Bahamas

metooxx · Apr 13, 2003

Quote from weewilly:

hey question for the offshore experts. if i trade as an individual from my home in the us and move to the bahamas --- do i have to convert my individual accounts with us addresses into bahamian-based custodial accounts (with bahamian brokers) to enjoy the foreign-earned income exemption? Or, can I keep my individual accounts with us addresses, have my mail forwarded to the bahamas, and file a us tax return with the requisite form that these capital gains are foreign-earned?

weewilly

No you can't.

Lot more complicated ...

metooxx · Apr 13, 2003

Quote from BlueHorseshoe:

You won't have to change your accounts. The exemption is taken against your global income, all of which you must report, irrespective of what address your broker has on file. The exemption itself is earned based on your legal residence for tax purposes, for which there are several tests primarily focused on where you reside and earn a living during the year.

If you want to trade certain overseas futures and options contracts that the CFTC has placed off-limits to US residents, then yes you will likely need to change your residence address with your brokers.

'Weewilly' - change your name for pete's sake, that's embarrassing!

Yes you will have to reorganize your accounts ...

BlueHorseshoe · Apr 13, 2003

Quote from metooxx:

Yes you will have to reorganize your accounts ...

Well, now that I think about it all of my accounts have been based overseas so maybe metooxx is right ...

In any event I would think most large brokers could simply move your US-based account to one of their overseas subsidiaries. This shouldn't be an over-riding consideration when deciding where to reside.

metooxx · Apr 13, 2003

Quote from BlueHorseshoe:

Well, now that I think about it all of my accounts have been based overseas so maybe metooxx is right ...

In any event I would think most large brokers could simply move your US-based account to one of their overseas subsidiaries. This shouldn't be an over-riding consideration when deciding where to reside.

Big deal ...

weewilly · Apr 13, 2003

i thought it was more involved. even the irs exemption on the first 80,000 a us citizen earns overseas/offshore would not include unearned income, right? so, capital gains are fully taxable whereever you are in the world. that would indicate to me that you need to use some sort of int'l business to trade behind. so, you form an ibc and open an account with a us broker that accepts such foreign entities, or, trade the us markets with an offshore broker. is that the gist of it?

BlueHorseshoe · Apr 13, 2003

Quote from weewilly:

i thought it was more involved. even the irs exemption on the first 80,000 a us citizen earns overseas/offshore would not include unearned income, right? so, capital gains are fully taxable whereever you are in the world. that would indicate to me that you need to use some sort of int'l business to trade behind. so, you form an ibc and open an account with a us broker that accepts such foreign entities, or, trade the us markets with an offshore broker. is that the gist of it?

Apparently so. From Form 2555 instructions: " Foreign earned income does not include ... interest, ordinary dividends, capital gains ..." but does include wages, salaries, professional fees, & other compensation.

Guess I have some work to do. Uggh ...

metooxx · Apr 13, 2003

Quote from weewilly:

i thought it was more involved. even the irs exemption on the first 80,000 a us citizen earns overseas/offshore would not include unearned income, right? so, capital gains are fully taxable whereever you are in the world. that would indicate to me that you need to use some sort of int'l business to trade behind. so, you form an ibc and open an account with a us broker that accepts such foreign entities, or, trade the us markets with an offshore broker. is that the gist of it?

Sort of ...

weewilly · Apr 13, 2003

metooxx please elaborate a little... do you need an offshore company and an offshore broker or just an offshore company and your us broker? do most us brokers accept foreign corporate accounts? i mean suppose you like and trust your particular (remote, online, daytrading) broker and would like to continue with them? can any u.s. joe schmoe simply go to the bahamas, form an ibc, rent a condo and trade?

ElectricSavant · Apr 13, 2003

thanx for your questions weewee.

I have the same questions....but I am not ready to load up the llama and move to bahama.......so I am relunctant to PM metoxxic...

Michael B.

metooxx · Apr 13, 2003

Quote from weewilly:

metooxx please elaborate a little... do you need an offshore company and an offshore broker or just an offshore company and your us broker? do most us brokers accept foreign corporate accounts? i mean suppose you like and trust your particular (remote, online, daytrading) broker and would like to continue with them? can any u.s. joe schmoe simply go to the bahamas, form an ibc, rent a condo and trade?

1) You have to be offshore;

2) A foreign broker is better, most just introduce but it cements your offshore status;

3) You should have an offshore company;

4) You enter into an employment agreement with your offshore entity to recharacterize your capital gains or ordinary income into earned income;

5) You should have some type of "official status";

6) you need to be domiciled in a no tax country.