• The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success
  1. Join 40,000+ entrepreneurs
    who are kicking butt and
    winning their dream life.

    Unscripted™ Entrepreneurship:
    A Business That Pays More Than Money, It Pays Time.

    "Fastlane" is an entrepreneur discussion forum based on The Unscripted Entrepreneurial Framework (TUNEF) outlined in the two best-selling books by MJ DeMarco (The Millionaire Fastlane and UNSCRIPTED™). From multimillionaires to digital nomads, the forum features real entrepreneurs creating real businesses.

    Download (Unscripted) Download (Millionaire Fastlane)  Register
    Registering for the forum removes this block!

How to legally pay no taxes... possible?

Discussion in 'Asset Protection/Taxes/Legal' started by André Casal, Dec 31, 2018.

Tags:
  1. Thoelt53
    Online

    Thoelt53 Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    307
    Likes Received:
    840
    Joined:
    Dec 8, 2016
    Gender:
    Male
    Location:
    Boston, MA
    Rep Bank:
    $4,228
    The thing is the US was never intended to be a democracy. The great men that founded this nation were well aware of the perils of democracy.

    Even to this day the US is technically a Constitutional Republic, however, the law of the land has been subverted.

    It's ironic that the 13 colonies that revolted against Britain are some of the most liberal and heavily taxed states in the nation.

    Once again history repeats itself.
     
    Merlox, jon.M, SMH and 4 others like this.
  2. GlobalWealth
    Offline

    GlobalWealth Platinum Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    2,377
    Likes Received:
    4,772
    Joined:
    Sep 6, 2009
    Location:
    Latvia
    Rep Bank:
    $26,815
    @gilman pretty much nailed it. You do need to show significant connection to PR to make this work.

    If you move your business there you need an office and employees, not just virtual office.

    Basically you get a 90% federal tax credit at corporate level. If you pay yourself via dividends, you pay zero personal tax as long as you live there.

    Sent from my VTR-L29 using Tapatalk
     
    UnrealCreative, SMH, Tom.V and 4 others like this.
  3. SamRussell
    Online

    SamRussell Contributor Read Millionaire Fastlane

    Messages:
    31
    Likes Received:
    58
    Joined:
    Dec 3, 2018
    Gender:
    Male
    Rep Bank:
    $295
    I was just about to post this lol.

    A constitutional republic, legally solidifying the rights of the individual, was one of the greatest achievements in the history of man.

    Unfortunately, it's been completely shafted and the US is on course to become more of a theocracy.
     
  4. Kak
    Offline

    Kak Capitalist Swine Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    4,961
    Likes Received:
    17,664
    Joined:
    Jan 23, 2011
    Rep Bank:
    $23,892
    That's pretty great. I wouldn't mind living in the Caribbean anyways. I'd happily make it my primary residence and totally comply with that.

    Do either you or @GIlman know of any good resources out there that would enable me to really educate myself on this particular plan? Beyond the obvious of just googling.
     
    Tom.V likes this.
  5. Striver
    Offline

    Striver Bronze Contributor Read Millionaire Fastlane

    Messages:
    118
    Likes Received:
    115
    Joined:
    Mar 23, 2017
    Location:
    USA
    Rep Bank:
    $599
    Is there any way you can explain it a little more? At first you agree with him, but then you recommend using a different method than what he seemed to be making look like the better one. If that makes sense lol
     
  6. CareCPA
    Online

    CareCPA Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    578
    Likes Received:
    1,933
    Joined:
    May 2, 2017
    Gender:
    Male
    Location:
    Pennsylvania
    Rep Bank:
    $12,979
    It's a timing issue.
    If you buy the inventory this year, and sell it next year, you're just manipulating when the cost is recognized ("manipulate" in this sense is not intended to be negative).

    This means at some point, you can expect a large reversal. What happens when you get to the end of 2020, need to buy $3 million in inventory to bring your cash-basis income to $0, but you only have $2 million in cash (from any number of reasons - delayed payouts from holiday sales, taking distributions from the company, etc)? Now you've accidentally recognized $1 million in income. Think of the effective tax rate on that.

    Assuming I'm US-based, and have to pay taxes at some point, I'd rather pay for several years at lower rates than in one year at a high rate. This is personal preference.

    I've been reading up on this a lot lately, and I have not gone back to re-read the thread, but some clarifications: you can only really use cash-basis for taxes as a retailer if your financials are cash-basis. If you are using accrual-basis for financials (i.e. recognizing COGS when item is sold so you can evaluate profitability, and tracking inventory on your balance sheet), then it's difficult to get away with.

    I should go back through my responses here to make sure I haven't made any claims otherwise.
     
    GlobalWealth and Striver like this.
  7. Striver
    Offline

    Striver Bronze Contributor Read Millionaire Fastlane

    Messages:
    118
    Likes Received:
    115
    Joined:
    Mar 23, 2017
    Location:
    USA
    Rep Bank:
    $599
    Okay, thanks for the explanation. So, if you had the cash, it does seem like the better way to do it. (If it's as simple as the example the guy showed year after year.)

    More profit in the end.
     
  8. Tom.V
    Offline

    Tom.V Tom Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    897
    Likes Received:
    1,835
    Joined:
    Feb 20, 2012
    Gender:
    Male
    Location:
    Raleigh
    Rep Bank:
    $9,591
    Same. I have reached out to several law firms at this point and awaiting responses. Had a few recommendations from friends on this front. Will let you know if I find someone solid to deal with.
     
