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 investing activities.

Learning Objectives:

• Become familiar with the tax challenges facing high net worth US citizens residing outside the United States with respect to operating their professional practices or businesses in a foreign jurisdiction (CFCs)
• Understand the tax implications of different entity structures such as trusts and branches versus subsidiaries for both inbound and outbound investments. Learn how each structure impacts tax liabilities, operational flexibility, and compliance requirements in different jurisdictions.
• Equip participants with the knowledge to navigate the U.S. tax implications and filing requirements for mixed citizenship couples living abroad. This includes 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.
• Educate participants on the U.S. estate tax implications for non-U.S. persons investing in U.S. real estate. This objective includes understanding the basis of U.S. estate taxation, key exemptions, applicable rates, and potential tax liabilities that arise upon the death of a non-U.S. investor.
• The session will also explore strategic planning tools such as the use of ownership structures (e.g., holding companies, trusts) to mitigate exposure to U.S. estate taxes, ensuring that participants can advise on or make informed decisions about estate planning to protect international investments in US property.