ESTATE TAX PLANNING TIP

Foreigners investing in U.S. property, including U.S. real estate, stocks and bonds should always use a tax haven holding company to hold those U.S. assets. If the nonresident alien invests $5,000,000 in a Texas oil lease directly under his own name, the entire $5,000,000 would be included in his estate for purposes of computing his U.S. estate tax liability. If the nonresident alien died in 1992, the $5,000,000 lease would be subject to U.S. estate taxes at rates to 55%, and the nonresident alien would be permitted only a $60,000 tax credit.

Using the estate tax table under IRC Section 2001(c) the nonresident alien would owe $1,290,800 on amounts up to $3,000,000, and 55% of everything above that. On his $5,000,000 estate, the nonresident alien's heirs would witness the payment of approximately $2,390,800 in estate taxes to the U.S. Treasury.

HOWEVER, under U.S. estate tax law shares of an offshore company would not be included in the nonresident alien's estate for purposes of calculating his U.S. estate tax liability, even if the only asset owned by the offshore company was the $5,000,000 U.S. oil lease. Offshore practitioners should never advise their non-U.S. clients to invest directly in the USA. A tax haven holding company should always be considered; unless the investment being planned is small - under $100,000.

Statute of Limitations is 10 to 16 years for tax matters in the U.S. of A.

Call me at 242-327-7359 with your questions. - 9AM to 5PM - New York time zone is best.

(P.O. Box CB 11552 o Nassau o Bahamas o tel/fax 242-327-7359)
http://www.endtaxes.com