    GlobalWealth, Kid and Kak like this.
  9. Tom.V
    Offline

    Tom.V Tom Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    897
    Likes Received:
    1,835
    Joined:
    Feb 20, 2012
    Gender:
    Male
    Location:
    Raleigh
    Rep Bank:
    $9,591
    Spoke to a guy I was referred to today. Feel free to reach out for his contact info.

    Really learned a lot from the conversation and I'm sold on the idea. 4.2% tax rate locked in for 20 years with act 20 plus no capital gains with act 22. How is this for real?

    I'll be starting the process in the next 30 days. Pretty incredible that this is even an option and I feel dumb not looking deeper into it after @million$$$smile told me about it last year. No more hesitating and not waiting on the laws to change.
     
  10. UnrealCreative
    Online

    UnrealCreative Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    541
    Likes Received:
    2,197
    Joined:
    Sep 20, 2016
    Gender:
    Male
    Location:
    The Jungle
    Rep Bank:
    $9,738
    Curious how this would work under Act 20.

    I'm incorporating a new service-based business and PR looks like an option, aside from still paying Social Security/Medicare/Whatever at ~33% on my personal salary.

    I'd like to see how to get around paying this personal tax.
    Seems like there's two possible options but both seem sketchy:

    #1: Take Zero Salary & Pay via Dividends/Owner's Draw at 4% Corporate Level
    #2: Pay Dividends to a Holding Company @4%, then transfer dividends to personal.

    Is it even possible to set up a new corporation like this and still be compliant?

    At the very least it seems you can pay yourself what's considered a "reasonable salary" by their standards...Nothing I've found specifies a minimum salary amount.
     
  11. GlobalWealth
    Offline

    GlobalWealth Platinum Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    2,377
    Likes Received:
    4,772
    Joined:
    Sep 6, 2009
    Location:
    Latvia
    Rep Bank:
    $26,815
    All the guys I know doing this just pay themselves a dividend, no salary.

    Sent from my VTR-L29 using Tapatalk
     
    UnrealCreative likes this.
  12. UnrealCreative
    Online

    UnrealCreative Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    541
    Likes Received:
    2,197
    Joined:
    Sep 20, 2016
    Gender:
    Male
    Location:
    The Jungle
    Rep Bank:
    $9,738
    Pardon the ignorance ... :)

    How does that work? Set up a PR C-Corp, and have accountant pay out dividends to shareholders (me) every quarter?

    Seems it'd be problematic if it looks like you're taking dividends instead of salary to deliberately avoid taxes on work you do for the corporation...

    Screen Shot 2019-02-18 at 9.42.51 AM.png

    Curious to learn at what point the IRS says "It's okay for you to take dividends based on XYZ criteria (like limited involvement, etc.)." Maybe the answer is don't take a salary for a few years, retain all the cash within the business, and by the time it runs itself without your involvement you can take dividends without the IRS batting an eye.

    This has me in a bind; for this new company I won't be paying myself ANYWAY so we can have more cash on hand to grow, BUT I also don't want it to look like we're taking unfair advantage of Act 20.
     
    GlobalWealth likes this.
  13. Sanj Modha
    Offline

    Sanj Modha Gold Contributor Speedway Pass

    Messages:
    666
    Likes Received:
    1,988
    Joined:
    Feb 16, 2016
    Gender:
    Male
    Rep Bank:
    $14,180
    Not sure if its legal to "pay no taxes" but you can certainly offset corporation taxes in places like Cayman Islands.

    You still need to declare the income from any offshore entity to your home country.
     
    UnrealCreative likes this.
  14. jon.M
    Online

    jon.M Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    372
    Likes Received:
    1,148
    Joined:
    Jul 4, 2016
    Gender:
    Male
    Location:
    Europe
    Rep Bank:
    $35
    It's the most beautiful idea ever. Really, it's beautiful.

    If it was the same today, I wouldn't even think about it. I'd take a flight over to you guys and do anything to become a proud American.

    Democracy is a tyranny of the majority.
     
    Thoelt53 and ZF Lee like this.
  15. GlobalWealth
    Offline

    GlobalWealth Platinum Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    2,377
    Likes Received:
    4,772
    Joined:
    Sep 6, 2009
    Location:
    Latvia
    Rep Bank:
    $26,815
    Please stop.

    Sent from my VTR-L29 using Tapatalk
     
    UnrealCreative likes this.
  16. GlobalWealth
    Offline

    GlobalWealth Platinum Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

    Messages:
    2,377
    Likes Received:
    4,772
    Joined:
    Sep 6, 2009
    Location:
    Latvia
    Rep Bank:
    $26,815
    Honestly you need to talk to a PR attorney. I am not an expert on act 20.

    All I know is that I have several friends and clients who went the PR route and only get personal income through dividends.

    I think @Tom.V has an attorney contact.

    Sent from my VTR-L29 using Tapatalk
    [/USER]
     
    UnrealCreative and Kid like this.

Join 1000s of entrepreneurs who are rewriting life's script and winning financial freedom.

---- ----

You must be a member to join the conversation.

Create Account

Join the community fast and easy!

REGISTER

Log In

Already have an account? Login here.

LOG IN

Share This Page