The IRS applies different methodologies for calculating the gambling winnings of US taxpayers and Nonresident Aliens (NRAs). For US taxpayers, the IRS calculates earnings based on winnings over the course of a gambling session, while for NRAs the IRS has taken the position that gambling winnings should be calculated based on each bet. So, for…
DetailsUS persons are required to file Form 3520 if they create, transfer money to, receive distributions from, or are the owners of a foreign trust. While there is no tax liability associated with Form 3520, it is a complicated form and can be quite time consuming and expensive to prepare. As such, people avoid filing…
DetailsOn February 29, 2012 the Financial Crimes Enforcement Network’s (FinCen) published rules requiring the E-Filing of all Bank Secrecy Act (BSA) submissions. As of July 1, 2013, FinCen’s regulations require that all FBARs be filed electronically through the BSA E-File System. The E-File system is not difficult to navigate and the electronic FBAR is a…
DetailsDuring 2012, the tax consequences of U.S. citizenship became a major source of worry for U.S. citizens living in Canada. Widespread reports in the media of increased U.S. enforcement of the tax and financial account reporting obligations of U.S. citizens living outside the United States created considerable anxiety. They also spurred questions about the particulars…
DetailsWhile it is uncommon for parents in the US to grant their minor children signatory authority over bank accounts, in other countries it is common practice to avoid inheritance, transfer taxes, or for other reasons. While this is generally not a problem, it can become an issue when the Internal Revenue Service (IRS) becomes involved.…
DetailsThis post will describe several common US citizenship situations for the purpose of demonstrating the various differences as to how US citizenship may be derived and how it may be lost. Ms. X was born in the United States. She is a US citizen by birth. Her US citizenship is self-executing and non-consensual. Her birth…
DetailsSection 1235 of the Internal Revenue Code (IRC) permits holders (Creators) “whose efforts created” the patent or holders (Investors) “who [] acquired [their] interest in such property in exchange for consideration in money or money’s paid to the creator prior to actual reduction to practice of the invention” to treat the transfer of “property consisting…
DetailsThe Cayman Islands announced on March 15, 2013, that it will enter into a Model 1 Intergovernmental Agreement (IGA) with the US in response to FATCA. With the Model 1 agreement, the information about the foreign assets held by US citizens, required by FATCA, will be collected by the Cayman Islands and then given by…
DetailsOn February, 14 2013, the US and Switzerland signed a bilateral agreement to implement the Foreign Account Tax Compliance Act (FATCA). In addition, on January 23, 2013, the US and Ireland signed their own bilateral agreement to implement FATCA. The US is averaging about one bilateral FATCA agreement signed per month. While this seems like…
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