506B Private Fund Offering Whitepaper

Introducing the 506B Private Fund Offering Whitepaper, we call it the Panama Plan

This next-generation Financial Structure is designed for the USA and built on the back of the 402(b). The 506B Private Fund Offering Whitepaper comes complete with case study and “proof of concept” from a leading Panama Law Firm. Now you can come to Panama to custom tailor your bespoke; Offshore Asset Protection Structure, to the engineered specifications of Hong Kong legal experts, using the the world’s best pension law; the Hong Kong ORS.

Specified Foreign Financial Assets

Specified foreign financial assets include foreign financial accounts and foreign non-account assets held for investment (as opposed to held for use in a trade or business), such as foreign stock and securities, foreign financial instruments, contracts with non-U.S. persons, and interests in foreign entities.

There are exceptions to the reporting requirement. For example, you do not have to report the following assets because they are not considered specified foreign financial assets:

• A financial account maintained by a U.S. payor. A U.S. payor includes a U.S. branch of a foreign financial institution, a foreign branch of a U.S. financial institution, and certain foreign subsidiaries of U.S. corporations. Therefore, financial accounts with such entities do not have to be reported.
• A beneficial interest in a foreign trust or a foreign estate, if you do not know or have reason to know of the interest. If you receive a distribution from a foreign trust or foreign estate, however, you are considered to have knowledge of your interest in the trust or estate.
• An interest in a social security, social insurance, or other similar program of a foreign government.

Other Exceptions from Reporting

If you reported specified foreign financial assets on other forms, you do not have to report them a second time on Form 8938. These include interests in:

• trusts and foreign gifts reported on Form 3520 or Form 3520-A (filed by the trust);
• foreign corporations reported on Form 5471;
• passive foreign investment companies reported on Form 8621;
• foreign partnerships reported on Form 8865; and
• registered Canadian retirement savings plans reported on Form 8891

The value of the foreign financial assets reported on these forms is included in determining the total value of assets for the reporting threshold, but you do not have to list the assets on Form 8938. In this situation, identify on Form 8938 which and how many of these form(s) report the specified foreign financial assets.

Additional exceptions from reporting are made for certain trusts, certain assets held by bona fide residents of U.S. territories, and assets or accounts for which mark-to-market elections have been made under Internal Revenue Code Section 475. For example, a U.S. beneficiary of a domestic bankruptcy trust or a domestic widely held fixed investment trust is not required to report any specified foreign financial asset held by the trust on Form 8938.

The Instructions for Form 8938 provide more information on specified foreign financial assets.

Asset Valuation of 506B Private Fund

You will need to determine the value of your specified foreign financial assets to know if the total value exceeds the threshold applicable to you. Generally, a reasonable estimate of the highest fair market value of the asset during the tax year is reported, but special rules apply to ease valuation burdens.

For reporting purposes, you may rely on periodic financial account statements (provided at least annually) to determine the maximum value of a financial account. For a specified foreign financial asset that is not held in a financial account, you may rely on the year-end value of the asset if it reasonably approximates the maximum value of the asset during the tax year. Special rules also apply for reporting the maximum value of an interest in a foreign trust, a foreign retirement plan, or a foreign estate.

You may determine the fair market value of a specified foreign financial asset based on information publicly available from reliable financial information sources or from other verifiable sources. Even if there is no information from reliable financial information sources regarding the fair market value of a reported asset, a reasonable estimate of the fair market value will be sufficient for reporting purposes.

For assets denominated in a currency other than U.S. dollars, use the U.S. Department of the Treasury’s Bureau of the Fiscal Service’s foreign currency exchange rates to convert the denomination into U.S. dollars. If a foreign currency exchange rate for a particular currency is not available there, use another publicly available foreign currency exchange rate to convert the value of a specified foreign financial asset into U.S. dollars. The exchange rate is determined by reference to the exchange rate on the last day of your tax year.

Panama Plan Whitepaper – Application Form

506B Private Fund Photo credit: capelle79 on Visual Hunt / CC BY