EB-5 Statistics Updates

USCIS released statistics on EB-5 applications on 4/30/2012:
• There have been currently 194 approved Regional Centers (RCs);
• There have been 2771 I-526 applications, 2101 applications got approved while 384 applications got denied. The approval percentage is 85%;
• There have been 375 new I-829 applications, 522 applications got approved while 24 applications got denied. The approval percentage is 96%;

Limited Liability Company (LLC)

A Limited Liability Company (LLC) is a business structure that combines the benefits of both corporations and partnerships. Like corporations, owners have limited personal liability for the debts and actions of the LLC. Like partnerships, LLC provides flexible management and the benefit of pass-through taxation.

Because LLCs are not allowed to issue stocks, the owners of LLCs are called members instead of shareholders. Members can be individuals, corporation, or even foreign individuals and entities. There is no maximum number of members, and most states, including California, permit “single-member” LLCs.

LLCs can operate any lawful business except for banks and insurance companies. There are, however, special regulations for LLCs having foreigners or foreign entities as their member.

Classification

For federal tax purposes, LLCs do not have its own classification and must file Form 8832 (Entity Classification Election) as a corporation, a partnership, or a solo proprietorship if there is only one member. If an LLC does not file Form 8832, it will automatically be classified as a partnership if there is more than one member. On the other hand, if the LLC is a “single-member” LLC, it will automatically be treated as a sole proprietorship.

Foreign Partners

If owners elect to treat the LLC as a partnership, and the LLC has foreigners or foreign entities as its members, the LLC must file Form 8804 (Annual Return for Partnership Withholding Tax) to report the total liability under Section 1446 for the partnership’s tax year. Each foreign partner must also file Form 8805 (Foreign Partner’s Information Statement) of Section 1446 to show the amount of effectively connected taxable income (ECTI) and the total tax credit allocable to the foreign partner for the partnership’s tax year. In addition to Form 8804 and Form 8805, the LLC must also file Form 8813 (Partnership Withholding Tax Payment Voucher) to pay withholding tax to the U.S. Treasury. This form must accompany each tax payment made during the partnership’s tax year.

Reporting Specified Foreign Financial Assets

Internal Revenue Code Section 6038 D requires Form 8938, Statement of Specified Foreign Assets, to be filed with the specified individual’s U.S. income tax return to report interests in specified foreign financial assets. The act was effective for tax years beginning after March 18, 2010. Therefore, the taxpayers subject to the requirement must file the form in 2012 for 2011 tax years.  

Specified Individual
A specified individual is a person who is―
• A U.S. citizen;
• A resident alien of the U.S.;
• A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return; or
• A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico.


Exception: If you do not have to file an income tax return for the tax year, you do not have to file form 8938, even if the value of your specified foreign financial assets is more than the appropriate reporting threshold.

Specified Foreign Financial Assets
• Financial accounts maintained by a foreign financial institution.
• Other foreign financial assets, which include any of the following assets that are held for investment and not held in an account maintained by a financial institution, such as:
Stock issued by a foreign corporation
A capital or profits interest in a foreign partnership
A note, bond, debenture, or other form of indebtedness issued by a foreign person
An interest in a foreign trust or foreign estate


…..
Reporting Threshold

Living in United State

• Unmarried taxpayers or married filling separate income tax returns: if the total value of his or her foreign financial assets exceeds (1) $50,000 on the last day of the tax year, or (2) $100,000 on any day during the tax year.

• Married filing a joint income tax return: if the total value of their foreign financial assets exceeds (1) $100,000 on the last day of the tax year, or (2) $200,000 on any day during the tax year.

Living aboard

• Unmarried, or married filing separate income tax return: if the total value of his or her foreign financial assets exceeds (1) $200,000 on the last day of the tax year, or (2) $400,000 on any day during the year.

• Married couple filing a joint income tax return: if the total value of their foreign financial assets exceeds (1) $400,000 on the last day of the tax year, or (2) $600,000 on any day during the year.  

Examples listed by IRS for helping you file Form 8938.

Case 1: I am not married and do not live abroad. The total value of y specified foreign financial assets does not exceed $49,000 during the tax year.

Answer: You do not need to file Form 8938. You do not satisfy the reporting threshold of more than $50,000 on the last day of the tax year or more than $100,000 at any time during the tax year.

Case 2: I am not married and do not live abroad. I sold my only specified foreign financial asset on October 15, when its value was $125,000.

Answer: You need to file Form 8938. You satisfy the reporting threshold even though you do not hold any specified foreign financial assets at the end of the year because you did own specified foreign financial assets of more than $100,000 at a time during the tax year.

Case 3: My spouse and I are US citizens but live abroad for the entire tax year and file a join income tax return. The total value of our combined specified foreign financial assets on any day of the tax year is $150,000.

Answer: You and your spouse do not need to file form 8938. You do not satisfy the reporting threshold of more than 400,000 on the last day of the tax year or more than $600,000 at any time during the tax year for married individuals who live abroad and file a joint income tax return.

