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Investing in the United States? Principal U.S. Tax Considerations

Monday, 21 November 2016

Gregory M. McKenzie Partner Kelley Drye & Warren LLP USA will be attend Invest Pro UAE Dubai with presentation:” U.S. Tax Considerations for Inbound U.S. Investments

Kelley Drye & Warren LLP

International corporate law firm with over 300 lawyers and professionals in 9offices, including: New York; Washington, D.C.; Los Angeles; Chicago; Brussels; & Mumbai (affiliate office)

Investing in the United States? Principal U.S. Tax Considerations

A.Federal Income Tax

B.Federal Estate Tax

C.State Income Tax

  1. Federal Income Tax Considerations (cont’d)

1.Direct Investment vs. Establishment of U.S. Business Entity

2.Gain from Sale Eligible for Capital Gain Tax Rate?

3.Tolerance for U.S. Tax Reporting?

4.Appropriate Mix of Debt and Equity in Capital Structure of U.S. Business Entity

5.Utilization of U.S. Attributes in Home Jurisdiction

  1. Federal Estate Tax Considerations

Why do we care?

Non-citizens non-residents (“NCNRs”) who die owning U.S. situs property are subject to 40% U.S. federal estate tax on value of U.S. situs property

  • $5.4 million exemption available to U.S. decedents is not available to NCNRs; NCNR sonly eligible for $60,000 exemption
  • S. situs property means tangible and intangible property located in the United States, including:
  • Shares in a U.S. corporation
  • Certain bonds of a U.S. obligor
  • Real estate located in United States
  • Ownership structure should consider U.S. estate tax consequences
  1. State Tax Considerations
  • In Which State to Organize U.S. Business Entity?
  • Delaware is a popular choice because of well-developed body of corporate law
  • Wyoming has become popular more recently because it has no corporate tax
  • But, if foreign investor plans to operate business or own an asset (e.g., real estate) in a particular jurisdiction, consideration should be given to establishing business entity in that jurisdiction because business entity will be taxable in that jurisdiction in any case

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