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The International Law Section Gazette
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International Law Board Certification Applications for Lawyers
Initial Applicants: The
filing period for initial applications
opens July 1, 2016
and applications must be postmarked by August 31, 2016.
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Call for Speakers: Give an ILSTalk!
Inspired by Ted Talks, one feature of this year's Section Retreat in Boca Raton will be our members' own ILSTalks. ILSTalks are short presentations, no longer than 8 to 16 minutes, designed to entertain, inform, and educate you on the latest topics in international law, society, and leadership. You will learn something new about the markets and communities in which we operate, gain a new perspective on issues you and your clients face, and be inspired to improve the way you work and communicate.
We already have several scheduled presenters on exciting and diverse topics, and if you have a topic that you would like to feature
we would love to hear from you.
Please contact
Al Lindsay (
[email protected]) with a short synopsis of your proposed ILSTalk.
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August 24, 2016
The Steering Committee of the International Law Section Annual Conference (name TBD) will hold its second meeting at Astigarraga Davis, 1001 Brickell Bay Drive, 9th Floor, Miami, FL 33131, at 6:30 PM. RSVP to Robert Becerra at [email protected].
The Coral Gables Chamber of Commerce will be hosting a panel discussion regarding Brexit. The event is scheduled for Tuesday, August 30, 2016, from 10:00 a.m. to 12:00 noon. The event will be held at the Coral Gables Art Cinema, which is located at 260 Aragon Avenue. For more information and to register for this event, visit the Coral Gables Chamber of Commerce's website.
September 9, 2016
The Quebec Bar (Barreau de Quebec) will hold its annual meeting (Reentrée) on September 9, 2016 in Quebec City. The program will be offered in French and includes conferences, the Reentrée Judiciaire and dinner at the Musée National des Beaux-Arts du Québec. Click here to download the full program of the event.
September 30 - October 2, 2016
ILS Retreat: Celebrating the Past and Leading into the Future.
Join us for another exciting International Law Section retreat at the Boca Raton Resort & Club
!
The theme of this year's retreat will be celebrating our past as we lead the world into the future of international law. We are encouraging all Section members to join us for
a fun and inspirational weekend
.
In addition to an exciting program featuring both alumni and future leaders, and an exciting keynote speaker, we are making sure to build in plenty of time for socializing with friends and family at this world-class resort. Don't wait, submit your registration form today!
October 27-29, 2016
The Caribbean Academy for Law and Court Administration (CALCA), in partnership with Jamaica's General Legal Council and the St. Maarten Bar Association, will hold CALCA's 4th Biennial Conference on Law under the theme "Law at the Cross-Roads: Reappraising the Role of Common Law and Civil Law Practitioners in Transnational Development", from October 27 to October 29 in St. Marteen. You can learn more about the conference by visiting the conference website.
November 3-4, 2016
The
International Bar Association will hold its
Annual IBA Corporate Governance Conference in Miami from November 3 to November 4. The conference will feature lectures from distinguished speakers on topics that include c
orporate governance issues for foreign subsidiaries, c
yber security and the the application of US corporate governance rules to non-US corporations. Click here to download the full program of the conference. To register, visit the conference website.
November 13-15, 2016
The International Chamber of Commerce will hold its 14th annual Miami Conference on International Commercial Arbitration in Latin America at the Mandarin Oriental hotel.
The conference attracts approximately 550 participants representing about 40 nationalities and features a rich training and networking program.
For more information and to register for this event, visit the ICC Conference website.
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Call for Short Articles: Share your Knowledge!
The ILS Gazette is accepting submissions for short articles or updates on current issues in international law. The articles should be shorter than 1000 words and will be in included in the "From Our Members" section of the Gazette. If you would like to share your piece with fellow ILS Members, please direct your submissions to Fabio Giallanza ([email protected]).
