[GyopoPlayboy]

Where would you say are some of the best places for entrepreneurs within the US?

If you took an ambitious, fairly intelligent, young kid and had to drop him anywhere in the US to give that kid the best possible environment today, where would it be?

[RedKurrant]

Wall Street Playboys have a good guide on choosing a city

[travolta]

If your budget is not an option then NYC is the obvious answer

[partyfowl]

If you want real estate go to Detroit. Get someone to handle the rent issues and make sure to rent to people that are kosher and you can make a killing. One reason I actually might move out there, a lot of investors are looking into that.

South Dakota has no income tax so you can be richer there on that alone.

[buja]

Puerto Rico (not the 50 states but a US territory)

4% tax for mainlanders who establish residency

[partyfowl]

(05-08-2019 02:50 PM)buja Wrote:  

Puerto Rico (not the 50 states but a US territory)

4% tax for mainlanders who establish residency

Puerto Rico is however filled with criminals since there's very little extradition laws there.

[Repo]

Oh and Detroit isnt? Do you have ant actual experience with real estate and renting, or just talking out your ass?

[Tail Gunner]

(05-08-2019 02:50 PM)buja Wrote:  

Puerto Rico (not the 50 states but a US territory)

4% tax for mainlanders who establish residency

If you have a business that sells a service primarily to buyers outside of Puerto Rico and you generate an income of more than $200k or so, then Puerto Rico Act 20 is an absolute no-brainer. I just researched this issue. I concluded that Act 20 will not work for me, because I have a limited service component.

You create a Puerto Rico corporation or LLC under Act 20 to provide services from PR for export. The salary for a Puerto Rico corporation is subject to Puerto Rico income taxes, plus U.S. self-employment tax. That is the bad news, but it compares favorably to tax U.S. rates.

The good news: Under Act 20, after you pay the taxes on your salary, a Puerto Rico corporation is subject to only a 4% corporate tax on earnings -- and any annual dividends issued by the Puerto Rico corporation are tax free!

Live in California and generate $1 million in profits? You will pay about $500k in state and federal income taxes. Live in PR and generate the same income? You will pay about $40k in taxes. That is insane! When you factor in the taxes on your salary, you are looking at about an 8%-10% overall tax rate.

If you make less than $200k, you are better off moving offshore and using the Foreign Earned Income Exclusion (FEIE) for a tax-free salary up to $104,000, plus another $16k to $30k income exclusion using the Foreign Housing Exclusion.

Puerto Rico Act 20 sunsets on December 31, 2020. So get it while you can. Once you have an Act 20 contract, you have a fifteen-year contract with Puerto Rico. It costs about $10k in attorney fees to prepare and file the application.

If you make enough money to make this tax planning scheme worthwhile, crime in Puerto Rico is irrelevant. You will live in a nice area.

[BalanceLife]

(05-08-2019 07:43 PM)Tail Gunner Wrote:  

(05-08-2019 02:50 PM)buja Wrote:  

Puerto Rico (not the 50 states but a US territory)

4% tax for mainlanders who establish residency

If you have a business that sells a service primarily to buyers outside of Puerto Rico and you generate an income of more than $200k or so, then Puerto Rico Act 20 is an absolute no-brainer. I just researched this issue. I concluded that Act 20 will not work for me, because I have a limited service component.

You create a Puerto Rico corporation or LLC under Act 20 to provide services from PR for export. The salary for a Puerto Rico corporation is subject to Puerto Rico income taxes, plus U.S. self-employment tax. That is the bad news, but it compares favorably to tax U.S. rates.

The good news: Under Act 20, after you pay the taxes on your salary, a Puerto Rico corporation is subject to only a 4% corporate tax on earnings -- and any annual dividends issued by the Puerto Rico corporation are tax free!

Live in California and generate $1 million in profits? You will pay about $500k in state and federal income taxes. Live in PR and generate the same income? You will pay about $40k in taxes. That is insane! When you factor in the taxes on your salary, you are looking at about an 8%-10% overall tax rate.

If you make less than $200k, you are better off moving offshore and using the Foreign Earned Income Exclusion (FEIE) for a tax-free salary up to $104,000, plus another $16k to $30k income exclusion using the Foreign Housing Exclusion.

Puerto Rico Act 20 sunsets on December 31, 2020. So get it while you can. Once you have an Act 20 contract, you have a fifteen-year contract with Puerto Rico. It costs about $10k in attorney fees to prepare and file the application.

If you make enough money to make this tax planning scheme worthwhile, crime in Puerto Rico is irrelevant. You will live in a nice area.

That's interesting, does it mean that if I setup a corporation before December 31 2020, I can then have use the act for another 15 years even though the act has sunset.

How does it compare with LLCs like Delaware?

