ByRichard S. Lehman, Esq., United States Tax Attorneywww.LehmanTaxLaw.com561-368-1113

U.S. Taxation ofForeign CorporationsAndNonresident AliensGeneral Rules Tax Planning BeforeImmigrating to the U.S. Tax Planning for theForeign Real EstateInvestor Copyright by Richard S. LehmanPage 2

Copyright by Richard S. LehmanPage 3

INTRODUCTIONThe United States has long been a safe haven for foreign investors. Nowit has become not only a safe haven for foreign investors, it has alsobecome a nation that has myriad real estate and business assets allavailable for acquisition at bargain prices due to the precipitous fall inthe U.S. dollar.What is not so well known is that the United States tax laws are veryfavorable to foreign investment; providing at times for the payment oftax free interest by U.S. taxpayers to foreign investors. Capital gainsfrom investment may be tax free or subject to tax rates of 15%, and thecomplex laws provide for numerous methods of deferring the payment ofU.S. taxes to a later point in time.At the same time, these same laws can become tax traps for the poorlyadvised investor and can cause income taxes on profits to be as high as65% and estate (inheritance) taxes to be paid on U.S. assets held atdeath as high as 48%.The following narrative outline is intended to provide the foreigninvestor, both corporate and individual, with only a basic introduction tothe tax laws of the United States as they apply to that foreign investor.Hopefully, it will let the foreign investor know that they are welcome inthe United States. More importantly, it should help the foreign investorknow that the U.S. tax laws are complex and must be dealt with in ahighly professional manner; if one is to avoid the tax traps and takeadvantage of the many tax benefits offered by the United States.The general principles discussed herein are not intended to be legal ortax advice and taxpayers should consult with their individual legal,accounting, and tax advisors. Copyright by Richard S. LehmanPage 4


I. TAXATION PATTERN United States Resident Alien (“TaxResident”) - Subject to Taxationa.b.c.Income Taxation - Worldwide IncomeEstate Taxation - Worldwide AssetsGift Taxation - Worldwide Assets Non Resident Alien - Subject toTaxationa.b.c.Income Taxation - United States SourceIncome, Limited type of Foreign SourceIncomeEstate Tax - United States Situs Assets OnlyGift Tax - Real and Tangible Personal Propertywith a United States SitusThere is a vast difference in the manner in which the UnitedStates will apply its income, estate and gift taxes to a would-beimmigrant that is considered a “tax resident” and one that stillhas “non-resident alien” status. A tax resident will be subject toU.S. incomes taxes, estate taxes and gift taxes on a worldwidebasis. Non-resident aliens will generally only pay U.S. incometax on income earned from U.S. sources and will pay U.S. estatetaxes only on real property and tangible personal property inthe United States, and selected intangible assets. Copyright by Richard S. LehmanPage 6

II. STATUS FOR TAX PURPOSES Resident for Income Tax Purposesa.b.c.d.e.Green CardSubstantial Presence TestVoluntary ElectionThe Closer Connection ExceptionTreaties: Tie BreakerNonresident Alien Individuals - Income TaxA nonresident alien individual is defined as any citizenof a country other than the United States who is not a“U.S. resident” for U.S. income tax purposes. Thegeneral rule is that an alien is not considered to be aU.S. resident for tax purposes if the alien does not have(1) a green card representing permanent residency inthe U.S. or (2) a “substantial presence or time period” inthe U.S. as described below. There are exceptions tothis general rule that will also be discussed.An alien individual has a “substantial presence” in theUnited States for the calendar year in which the alien isboth physically present in the U.S. for at least 31 daysand; in that same calendar year is considered to havebeen in the U.S. for a combined total of 183 days ormore over the past three years pursuant to a formula. Copyright by Richard S. LehmanPage 7

