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Hi Phil, It's very common in Australia for a founder to hold shares in their startup through a discretionary trust. What happens if the startup converts to a D
by bentoner 14y ago
Hi Phil,
It's very common in Australia for a founder to hold shares in their startup through a discretionary trust. What happens if the startup converts to a Delaware corporation and the founder moves to San Francisco, becoming a US person for income tax purposes?
Now they indirectly own shares in a US corporation via a foreign trust and I understand the IRS would tax an eventual acquisition extremely unfavorably. Does this mean that Australians in a similar position (like me!) need to forgo the benefits of using a trust and just hold the shares directly?
- philiphodgen 14y agoOh Christ. You have bought a $10,000 tax return. That's all I can tell you. The mind boggles in a few directions. Migrating assets and corporations across borders is scary. You are now the creator and beneficiary of a foreign trust. Oh. Your superannuation is a foreign trust. See. THIS is an example of why the US tax system is broken. Not because of the tax rate. Because of the rules. The folly and arrogance of a rules-based system. A logic system built like sediment builds up on the bottom of a lake. If sediment buildup involved corruption in the form of lobbyists.
- bentoner 14y agoThanks Phil! I went to grad school about 5 mins walk from your office, but right now the plan is to avoid ever again becoming a US taxpayer.
- philiphodgen 14y agoYay CalTech. If you're ever in Pasadena give me a call.
- tankenmate 14y agoThe reverse situation for Australians is actually quite easy, for the most part if you have no income from or assets in Australia you're not required to file.