SlideShare uma empresa Scribd logo
1 de 5
Baixar para ler offline
Panorama
                                                           January 2012 VOLUME 1, ISSUE 2




                              Remind Me, What Are The Bush
                                       Tax Cuts?
                          There has been rigorous debate in Congress over the pending expiration of
                          some tax provisions affecting individuals. A portion of these cuts were enacted
                          in 2001 and some additional provisions followed in 2003. Since these individ-
    In this Issue:        ual tax cuts were implemented during the first term of President George W.
                          Bush’s administration, they are collectively referred to as the “Bush Tax Cuts”.
Remind Me, What Are The   As enacted, the cuts were scheduled in the original legislation to expire, or
Bush Tax Cuts?            “sunset”, at the end of 2010. Republicans and Democrats have opposite views
                          on extending the tax cuts, and whether the wealthiest taxpayers should be pay-
Status Report on the      ing more tax. President Obama agreed in late 2010 to temporarily extend the
Mexico-U.S. Tax           expiration of those provisions until December 31, 2012, in order to buy more
Information Exchange      time to get a political deal on taxes negotiated.

                          We are now early in 2012, so it might be helpful to give a refresher on the spe-
What Is A Durable Power   cific provisions that are scheduled to change at the end of this year. We will
of Attorney?              limit the discussion to those provisions affecting high income taxpayers and that
                          are most relevant to those taxpayers. The following summary identifies the key
New Disclosure            provisions of the Bush Tax Cuts, as well as the prior rule that we will revert to
Requirement For Foreign   at the end of the year:
Financial Assets!
                          •   Lowered the top rates on ordinary income to 35% from 39.6%.
                          •   Lowered long-term capital gains rates to 15% from 20%.
                          •   Gradually raised the estate exemption to $3.5 million by 2009, and at the
                              same time lowered the top estate rate to 45% from 55% over the same pe-
                              riod. (President Obama agreed to temporarily raise the estate exemption to
                              $5 million per person and further lower the estate tax rate to 35% through
                              the end of 2012).