II. STATUS FOR TAX PURPOSESFor purposes of calculating this combined 3 year, 183-dayrequirement; each day present in the United States during thecurrent “combined” calendar year counts as a full day, eachday in the preceding year as one-third of a day and each dayin the second preceding year as one-sixth of a day. This isshown on the example below.The United States has tax treaties with many countries. Thesetreaties generally provide that the residents and corporationsof each country to the treaty are entitled to a more liberal taxtreatment than residents and corporations of non-treatycountries. The concept of residency under the treaties isdifferent than the general definition and may permit anonresident alien to spend more time in the U.S. each yearwithout being a U.S. tax resident. Generally, the tax treatieswill permit the alien individual to remain a non-resident forU.S. tax purposes so long as the alien covered by the treatystays less than 183 days in the U.S. each separate year: andnot over the cumulative three year period.This same type of treatment, that of permitting aliens to havean extended stay in the U.S. of less than 183 days in eachyear without becoming a U.S. tax resident, is also available tocertain aliens that are not from countries governed by a treaty. If an alien has provable close business and socialties to his or her native country; the substantial presence testis extended due to their “closer connection” to a foreigncountry than to the U.S.The Foreign Corporation – Income TaxA foreign corporation is a recognized separate taxpayer forU.S. tax purposes. A foreign corporation for U.S. tax purposes,is a corporation that is not organized under the laws of theUnited States or any one of the states of the United States. Aforeign corporation’s articles of incorporation will reflectwhether it is a foreign corporation or a U.S. domesticcorporation. Copyright by Richard S. LehmanPage 8

Substantial Presence TestNONRESIDENT ALIENResidency"Days"Daysin USYear1201204020180RESIDENT ALIENFormulaDaysin 20200316.67%12020Total Copyright by Richard S. LehmanTotal190Page 9

III. TWO TYPES OF FEDERAL INCOMETAXATION PATTERNSU.S. Taxpayers (Citizens and Resident Aliens)As a general rule, U.S. domestic corporations and United Statescitizens and residents are taxed by the U.S, on their worldwide netincome regardless of the source of the income. Exceptions to thisrule exist only to prevent “double taxation” of foreign incomeearned by U.S. individuals and Companies abroad. DoubleTaxation is prevented by allowing U.S. taxpayers to obtain a creditagainst their U.S. tax for foreign taxes paid on that same income.Foreign TaxpayerForeign Taxpayers (both alien individuals and foreigncorporations), however, pay U.S. tax on U.S. income in twoentirely different ways depending upon whether the income theForeign Taxpayer earns is from “passive” sources or whether theincome results from the Foreign Taxpayer’s conduct of an activetrade or business in the U.S.Furthermore, the U.S. tax rules for Foreign Taxpayers take intoaccount the fact that the jurisdiction of the United States canextend just so far. Therefore, as a general rule a Foreign Taxpayerwill only pay U.S. tax on their “U.S. Source Income” and not onincome earned from outside of the United States. There arehowever exceptions.In order to understand the two different types of taxation, it isimportant to examine the general rules that define whether aForeign Taxpayer is conducting an “active business in the U.S.” ora “passive investment” as well as the rules governing “source ofincome” and the “source of deductions”. These definitionsdetermine which one of the two sets of tax rules must be appliedin order to calculate the U.S. tax liability of foreign corporationsand nonresident alien investors. Source of Income Rulesa.b.c.U.S. Source IncomeForeign Source IncomeDeductions Copyright by Richard S. LehmanPage 10

III.TWO TYPES OF FEDERAL INCOME TAXATIONPATTERNSThere are a strict set of rules that govern the determination ofwhether income finds its source in the United States or a foreignplace for U.S. tax purposes. They are as follows:1. Compensation for personal services. The source of income from theperformance of personal services is located at the place where the servicesare performed.2. Rents and royalties. Rent or royalty income has its source at thelocation, or place of use, of the leased or licensed property.3. Real Property Income and Gain. Income and gain from the rental or saleof real estate has its source at the place where the property is situated.4. Sale of personal property. Historically, gain from the sale of personalproperty has been sourced at the “place of sale” which is generally held tobe the place where title to the goods passes; however the rules havebecome more complex taking other factors in place.5. Interest. The source of interest income is generally determined byreference to the residence of the debtor; interest paid by a resident of theUnited States constitutes U.S. source income, while interest paid bynonresidents who are not U.S. citizens is generally foreign-source income.6. Dividends. The source of dividend income generally depends on thenationality or place of incorporation of the corporate payor; that is,distributions by U.S. corporations constitute domestic-source income,while dividends of foreign corporations are foreign-source income. Thereare, however, several important exceptions to these rules.7. Partially Within and Partially Without. There is a set of source rules thatconsider the sources of income that can be partially earned in the U.S. andpartially from foreign sources such as income from transportation servicesrendered partly within and partly without the United States; income fromthe sale of inventory property “produced”, “created”, “fabricated”,“manufactured”, “extracted”, “preserved”, “cured”, or “aged” without andsold within the United States or vice versa, and several other types ofincome. Generally, this is done on some type of allocation basis betweenthe source countries.Source of DeductionsThe source rules for deductions are considerably less specific than thosedealing with gross income. The rules regarding claiming deductionsagainst U.S. income earned by a Foreign Taxpayer merely provide thattaxable income from domestic or foreign sources is to be determined byproperly apportioning or allocating expenses, losses, and other deductionsto the items of gross income to which they relate. Copyright by Richard S. LehmanPage 11

