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A blocker corporation is a type of C Corporation in the United States that has been used by tax exempt individuals to protect their investments from taxation when they participate in private equity or with hedge funds. In addition to tax exempt individuals, foreign investors have also used blocker corporations. [1]
The tax law of many countries, including the United States, does normally not tax a shareholder of a corporation on the corporation's income until the income is distributed as a dividend. Prior to the first U.S. CFC rules, it was common for publicly traded companies to form foreign subsidiaries in tax havens and shift "portable" income to those ...
When repatriated, the corporations are entitled to a foreign tax credit for taxes (if any) paid in foreign countries. Retaining such profits offshore may be regarded as a tax strategy. Many corporations have accumulated substantial untaxed profits offshore, especially in countries with low corporate tax rates.
To avoid double taxation, Ambrose explained that the U.S. offers a Foreign Tax Credit, which allows retirees to offset their U.S. tax liability with taxes paid to the foreign country where they ...
Needless to say, getting double taxed on the same income in two countries is something you want to avoid. For American citizens and resident aliens who pay income taxes in foreign countries, the...
The use of repatriation tax avoidance strategies has been compared with the use of Double Irish arrangements to avoid taxes, though the two tax avoidance plans differ in the sorts of taxes that they allow a company to avoid. Double Irish arrangements have allowed multinational companies to avoid taxes owed to countries in which foreign ...
To avoid paying tax twice, at the corporate and personal income tax levels, the loan-out corporation will pay out its profits to the sole shareholder as a salary or bonus. Since the payment is treated as a salary expense, it is tax deductible as it is a typical part of business operations, rather than the elective payment of a dividend ...
"The convenience rule can result in individuals paying state income tax on more than 100% of their wage income due to the lost out-of-state credits on their resident state tax returns," Mandy R ...