Case 4: My spouse and I do not live abroad and file a joint income tax return. We jointly own a single specified foreign financial asset valued at $60,000.

Answer: You and your spouse do not need to file Form 8938. You do not satisfy the reporting threshold of more than $100,000 on the last day of the tax year or $200,000 on any day of the tax year.

Case 5: My spouse and I do not live abroad, file a joint income tax return, and jointly and individually own specified foreign financial assets. On the last day of the tax year, my spouse and I jointly own a specified foreign financial asset with a value of $90,000. My spouse has a separate interest in a specified foreign financial asset with a value of $10,000. I have a separate interest in a specified foreign financial asset with a value of $1,000.

Answer: You and your spouse need to file a combined Form 8938. You and your spouse have an interest in specified foreign financial assets in the amount of $101,000 on the last day of the tax year. This is the entire value of the specified foreign financial asset that you jointly own, $90,000, plus the value of the asset that your spouse separately owns, $10,000, plus the value of the asset that you separately own $1,000. You and your spouse satisfy the reporting threshold of more than $100,000 on the last day of the tax year.

Case 6: My spouse and I do not live abroad, file separate income tax returns, and jointly own a specified foreign financial asset valued at $60,000 for the entire year.

Answer: You and your spouse do not need to file form 8938. You each use one-half of the value of the asset, or $30,000, to determine the total value of the specified foreign financial assets that you each own. Neither of you satisfies the reporting threshold of more than $50,000 on the last day of the tax year or more than $100,000 at any time during the tax year.

Case 7: My spouse and I file separate income tax returns, jointly and individually own specified foreign financial assets, and do not live abroad. On the last day of the tax year, my spouse and I jointly own a specified foreign financial asset with a value of $90,000. My spouse has a separate interest in a specified foreign financial asset with a value of $10,000. I have a separate interest in a specified foreign financial asset with a value of $1,000.

Answer: You do not need to file form 8938 but your spouse does. Your spouse has an interest in specified foreign financial assets in the amount of $55,000 on the last day of the tax year. This is one-half of the value of the asset that you jointly own, $45,000, plus the entire value of the asset that your spouse separately owns, $10,000. You have an interest in specified foreign financial assets in the amount of $46,000 on the last day of the tax year. This is one-half of the value of the asset that you jointly own, $45,000, plus the entire value of the asset that you separately own, $1,000. Your spouse satisfies the reporting threshold of more than $50,000 on the last day of the tax year. You do not satisfy the reporting threshold of more than $50,000 on the last day of the tax year.

Case 8: My spouse and I live abroad and file separate income tax returns. My spouse is not a specified individual. On the last day of the tax year, my spouse and I jointly own a specified foreign financial asset with a value of $150,000. My spouse has a separate interest in a specified foreign financial asset with a value of $10,000. I have a separate interest in a separate interest in a specified foreign financial asset with a value of $60,000.

Answer: You need to file Form 8938 but your spouse, who is not a specified individual, does not. You have an interest in specified foreign financial assets in the amount of $210,000 on the last day of the tax year. This is the entire value of the asset that you jointly own, $150,000, plus the entire value of the asset that you separately own, $60,000. You satisfy the reporting threshold for a married individual living abroad and filing a separate return of more than $200,000 on the last day of the tax year.

Case 9: I am not married and do not live abroad. An unrelated US resident and I jointly own a specified foreign financial asset valued at $60,000.

Answer: You each need to file Form 8938. You each satisfy the reporting threshold of more than $50,000 on the last day of the tax year.

Case 10: I am not married and do not live abroad. I own an entity disregarded for tax purposes, which owns one specified foreign financial asset valued at $30,000. In addition, I own a specified foreign financial asset valued at $25,000.

Answer: You need to file Form 8938. You own both the specified foreign financial asset owned by the disregarded entity and the specified foreign financial asset owned directly, for a total value of $55,000. You satisfy the reporting threshold of more than $50,000 on the last day of the tax year.

Community Property with Right of Survivorship

Community Property with Right of Survivorship

Community property with right of survivorship(CPWROS) is a way for married couples to hold title to property in California. It combines the best features of joint tenancy and community property. This title not only retains the benefit of joint tenancy to eliminate the probate upon the death of a spouse, but also retains a full step-up in basis in the property to fair market value. Here we discuss community property with right of survivorship from following three aspects: 1. Right of Survivorship; 2. Creditor’s Right; 3. Tax Treatment.

Right of Survivorship

The right of survivorship determines what happens to a certain type of co-owned property after one of its owners dies. Like joint tenancy, CPWROS also creates a right of survivorship, which means, at the death of one spouse, the ownership of the remaining property passes to the surviving spouse. Husbands and wives often create CPWROS or joint tenancies for co-ownership of their real property. Upon one spouse’s death, the interest owned by decedent passes to surviving spouse without going through probate proceeding.

Tax Treatment

For the purpose of estate tax, like community property, the decedent’s one-half interest in CPWROS is included in his gross estate.