III.TWO TYPES OF FEDERAL INCOMETAXATION PATTERNS Taxation of Passive (Non BusinessIncome)a.b.30% Flat Tax Rate – Gross IncomeWithholding obligations The Taxation of Passive IncomeIf the income that a Foreign Taxpayer earns is passivein nature and does not result from the ForeignTaxpayer conducting an ongoing “trade or business”;the Foreign Taxpayer’s U.S.-source investment incomeis taxed at a flat 30 percent rate (with no deductions).Generally, the passive types of income earned byinvestors are such things as interest, dividends,royalties and other periodic payments that arise fromthe licensing of trademarks, goodwill and numeroustypes of intellectual property. Foreign Investors thatearn only passive U.S. income are also generally notsubject to tax on capital gains and other nonrecurringU.S.-source income.Since as a general rule Foreign Taxpayers earningpassive income in the U.S. have only limited ties to theU.S.; a tax “withholding system” is in place. Thissystem essentially forces the U.S. person that is payingthe passive income to a Foreign Taxpayer to collect thetax that is due and pay it to the United States. Failureto do so can result in the U.S. person that isresponsible to withhold this tax being personallyresponsible for the tax. Copyright by Richard S. LehmanPage 12

III.TWO TYPES OF FEDERAL INCOMETAXATION PATTERNS Taxation of Active Trade or BusinessIncomea.b.c.Graduated Corporate Tax RatesGraduated Individual Tax RatesEffectively Connected IncomeOf central importance to the U.S. taxation of Foreign Taxpayersis whether the foreign persons are engaged in a trade orbusiness and, if so, whether the trade or business is locatedwithin the United States. Foreign Taxpayers engaged in a tradeor business are taxed on their U.S. source income in the samemanner as U.S. citizens, tax residents and domesticcorporations. That is they are taxed on their taxable U.S. sourceincome after allowable deductions at graduated tax rates.Whether the Foreign Taxpayer is considered to be engaged in atrade or business within the United States depends on thenature and extent of the taxpayer’s economic contacts with theUnited States. It is clear that the entire business operation neednot be centered in the United States.The difficult question is, how much of the business functionsmust be located in the United States in order to create a situs?A fully integrated enterprise that manufactures and sells itstotal output in the United States, and is managed and controlledin the United States, is clearly a U.S. trade or business.At the other end of the spectrum, is the wholly foreignenterprise that merely ships products to customers in theUnited States, but has no other economic contact with theUnited States engaged in a U.S. trade or business. Betweenthese two extremes, however, the presence of a U.S. businesssitus has to be determined on a case-by-case basis, to identifythe point at which mere business with the United States crossesthe line and becomes business within the United States. Copyright by Richard S. LehmanPage 13

III. TWO TYPES OF FEDERAL INCOMETAXATION PATTERNSAs a general rule, the more deeply a foreign corporationbecomes enmeshed in the economic and commercial structureof the United States, the more likely it will be found to haveestablished a trade or business in the United States.Income Effectively Connected with a U.S. BusinessUnlike a Foreign Taxpayer that is taxed on passive U.S. sourceincome only; income of a Foreign Taxpayer that conducts atrade or business in the U.S. will pay tax on all of its UnitedStates source income and in limited circumstances, U.S. taxmust be paid on income that is earned from foreign sources andnot U.S. sources. Foreign source income that is attributable to aForeign Taxpayer’s U.S. trade or business activity maybe taxedby the U.S. and is called “Effective Connected Income”.Whether non-U.S. source income earned by a Foreign Taxpayeris taxed as “trade or business” income is determined by howclosely the income is attributed to the Foreign Taxpayer’s or business.In addition to certain foreign source income being subject toU.S. tax; U.S. passive source income may be taxed like trade orbusiness income, if it is considered to be “effectively connectedincome.”It is possible that at times, U.S. source passive type income willbe subject to a tax on net income and not the usual 30% taxthat is applied to gross income. For example, though interestincome is normally considered “passive income”; it is “activebusiness income” to a Foreign bank that holds deposits andconducts business in the U.S. Therefore, interest earned on suchdeposits would not be taxed at a flat rate. Rather it is taxed ona progressive rate that permits offsetting deductions for theforeign bank’s cost of funds and other costs of doing business inthe U.S. Copyright by Richard S. LehmanPage 14

