Capital Gain Tax advice on Puerto Rico Act 20/22

Member since 07 July 2017

cram1Member07 July 2017 23:14:08

Hey Guys, I live in Pennsylvania and I am seriously considering moving to Puerto Rico to take advantage of Act 20/22. One of the main reasons is that I have substantial capital appreciation through my crypto currency holdings. I've just learned that any capital gains are only tax fee from the time I became a PR resident, so that any capital appreciation prior to moving would still be taxed at the US rate.

Now I came up with a new idea and wanted to check if that would work. Crypto currencies such as Bitcoins are considered property for purpose of the IRS and as far as I understand if I fund a corporation with property in exchange for equity the cost basis is just moved to the corporation and not taxable event occurs. So if I fund my PR Act 22 company with bitcoins and then sell these bitcoins to fund my operations and to trade I would pay the 4% corporate rate and eventually could pay dividends to myself as a Act 20 PR resident at 0%.

Am I missing something here?

Thank you very much!

ReyP ViP

Member since 09 May 2015

ReyPViP07 July 2017 23:45:57

5509

I am not sure there is anyone here that can answer that. You need a tax lawyer. There are several outfits also that advertice services for act 20/22, there is also a facebook group.
https://m.facebook.com/groups/1341904249161705

Sitka Serial expat

Member since 07 October 2015

SitkaSerial expat08 July 2017 13:52:48

953

An interesting question - inquiring minds want to know

ReyP ViP

Member since 09 May 2015

ReyPViP08 July 2017 14:11:28

5509

A very complex question since he is talking about crypto currency being used to finance the business and then playing games with Salary and dividends

anneschuller Member

Member since 11 December 2018

anneschullerMember23 February 2019 13:37:22

You should check out Puerto Rico - 0% capital gains tax after moving and a 4% corporate tax. But it expires soon... I moved last year - relocatepuertorico.com/

olddawgsrule Serial expat

Member since 26 October 2014

olddawgsruleSerial expat24 February 2019 18:12:31

252

Find yourself a 'qualified, trustworthy' tax advisor. Act 20/22 (and a couple others) has pretty much passed it's time. It's like a boat starting to take on water and you're hoping to just go to a higher deck and ride it out for as long as you...

If all you're looking at is getting away from US Taxation.. there are better ways.. better places for that..

If you intend on moving to PR for life anyway, then yes, take full advantage for as long as you can. That only makes sense. Be prepared for a lot of paperwork to make it work.

Good luck on your quest