Changes in the New Tax Act & International Tax Questions Answered

[object Object],“ Changes in the New Tax Act & International Tax Questions Answered” Citibank San Francisco, California February 24, 2011 Rowbotham & Company Accountants & International Tax Consultants (415) 433-1177 [email_address] [email_address] [email_address] Harriet Leung Brian Rowbotham Peter Trieu

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[object Object],Foreign Reporting U.S. Residents Filing “Activities” include ownership in: Rowbotham & c o m p a n y l l p (1) Foreign Corporation 5471 $10,000 / year per company (2) Foreign Partnership 8865 $10,000/ year per entity (3) Foreign Trust 3520 25% of distribution 3520A 5% per month up to 25% (4) Transfers of Assets to 926 25% of value, a foreign corporation maximum of $10,000 (*) Potential criminal prosecution can result for non-reporting. Potential Penalties IRS Form for Non-compliance (*)

[object Object],Foreign Bank Account Reporting Rowbotham & c o m p a n y l l p Current Requirements TDF 90-22.1 Voluntary disclosure [March – October 2009] program 2011 voluntary [February 14, 2011 - disclosure program August 31, 2011] How to handle the problem today if (a) Your foreign accounts are in a Swiss Bank (b) Your foreign accounts are not in Swiss Banks FATCA Rules for 2011 (*) Potential criminal prosecution can result for non-reporting. Maximum Monetary Penalties IRS Form for Non-compliance (*) 50% of account balance 5% in limited circumstances 20% of account balance 5% in limited circumstances 12.5% for accounts up to $75,000 25% for accounts over $75,000

[object Object],Offshore Voluntary Disclosure Initiative Rowbotham & c o m p a n y l l p ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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[object Object],Outcome of Expatriation Income Tax: IRS: Rowbotham & c o m p a n y l l p ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],Rowbotham & c o m p a n y l l p * Executor may elect estate tax with increased exemption and step up basis of assets, or elect no estate tax with modified carry-over basis in assets. ** Exemption equivalent amount for nonresidents is limited to $60,000 for all years. $3,500,000 45% 2009 $5,000,000 35% (optional)* 2010 $5,000,000 35% 2011 $1,000,000 55% 2013 $5,000,000 35% 2012 Exemption Equivalent ** Top Estate Tax Rate For Decedents Dying During

[object Object],Rowbotham & c o m p a n y l l p ,[object Object],[object Object],[object Object],$1,000,000 2010 $5,000,000 2011 $1,000,000 2013 $5,000,000 2012 Exemption Equivalent For Gifts During

[object Object],Rowbotham & c o m p a n y l l p First Death Second Death Beneficiary Beneficiary Beneficiary ,[object Object],[object Object],No estate tax due to unlimited marital deduction. No exemption amount used. Revocable Living Trust $10,000,000 Revocable Living Trust (Continuing) $10,000,000

First Death Second Death Beneficiary Beneficiary Beneficiary ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Survivor’s Trust (Trust A) $5,000,000 - Revocable - Subject to estate tax Revocable Living Trust $10,000,000 Rowbotham & c o m p a n y l l p ,[object Object],[object Object],[object Object],[object Object],[object Object],Mandatory income distribution Principal distribution as needed

[object Object],Rowbotham & c o m p a n y l l p Harriet Leung is a California CPA heads up the firm's Asian business practice engagements for private and public companies. Harriet is active advising companies with M&A transactions and international clients in the financial due diligences, audit and business advisory areas. She has substantial experience servicing companies that were seeking listings on both foreign and U.S. stock exchange markets. She has represented and worked with companies in Asia completing reverse mergers into the U.S. public companies. Harriet also has extensive experience working in restructuring international investment funds with operations in the U.S., but owned and controlled in Asia. Her client base includes companies in real estate (including domestic and foreign), international investments, science, distribution, high-tech and software. Harriet is fluent in both Cantonese and Mandarin. Brian Rowbotham is a CPA with 33 years of experience advising businesses and individuals on complex domestic and international income and estate tax planning. He is the founding partner of Rowbotham & Company LLP which is almost exclusively dedicated to businesses and investors needing both domestic and international tax and accounting services. His clients include private and public companies around the globe which consist of: U.S. and foreign institutional investors, multinational families and executives and non-U.S. investors doing business in the U.S. Mr. Rowbotham has advised clients in major domestic and international litigation and has also served on the boards of both privately held and publicly traded companies. From 1992 to 2006, he directly supervised his firm’s engagement by trustees in Europe to assist with the recoveries of funds from one of the largest frauds in U.K. history. Over the past 20 years, he has represented large European and Middle Eastern institutional investors and numerous Asian families investing in U.S. Real Estate transactions. Peter Trieu is a Tax Director at Rowbotham & Company. His practice focuses on advising clients regarding domestic and international tax planning and compliance. He also assists clients with their estate plans. His clients include private and public companies around the globe, U.S. and foreign institutional investors, multinational families and executives and non-U.S. investors doing business in the U.S. Mr. Trieu co-authored “Doing Business in India” published in the May/June 2009 issue of CalCPA magazine. Rowbotham & Company is a full service Certified Public Accounting firm that provides audit, accounting, and domestic and international tax services to individuals and businesses, both public and private. Rowbotham & Company has offices in San Francisco and Silicon Valley and is a member of Polaris International, a worldwide network of accounting and consulting firms. The firm is a member of the American Institute of Certified Public Accountants and is registered with the Public Company Accounting Oversight Board.

Changes in the New Tax Act & International Tax Questions Answered

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Changes in the New Tax Act & International Tax Questions Answered