IV. THE EFFECT OF BILATERAL TREATIESBilateral Tax TreatiesThe role of bilateral tax treaties in the taxation of ForeignTaxpayers on their U.S. source income is frequently of evengreater importance than the basic statutory general rules justmentioned. Tax treaties between the U.S. and other countriescan operate to (1) reduce (or even eliminate) the rate of on certain types of U.S. income derived by ForeignTaxpayers situated in the treaty-partner country; (2) overridevarious statutory source of income rules (3) exempt certaintypes of income or activities from taxation, by one or bothtreaty-partner countries; and (4) extend credit for taxes leviedby one country to situations where the domestic law would notso provide.The principal purpose of the U.S. bilateral tax treaties is to avoidthe potential for double taxation arising from overlapping taxjurisdictions (e.g. income source arising in one country whilethe taxpayer is resident in the other country.)V. THE BRANCH PROFITS TAXThe Branch Profits TaxThere is an additional tax that foreign corporations must beaware of. This is a major trap for the unwary. Absent the taxbenefits of an applicable United States tax treaty; a ForeignCorporation may be subject to not only the combined Floridaand Federal income tax approaching 40%; but depending uponthe facts and circumstances, foreign corporations with earningsfrom United States investments could be subject to anadditional United States tax known as the Branch Profits Tax.The 30% tax is applied to U.S. income that is either notdistributed as a dividend or reinvested in U.S. assets by theForeign Corporation. Copyright by Richard S. LehmanPage 15

Tax Planning BeforeImmigrating to the U.S.SafeguardingThe Immigrant’s FinancialInterestsPrior to Tax Residency Copyright by Richard S. LehmanPage 16

VI. PRE-IMMIGRATION PLANNING –Income Tax and Gains Objective – Minimize United States Gains andIncome Taxa.A nonresident alien, prior to becoming a U.S. taxresident will want to make sure that he or she does nothave to pay a U.S. tax on money that as a practicalmatter, was earned before their residency period.A key strategy therefore, is to accelerate gains prior toresidency so that gains earned while one was anonresident alien are not subject to U.S. tax afterresidency is obtained. An example of acceleration wouldbe to trade securities with unrealized gain and sell thembefore residency. There would be no tax on the gain andthe shares can be repurchased with a new high costbasis.Assume a nonresident alien owned 1.0 million dollarsworth of shares of Ford Motor Company that waspurchased for 100,000. If the shares are sold afterU.S. tax residency is assumed, there will be a tax on 900,000 in gains. A sale of these same shares by aNonresident before obtaining U.S. income tax residencywould result in no taxable gain.b. Another key strategy is to accelerate income that isexpected to be paid after residency. Payments shouldbe collected prior to residency. Examples of incomeacceleration:1.2.Exercise stock optionsAccelerate taxable distributions from deferredcompensation plans3. Accelerate gains on Notes held from installment salesc. One can also defer recognizing a loss until afterobtaining residency so that it can be used against postresidency gain. Assets with a fair market value belowcost can be sold after residency. Copyright by Richard S. LehmanPage 17

VII. Pre Immigration Planning –Estate and Gift Tax Residency for Estate and GiftTax PurposesA nonresident alien individual can be subject to the UnitedStates estate and gift taxes. However, nonresident aliens aresubject to U.S. estate and gift taxes only on assets situated inthe U.S.The definition of nonresidency for estate and gift tax purposesis completely different than the definition of residency forincome tax purposes. A nonresident alien for estate and gift taxpurposes is an individual whose “domicile” is in a country otherthan the U.S. Domicile is a subjective test based on one’s intentof permanency in a country. Objective-Minimize United States EstateTaxa.Key strategy is to minimize assets in one’sestate before obtaining residency status; andwhere possible to retain some degree ofcontrol over assets.b.Planned gifts to third parties should be madeprior to residency.c.Planned gifts of United States Situs Property1. Tangible Property - Physical Change of Situsto a Foreign Situs Before Gift is made.2. Real Estate - Contribution to foreigncorporation and gift of stock in foreigncorporation.d.Transfers in Trust for Beneficiaries Copyright by Richard S. LehmanPage 18

