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Financial Planning / Tax Strategies


Subject:  Re: dividends from foreign corporation as gift? Date:  12/30/2012  10:15 PM
Author:  loopholes Number:  117253 of 127642

Whether or not the cash receipt is a gift for US tax purposes depends on the facts. These are not entirely clear from your description.

I think it would be difficult to take the position that the annual receipt is a gift for US tax purposes, if, as I infer, the dividend is paid by a corporation to you in your capacity as a share owner, presumptively after a board of directors's meeting at which a dividend was declared payable to shareholders (not just to you), which board action is supported by the company's books and records. It's hard to know for sure, though, since you refer to the payment both as a dividend in respect of shares you own in your dad's company, and as a payment by your dad from his account (not a corporate account?) to yours.

If you are the record or beneficial owner of the shares, the company declared a dividend, and the cash deposited to your UK account is the amount of the dividend, there's no basis for saying it's a gift, even if it was disbursed to your dad then paid by him to you. If you own the shares, but the company didn't declare a dividend, and you nevertheless got a cash contribution to your account from your father"s, maybe it's a gift. If your dad owns the shares, and treats himself as the owner of the shares and the dividends for UK tax purposes, and includes the dividend in his UK taxable income, even though he has paid it to your account, then maybe it's a gift.
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