From the Founder – Edmund:
The ICO train continues unabated
Hi
Two topics today, one is on bitcoin and the other on neverending ICO madness. If you go to http://coinmarketcap.com and click on assets you can see the total market cap across different assets.
Most of these companies are less than 1 year old, EOS being less than just a few months old. And almost all of these companies have raised via ICO. We’ve had several inquiries in the past week of some very promising and ambitious companies.
We’ve got a new article in the pipeline that compares all the legal jurisdictions for ICO’s thus far. Also we have a new article on corporate structuring for ICO’s.
In order to participate in an ICO, one would send bitcoin to an address which the ICO company has declared is the official address. Once you send your BTC to that address, you will get the newly issued token in return. One should follow directions of individual project if you are interested, this is just a primer to explain that to partake in an ICO, one generally needs ethereum or bitcoin, which brings us to our next topic of today:
Bitcoin is about to fork, and why you should care
Blockchains are chains of blocks which keep track of native assets sometimes called ‘cryptocurrency’. Miners do calculations to ‘find’ the next block.
All of the miners agree on a certain chain of blocks, but if some of the miners disagree and when this happens, there is something called a ‘fork’ -where you wind up with 2 distinct chains.
We have a critical event coming up on august 1st for bitcoin, which has been raging for literally months called the ‘block size debate’. Certain miners think the block size should be increased, and others believe it will stay the same.
Therefore the bitcoin blockchain WILL split on august 1st 2017, and it’s called Segregated witness. I’ll spare you the technical nuance, but SegWit is the process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. Events like this represent a volatility, and opportunity to make (or lose) money. Some people will sell bitcoin as they feel it’s a risk (things changing is generally riskier than things staying the same), others will buy in as it creates potentially a longer term more sustainable network.
My opinion is that it’s much ado about nothing. Bitcoin has a relatively hard time with governance and making decisions to change. Bitcoin is the largest coin by market cap and has been since it’s inception as the first coin. But others are more interesting from a purely technology standpoint, and still others are completely worthless!
The interesting thing about these markets is that there is nothing new under the sun. You buy low sell high. In the last week there was a major pullback. Z-cash pulled back to around $140, and within a week it was back up to $200.
Very volatile, but interesting. I’m interested in Z-cash because it has a breakthrough in mathematics called a ‘zero-knowledge proof’ that some other coins do not have.
While some coins such as Z-Cash represent technological breakthroughs, many coins and assets have zero redeeming qualities, and some are a joke (literally) – for instance, according to wikipedia, “DogeCoin was Introduced as a ‘joke currency’ on 8 December 2013… but as of June 2017, it has a capitalization of US$340 million.”
I’m not recommending a buy on Dogecoin! Back to bitcoin, shall we?
One thing to note is that bitcoin has forked in the past, several times. See this chart below and note that none of these hard forks caused any irreparable damage. Many were intentional.
What is happening in the past to bitcoin in terms of forks.
Now why should you care and how can you make money off of this?
There have even been fork events which actually ended up benefiting those who were a previous holder of token before a split. An example of this would have been the hacked “DAO” event where the Ethereum blockchain hard forked and created Ethereum (proper – or ETH) and Ethereum (classic – or ETC).
Token holders who held before this split ended up doubling and having both ETH and ETC which turned out to be an Unexpected benefit to all. In case you don’t know what Ethereum is, this website whatthefuckisethereum.com – despite the vulgar name, this site does a great job explaining ethereum based on your demographic. Oddly enough, I was shown this by a banker – who was previously an entrepreneur no less – the world certainly is changing quickly.
What’s the TL;DR here? In the runup to this hard fork it’s a good buying opportunity due to the uncertainty. If it’s anything like the ethereum event where people split, it’s possible you may wind up with double the tokens (so to speak) on two different chains. Then, you could decide to sell one or both of hese.
If you are looking for an excuse to get into bitcoin – buy on the dip and get in before the fork! Furthermore, South Korea has officially sanctioned bitcoin exchanges, which means that we can expect more growth from this market.
This is not professional advice, do your own due diligence, and out of transparency, I hold some of the assets described in this letter.
From Flag Theory:
Flag Theory for U.S. citizens
If you are a U.S. citizen or a green card holder you are taxed on your worldwide income, no matter the part of the world you live and the part of the world your income is derived from.
This is unique, as the U.S., together with Eritrea, are the only countries who taxes individuals based on their citizenship.
In general, when a citizen of a country (other than the US) obtains tax residency in another jurisdiction, they are no longer subject to tax in their home country, unless their income is derived from there (subject to the specific legal guidance in tax treaties and other laws).
That said, if you are location independent, doing business internationally and living in the U.S., consider moving to a low-tax or a territorial tax based country and reduce your tax bill, claiming the Foreign Earned Income Exclusion (FEIE).
You can earn non-US source income up to $102,100 tax free. This amount can be increased up to $250,000 if you file jointly with your spouse and include housing benefits.
To qualify you should not stay in the US for 330 days per year, that is, staying a maximum of 35 days per year in the US. Or pass the IRS’ “residency test”, proving that you are a bona fide resident of another country. This will allow you to stay in the US more than a month.
To pass the bona fide resident test, your country of residence must be one where the United States has concluded a tax treaty with and you must prove that you are a tax resident in that country.
Moving abroad will not only enhance your personal finances and save a handsome amount of tax money, it will also open a myriad of opportunities and lead you to live experiences to grow both personally and professionally. Check out residency, second citizenship and incorporation options in our free jurisdiction comparison matrix: Incorporations.io and Passports.io (new version coming soon).
For instance:
- Tax-free:
Antigua, The Bahamas, British Virgin Islands, Brunei, Cayman Islands, Monaco, Oman, Turks and Caicos, United Arab Emirates or Vanuatu.
- Territorial taxation
Anguilla, Belize, Costa Rica, Chile, Georgia, Gibraltar, Guatemala, Hong Kong, Macau, Malaysia, Malta, Nicaragua, Panama, Paraguay, Qatar, Singapore, Thailand or Uruguay
There are certain “gotchas” by the IRS if you do not reside in the same country as the incorporated entity. Living in these countries can help.
Despite Americans’ citizenship based taxation, there are ways to legally minimize taxes being in compliance with the law. So, there is nothing that Trump, the IRS, or any government agency can do about it.
Working with Americans can be more challenging due to the tax laws. US citizens face an increasingly complex set of rules and regulations as it pertains to holding and increasing their wealth.
At Flag Theory we offer residency, citizenship, corporate structuring, banking and tax planning to American business owners, freelancers, entrepreneurs and investors, to build their life internationally and save tax money:
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Report of tailored options for your specific situation
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Incorporation, residency and bank account setup
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Setup a structure and sign documents
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Ongoing yearly US tax maintenance compliance
Apply now for a consultation and start your journey towards more freedom, privacy and wealth.
P.S.: Puerto Rico has amended Act 20, waiving the 5 employees requirement for export services businesses to qualify for 4% corporate tax rate. More on that soon.
The above is not, nor intends to be legal or tax advice. Before taking action, always speak with your accountant. You can contact us to engage with a US CPA, who can give you the proper advice according to your specific circumstances. The above should not be used to evade taxes.