[Tail Gunner]

(05-10-2019 08:26 PM)BalanceLife Wrote:  

(05-08-2019 07:43 PM)Tail Gunner Wrote:  

(05-08-2019 02:50 PM)buja Wrote:  

Puerto Rico (not the 50 states but a US territory)

4% tax for mainlanders who establish residency

If you have a business that sells a service primarily to buyers outside of Puerto Rico and you generate an income of more than $200k or so, then Puerto Rico Act 20 is an absolute no-brainer. I just researched this issue. I concluded that Act 20 will not work for me, because I have a limited service component.

You create a Puerto Rico corporation or LLC under Act 20 to provide services from PR for export. The salary for a Puerto Rico corporation is subject to Puerto Rico income taxes, plus U.S. self-employment tax. That is the bad news, but it compares favorably to tax U.S. rates.

The good news: Under Act 20, after you pay the taxes on your salary, a Puerto Rico corporation is subject to only a 4% corporate tax on earnings -- and any annual dividends issued by the Puerto Rico corporation are tax free!

Live in California and generate $1 million in profits? You will pay about $500k in state and federal income taxes. Live in PR and generate the same income? You will pay about $40k in taxes. That is insane! When you factor in the taxes on your salary, you are looking at about an 8%-10% overall tax rate.

If you make less than $200k, you are better off moving offshore and using the Foreign Earned Income Exclusion (FEIE) for a tax-free salary up to $104,000, plus another $16k to $30k income exclusion using the Foreign Housing Exclusion.

Puerto Rico Act 20 sunsets on December 31, 2020. So get it while you can. Once you have an Act 20 contract, you have a fifteen-year contract with Puerto Rico. It costs about $10k in attorney fees to prepare and file the application.

If you make enough money to make this tax planning scheme worthwhile, crime in Puerto Rico is irrelevant. You will live in a nice area.

That's interesting, does it mean that if I setup a corporation before December 31 2020, I can then have use the act for another 15 years even though the act has sunset.

That is correct. Supposedly, you can then extend the contract for another ten year period.

(05-10-2019 08:26 PM)BalanceLife Wrote:  

How does it compare with LLCs like Delaware?

Well, if you are an American the entire reason for obtaining a Puerto Rico Act 20 contract (you must actually live in Puerto Rico for part of the year) is to obtain a 4% corporate tax rate and zero dividend tax, so that you can escape the U.S. 21% corporate tax rate (which is reduced 10.5% if you live offshore and use a U.S. C corporation to hold a foreign corporation).

So, if you are an American, the comparison would be roughly an 8-10% effective tax rate (including taxes on a salary) under Puerto Rico Act 20 compared to a 12%-15% effective tax rate living offshore with a U.S. C corporation that holds a foreign corporation. Either scenario is preferable to living in the U.S. and paying 40% to 50% in state and federal income taxes (at top tax rates) in the most socialist U.S. States.

The purpose of forming a C corporation to hold a foreign corporation is to draw a tax-free Foreign Earned Income Exclusion salary up to $104,000, apply a tax-free Foreign Housing Exclusion up to $30,000, avoid U.S. self-employment taxes, have all remaining corporate income taxed at 10.5% under GILTI, retain and reinvest a portion (or all) of the taxed income in the business, and then draw whatever you wish out of the C corporation as a dividend -- which is taxed at your individual U.S. tax rate.]

If remain in the U.S. with a C corporation, Delaware or otherwise, you will get hit with the full 21% corporate tax rate, then get hit with state and federal taxes for whatever money you pull out of the C corporation as dividends. So, you get taxed twice at full tax rates. That is a losing tax planning strategy.


You can read a primer on the new tax law and Puerto Rico Act 20 here:

http://premieroffshore.com/us-expats-ret...ions-2018/


You can examine a comparison chart of some foreign corporations here:

https://www.lowtax.net/g/tool/

https://incorporations.io/

[313jay]

I worked at a hedge fund from 2011-2014. Our fund manager relocated to PR for ACT 20/22.

So I lived down there for a few years before I left the firm. Our company got down there in 2013. A lot of the rules for it have changed since 2013. A little more difficult than it was in the beginning but once your in your in.

It’s a good program for high income earners. Especially as Tail Gunner mentioned. Once your income is over the millions it’s a no brainer.

[Tail Gunner]

(05-10-2019 11:19 PM)313jay Wrote:  

I worked at a hedge fund from 2011-2014. Our fund manager relocated to PR for ACT 20/22.

So I lived down there for a few years before I left the firm. Our company got down there in 2013. A lot of the rules for it have changed since 2013. A little more difficult than it was in the beginning but once your in your in.

It’s a good program for high income earners. Especially as Tail Gunner mentioned. Once your income is over the millions it’s a no brainer.

It is actually easier to qualify for Act 20 today than it was originally. You no longer need to hire any employees, just yourself. Under Act 22, you no longer need to purchase a home in Puerto Rico (you can rent instaed), you just need to pay a $ 5,000 annual donation to an approved charity.