                                                                                  Story continues inside ...
Story continued from front ...                          would provide both countries with a powerful tool to
                                                        detect, prevent and combat tax evasion, money laun-
       Remind Me, …                                     dering, terrorist financing, drug trafficking and organ-
                                                        ized crime. However, as of the date of this newsletter,
•   Lowered the tax rate on qualified dividends to      there has been no formalization of the requested agree-
    15% from 39.6%.                                     ment.
•   Indexed the alternative minimum tax for infla-
                                                        What seems to be the holdup, you might ask? There
    tion.
                                                        has been no official comment by Secretary Geithner,
•   Certain itemized deductions are phased out
                                                        but there has been some speculation. About the same
    above specified levels of income.
                                                        time that Secretary Carstens sent his request, the U.S.
•   Personal exemptions are phased out above speci-     had begun a sizeable and formidable undertaking
    fied levels of income.                              against Swiss banks who were facilitating U.S. citi-
                                                        zens and residents in tax evasion through the use of
Keep in mind that the Bush Tax Cuts expire on De-       unreported bank accounts in Switzerland, and cloaked
cember 31, 2012 absent new legislation to extend or     in Swiss bank secrecy laws.
modify those rules. This means that the pre-Bush
Tax Cut law will automatically be reinstated as of      In fact, there is only one country with which the U.S.
January 1, 2013.                                        has such an expanded tax information exchange agree-
                                                        ment as that requested by Carstens – Canada. Some
                                                        commentators have surmised that the U.S. lack of re-
                                                        sponse to Mexico is motivated by its desire to protect
Status Report On The Mexico-U.S.                        its own financial institutions. If the U.S. were to re-
Tax Information Exchange                                port tax information to Mexico on accounts held by
Agreement.                                              Mexicans in U.S. banks, the funds would likely leave
                                                        the U.S. banking system, which is still fragile from the
In February, 2009, Mexico’s Secretary of Finance,       2008 meltdown.
Agustin Carstens, sent a formal request to the U.S.
Secretary of the Treasury, Tim Geithner proposing       So, while it would seem that universal tax information
to expand the information exchanged between the         sharing among all countries would be acceptable with-
two countries under the current treaty. There is cur-   out objection, that does not appear to be the case.
rently a treaty between the U.S. and Mexico for the
bulk exchange of information on the payment of in-      Perspective
terest (between corporations), dividends and royal-
ties. However, the two countries have historically                                           Strength
not exchanged information regarding the payment
by banks in one country to residents of the other
country.                                                What Is A Durable Power of
                                                        Attorney?
Secretary Carstens expressed his concern in that let-
ter that the current U.S. and Mexico treaty is not      A power of attorney is a written authorization for an
enough by itself to deter tax evasion by individuals,   individual to act on behalf of another in dealing with a
or to prevent criminals from hiding profits obtained    third party. The parties to the arrangement are the
from illicit sources in one country in banks in the     principal, who is the person granting authority to an-
other country. He believes that this can be done to-    other to act on his behalf, and the agent, who is the
day by simply opening a bank account in the other       person to whom authority has been granted by the
country.                                                principal. As an agent, there is a fiduciary obligation
The argument behind Carstens’ request was that an       to act with honesty and loyalty to his principal.
expanded tax information exchange agreement
                                                                                          Continued next page
A power of attorney may grant broad or very narrow          New Disclosure Requirement for
authority to the agent to act, and the scope of his au-
thority is spelled out in writing. A principal can grant    Foreign Financial Assets!
the authority to perform any legal act that he could
                                                            The IRS released new Form 8938, Statement of Speci-
have performed for himself. Since powers of attor-
                                                            fied Foreign Assets (“SFFA”) that some individuals may
ney derive from contract law principles, the principal
                                                            need to complete and attach to their 2011 Form 1040.
must have legal capacity to act for himself, before he
                                                            The attached chart will help you identify whether the
can transfer such authority to his agent.
                                                            new filing requirement affects you.
For example, if Sam appoints David as his agent, to
                                                            Generally, this form furthers the IRS’ continuing efforts
act on behalf of Sam for any matter, and Sam has full
                                                            to ensure that U.S. taxpayers are reporting and paying
mental and legal capacity to enter the arrangement,
                                                            tax on all their worldwide sources of income. Simply
then David’s appointment should be respected by any
                                                            stated, if you are a “specified individual” who owns
third party that he deals with at Sam’s instruction.
                                                            “specified foreign financial assets” whose total value
However, if Sam becomes mentally disabled because
                                                            exceeds the “reporting threshold”, then you need to con-
of age, David’s authority will end because of that dis-
                                                            firm with your tax preparer your filing requirements for
ability.
                                                            this new Form. Also note that this form is required in
                                                            addition to the annual requirement to report Foreign
To remedy that particular situation, we have the dura-
                                                            Bank and Financial Accounts (“FBAR”) on Form 90-
ble power of attorney. The principal makes his
                                                            22.1.
power survive his disability, by specifying in writing
that the power is durable, meaning that it survives the
                                                            Following are some examples of foreign financial ac-
principal’s disability. Durable powers of attorney are
                                                            counts and foreign financial assets that need to be con-
commonly used in U.S. estate planning to address
                                                            sidered in determining your filing requirements:
one of the risks we all face – who can act for me on
financial matters if my legal capacity becomes im-
paired? A word of caution – while durable powers of         •   Financial accounts maintained by a foreign financial
attorney are highly recommended components of any               institution (“FFI”) are SFFA’s. However, a foreign
                                                                branch of a U.S. financial institution is not consid-
individual’s estate plan, third parties are not obligated
                                                                ered a foreign financial institution.
to deal with an agent attempting to transact with the
third party pursuant to your validly executed power         •   A FFI includes investment vehicles such as foreign
of attorney. You should check in advance with any               mutual funds, foreign hedge funds and foreign pri-
third party with whom you wish your agent to deal               vate equity funds.
with on your behalf.                                        •   Stock issued by a foreign corporation.
                                                            •   A capital or profits interest in a foreign partnership.
                                                            •   A note, bond, debenture, or other form of indebted-
                                                                ness issued by a foreign person.
Integrity                                                   •   An interest in a foreign trust or foreign estate.
                                                            •   Swap contracts with a foreign counterparty.
                                                            •   Options or other derivatives entered into with a for-
                Innovation                                      eign counterparty.

