Feinstein & Partners provides pre-immigration tax planning to foreign individuals immigrating to the U.S. Once an individual becomes a U.S. resident alien for the purposes of U.S. income taxation, he or she will be exposed to U.S. income taxes on worldwide income and estate and gifts taxes on worldwide assets. Through years of representing foreign individuals in connection with U.S. business, tax planning and immigration matters, Feinstein & Partners developed pre-immigration tax planning solutions that allow our clients to significantly reduce exposure to U.S. federal income, gift and estate taxes. Depending on each client’s unique situation and country of origin, we might advise different pre-immigration tax planning solutions, including:
- Accelerating income earned by an immigrating client prior to becoming a U.S. tax resident
- Accelerating recognition on account receivables and other income
- Accelerating gain in appreciated assets belonging to an immigrating nonresident alien prior to becoming a U.S. tax resident; an immigrating alien should consider accelerating gains on his or her real estate assets, artwork, corporate stocks and options, and other assets
- Deferring losses until after a client becomes a U.S. tax resident; these losses can be taken after an individual becomes a U.S. resident, thereby reducing his or her taxable income tax basis in the U.S.
- Exploring strategies to benefit from the step-up in basis of assets to their fair market value so that only appreciation will be taxable once a foreigner becomes a U.S. tax resident
For example, Mr. X purchased a property many years ago and paid $200,000 for it. On the date he plans to become a U.S. tax resident, the property is worth $1,000,000. If Mr. X does not step up the cost basis of the property before relocating to the U.S. and sell the property thereafter, his gain on the sale will be $800,000. This gain will be subject to the highest U.S. income tax rate (almost 40%). With proper planning, Mr. X could have paid $0 in U.S. income taxes on the gain realized from the sale of the property.