You can't escape US taxation by giving up citizenship.
He will have to pay the exit tax instituted in the 2008 Heroes Earning Assistance and Relief Tax Act (HEART) on all unrealized gains he has worldwide because his net worth is likely greater than $2 million. I believe it is set at 30%.
As Facebook has announced the strike price, the value of the company and what his tax liability is, already has a very dollar value.
There used to be a ten year shadow for giving up US citizenship where you'd still have to pay US gain taxes for 10 years after you gave it up.
And the federal government has the incentive and the means to collect on someone who is a billionaire.
The article says he actually gave it up last September, so the numbers might have been fuzzier then. Regardless, he's protected from tax on any subsequent rise in stock price. You can't escape past or current tax, but you can "escape" future taxation.
On the ten-year tax shadow: How would that even work? If you were no longer a citizen, what claim would the US have on your money?
There is a rule - quite reasonable in my opinion - that if you were to renounce your US citizenship but then come back for more than 120 days (per year) during the first 10 years following your "resignation", you are considered a resident of the US for tax purposes. It is designed to deter Americans from giving up citizenship solely for tax evasion purposes, as opposed to actually moving to another country. I imagine one enforcement mechanism would be the denial of entry.
Comments
You can't escape US taxation by giving up citizenship.
He will have to pay the exit tax instituted in the 2008 Heroes Earning Assistance and Relief Tax Act (HEART) on all unrealized gains he has worldwide because his net worth is likely greater than $2 million. I believe it is set at 30%.
As Facebook has announced the strike price, the value of the company and what his tax liability is, already has a very dollar value.
There used to be a ten year shadow for giving up US citizenship where you'd still have to pay US gain taxes for 10 years after you gave it up.
And the federal government has the incentive and the means to collect on someone who is a billionaire.
The article says he actually gave it up last September, so the numbers might have been fuzzier then. Regardless, he's protected from tax on any subsequent rise in stock price. You can't escape past or current tax, but you can "escape" future taxation.
On the ten-year tax shadow: How would that even work? If you were no longer a citizen, what claim would the US have on your money?
There is a rule - quite reasonable in my opinion - that if you were to renounce your US citizenship but then come back for more than 120 days (per year) during the first 10 years following your "resignation", you are considered a resident of the US for tax purposes. It is designed to deter Americans from giving up citizenship solely for tax evasion purposes, as opposed to actually moving to another country. I imagine one enforcement mechanism would be the denial of entry.