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Avoiding U.S. Controlled Foreign Corporation (CFC) status using Nominees?  You’re at risk with the IRS.

So often I speak with clients who were advised to use nominees to conceal their status as the UBO – ultimate beneficial owner.

I cannot say this often enough.  It’s dangerous and it’s dangerous.  Banking is problematic, what if the nominee passes or becomes incapacitated, and most importantly – the IRS sees right through it.  You will get caught and we avoid these arrangements like a plague.

This is what the IRS relies on –

  • Garlock v. Commissioner, 489 F – .2d 197 (2d Cir. 1973) and
  • Treas. Reg. 1.951- 1(g)(2)

Have a look at this deck from an IRS presentation. It’s from the LB&I International Practice Service Transaction Unit –

https://drive.google.com/open?id=1fPgxBBVjClOzYlKeEnhnRm_mF3JhJ8GO

Someone recommended using nominees for tax purposes?  Run…..

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Table of Contents: Avoiding U.S. Controlled Foreign Corporation (CFC) status using Nominees?  You’re at risk with the IRS.

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Derren is a part of an international tax team that works with 6, 7 and 8 figure International Entrepreneurs, Expats and Investors to legally minimize their global tax burden and protect their wealth. Strategies include second citizenships, second residencies, trusts, foundations, insurance wrappers and other offshore structures.

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