American Hunting: Starting with Solitary Life in the Wilderness

Chapter 258 Tax Evasion Possibly Possible? (Bonus Chapter for the 80th Anniversary of the Victory in the War of Resistance Against Japan!)
“That’s so stupid! Because that would mean that all 14 million would become your taxable income in the United States.”

"Even in Wyoming, where there is no personal income tax, Uncle Sam's federal taxes are enough to make you lose sleep over them."

"How do I do it?" Lin Yu'an asked, like a studious student.

"The answer is, split. We need to break down your income from a single source of labor within the United States into a diversified portfolio of income in different types and regions."

Marty explained, “CAA’s legal team will immediately register a brand new global IP management company for you in Ireland, which you will own 100% of.”

"Now you can start thinking of a name for the company."

"Then your portrait rights, the brand name Lin Yu'an in the Wilderness, and the overseas copyrights of all your future content will be injected into this Irish company as intangible assets."

"Why Ireland?" Lin Yu'an keenly grasped the key point.

"Because its corporate income tax rate is only 12.5%, one of the lowest in Europe, and it also has a comprehensive tax treaty with the United States, it is the perfect transit point for global tax planning."

Lin Yu'an thought for a moment and said, "Let's call the company 'Heart of the Snowfield'."

“A good name,” Marty said approvingly. “Now, let the magic begin.”

“Before we move on to the next step, you need to set up a firewall in the United States as well. You can no longer take on any business in your personal capacity.”

"My team will immediately register a brand new company for you in Wyoming. How about calling it 'Heart of the Wilderness,' echoing the name of Ireland's snowy heartland?"

"This company will be responsible for all your future business operations in the United States, including the ranch you are about to purchase."

"Okay, Marty, that's a good name too."

“Now, here comes the crucial point.” Marty’s voice became very focused.

"Given that you do not currently have a farm and cannot generate significant business expenses to offset taxable income in the United States."

"Therefore, in the first year of the contract, we must, to the greatest extent possible, legally attribute the income to the Irish company, which has a lower tax rate."

“The fourteen million from Arc'teryx will be restructured by our team into two separate contracts.”

“One is a creative and production service contract worth $1.5 million, paid by Arc'teryx North America to your Wilderness Heart company in Wyoming.”

"This money is part of the basic remuneration you receive for providing them with a range of services, such as content creation and filming, within the United States."

"The other one is a global brand intellectual property licensing contract worth up to $12.5 million, which will be paid by Arc'teryx's European headquarters to your Snowheart company in Ireland."

"This money is the fee for authorizing them to use your image rights and brand image, which became priceless overnight, worldwide."

Lin Yu'an instantly understood the mystery: "So, in other words, the taxable income I actually generated in the United States is only 1.5 million?"

"Completely correct!"

"Now let's do the calculations. Before that, let's deal with one of the most important legitimate business expenses—brokerage commissions."

"According to your agreement with CAA, for the six million dollar increment in the Arc'teryx contract that exceeds eight million dollars, you need to pay a commission of 25%, totaling one million five hundred thousand dollars."

Lin Yu'an immediately suggested an idea: "So, the $1.5 million that Wyoming Company received was used entirely to pay the $1.5 million commission?"

On the other end of the phone, Marty's satisfied chuckle came through. "Lin, you've started to think like a real CEO. That's exactly what I wanted to do for you."

"In practice, we will have your Wyoming company bear the entire 1.5 million commission."

Marty's voice carried a hint of pleasure at revealing the secret of a magic trick: "This way, your Wyoming Company's books will be perfectly clean."

Total revenue: $1.5 million; Total expenses: $1.5 million; Final profit: zero.

“A company with zero profit doesn’t need to pay a single penny of federal tax. Your $1.5 million tax problem in the United States has been legally cleared by us.”

"Do you think Uncle Sam will still ask you for taxes if a company has zero receivables? But if this 1.5 million goes into CAA's account, they are fully capable of reducing the tax to 100,000."

Lin Yu'an finally understood. It was like a sophisticated mathematical game, where the tax burden was completely shifted to the stage with the lowest tax rate through reasonable allocation of funds.

This is tantamount to using this huge, legal expense of commissions to almost completely offset all of his income from creative and production service contracts in the United States!

Lin Yu'an continued to ask curiously, "What about the Heart of the Snowfield in Ireland?"

Marty's voice carried a hint of pleasure: "It's even simpler; its pre-tax profit is $12.5 million."

"In Ireland, you only need to pay a corporate income tax of 12.5%, which is $1,562,500."

"The remaining $10,937,500 will remain safely in your Irish company's bank account as the company's after-tax profit."