                                                            Don’t take this lightly. Failure to timely (with your
                                   Character                2011 Form 1040) and accurately file this form could re-
                                                            sult in penalties of $10,000, plus another $50,000 for
                                                            continuing the failure to file after being notified of the
                                                            failure by the IRS.
If you answer all 3 questions yes, you must file Form 8938 with your
        2011 Form 1040



                                              • A U.S. citizen
                                              • A Resident Alien for any part of
                                                 the tax year (Green card or
 Are you a Specified                             substantial presence test)
     Individual?                              • A Nonresident Alien electing to
                                                 be a Resident Alien for joint
                                                 tax return purposes




                                               • A financial account maintained
                                                  by a foreign financial institution
                                               • Foreign financial investment as-
Do you own Specified                              sets not held in a financial insti-
 Foreign Financial                                tution account:
                                                          • Stock or securities from a non-
      Assets?                                               U.S. issuer
                                                          •Any interest in a foreign entity
                                                          • Any financial instrument from a
                                                            non U.S. issuer




                                                             Unmarried &
                                                           SFFA Value as of:
                                          Lives in U.S.                       Lives Abroad
                                                      Last day of tax year, or
                                         > $50,000 USD                      > $200,000 USD
                                                       Any time during year
                                         > $75,000 USD                      > $300,000 USD
 Is the value of those
SFFA assets above the
Reporting Threshold?                                     Married filing joint &
                                                           SFFA Value as of:
                                           Lives in U.S.                         Lives Abroad
                                                         Last day of tax year, or
                                         > $100,000 USD                        > $400,000 USD
                                                          Any time during year
                                         > $150,000 USD                        > $600,000 USD
View Capital Advisors, LLC was founded in 2004 by its
                                                   principals with the mission of providing sophisticated
    Contributing to this issue:                    investment asset management and financial and estate
                                                   planning to our U.S. and Non-U.S. clients.
              R. Craig Brubaker

             I. Michael Goodrich                   We seek to bring wealth planning best practices and a
                                                   wide range of non-proprietary solutions to our clients.
                                                   We also conduct our own research and diligence on
     2000 McKinney Avenue, Suite 600
                                                   world markets and investment alternatives.
              Dallas, TX 75201
                                                   For further information, please contact your investment
                214-855-2550                       representative or one of our wealth planning specialists:
             www.view-cap.com
                                                   R. Craig Brubaker                      214-855-2556
                                                                                          cbrubaker@view-cap.com

                                                   I. Michael Goodrich                    214-855-2552
                                                                                          mgoodrich@view-cap.com




To ensure compliance with requirements imposed by U.S. Treasury Regulations, View Capital Advisors, LLC, and its affiliates,
informs you that any U.S. tax advice contained in this communication was not intended or written to be used, and cannot be
used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending
to another party any transaction or matter addressed herein.

View Capital Advisors, LLC provides asset allocation and investment advisory services through its affiliated registered invest-
ment advisor, View Capital RIA, LP and provides trade execution services through its affiliate, VCA Securities, LP.

Mais conteúdo relacionado

Mais procurados

Eurofenix Autumn 10
Eurofenix Autumn 10Eurofenix Autumn 10
Eurofenix Autumn 10mcarruthers
 
09IR2_FBARarticle
09IR2_FBARarticle09IR2_FBARarticle
09IR2_FBARarticleMax Koss
 
Anticipating State Restructuring
Anticipating State RestructuringAnticipating State Restructuring
Anticipating State Restructuringjoekennedy22206
 
Investment Tax Landscape Countdown To 2013
Investment Tax Landscape   Countdown To 2013Investment Tax Landscape   Countdown To 2013
Investment Tax Landscape Countdown To 2013dvanderjagt
 
