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Nonresident Tax Issues: ECI, Structures for Holding U.S. Assets, Treaty Benefits, Estate and Gift Taxes

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, July 6, 2023

Recorded event now available

or call 1-800-926-7926

This course will provide tax practitioners working with U.S. nonresident aliens (NRAs) with practical steps to minimize U.S. taxes for these U.S. taxpayers. The panelists will cover the rules for federal income, estate, and gift taxation of nonresidents and provide concrete advice on mitigating these taxes.

Description

NRAs are taxed on income effectively connected with a U.S. trade or business and non-U.S. trade or business income that is sourced to the U.S.--fixed and determinable annual or periodic income, better known as FDAP income. With more and more NRAs doing business in the U.S., the determination of whether a regular, substantial, and continuous business activity is taking place within the U.S. is critical.

The primary criteria for taxation, however, can be altered when and if there is a U.S. treaty with the related country. Deductions and credits are available to offset business income too, but a return must be timely filed to take advantage of these.

In addition to income taxes, NRA advisers must consider the significant effect of estate and gift (transfer) taxes when advising NRAs. The U.S. estate tax regime is particularly potent since NRAs receive a $60,000 estate tax exclusion compared to the resident exemption of $12.92 million (2023).

A nonresident estate tax is assessed on all U.S. property owned at death with certain exceptions. Like income tax, estate and gift taxation can be modified by U.S. treaties. Understanding the estate as well as income tax issues affecting nonresidents is vital for practitioners working with these U.S. taxpayers.

Listen as our panel of experts explains the ins and outs of NRA taxation, including nonresident classification, foreign entity taxation and ownership structures, U.S. investments by NRAs, and potential tax repercussions faced by these U.S. taxpayers.

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Outline

  1. Nonresident classification
  2. Income tax default rules
  3. Income tax treaty modifications
  4. Estate and gift tax
  5. Foreign entity taxation
  6. Considerations for U.S. investments
  7. Other considerations

Benefits

The panel will review these and other critical issues:

  • How is effectively connected income determined?
  • What is FDAP income and how is it taxed?
  • What common treaty benefits are available to lower income, estate, and gift taxes for NRAs?
  • How does asset type influence holding structure choices?
  • When should an NRA file a protective income tax return?

Faculty

McCormick, Patrick
Patrick J. McCormick, J.D., LL.M.
Partner
Rimon Law

Mr. McCormick specializes in the areas of international taxation and multinational trusts and estates. He has...  |  Read More

Sielicki, Christine
Christine Sielicki, EA
Senior Manager, Global Mobility Tax
Plante Moran

Ms. Sielicki is a manager within the Global Mobility team. She has over 15 years of experience in personal taxation and...  |  Read More

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