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How to legally pay no taxes... possible?

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

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  1. Thoelt53
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    Thoelt53 Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    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.
     
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  2. GlobalWealth
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    GlobalWealth Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    @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
     
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  3. SamRussell
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    SamRussell Contributor Read Millionaire Fastlane

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

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    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.
     
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  5. Striver
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    Striver Bronze Contributor Read Millionaire Fastlane

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    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
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    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.
     
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  7. Striver
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    Striver Bronze Contributor Read Millionaire Fastlane

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

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

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    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
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    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
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    GlobalWealth Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    All the guys I know doing this just pay themselves a dividend, no salary.

    Sent from my VTR-L29 using Tapatalk
     
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  12. UnrealCreative
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    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.
     
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  13. Sanj Modha
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    Sanj Modha Gold Contributor Speedway Pass

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    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.
     
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  14. jon.M
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    jon.M The Well Defined Forum Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    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.
     
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  15. GlobalWealth
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    GlobalWealth Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    Please stop.

    Sent from my VTR-L29 using Tapatalk
     
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  16. GlobalWealth
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    GlobalWealth Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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

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    Yeah, just on the point of the salary question, to maintain compliance with Act 20 you DO need to take a reasonable salary. That is in its current form. They have changed Act 20 several times since 2012 so that may have been added more recently. Other things that have changed is you only need 1 employee on the island at all times (could be yourself if you're the owner) versus 5 minimum which was a previous requirement.

    As for the specifics on HOW MUCH is a reasonable salary, that is going to depend on a lot of different factors from what I have heard. Will report back as I learn more.
     
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  18. Devampre
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    Devampre New Contributor

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    No taxation without representation! :)

    I'd probably seek advice from a tax attorney or some qualified expert that could help you come up with an optimal strategy that's specialized to your location, your customers' locations and the services/products you sell. Like other's have mentioned, there's likely no easy one size fits all solution. I wish I could help you more and I too am highly interested in paying less taxes. But, I think you'd need to share more information with an expert and get a more direct and personable response.
     

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