Praestans Key Service Insights Newsletter

avoid double taxation, FATCA compliance for U.S. citizens, tax filing, tax for U.S. citizens and U.S. tax residents, Taxation of Foreign Assets

28 Mar 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Taxation and Reporting of Certain Foreign Assets

U.S. citizens and U.S. tax residents (“U.S. Persons”) who reside outside the U.S may have investments or assets that require special reporting or have alternative tax regimes. It is important the U.S. Person or their tax advisor understands these specialized tax rules in order to avoid punitive tax regimes or penalties to properly file the required informational reports.

avoid double taxation, FATCA compliance for U.S. citizens, tax filing, tax for U.S. citizens and U.S. tax residents

14 Mar 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Foreign Bank Accounts

The government does not annually tax wealth. However, the IRS wants to know about funds U.S. Persons have in foreign bank accounts. There are now two different reporting requirements for foreign bank accounts, the Foreign Bank Account Report (“FBAR”) and the individual reporting requirement under the Foreign Account Tax Compliance Act (“FATCA”).

avoid double taxation, tax filing, tax for U.S. citizens and U.S. tax residents

29 Feb 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Mitigation of Double Taxation

There are two methods that a U.S. Person living abroad can use to reduce their U.S. tax liability. The two methods are the Foreign Earned Income Exclusion (“FEIE”) and the Foreign Tax Credit (“FTC”). Even if one of these methods were to eliminate the U.S. Person’s U.S. tax liability, the U.S. Person is still required to file their U.S. tax return if their income exceeds the filing thresholds for the tax year.

tax filing, tax for U.S. citizens and U.S. tax residents

15 Feb 2024

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas

U.S. citizens and U.S. tax residents (“U.S. Persons”) are taxed in the United States on their worldwide income no matter where in the world they reside. The U.S. taxes based on citizenship, which is different than almost all other countries in the world that tax based on residence. This often catches U.S. Persons who have never lived in the U.S. or have lived abroad for a number years by surprise. Any U.S. Person living abroad with income for tax year 2023 above the following thresholds must file a U.S. tax return:

PFIC, PFIC Testing

18 May 2023

PFIC Testing for Foreign Portfolio Companies

Funds with U.S. investors, U.S. family offices, and individual U.S. investors (collectively, “U.S. Investors”) must be cognizant of whether their foreign investment in private companies is an investment in a passive foreign investment company (“PFIC”). Typically, a foreign portfolio company would be classified as a corporation for U.S. income tax purposes unless an election was made to have it taxed otherwise. The issue with PFICs is that unless certain elections are made, distributions from a PFIC may be subject to an excess distribution regime resulting in a punitive tax and interest charge. In certain bad circumstances, the punitive tax and interest charge can be the amount of the distribution.

QOF, QOZ

11 May 2023

Importance of Semiannual and Annual OZ Testing

Fund managers must ensure their qualified opportunity funds (“QOF”) meet the requirement that 90 percent of the QOF’s assets are held in qualified opportunity zone (“QOZ”) property. Failure to meet the test can result in significant penalties to the QOF that can have a significant impact on the investment return to its investors.

tax filing, tax planning

10 Jul 2025

Taxpayer Can’t Use 2020 Crypto Losses to Offset Prior-Year Gains | Kim v. Commissioner

Virtual currencies can have large swings in values from year to year. Where large gains are recognized in one year that are then followed by large losses in a following year, under the annual accounting principle and the Internal Revenue Code the Taxpayer cannot use a capital loss in a future tax year to offset capital gains in a previous tax year.

Accounting, Bookkeeping

19 Jun 2025

How Liabilities Affect Business Health: What Small and Midsize Companies Need to Know

Understanding liabilities on a balance sheet is crucial because it provides a clear picture of a company’s financial obligations, revealing its debt levels, solvency, and overall financial health. This allows stakeholders like executives and directors, investors, and creditors to assess the company’s ability to meet its short-term and long-term financial commitments and make informed decisions about its financial stability.

