QUESTION: I wonder if you might clear something up regarding the fabled corporate cash hoard parked overseas? Must this be held in non-USD form thus taking an FX risk,albeit presumably hedged? I gather any USD parked in a foreign bank is immediately transferred to a US bank, likely in NYC — would this be regarded as repatriation?
I have not seen this matter addressed in the media.Why not I do not know.
Much thanks,
Bill
ANSWER: Most of our multinational corporate clients have converted to USD because of FX risk. Either way, whether they keep it in dollars or a foreign currency and hedge the risk, it would be repatriation bringing it home. Despite the rantings of Democrats and their bet on the leash, Larry Summers, any company with a lot of cash overseas would be INSANE not to bring it home and pay 10% one time.
I can tell you that every worthwhile accountant had advised his clients to hold off on doing anything until after the 1st of January. Capital gains will drop to 50% of the top tax rate that is proposed to be 33%, which would make the capital gains under 20%.
Anyone who has capital gains in something they have not sold because of taxes is also likely to sell and reinvest once Trump takes office and implements tax reform.
It also did not make any sense for us to launch new systems in 2016. In our case, we are forced to go public because of FATCA. American citizens cannot open accounts overseas, so the only way to full service our clients worldwide is to go public in Hong Kong due to FATCA. If Trump realizes that FATCA is causing serious problems internationally and repeals that, then we could go public in the USA. So this whole tax issue is absolutely vital and the world economy is trying to balance on the head of a pin right now. The Democrats always propose higher taxes and support Marxist policies, yet never admit that is their model any more than they admit the founder of the Democratic Party, Andrew Jackson, supported slavery.
It is time to rethink everything!
