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No discussion of Cyprus?

TPS

By TPS
in Politics, Polls, and Pundits

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Nanker Hall of Famer

Nanker

Posted
Posted

What's so special about this action in Cyprus?

Obama and the Dem's have already done this to the US citizenry. We're talking about taxing assets and not income. What do you think happens - now that Obamacare is the law of the land - when you sell a capital asset such as your house? Right, you pay a 3.8% ACA tax to help "Him" pay for it.

There's little difference between taxing an asset that's housed in a bank and one that's a house that you own. You can argue timing and cycles, but a capital asset has never before been taxable by the Federal government AFAIK. They used to just go after your income. Now, your assets are in scope.

That's "progress" for you. FORWARD!

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TakeYouToTasker Hall of Famer

TakeYouToTasker

Posted
Posted (edited)

Wouldn't you have to pay capital gains on your unrealized P&L and withholding on tax deferred accounts?

 

Aside from that?

http://www.expattaxandlaw.com/expatriation.html

 

US politicians typically view those USCs or long term residents who leave the US tax system (“

expatriates”) as wealthy “tax dodgers” who are about to run off to some tax haven with their millions. However, in our experience the vast majority already reside in a high tax jurisdiction and pay full tax on all their income. These individuals just want to simplify their lives and limit exposure to some of the hefty IRS penalties that lay in wait should they fail to file a tax form on a timely basis. To discourage expatriation Congress passed Code section 877 originally in 1966. There have been several modifications since, the latest being legislation known as “HEART” (Code section 877A) effective for expatriations after June 17, 2008.

 

The Objective Thresholds


  • First you must either be a USC or LTR (LTR’s are those LPR’s who have held their green cards in at least 8 years in a 15 year lookback period, otherwise these rules do not apply to you).



  • Then if your average tax liability for the five preceding tax years has exceeded $139,000 (adjusted annually for cost of living) or your net worth exceeds $2 million you are subject to taxation under either Section 877 or 877A depending upon date of expatriation.



  • All expatriates must file Form 8854 upon expatriation. Those subject to tax under 877 or 877A must file the complete form.



  • As part of this process, you must certify that you have fulfilled your US tax obligations for the past five years. This must be done by all expatriates on Form 8854.


Expatriation Pre- June 17, 2008


  • You will have to pay US tax on certain US source investment income (including certain US source income realized by controlled foreign corporations) realized during the 10 years following expatriation. This category of income would not otherwise be taxed in the hands of a nonresident alien. Inconsistent treaty provisions are overridden by this legislation.



  • You must file Form 8854 annually.


Expatriation Post – June 16, 2008


  • The 10 year clawback taxation of US source income has been replaced by a deemed sale (mark-to-market) of all your property the day before your date of expatriation. You are given a $600,000 exempt amount, gains in excess of that sum are taxable. Pensions and deferred compensation plans are subject to special rules.



  • If you return to the US for more than 30 days in a given year (60 if traveling on behalf of an unrelated employer) you are US tax resident for the entire year and any conflicting tax treaty provision is overridden.



  • You will have to provide an information statement for each year you have any obligations under this new tax regime.


    USC or residents who receive gifts from an expatriate will be subject to a transfer tax of 45%. For those with limited ties to the US, this new tax may not be of concern.



  • Certain deferred compensation arrangements (pensions etc.) will be subject to 30% withholding. These arrangements are limited to those subject to US withholding – US plans. Other arrangements, for example foreign pensions, are treated as received (present value) the day before expatriation.



  • Payment of the exit tax can be deferred by payment of bond (or other security arrangement). Interest will be charged.


Statutory Exceptions to Sec.

877A Exit Tax Regime. If you otherwise fall within the financial thresholds set out above and certify that you have fulfilled your tax obligations for the past 5 years you can escape the Sec. 877A tax regime if you became a dual citizen at birth, you retain that other citizenship, and you are currently a tax resident of that country or you expatriate by age 181/2 and in the last 15 years you were not US resident (under substantial presence test) more than 10 years.

 

The Inadvertent USC. Many individuals have become USC by birth in the US or birth abroad to a USC parent (the rules here are complex) but otherwise have few or no ties to the US. We call these individuals “inadvertent USC”. The IRS has set out procedures that provide for discretionary relief from the office of the Assistant Commissioner International for individuals who are USC but did know they were USC and never exercised the rights of US citizenship. To date, these procedures have not been coordinated with Sec. 877 or 877A.

 

The individuals we are discussing likely pay full tax in their country of residence. Given the treaty override (tax treaties are designed to eliminate double taxation), the possibility of double taxation must be addressed.

Edited by TakeYouToTasker
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TakeYouToTasker Hall of Famer

TakeYouToTasker

Posted
Posted

Why does our stock market drop when Cyprus has a problem?

I assume you mean our composites and indices, specificly the DOW.

 

It drops because everything hinges on our financial houses, and the predictability of government. Our financial houses are deeply tied to those of Europe, and this act was very unpredictable and unprecedented. It is a possible foreshadowing of events to come in the PIIGS, and has led to runs on banks.

 

Do you believe that the US has divested itself of it's international holdings and it's global trade arrangements?

 

To further simplify, do you own any shares of any total return funds which are largely comprised of sovereign debt?

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Magox Hall of Famer

Magox

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Posted

It appears that it is quite possible and at the very least from their perspective, a viable option that is on the table for most of Europe.

 

Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe's single currency by propping up failing banks, a senior eurozone official has announced.

 

 

 

 

The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman of the eurozone, told the FT and Reuters that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe.

 

"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'," he said.

 

"If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders."

 

 

 

http://www.telegraph.co.uk/finance/financialcrisis/9952979/Cyprus-bail-out-savers-will-be-raided-to-save-euro-in-future-crises-says-eurozone-chief.html

 

 

!@#$ing nuts

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TPS All Pro

TPS

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It appears that it is quite possible and at the very least from their perspective, a viable option that is on the table for most of Europe.

 

 

 

 

 

 

 

 

 

http://www.telegraph.co.uk/finance/financialcrisis/9952979/Cyprus-bail-out-savers-will-be-raided-to-save-euro-in-future-crises-says-eurozone-chief.html

 

 

!@#$ing nuts

The first idea, to tax all deposits, was !@#$ing nuts. If you have in excess of the insured level, aren't you supposed to be aware of the risk?
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DC Tom Hall of Famer

DC Tom

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Posted

It appears that it is quite possible and at the very least from their perspective, a viable option that is on the table for most of Europe.

 

 

 

 

 

 

 

 

 

http://www.telegraph...zone-chief.html

 

 

!@#$ing nuts

 

Just like Nazi Germany did.

 

Except Nazi Germany didn't...they created a special class of savings bond, and encouraged the German middle class to use it for savings, so they could then use the savings against their balance of payments.

 

So basically, entirely unlike Nazi Germany did. Modern European countries are actually more economically draconian than Nazis.

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Fezmid All Pro

Fezmid

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Posted

Apparently a change of plans. No longer will the government confiscate 30% of savings. Nope, instead they'll take 60%! But they'll give you some worthless shares in the bank as payment!

 

http://www.washingto...99de_story.html

 

Deposits of more than 100,000 euros ($128,000) at the Bank of Cyprus will lose 37.5 percent in money that will be converted into bank shares, according to a central bank statement. In a second raid on these accounts, depositors also could lose up to 22.5 percent more, depending on what experts determine is needed to prop up the bank’s reserves. The experts will have 90 days to figure that out.
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