Offshore Accounts for beginners

[dewton]

Quote from comintel:

See
http://www.irs.gov/irm/part4/irm_04-061-007.html#d0e10

"The taxation of foreign income earned by U.S. controlled foreign corporation drastically changed with the introduction of Subpart F into the Internal Revenue Code in 1962. Subpart F deals with the U.S. taxation of amounts earned by controlled foreign corporations (CFCs). It provides that certain types of income of CFCs, though undistributed, must be included in the gross income of the U.S. shareholder in the year the income is earned by the CFC."

Yeah I was looking at that, but I wasn't sure if profits from trading Forex with a foreign broker is considered Subpart F. In any case, before doing any offshore tax minimizing structure, it's best to consult with a tax lawyer. The penalties for making mistakes is significant.

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Robert Green: thanks for your response and thoughts to my post! Though the CFTC enforcement attorney may say these things, I don't see how they can prosecute a US person dealing with a foreign broker since there's no law against it- no law is being broken. Americans have been opening accounts with foreign brokers accepting US clients (such as FinFX) without being sued.

 

[colonial dr]

Quote from Robert A. Green:

Disagree. The CFTC enforcement attorney said Americans couldn't use offshore dummy corps to evade the CFTC forex trading rules for retail accounts. You are correct that they are more focused on the intermediaries.

Americans can only get some deferral of income offshore if they have real operations outside the US on trade or business income. But, that doesn't work on passive or investment income. Then the offshore entity, if owned by Americans is disregarded and the income is passed-through to the US. The rules are more complex, but that's the gist of it.

Hi Robert. Since I posted this, I spoke to an attorney and learned it is true usa clients can open offshore retail accounts legally. The rules for forex are to protect retail forex traders from blowing up. It sounds like that CFTC attorney was lying -what a sum bag.