Legal Question in Tax Law in Pennsylvania

New IBC formation and taxes

I heard that some incorporations are retro-active, would this apply to my trading account if I were to transfer the ownership to an IBC? Would I be able to escape taxation on the profits made during the first part of the year if the cash was still in the trading account?


Asked on 12/18/01, 4:59 pm

1 Answer from Attorneys
Lawrence Graves Coolidge & Graves PLLC

Re: New IBC formation and taxes

Even if you find a jurisdiction that permits retroactive incorporation, the transfer of ownership to the corporation would be unlikely to withstand audit scrutiny.

You're doing pretty well to have profits for 2001. Don't complain.

Finally, the US tax code has an entire regime for controlled foreign corporations, the goal of which is to ensure taxation of US stockholders irrespective of whether profits are distributed. Best to talk with a CPA with expertise in international taxation issues before you buy into some scheme of dubious validity.

Best wishes,

LDWG

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Answered on 12/18/01, 5:13 pm


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