"This...this is it?" Lin Yu'an looked at the numbers he had quickly calculated, his voice filled with disbelief.

"In other words, after paying 1.5 million in commissions from my total income of 14 million, the total tax I need to pay is only a little over 1.56 million?"

“Yes, that’s it,” Marty said, perfectly enjoying the moment when his client was amazed by his professionalism.

"Your final effective tax rate has been successfully reduced to around 11%." "And your after-tax, freely disposable net profit is over $10.93 million! Lin, tell me, are you satisfied with this result?"

“…Very satisfied.” Lin Yu’an said sincerely. This was no longer just satisfaction; it was magic.

"Haha, this is rules and mathematics! But calling it magic wouldn't be an exaggeration."

Marty added, "But don't get too excited. That ten million or so is Snowfield Heart's money, not yours personally."

“If you want to use this money, the standard procedure is to first distribute the money from the Irish company to you personally, and then transfer it back to the United States.”

“This process would require you to pay up to 20% eligible dividend tax, which would be a huge sum of over two million dollars. Of course, we won’t do that.”

"What should we do then?" This was precisely Lin Yu'an's biggest concern. "How can this money be legally returned to the United States and used for my own purposes?"

“I’ll teach you how the rich move their assets gracefully,” Marty said with a hint of slyness in his voice. “We don’t use dividends; we use loans.”

"A loan?" A flash of inspiration struck Lin Yu'an.

“Absolutely right. It’s the loan you understand.” Marty confirmed his idea.

"The specific procedure is as follows: Your Wilderness Heart Company in Wyoming will formally submit a compliant business loan application, drafted by a lawyer, to your Snowfield Heart Company in Ireland."

"The reasons for the loan are very valid and justifiable. Wilderness Heart needs a huge sum of money to purchase a filming location in the United States for future business expansion and content creation."

"Then, with board approval, your Irish company provides your American company with a $10 million, 20-year, low-interest inter-company loan."

"This money will be legally transferred from your Irish bank account to your Wilderness Heart company's US account."

Lin Yu'an finally understood. He muttered to himself, "Because... loans are not income, so they don't need to be taxed."

"Exactly!" Marty's voice was full of appreciation for his client's quick understanding. In the past, he would explain things to those fat, gruff clients for hours, and they still might not understand.

He really liked Asian clients like Lin Yu'an, or rather, Chinese clients, whose math skills were all on the basics.

Marty continued, “The tax authorities cannot tax a legitimate debt. And this money will forever exist between your two companies as a debt.”

“Your American company could even use future profits generated in the United States to slowly and symbolically repay the loan, allowing the funds to flow back to Ireland legally again.”

"This will create a perfect closed loop of offshore and onshore funds that belongs to you."

"As for what to do with the money?" he offered a more enticing option.

“You can use your American company’s name to buy the ranch of your dreams. You can also use your Irish company’s name to make global investments.”

"Or buying a castle in London, a watch in Switzerland, or a winery in France... these can all be considered legitimate investments or operating expenses for the company."

"And you, as the owner of the company, are simply using these assets."

Lin Yu'an was utterly shocked by these words. He felt as if he had pushed open the door to a new world! Behind that door lay an intricate labyrinth constructed by law and capital, a world that ordinary people could never imagine.

Marty concluded, "So, Lin, welcome to the world of the rich!"

"In this world, the most important thing is not how much money you make, but how cleverly you structure that money."

“I understand.” Lin Yu’an took a deep breath and immediately switched to pragmatic mode. “Marty, before hanging up, there’s one last thing.”

"explain."

"Please have your assistant compile a detailed billing statement for all the services you provided me today, including the CAA contract review, the Arc'teryx negotiations, and that invaluable tax planning course we just had. Send it to me."

Lin Yu-an's tone was full of respect for professional value: "Tell me the total amount I need to pay, and how I should pay it."

Marty, on the other end of the phone, seemed surprised that he would bring up the issue of settling the bill at this moment.

He then let out a heartfelt, cheerful laugh. "Haha, Lin, you really are the most special client I've ever met."

"Most people, at times like this, are either so caught up in the joy that they forget about it, or they're thinking about how to include the lawyer's fees in the company's costs and pay for them from the next revenue."

“I respect professionalism, and I also respect contracts,” Lin Yu’an replied calmly.

“Very good. I like this attitude. However, regarding the cost this time, how about we try a different approach?”

"Oh? What kind of game is it?"

"The review of the CAA contract was a favor I did for Scout, and also a gift to you, completely free of charge."

"As for the negotiations with Archaeopteryx," Marty's tone became subtle.

“I will pay the bill. Based on the time our team put in and the final results, the total cost will be around $250,000.”

“But,” he changed the subject.

(End of this chapter)