There is also a tax basis implication for the survivor spouse. The basis of property in the hands of survivor spouse from deceased spouse shall be the fair market value of the property at the date of the decedent’s death. Under community property laws, the property which represents the surviving spouse’s one-half share of community property held by the decedent and the surviving spouse is treated as having acquired from a decedent. Thus, the property is held as CPWROS, the survivor spouse receives a fair market value, date of death basis in the interest received from the decedent as well as in surviving spouse’s own community interest.

For example: Husband and Wife purchased their house for $800,000 with each spouse’s tax basis at $400,000. At the date of Husband’s death the property’s fair market value was $1,200,000. Since they held the property in joint tenancy, Wife automatically received Husband’s 1/2 interest upon his death.

Husband’s 1/2 interest tax basis (originally $400,000) is “stepped up” to the fair market value at his death ($600,000). Wife then has property worth $1,200,000 with a tax basis of $1,000,000 (her original $400,000 basis plus her deceased husband’s stepped up basis of $600,000). If the property were sold for $1,200,000, there would be $200,000 of taxable gain.

Assume the same $800,000 purchase and $1,200,000 value at date of death, but they take title as CPWROS. Wife’s original $400,000 basis gets stepped-up along with Husband’s original $400,000 basis to the current $1,200,000 fair market value. Wife then has property worth $1,200,000 with a basis of $1,200,000. If the property were sold for $1,200,000, there would be no taxable gain.

Creditor’s Right

In the case of an interest held by the decedent as community property, creditors may reach the decedent’s interest after the decedent’s death as the property is part of decedent’s estate. In the case of a joint tenancy, the decedent’s creditors have no right to joint tenancy property because the decedent’s joint interest terminates at death. Like community property, creditors may reach the decedent’s interest held in CPWROS after the decedent’s death.

申请大学资助和减低征税的收入

By ShirleyZ

又到了大学申请的时间,父母和大学资助专家为减低征税的收入想破了脑袋,拼命想把自己归为“穷人”的行列。也难怪,现在公立大学年学费动辄两三万,私立更是奔五六万,寻常工薪家庭实在是负担沉重。但是,大学资助本身就是“need” base, 即便你心理不平衡(因为你努力,你拼命,所以你赚得多,不qualify),也没有办法,因为你不在”need ” 这个分类,这和你努不努力,拼不拼命没关系。
美国税收制度的规则如下:把你所有的收入加总,不管是earned income 还是unearned income, 然后adjust, 即减去一些deduct, 得到Adjust Gross Income, 然后再减掉exemption 和stand 或Itemize deduction, 就得到taxable income, 乘以不同的税率,再加减tax credit, 最后得到effective 税。
从上所述,你所能腾挪的就是:或者收入不归类为taxable income, 即不需缴税的收入,或可以deduct 掉。
再回到大学资助申请的话题,申请财务资助要看两个方面: 一是asset, 二是income。资产容易藏起来,income 就要看是何种income. 两个W2 income, 属于ordianry income, 是不可能不算到taxable income里面的,所以你能做的只有遍寻tax code, 看能否扣减掉。你一定听专家讲过能把二三十万的收入减到七八万,就是用到了special tax code. 例如:石油投资和在”go zone” 投资房地产,因为前期投资可以折旧或费用化。听起来很诱人,但需注意的是,石油投资很可能把你的现金变成不能liquid 资产。而”go zone” 投资对投资人有一定的要求,若你是全职员工,要qualify 50%时间管理投资房,IRS 一定会challenge 你。
综上所述,临时抱佛脚做税务规划不那么容易,如能和一个合格的financial advisor 常常合作,提早打算,才能达到最大的效果。

房产投资者的税务问题

By ShirleyZ
正值房地产大跌之后,又对过去十年股票市场两次大跌心有余悸,且湾区的房地产市场一直是求大于供,手里有些余钱的人考虑买投资房保值且增值。
房地产投资除了其稀缺性之外,还有许多税的优惠。除了众所周知的广告费、利息、电话费、汽油费、修理费及管理费之外,还有折旧费,这是其他投资未必有的。房产投资的折旧分两部分:一部分是土地,一部分是improvement。土地是不可以折旧的,但为了minimum tax, minimam taxable income, maxmum 折旧是一个方法。鉴于这个目的,我们可以把土地细分为纯粹的土地和土地improvement, 土地的improvement 比如:driveways, sideways, landscaping replacing, 从房屋到街道的地下管道,可用十五年来折旧。至于房屋的improvement, 住宅27.5 年折旧,非住宅39年,又可进一步细分为compnents 和personal property, compnents 折旧的规则是27.5 年,而personal property 则可用五年来折旧,这就大大加速了前五年的费用。什么属于personal property 呢?房子的主题结构属于compnents, 冰箱,微波炉,地毯,洗碗机,炉灶,电话,供电材料,安全系统,窗架等等可归为personal property。还有就是修理和improvement 的区别,修理可当年费用化,而improvement 则需多年折旧。
系统的分类,既避免了税务错误,又可minimum tax.