Advanced Taxation
# 1. Bella is a citizen of the Cayman Islands. Terri is a citizen of Argentina. They both work for the same company. Their jobs required them to travel to the U.S. Originally, they were needed in the U.S. for many months to help build up the company’s U.S. business. Now, they travel to the U.S. less frequently. They do not have a Green Card or any special Visas.
Bella was present in the U.S. for 330 days in 2019, 210 days in 2020, and 60 days in 2021. Terri was present in the U.S. for 360 days in 2019, 300 days in 2020, and 25 days in 2021. Is Bella a U.S. resident in 2021? Is Terri a U.S. resident in 2021? Explain.
# 2. Bill Langford owns 100% of Office Links. Office Links made a filing to be organized as a public limited company organized in the U.K. PLCs are “per se” corporations under the Tax regulations. Office Links also made a filing to be organized as a limited liability company under the laws of Delaware.
Bill discusses his situation with 4 advisers, each of whom gives Bill conflicting advice:
• Bill’s cousin Joe, a tax accountant who retired in 1995, tells Bill that Office Links is a foreign corporation because it is a U.K. per se corporation, but it has been several decades since Joe looked at the Tax Code or read the latest Tax journals.
• Bill’s nephew Allan, a Professor of Philosophy at the local university, tells Bill that Office Links is a U.S. partnership because it is organized in two jurisdictions and philosophically, that sounds right. Allan never read a tax book in his life.
• Bill’s old college classmate Caitlyn, a tax partner at a Big 4 accounting firm, tells Bill that Office Links is a U.S. corporation because it is a per se corporation that is also organized in the U.S.
• Bill’s best friend and resident “know it all” Johnny tells Bill that he does not need a professional tax advisor. Johnny is sure that Office Links is a disregarded entity because it is a single member U.S. LLC. He Googled it!
Whose advice is correct and why? Explain.
K economy has been surviving the wave of global financial crises of 2008, which leads to weak job creation, high-energy prices and negative real income growth, which keep consumer-spending low and restrained business investment, weighed on the economy. From the year 2013 however, UK economy has started improving as Gross Domestic Product (GDP) grew by 1.7% and by 2.8% in 2014. Similarly, the UK economy grew by 2.2% in 2015 as a whole, down markedly from the growth of 2.9% recorded in 2014. In May 2015, the inflation rate rose to 0.1% from -0.1% in the previous month.
UK public finances remain weak despite slow good progress. Public-sector borrowing (excluding public-sector banks) is in deficit of £7.5 billion in December 2015, £4.3 billion lower than the total recorded in December 2014. For the period between the month of April and the month last month of the year 2015, borrowing of public sector amounting £74.2 billion, which is £11 billion smaller than that recorder from previous financial year. This improvement means that there is a chance government could meet its borrowing target for financial year 2015/16. The official bank rate has been 0.5% since March 2009; the rate is low when compared to historic trends comparison and has a positive impact on the economy, because reduces the cost of borrowing and makes savings less attractive – so people invest and consume more. Despite Bank of England downwardly revised its UK GDP forecast for 2016 to 2.2%, from 2.5% but Uncertainty over ‘Brexit’, weak overseas growth and financial market volatility potentially rising inflation and interest rates are prospecting to create poor environment for business performance in the years 2016.