Business Tax Planning, C-Corporation, tax planning

11 Jun 2025

Avoiding Dividend Reclassification: Key Tax Takeaways for Closely Held C-Corporations | Clary Hood, Inc. v. Commissioner, 69 F.4th 168 (4th Circuit)

This case highlights the need for C corporations to have a dividend policy and history. It also highlights the need to carefully consider the compensation paid each year to the shareholder-employee of a closely held corporation to have better support of reasonable compensation in order to avoid the recharacterization of deductible compensation to nondeductible dividend distributions. It would likely have been tax advantageous for the Taxpayer to be an S corporation.

M&A, tax planning

15 May 2025

Tax Complications of an Earnout: How Earnouts Trigger Tax Considerations in M&A Deals

An earnout is a contractual mechanism in acquisitions that provide for contingent additional payments from the buyer of the company to the seller’s shareholders. Earnouts are usually received if the business that is acquired meets certain financial or other milestones after the acquisition is closed.

M&A, tax planning

24 Apr 2025

The Critical Role of Tax Treatment and Structuring in International M&A

There can be additional complexities involved in cross-border acquisitions. It is important to understand the tax treatment in each country in order to ensure the acquiror and target receive the desired result. Techniques for acquisitions in one country can be different than in the other and the resulting tax implications can be significant even if unintended.

Accounting, tax planning

26 Mar 2025

How Assets are Reported on the Balance Sheet

The information found on a company’s balance sheet is among the most important information for a business leader, regulator, or potential investor to understand. Without this knowledge, it can be challenging to know whether a company is struggling or thriving

Business Tax Planning, ROI, tax planning

16 Jan 2026

U.S. FATCA Model 2 Reporting Obligations for New Fund Managers

For fund managers operating under Model 2 IGAs, U.S. FATCA compliance requires direct engagement with the IRS, precise reporting, and ongoing oversight. Clear processes and reliable support can make the difference between routine compliance and unnecessary risk.

Business Tax Planning, ROI, tax planning

20 Nov 2025

Measuring ROI: Tools for Profitability and Strategic Growth

Understanding ROI gives business leaders a clear view of which initiatives are creating value and which need reevaluation. With the right metrics, companies can make sharper, more confident decisions that accelerate growth and profitability.

Business Tax Planning, tax planning

6 Nov 2025

The Role of Financial Forecasting in Business Planning and Decision-Making

Financial forecasting plays a critical role in helping businesses anticipate cash flow, assess risks, and plan strategically. By using pro forma statements and accurate projections, companies can make informed financial decisions that support stability and long-term growth.

Business Tax Planning, tax planning

20 Aug 2025

Profits Interest in Tiered Partnerships

In structuring a private equity fund or other tiered partnership arrangement, care must be taken to ensure the safe harbor for profits interest received for services is preserved. It is important in the issuance of profits interest to carefully document and substantiate capital account book-ups to protect against IRS contest that the interest is a capital interest.

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Structuring for Tax-Exempt Investors

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Taxation and Reporting of Certain Foreign Assets

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Foreign Bank Accounts

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas – Mitigation of Double Taxation

U.S. Taxation of U.S. Citizens and U.S. Tax Residents Residing Overseas

Tax Filings for the International Executive

PFIC Testing for Foreign Portfolio Companies

Importance of Semiannual and Annual OZ Testing

FATCA Compliance for Offshore Funds

Taxpayer Can’t Use 2020 Crypto Losses to Offset Prior-Year Gains | Kim v. Commissioner

How Liabilities Affect Business Health: What Small and Midsize Companies Need to Know

Avoiding Dividend Reclassification: Key Tax Takeaways for Closely Held C-Corporations | Clary Hood, Inc. v. Commissioner, 69 F.4th 168 (4th Circuit)

Tax Complications of an Earnout: How Earnouts Trigger Tax Considerations in M&A Deals

The Critical Role of Tax Treatment and Structuring in International M&A

How Assets are Reported on the Balance Sheet

U.S. FATCA Model 2 Reporting Obligations for New Fund Managers

Measuring ROI: Tools for Profitability and Strategic Growth

The Role of Financial Forecasting in Business Planning and Decision-Making

Profits Interest in Tiered Partnerships

Rollover of Hedge Fund Interest Fails IRA Rules: Estate of Caan Offers a Warning on Nontraditional Assets