Pre-Immigration Tax and Estate Planning: Strategic Application of Protective Check-the-Box Elections
By: William H. Newton, III*
Pre-immigration tax and estate planning for a foreign person must necessarily take into consideration assets owned outside of the United States. Such assets may include ownership interests in entities formed in foreign jurisdictions which are eligible to exercise the check-the-box election for U.S. taxation (the "Election"), e.g., B.V.I. corporations, Panamanian limitadas, Swiss GmbHs, etc.
The effect may result in transformation of the classification of the entity for U.S. taxation such as from a corporation to a partnership or even a disregarded entity. This may be of significant importance on a subsequent change in the status of the individual owner from that of a nonresident alien to a U.S. resident.
Example: X, a nonresident alien of the U.S., anticipates moving to the U.S. in the near future and thereby becoming a resident for income taxation. X is the sole owner of a B.V.I. corporation ("BVICo") which in turn owns foreign passive investment assets such as stocks and bonds. As a result, absent exercise of the Election, on acquisition of residence status, BVICo will become a controlled foreign corporation ("CFC") with income as subsequently generated being imputed up and taxed to X as a dividend. By contrast, with exercise of the Election, BVICo will become classified as disregarded entity with long-term capital gains treatment and potentially a substantially reduced rate of taxation then being available to X.
Analogous scenarios likewise exist, e.g., with respect to foreign business operations, foreign real property, utilization of foreign tax credits, etc.
The result gives rise to the need to be proactive as an integral part of the pre-immigration tax and estate planning process and to exercise the Election in a context where appropriate to do so. For exercise to be viable the classification of the foreign entity must in general be relevant, i.e., must affect the tax liability of a person for federal tax purposes. Yet, consistent with the above example, prior to the acquisition of residence by X, relevance will not ordinarily exist. Even so, with the acquisition of residence, relevance will then concurrently arise due to the CFC classification of BVICo with resulting negative attendant tax consequences.
Treas. Reg. §301.7701-3(d)(1)(ii)(A) provides potential relief from this conundrum. Specifically, this provision authorizes the protective election. It does so by deeming relevance to exist, irrespective of whether actual relevance is otherwise present, but "... only on the date the entity classification election is effective". Id. In line therewith, the Election is treated as effective on such date but not then again until a later event occurs whereby actual relevance exists. At that point no new election is treated as having been exercised, rather, the protective election is reactivated and confirmed consistent with the Election as initially submitted. Even so, if the classification of the foreign eligible entity is not subsequently relevant for a period of sixty (60) consecutive months, then, the entity's classification reverts to that of one whose status has never been relevant. The effect is to require the presence of actual relevance within the sixty (60) month period in order for the protective election to continue to be treated as viable.
This result may be achieved through the insertion of actual relevance at a propitious point prior to the acquisition of residence in the United States. The effect, as having been accomplished within the 60-month period, should accelerate and even pinpoint the date of actual relevance. One approach would be the purchase by BVICo of a U.S. Treasury bill or note. Because same results in the payment of portfolio interest, concurrently with the purchase actual relevance should then thereby exist with the protective election as originally exercised being reactivated and confirmed. Notably, caution in this context is warranted as inappropriate use of the Election may result in unintended consequences.
In conclusion, while multi-faceted, pre-immigration tax and estate planning may indeed be greatly facilitated through the assiduous utilization of the protective check-the-box election.
*
Mr. Newton is author of the two volume treatise, International Income Tax and Estate Planning, published by Thomson-Reuters, a practicing attorney in Miami, Florida, an adjunct professor of law in the Masters of Tax Program at the University of Miami of Law for over 25 years, author of numerous articles regarding international tax and international estate planning, and a graduate of the Massachusetts Institute of Technology and Southern Methodist University
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International Law Quarterly (ILQ)
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The Spring 2016 ILQ focusing on Women and International Law is now available to view and download
here.
If you are interested in submitting an article in the next ILQ or have questions, please contact Rafael Ribeiro:
[email protected].
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