(The following is an excerpt from our 1031 Advisor newsletter located here )
Reducing income taxes on foreign source income used to be the elite preserve of the multi-national set. However, businesses (large and small, public and private) now conduct significant business overseas. Preserving cash by reducing your client’s taxes will turn you into your client's local hero!
Current Tax Regime: Foreign source income of controlled foreign corporations (CFC) not effectively connected to the US is not taxable until returned to the US via dividend payments. This allows businesses to maximize their tax deferral until the income is received by the US business or the CFC is sold.
Currently, passive income and income effectively connected to the US is taxed under current rules. If this income includes gains from the sale of business assets, these taxes can be eliminated.
