New IRS Form 8938 created by FATCA in 2010. Can filing this form be avoided?

US$8.5 B from Microsoft ends up in Caymans.

“This is the kind of thing that companies do all the time,” said David Hasen, an associate professor and tax scholar at Santa Clara law school. “You are always trying to set up an entity so you can avoid having income in an high tax jurisdiction.”

– David Hasen, associate professor and tax scholar at Santa Clara law school

https://www.linkedin.com/pulse/dear-wealth-managerstax-attorneys-tax-havens?trk=prof-post

$1.2 trillion dollars on deposit in Cayman Banks - up 10% in 2005 says Cayman Government?

IRS Form 8938 requires American taxpayers to report their specified foreign financial assets. But, in some cases you may not have to file this form at all. For example, if your specified foreign financial assets are under $50,000 you don’t have to file Form 8938.

Let’s look at an example.

US person JR owns 1% of the shares in FC1. FC1 has 50,000 authorized shares outstanding, and JR owns 500 shares of these. FC2 (or a FT) owns the remaining 49,500 shares of FC1. FC1 is itself owned by FC2 (or optionally in this example by a foreign trust / FT with no US beneficiaries). FC1 and FC2 are both organized in the Bahamas – a no tax haven.

FC1 holds an account with a broker on Wall Street worth $1M. This is the only asset of FC1. FC1 and FC2 have no foreign bank accounts or specified foreign financial…

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One Response to New IRS Form 8938 created by FATCA in 2010. Can filing this form be avoided?

  1. US$8.5 B from Microsoft ends up in Caymans.

    “This is the kind of thing that companies do all the time,” said David Hasen, an associate professor and tax scholar at Santa Clara law school. “You are always trying to set up an entity so you can avoid having income in an high tax jurisdiction.”

    – David Hasen, associate professor and tax scholar at Santa Clara law school

    https://www.linkedin.com/pulse/dear-wealth-managerstax-attorneys-tax-havens?trk=prof-post

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