the tax challenges facing high net worth US citizens residing outside the US with respect to operating their professional practices or businesses in a foreign jurisdiction (CFCs).
• Recognize the tax implications of different entity structures such as trusts and branches versus subsidiaries for both inbound and outbound investments. Identify how each structure impacts tax liabilities, operational flexibility, and compliance requirements in different jurisdictions.
• Identify the knowledge needed to navigate the U.S. tax implications and filing requirements for mixed citizenship couples living abroad, including understanding the filing statuses available, the potential benefits and drawbacks of electing to file jointly with a non-U.S. citizen spouse, and how to utilize QDOTs to defer US estate tax on the death of a US spouse.
• Identify the US estate tax implications for non-US persons investing in US real estate. This objective includes identifying the basis of US estate taxation, key exemptions, applicable rates, and potential tax liabilities that arise upon the death of a non-US investor.
• Indicate strategic planning tools such as the use of ownership structures (e.g., holding companies, trusts) to mitigate exposure to US estate taxes, ensuring that participants can advise on or make informed decisions about estate planning to protect international investments in US property.