What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...
What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...
What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...Rea & Associates
 
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013LexisNexis
 
Sunset Of Tax Cuts
Sunset Of Tax CutsSunset Of Tax Cuts
Sunset Of Tax Cutsapuckett
 
California redevelopment dissolution
California redevelopment dissolutionCalifornia redevelopment dissolution
California redevelopment dissolutionmelshannon
 
Fiscal Cliff Obscures Fading Fundamentals
Fiscal Cliff Obscures Fading FundamentalsFiscal Cliff Obscures Fading Fundamentals
Fiscal Cliff Obscures Fading FundamentalsOpen Knowledge
 
The rise and rise of the administrative state
The rise and rise of the administrative stateThe rise and rise of the administrative state
The rise and rise of the administrative stateJason Nix
 
Chapter 20
Chapter 20Chapter 20
Chapter 20steckejo
 
- Instructional pamphlet for Schedule 3
- Instructional pamphlet for Schedule 3- Instructional pamphlet for Schedule 3
- Instructional pamphlet for Schedule 3taxman taxman
 
Capital Thinking ~ December 10, 2012
Capital Thinking ~ December 10, 2012Capital Thinking ~ December 10, 2012
Capital Thinking ~ December 10, 2012Patton Boggs LLP
 
The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...
The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...
The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...D.B. Geehan
 
Current Thinking, November/December 2012
Current Thinking, November/December 2012Current Thinking, November/December 2012
Current Thinking, November/December 2012Kevin Lenox
 

Mais procurados (19)

Eurofenix Autumn 10
Eurofenix Autumn 10Eurofenix Autumn 10
Eurofenix Autumn 10
 
09IR2_FBARarticle
09IR2_FBARarticle09IR2_FBARarticle
09IR2_FBARarticle
 
Anticipating State Restructuring
Anticipating State RestructuringAnticipating State Restructuring
Anticipating State Restructuring
 
Investment Tax Landscape Countdown To 2013
Investment Tax Landscape   Countdown To 2013Investment Tax Landscape   Countdown To 2013
Investment Tax Landscape Countdown To 2013
 
What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...
What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...
What Is Life After Coronavirus? State and Local Tax: First Wave Response & Se...
 
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013
LEXIS® FEDERAL TAX JOURNAL QUARTERLY September 2013
 
Sunset Of Tax Cuts
Sunset Of Tax CutsSunset Of Tax Cuts
Sunset Of Tax Cuts
 
RAUTHSCHILD'S ROYAL DRAGON FAMILY
RAUTHSCHILD'S ROYAL DRAGON FAMILYRAUTHSCHILD'S ROYAL DRAGON FAMILY
RAUTHSCHILD'S ROYAL DRAGON FAMILY
 
VCA Panorama Issue 6
VCA Panorama Issue 6VCA Panorama Issue 6
VCA Panorama Issue 6
 
MTBiz December 2013
MTBiz December 2013MTBiz December 2013
MTBiz December 2013
 
California redevelopment dissolution
California redevelopment dissolutionCalifornia redevelopment dissolution
California redevelopment dissolution
 
Fiscal Cliff Obscures Fading Fundamentals
Fiscal Cliff Obscures Fading FundamentalsFiscal Cliff Obscures Fading Fundamentals
Fiscal Cliff Obscures Fading Fundamentals
 
The rise and rise of the administrative state
The rise and rise of the administrative stateThe rise and rise of the administrative state
The rise and rise of the administrative state
 
Chapter 20
Chapter 20Chapter 20
Chapter 20
 
- Instructional pamphlet for Schedule 3
- Instructional pamphlet for Schedule 3- Instructional pamphlet for Schedule 3
- Instructional pamphlet for Schedule 3
 
Capital Thinking ~ December 10, 2012
Capital Thinking ~ December 10, 2012Capital Thinking ~ December 10, 2012
Capital Thinking ~ December 10, 2012
 
The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...
The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...
The Fiscal Cliff and 10 Moves Every Investor Should Consider Making Now (...B...
 
