Does a US citizen incur a domestic tax obligation if he is the sole shareholder and Director of a foreign Ltd., with no dividends or salary?

SPC Elijah J. Henry, MBA — Mon, 07 May 2018 10:44:49 -0400

I'm considering registering a corporation in Liberland, and I'm wondering what the tax obligation would be if there were no dividends or salary for a while.

Response by PO1 Private RallyPoint Member made May 7 at 2018 10:53 AM

PO1 Private RallyPoint Member — Mon, 07 May 2018 10:53:42 -0400

Take a step back and really consider this course of action. What are the benefits to you?

I think your best bet is to talk to a lawyer, but since Liberland is not a real, legal entity, you may run in to a whole host of issues here since it is located on land that is in dispute.

Response by CPT Jack Durish made Sep 12 at 2018 4:22 PM

CPT Jack Durish — Wed, 12 Sep 2018 16:22:23 -0400

If you want to live in Fantasyland, go for it. But don't expect Tinkerbell to come to your rescue when the big bad wolves come after your corporation. I suggest that you look at the various benefits offered by incorporating in a real state (which, by the way, does not include California). Delaware used to be a popular choice for limited tax liability. Texas was popular for protection from lawsuits. There are others, 48 others worth considering (47 actually, don't forget what I said about California)

Response by MAJ Ken Landgren made Sep 13 at 2018 12:14 PM

MAJ Ken Landgren — Thu, 13 Sep 2018 12:14:49 -0400

I believe you are on the hook for earnings, but I am not a Tax Accountant.

Response by CPT Lawrence Cable made Sep 13 at 2018 12:27 PM

CPT Lawrence Cable — Thu, 13 Sep 2018 12:27:11 -0400

US Citizens are taxed on income earned anywhere in the World. There is an exemption available for part of the income if you reside in the country for the majority of the year, there is a number of days, but I don't remember the exact number, but more than 3/4's of the year. If you don't meet those requirements, you can deduct any taxes paid to that foreign government. Other than that, the IRS frowns on trying to hide assets overseas and the present Administration seems willing to pursue those taxes.