VIII.EXCEPTIONAL CIRCUMSTANCESAND SPECIAL TAX BENEFITS Studentsa.A foreign student who has obtained the properimmigration status will be exempt from being treatedas a U.S. resident for U.S. tax purposes even if he orshe is here for a substantial time period that wouldordinarily result in the student being taxed as a U.S.resident.b.This student visa not only permits the student tostudy in the United States but to pay taxes only onincome from U.S. sources not worldwide income. Thevisa also permits the student’s direct relatives toaccompany the student to the United States andreceive the same tax benefits.c.Assume the student, a South American woman aged40, is married to an extremely successful SouthAmerican businessman who accompanies her withtheir two children to the U.S. His annual income is 1.0 Million and is earned from the banking businessin Columbia. He earns no U.S. income. Under thosecircumstances, for U.S. income tax purposes, thisbusinessman is exempt from U.S. tax on hisworldwide income while living full-time in the U.S. forless than five calendar years. Treaty Benefitsa.Aliens that are governed by a tax treaty can generallyspend more time in the U.S. than an alien not coveredby a treaty before being considered a resident alienfor tax purposes. Copyright by Richard S. LehmanPage 19

TAX PLANNINGFOR THEFOREIGN REALESTATE INVESTORTax BenefitsandTax Traps Copyright by Richard S. LehmanPage 20

IX. Real Estate - TAXATION PATTERNU.S. Taxpayers U.S. Citizens, Resident Aliens and Domestic Corporations– Real Estate Income Subject to Taxationa. Income Taxation – Worldwide Incomeb. Estate and Gift Taxation (Individuals only) –Worldwide AssetsForeign Taxpayers Nonresident Aliens and Foreign Corporations –Real Estate Income Subject to Taxationa. Income Taxation – United States Real EstateIncome1. Generally taxed on net income similar to USTaxpayers2. Several Important Exceptionsb. Capital Gains Taxation1. Alien Individual – Individual Tax Rates2. Foreign Corporation – Corporate Tax Ratesc. Estate Taxation1. Alien Individual Residency for Estate TaxPurposes2. U.S. Real Property, U.S companies holding U.S.Real Property and the U.S. estate and gifttaxesd. The Branch Profits Tax (Foreign Corporation Only) Copyright by Richard S. LehmanPage 21

IX. Real Estate - TAXATION PATTERNIncome TaxIncome derived by a Foreign Taxpayer from United States realestate has its own unique taxation pattern that is different inmany instances from other types of income earned by theForeign Taxpayer. A Foreign Taxpayer will generally pay incometax like a United States investor on its real estate income andthe Foreign Taxpayer will pay tax on capital gains derived froma sale of United States real property like the U.S. taxpayer.Capital GainsLike the U.S. taxpayer, in the event of real estate capital gains,there is a distinct benefit between capital gains earned by anonresident alien individual who will be taxed at the lowerlong-term capital gains rate of 15%, and the capital gainsearned by a foreign corporation that might carry a Florida stateand Federal income tax on the same gain approaching 40%.Estate/Gift TaxesA nonresident alien individual can be subject to the UnitedStates estate and gift taxes. However, non- resident aliens aresubject to U.S. estate and gift taxes only on assets situated inthe U.S. U.S. real estate is one of the items that is subject toU.S. estate and gift taxes.The Branch TaxThere is an additional tax that foreign corporations must beaware of. This is a major trap for the unwary. Subject to theprovision of a potentially applicable United States tax treaty; aforeign corporation may be subject to not only the combinedFlorida and Federal income tax approaching 40%. Foreigncorporations with earnings from United States real propertyinvestments could be subject the additional United StatesBranch Tax of 30%. Copyright by Richard S. LehmanPage 22