Current Thinking, November/December 2012
Current Thinking, November/December 2012Current Thinking, November/December 2012
Current Thinking, November/December 2012
 
John mcdonald
John mcdonaldJohn mcdonald
John mcdonald
 

Semelhante a Vca Panorama Issue 2 2012 Jan17

The Rise Of Wilsons Tax Reform
The Rise Of Wilsons Tax ReformThe Rise Of Wilsons Tax Reform
The Rise Of Wilsons Tax ReformApril Scranton
 
Defense Of Marriage Act Ruled Unconstitutional
Defense Of Marriage Act Ruled UnconstitutionalDefense Of Marriage Act Ruled Unconstitutional
Defense Of Marriage Act Ruled UnconstitutionalChelsea Porter
 
President Of The United States Will Change The Future Of...
President Of The United States Will Change The Future Of...President Of The United States Will Change The Future Of...
President Of The United States Will Change The Future Of...Kelly Byers
 
Subchapter Case Study
Subchapter Case StudySubchapter Case Study
Subchapter Case StudyPamela Caluso
 
The Current American Tax Code
The Current American Tax CodeThe Current American Tax Code
The Current American Tax CodeKerry Lewis
 
Housing Planning And Estate Planning
Housing Planning And Estate PlanningHousing Planning And Estate Planning
Housing Planning And Estate PlanningAngel Ashford
 
Americas Hidden Debt Bombs
Americas Hidden Debt BombsAmericas Hidden Debt Bombs
Americas Hidden Debt Bombsjenkan04
 
Creating A Business Entity With Her Friend Dan Nemec From...
Creating A Business Entity With Her Friend Dan Nemec From...Creating A Business Entity With Her Friend Dan Nemec From...
Creating A Business Entity With Her Friend Dan Nemec From...Stefanie Yang
 
Taxes And Inflation In The United States
Taxes And Inflation In The United StatesTaxes And Inflation In The United States
Taxes And Inflation In The United StatesKara Bell
 
Do I Pay North Dakota Taxes When Someone Leaves Me Money?
Do I Pay North Dakota Taxes When Someone Leaves Me Money?Do I Pay North Dakota Taxes When Someone Leaves Me Money?
Do I Pay North Dakota Taxes When Someone Leaves Me Money?Raymond German
 
Tax Evasion Paper
Tax Evasion PaperTax Evasion Paper
Tax Evasion PaperLiz Bundren
 
Justice Legislation Amendment (Success And Surrogacy) (Vic)
Justice Legislation Amendment (Success And Surrogacy) (Vic)Justice Legislation Amendment (Success And Surrogacy) (Vic)
Justice Legislation Amendment (Success And Surrogacy) (Vic)Aurora Cuellar
 
Essay About Mid Term Exam
Essay About Mid Term ExamEssay About Mid Term Exam
Essay About Mid Term ExamLisa Anderson
 
Essay On Subprime Lending
Essay On Subprime LendingEssay On Subprime Lending
Essay On Subprime LendingAimee Brown
 
The History Of The Irs
The History Of The IrsThe History Of The Irs
The History Of The IrsAshley Smith
 

Semelhante a Vca Panorama Issue 2 2012 Jan17 (20)

The Rise Of Wilsons Tax Reform
The Rise Of Wilsons Tax ReformThe Rise Of Wilsons Tax Reform
The Rise Of Wilsons Tax Reform
 
Defense Of Marriage Act Ruled Unconstitutional
Defense Of Marriage Act Ruled UnconstitutionalDefense Of Marriage Act Ruled Unconstitutional
Defense Of Marriage Act Ruled Unconstitutional
 
President Of The United States Will Change The Future Of...
President Of The United States Will Change The Future Of...President Of The United States Will Change The Future Of...
President Of The United States Will Change The Future Of...
 
