Corporate inversions

There has been a lot of information in the news recently regarding “ inversions,” where a moves its headquarters to a low-tax nation or , such as , while retaining its material operations in a higher-tax country of origin, such as the U.S.

This is a complex transaction with Donor–advised fund annual gift exclusion. If considering potential tax implications to U.S. A donor–advised fund (DAF) is another gifting stock to minor children, be shareholders who own stock in a means of charitable giving that offers aware that the “kiddie tax” may impact non-qualified account, or outside a potential benefits. By the benefit of shifting income to tax-advantaged account. Since each contributing company stock to the minor children. situation is unique, the tax implications DAF, the donor generates a charitable Tax strategies should be reviewed by your tax advisor. income . The DAF is a In situations where a shareholder may gifting vehicle created with a parent We can explore ways to spread the have to recognize capital gains, this may organization such as a community capital gains over a period of time be an unforeseen surprise. foundation or another qualified to help lessen their impact. 501(c)(3) nonprofit organization, As a client of RBC Wealth Management • You can choose to offset potential gain which results in a potentially larger who may be affected, we can discuss by selling a portion of the stock in a tax income tax deduction than gifts to a several solutions, such as charitable year preceding the inversion to help private charity. The parent organization giving, transferring assets, and spread the taxable gain over two years. provides a document, normally free of tax strategies to help mitigate tax charge, in exchange for an irrevocable • Many individuals will take advantage implications you may encounter. of harvesting capital losses in their relationship. While you may choose portfolio to offset the capital gains. Charitable giving what charity to support, you have few responsibilities beyond donating funds • In states with a state income tax, One means of managing the potential and suggesting how they are used. paying your income tax liability in the income tax consequences of a corporate year of the income recognition may is by charitable giving. Gifting better match your income against your deduction for state income tax Charitable remainder trust Gifting company shares prior to the inversion transaction to individuals, payment (for those who itemize their One strategy is to contribute shares in the such as children, can shift income to deductions). For instance, if you pay company to a charitable remainder trust those who are potentially in a lower an anticipated liability due in April (CRT). A primary benefit of a CRT is the income . If you’re in a high 2019, for the 2018 tax year, consider ability to postpone recognition of capital tax bracket, but have family members making an estimated tax payment gains on the sale of appreciated stock in December 2018. Any alternative who aren’t, consider gifting them within the trust. Additionally, the gift of minimum tax implications should be appreciated stock. If the donee sells the stock to the CRT generates a potential tax discussed with your tax advisor. stock, they would recognize the gain deduction when the trust is created. The between the basis they inherited and CRT also allows the donor, or other family Contact your RBC Wealth Management® the fair market value on the date of the members, to receive an income from advisor for more information about our sale, and assets with substantial gains the trust for life or a term not to exceed solutions. will not be taxable to you. Further, you 20 years. Upon the death of the income can gift up to $15,000 per person per beneficiaries, the trust is dissolved and year (in 2019) as what is known as the charity receives the remaining assets.

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