X. OWNERSHIP OF REAL PROPERTY How Should the Foreign Taxpayer Hold U.S.Property – Alien Individual Ownership,Partnerships, Limited Liability Companiesand Foreign and Domestic Corporationsa.Capital Gains Benefitsb.Ordinary Income Taxesc.Estate Tax BurdensAn alien individual may conduct his or her real estate businessin the United States as an individual owner of real property, as apartner in a partnership, as a member of a limited liabilitycompany or as a shareholder of a corporation either foreign ordomestic.Individual Ownership and Ownership by PassThrough EntitiesIndividual ownership or the use of a limited partnership orlimited liability company does generally provide the best incometax results. This is because both partnerships and most (but notall) limited liability companies (“Pass Through Entities”) pass allof their U.S. tax attributes to their individual owners directly;asif the entity does not exist for tax purposes. The long-termcapital gains rate for a nonresident alien individual will be at amaximum of 15%.Individual or pass through entity ownership has its income taxbenefits but has several drawbacks. The conduct of the realestate business through anything other than the typicalcorporation will not accomplish the goal of Foreign Investoranonymity. Copyright by Richard S. LehmanPage 23

X. OWNERSHIP OF REAL PROPERTYOwnership individually or through Pass Through Entities requirethe Foreign Taxpayer Owner to file a U.S. tax return.Furthermore, a nonresident alien’s individual ownership or passthrough ownership of U.S. real property will also most likelysubject the nonresident alien to a U.S. estate tax on the equityvalue of the real property. The individual Foreign Taxpayer mayat times be forced to trade off the income tax benefit versusthese other exposures.Corporate OwnershipThe ordinary income rates and capital gain rates of acorporation are the same. Therefore, both ordinary income andcapital gain earned by a corporation can be subject to a U.S. andindividual state tax rate approaching 40%; as compared to the15% capital gain rate paid by a nonresident individual owner.Furthermore, the payment of dividends by a corporation to itsnonresident shareholder might be subject to an additional U.S.withholding tax on dividends. However, ownership of U.S. realproperty through the corporate form will insure that individualtax returns do not need to be filed by the individual ForeignInvestor.Often with proper tax planning, the tax barriers ofcorporate ownership of real estate can be significantlyreduced. Copyright by Richard S. LehmanPage 24

XI. TAX PLANNING BENEFITS AND TRAPS UNIQUETO THE FOREIGN INVESTOR IN REAL ESTATE Tax Treaties Liquidation of Corporationa.b.The Problems of Double TaxationForeign Taxpayer – Payment of a Single Portfolio Interesta.b.c.d.Tax Free U.S. IncomeU.S. Interest DeductibleThe Restrictions on Portfolio InterestPlanning Techniques Sale of Foreign Corporate Stocka.b.Tax BenefitsPractical ApplicationsOnce the form of ownership is determined there are severaladditional planning tools that may be specifically helpful to theForeign Taxpayer.Tax TreatiesAs mentioned previously, a primary planning tool available tocertain Foreign Taxpayer is their ability to rely on a UnitedStates tax treaty that may exist with the Foreign Taxpayer’shost country. This type of tax treaty will assure that there is nodouble taxation between the two countries. Copyright by Richard S. LehmanPage 25

XI. TAX PLANNING BENEFITS AND TRAPS UNIQUE TOTHE FOREIGN INVESTOR IN REAL ESTATEIncome will only be taxed at the maximum highest rate of bothcountries. Treaties may also provide for the prevention of doubletaxation under the estate tax laws of the two countries, reduce oreliminate the Branch Tax and generally reduce United States taxeson the Foreign Investor’s interest, dividends and business incomethat are earned from U.S. sources.A Single U.S. TaxEven without treaty benefits, Foreign Taxpayers investing in theUnited States in corporate form can ensure that there will be nodividend or Branch tax on income earned from United States realproperty by a corporation.So long as a corporate entity sells or distributes all of its realestate assets and pays a U.S. corporate tax on gain; it may betimely liquidated and distribute all of the sales proceeds free ofany further tax. This can avoid a second U.S. tax by the ForeignTaxpayer since the distributions from the Corporation that areliquidation proceeds and not dividends, are excluded from furtherU.S. taxes.Portfolio InterestAnother planning tool permits Foreign Taxpayers, both corporateand individual, to benefit from the fact that they are permitted toearn tax-free interest income on certain loans to support U.S. realestate investments. By taking advantage of and meeting therequirements of the “portfolio interest rules”, the ForeignTaxpayer may earn tax-free interest instead of taxable real estateprofits or dividends.Sale of Stock/Foreign CorporationU.S. taxes on real estate profits can be totally eliminated in rareoccasions in which a real estate buyer is willing to acquire aForeign Taxpayer’s shares in a foreign corporation that owns U.S.real estate. A Foreign Taxpayer ma

By Richard S. Lehman, Esq., United States Tax Attorney 561-368-1113 Copyright by Richard S. Lehman Page 2