Subchapter Case Study
Subchapter Case StudySubchapter Case Study
Subchapter Case Study
 
The FATCA Hurricane Hits Ground
The FATCA Hurricane Hits GroundThe FATCA Hurricane Hits Ground
The FATCA Hurricane Hits Ground
 
The Current American Tax Code
The Current American Tax CodeThe Current American Tax Code
The Current American Tax Code
 
Housing Planning And Estate Planning
Housing Planning And Estate PlanningHousing Planning And Estate Planning
Housing Planning And Estate Planning
 
Some Fiscal Cliff Scenarios
Some Fiscal Cliff ScenariosSome Fiscal Cliff Scenarios
Some Fiscal Cliff Scenarios
 
VCA Panorama Issue 5
VCA Panorama Issue 5VCA Panorama Issue 5
VCA Panorama Issue 5
 
Americas Hidden Debt Bombs
Americas Hidden Debt BombsAmericas Hidden Debt Bombs
Americas Hidden Debt Bombs
 
Creating A Business Entity With Her Friend Dan Nemec From...
Creating A Business Entity With Her Friend Dan Nemec From...Creating A Business Entity With Her Friend Dan Nemec From...
Creating A Business Entity With Her Friend Dan Nemec From...
 
Taxes And Inflation In The United States
Taxes And Inflation In The United StatesTaxes And Inflation In The United States
Taxes And Inflation In The United States
 
Estate Planning Newsletter_Jan_Feb_2015
Estate Planning Newsletter_Jan_Feb_2015Estate Planning Newsletter_Jan_Feb_2015
Estate Planning Newsletter_Jan_Feb_2015
 
Do I Pay North Dakota Taxes When Someone Leaves Me Money?
Do I Pay North Dakota Taxes When Someone Leaves Me Money?Do I Pay North Dakota Taxes When Someone Leaves Me Money?
Do I Pay North Dakota Taxes When Someone Leaves Me Money?
 
Executive Pay History
Executive Pay HistoryExecutive Pay History
Executive Pay History
 
Tax Evasion Paper
Tax Evasion PaperTax Evasion Paper
Tax Evasion Paper
 
Justice Legislation Amendment (Success And Surrogacy) (Vic)
Justice Legislation Amendment (Success And Surrogacy) (Vic)Justice Legislation Amendment (Success And Surrogacy) (Vic)
Justice Legislation Amendment (Success And Surrogacy) (Vic)
 
Essay About Mid Term Exam
Essay About Mid Term ExamEssay About Mid Term Exam
Essay About Mid Term Exam
 
Essay On Subprime Lending
Essay On Subprime LendingEssay On Subprime Lending
Essay On Subprime Lending
 
The History Of The Irs
The History Of The IrsThe History Of The Irs
The History Of The Irs
 

