EB5 Investors Magazine Volume 5, Issue 2 - Page 122

eliminate U.S. income tax on non-U.S. assets. For example, the investor could make irrevocable gifts to long-term trusts for U.S. or non-U.S. beneficiaries. These trusts can be either U.S. trusts or foreign trusts for U.S. tax purposes – typically U.S. trusts if there are U.S. beneficiaries and foreign trusts if there are non-U.S. beneficiaries. However, if it is a foreign trust for U.S. tax purposes, the trust will be taxable to the investor/trust settlor if he becomes a U.S. resident within five years of the trust’s creation, thereby eliminating much of the benefit of using a foreign trust. In reality, it is often impractical to engage in planning more than five years in advance. Under these circumstances, the client should still establish the trust – to remove the assets from the U.S. transfer tax system – and invest the trust assets in such a way so as to not produce U.S. taxable income; through tax-efficient investments or a U.S. insurance policy that allows tax-free access to the policy’s cash value. This will significantly reduce – if not eliminate – U.S. income tax going forward. 121 EB5 INVESTORS M AGAZINE U.S. TRANSFER TAX Under current law, absent a tax treaty, real property and tangible personal property located in the United States and owned by a non-U.S. person are subject to a 40 percent gift tax for lifetime transfers above $14,000 ($15,000 as of January 1, 2018) if to a non-spouse, and $149,000 ($152, 000 as of January 1, 2018) for lifetime transfers to a non-U.S. citizen spouse. These same assets and [ܙH\HXXH \[\]B^XݙHۛH YۙY]X] ۝\[KKˈ]^[[8'\Y['H]HH8'[YYYܙY]8'H܂[YYYY[\]H^^[\[ۈ[[[و BZ[[ۋ[^Y܈[][ۈ KHZ[[ۈ[ MŠ KZ[[ۈ[ N K[\ܙKˈ]^[[\Y[[[ٙ\\ KHZ[[ۈYHوY܂\]H^ Y][YHY]^YYHY^[X[^\[ۂ\[H M \X\Y[ H\]Z\HH[[وHK˂ܛH HY^]\[\H\YHو\[YYYܙY] YۚYX[KH[YYYܙY]܈Kˈ\Y[