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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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Question for Ed Johnson - o.k. continuing with our Panama

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Question for Ed Johnson - o.k. continuing with our Panama property. If we move our lot here in the US under the Panama corporation and move my husband's architectural business under the corporation - then the corporation pays taxes on whatever income is derived - but the gains and losses of all three investments - the Panama real estate, CA real estate and Architecture business can all be added and subtracted against each other right? If this corporation is then put into a Panamanian trust or foundation then which entity pays US tax - the trust or the corporation? and what would the tax rate be? To answer your question Mike is the director and does own all the shares of the corporation (10,000) Thus we do need to file Form 5471 - right?

Dear Denise,

FORM 5471 requirement: since you have clarified that it is a foreing corporation; then the reporting requirement would be:

1. If he owned 10 percent of the available stock in the company, then he has to report.

2. If he had 50% control of the company voting power for at least 30 days out of the year, he has to report.

If he owns all the shares, then he meets this requirement and must complete form 5471.

IF THIS property is corporate held property and the corporation is a realestate company, then the profits and losses will balance each other through the balance sheet and show up as net corporate profits or losses.

It has to flow through the chart of accounts. It is really not one property balancing the others;

some properties will have losses,and some will have profits, and this will affect the net.

You get to the same place, but it is a matter of process.


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