Vca Panorama Issue 2 2012 Jan17

  • 1. Panorama January 2012 VOLUME 1, ISSUE 2 Remind Me, What Are The Bush Tax Cuts? There has been rigorous debate in Congress over the pending expiration of some tax provisions affecting individuals. A portion of these cuts were enacted in 2001 and some additional provisions followed in 2003. Since these individ- In this Issue: ual tax cuts were implemented during the first term of President George W. Bush’s administration, they are collectively referred to as the “Bush Tax Cuts”. Remind Me, What Are The As enacted, the cuts were scheduled in the original legislation to expire, or Bush Tax Cuts? “sunset”, at the end of 2010. Republicans and Democrats have opposite views on extending the tax cuts, and whether the wealthiest taxpayers should be pay- Status Report on the ing more tax. President Obama agreed in late 2010 to temporarily extend the Mexico-U.S. Tax expiration of those provisions until December 31, 2012, in order to buy more Information Exchange time to get a political deal on taxes negotiated. We are now early in 2012, so it might be helpful to give a refresher on the spe- What Is A Durable Power cific provisions that are scheduled to change at the end of this year. We will of Attorney? limit the discussion to those provisions affecting high income taxpayers and that are most relevant to those taxpayers. The following summary identifies the key New Disclosure provisions of the Bush Tax Cuts, as well as the prior rule that we will revert to Requirement For Foreign at the end of the year: Financial Assets! • Lowered the top rates on ordinary income to 35% from 39.6%. • Lowered long-term capital gains rates to 15% from 20%. • Gradually raised the estate exemption to $3.5 million by 2009, and at the same time lowered the top estate rate to 45% from 55% over the same pe- riod. (President Obama agreed to temporarily raise the estate exemption to $5 million per person and further lower the estate tax rate to 35% through the end of 2012). Story continues inside ...
  • 2. Story continued from front ... would provide both countries with a powerful tool to detect, prevent and combat tax evasion, money laun- Remind Me, … dering, terrorist financing, drug trafficking and organ- ized crime. However, as of the date of this newsletter, • Lowered the tax rate on qualified dividends to there has been no formalization of the requested agree- 15% from 39.6%. ment. • Indexed the alternative minimum tax for infla- What seems to be the holdup, you might ask? There tion. has been no official comment by Secretary Geithner, • Certain itemized deductions are phased out but there has been some speculation. About the same above specified levels of income. time that Secretary Carstens sent his request, the U.S. • Personal exemptions are phased out above speci- had begun a sizeable and formidable undertaking fied levels of income. against Swiss banks who were facilitating U.S. citi- zens and residents in tax evasion through the use of Keep in mind that the Bush Tax Cuts expire on De- unreported bank accounts in Switzerland, and cloaked cember 31, 2012 absent new legislation to extend or in Swiss bank secrecy laws. modify those rules. This means that the pre-Bush Tax Cut law will automatically be reinstated as of In fact, there is only one country with which the U.S. January 1, 2013. has such an expanded tax information exchange agree- ment as that requested by Carstens – Canada. Some commentators have surmised that the U.S. lack of re- sponse to Mexico is motivated by its desire to protect Status Report On The Mexico-U.S. its own financial institutions. If the U.S. were to re- Tax Information Exchange port tax information to Mexico on accounts held by Agreement. Mexicans in U.S. banks, the funds would likely leave the U.S. banking system, which is still fragile from the In February, 2009, Mexico’s Secretary of Finance, 2008 meltdown. Agustin Carstens, sent a formal request to the U.S. Secretary of the Treasury, Tim Geithner proposing So, while it would seem that universal tax information to expand the information exchanged between the sharing among all countries would be acceptable with- two countries under the current treaty. There is cur- out objection, that does not appear to be the case. rently a treaty between the U.S. and Mexico for the bulk exchange of information on the payment of in- Perspective terest (between corporations), dividends and royal- ties. However, the two countries have historically Strength not exchanged information regarding the payment by banks in one country to residents of the other country. What Is A Durable Power of Attorney? Secretary Carstens expressed his concern in that let- ter that the current U.S. and Mexico treaty is not A power of attorney is a written authorization for an enough by itself to deter tax evasion by individuals, individual to act on behalf of another in dealing with a or to prevent criminals from hiding profits obtained third party. The parties to the arrangement are the from illicit sources in one country in banks in the principal, who is the person granting authority to an- other country. He believes that this can be done to- other to act on his behalf, and the agent, who is the day by simply opening a bank account in the other person to whom authority has been granted by the country. principal. As an agent, there is a fiduciary obligation The argument behind Carstens’ request was that an to act with honesty and loyalty to his principal. expanded tax information exchange agreement Continued next page
