Bud, sorry if I misled.
It’s not a question of avoiding taxation, but of avoiding mandatory WITHHOLDING. Non-residents must automatically have a relatively high (details escape me) % of certain kinds of profits WITHHELD. This guy is not trying to avoid taxation, but is participating in the all-american sport of avoiding OVER taxation.
I have a dear friend who has some money (up to 100k) to invest in our ‘ventures’, but he is frothing and writhing over how it should be structured. (I will add that as a non-resident ‘alien’ he doesn’t want to have taxes withheld from profits … though he is tax-paying in this country.)
I suggested that we set up a separate corp and use his money for wholesale flips or our rehabs, and suggested that he check with his CPA.
Posted by JHyre in Ohio on February 26, 1999 at 17:53:59:
Carol:
Check out the tax treaty between the investor’s country and the US, if any. See if dividends, interest or some other type of income is given more favorable treatment. If so, structure the deal accordingly (e.g.- low rate on dividends means try corp, etc.). If the treaty is not useful, you’re talking fairly serious bucks for advice- at that point accessing 100k becomes expensive, assuming that the 31% withholding can be avoided at all.
Not to start something but if all the rest of us have to pay taxes on income produced here, why shouldn’t he.
I personally prefer the participatory loan to partnerships and corporations. If the percentage profit isn’t acceptable then let him invest on his own.
Yes there are legal ways to funnel the profits to off shore corporation. In turn the profits are moved to another offshore corporation that the IRS has no purview over. For the money you are talking about the setup is probably not worth it.