  • 3. A power of attorney may grant broad or very narrow New Disclosure Requirement for authority to the agent to act, and the scope of his au- thority is spelled out in writing. A principal can grant Foreign Financial Assets! the authority to perform any legal act that he could The IRS released new Form 8938, Statement of Speci- have performed for himself. Since powers of attor- fied Foreign Assets (“SFFA”) that some individuals may ney derive from contract law principles, the principal need to complete and attach to their 2011 Form 1040. must have legal capacity to act for himself, before he The attached chart will help you identify whether the can transfer such authority to his agent. new filing requirement affects you. For example, if Sam appoints David as his agent, to Generally, this form furthers the IRS’ continuing efforts act on behalf of Sam for any matter, and Sam has full to ensure that U.S. taxpayers are reporting and paying mental and legal capacity to enter the arrangement, tax on all their worldwide sources of income. Simply then David’s appointment should be respected by any stated, if you are a “specified individual” who owns third party that he deals with at Sam’s instruction. “specified foreign financial assets” whose total value However, if Sam becomes mentally disabled because exceeds the “reporting threshold”, then you need to con- of age, David’s authority will end because of that dis- firm with your tax preparer your filing requirements for ability. this new Form. Also note that this form is required in addition to the annual requirement to report Foreign To remedy that particular situation, we have the dura- Bank and Financial Accounts (“FBAR”) on Form 90- ble power of attorney. The principal makes his 22.1. power survive his disability, by specifying in writing that the power is durable, meaning that it survives the Following are some examples of foreign financial ac- principal’s disability. Durable powers of attorney are counts and foreign financial assets that need to be con- commonly used in U.S. estate planning to address sidered in determining your filing requirements: one of the risks we all face – who can act for me on financial matters if my legal capacity becomes im- paired? A word of caution – while durable powers of • Financial accounts maintained by a foreign financial attorney are highly recommended components of any institution (“FFI”) are SFFA’s. However, a foreign branch of a U.S. financial institution is not consid- individual’s estate plan, third parties are not obligated ered a foreign financial institution. to deal with an agent attempting to transact with the third party pursuant to your validly executed power • A FFI includes investment vehicles such as foreign of attorney. You should check in advance with any mutual funds, foreign hedge funds and foreign pri- third party with whom you wish your agent to deal vate equity funds. with on your behalf. • Stock issued by a foreign corporation. • A capital or profits interest in a foreign partnership. • A note, bond, debenture, or other form of indebted- ness issued by a foreign person. Integrity • An interest in a foreign trust or foreign estate. • Swap contracts with a foreign counterparty. • Options or other derivatives entered into with a for- Innovation eign counterparty. Don’t take this lightly. Failure to timely (with your Character 2011 Form 1040) and accurately file this form could re- sult in penalties of $10,000, plus another $50,000 for continuing the failure to file after being notified of the failure by the IRS.
  • 4. If you answer all 3 questions yes, you must file Form 8938 with your 2011 Form 1040 • A U.S. citizen • A Resident Alien for any part of the tax year (Green card or Are you a Specified substantial presence test) Individual? • A Nonresident Alien electing to be a Resident Alien for joint tax return purposes • A financial account maintained by a foreign financial institution • Foreign financial investment as- Do you own Specified sets not held in a financial insti- Foreign Financial tution account: • Stock or securities from a non- Assets? U.S. issuer •Any interest in a foreign entity • Any financial instrument from a non U.S. issuer Unmarried & SFFA Value as of: Lives in U.S. Lives Abroad Last day of tax year, or > $50,000 USD > $200,000 USD Any time during year > $75,000 USD > $300,000 USD Is the value of those SFFA assets above the Reporting Threshold? Married filing joint & SFFA Value as of: Lives in U.S. Lives Abroad Last day of tax year, or > $100,000 USD > $400,000 USD Any time during year > $150,000 USD > $600,000 USD
  • 5. View Capital Advisors, LLC was founded in 2004 by its principals with the mission of providing sophisticated Contributing to this issue: investment asset management and financial and estate planning to our U.S. and Non-U.S. clients. R. Craig Brubaker I. Michael Goodrich We seek to bring wealth planning best practices and a wide range of non-proprietary solutions to our clients. We also conduct our own research and diligence on 2000 McKinney Avenue, Suite 600 world markets and investment alternatives. Dallas, TX 75201 For further information, please contact your investment 214-855-2550 representative or one of our wealth planning specialists: www.view-cap.com R. Craig Brubaker 214-855-2556 cbrubaker@view-cap.com I. Michael Goodrich 214-855-2552 mgoodrich@view-cap.com To ensure compliance with requirements imposed by U.S. Treasury Regulations, View Capital Advisors, LLC, and its affiliates, informs you that any U.S. tax advice contained in this communication was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. View Capital Advisors, LLC provides asset allocation and investment advisory services through its affiliated registered invest- ment advisor, View Capital RIA, LP and provides trade execution services through its affiliate, VCA Securities, LP.