Has anyone here dealt with selling a Treaty of Amity company? I'm considering buying one from another American, and wondering about tax implications of the purchase/sale transaction.

This is such a helpful thread! I'm in a similar situation - American looking to start a business in Thailand under the Treaty of Amity. Reading through all these responses, it sounds like the key takeaways are: 1) It's a Thai company with special ownership privileges, not a US company 2) Form 5471 is definitely required for CFC reporting 3) FBAR and Form 8938 likely needed for bank accounts 4) GILTI and Subpart F rules can apply 5) FEIE is still possible but gets complicated with company ownership One question I haven't seen addressed - does the type of business matter for these reporting requirements? I'm looking at starting a consulting business vs. my friend who wants to do e-commerce. Would both have the same IRS filing obligations, or do certain business types trigger additional requirements under the Treaty of Amity structure? Also, has anyone worked with a US tax professional who specializes in Treaty of Amity businesses? It seems like regular expat tax preparers might not be familiar with this specific structure.

I went through this process about two years ago and can share some insights that might help with your decision. The person I reported was a contractor who was very openly bragging about taking only cash payments and "never reporting a dime to the government" - they were making it sound like some kind of clever game rather than tax evasion. What really helped me get past the guilt was talking to a tax professional who explained that the IRS isn't out to destroy people's lives - they primarily want to collect the taxes owed. Most cases end up with payment plans and penalties rather than criminal prosecution, unless we're talking about massive, systematic fraud over many years. The reporting process itself was pretty straightforward using Form 3949-A. I included their business information, timeframe of suspected evasion, and estimated amounts based on their own public statements about income levels and cash transactions. The key is sticking to information that came from their own bragging rather than private details that would make you an obvious source. Never got any direct feedback from the IRS, but about 10 months later the person suddenly started accepting credit cards and stopped making those comments about cash-only payments. They also seemed much more stressed during tax season. Whether my report caused it or not, I'll never know for sure, but the timing was pretty coincidental. My take: if someone is openly bragging about breaking tax laws, they've already made their choice. You're just making sure there are appropriate consequences for that choice, which ultimately helps maintain fairness for everyone who does pay their taxes honestly.

I reported someone about 14 months ago and wanted to share my experience since you're clearly wrestling with the same concerns I had. The person was a real estate agent who was constantly bragging at social events about how they structured deals to hide commission income and avoid "giving the government their cut." What finally pushed me to file the report was when they started openly encouraging other agents at networking events to use their "methods." It went from personal tax evasion to actively spreading illegal practices to others in their professional network. I used Form 3949-A and focused exclusively on information from their public statements - their boasting about hidden income, the approximate amounts they mentioned, and their advice to others about avoiding taxes. I was very careful not to include any details that would make it obvious the report came from me specifically. The process was actually less stressful than I expected. The hardest part was getting over the guilt, but I kept reminding myself that honest taxpayers shouldn't have to subsidize someone else's illegal behavior. When people openly brag about cheating the system, they're essentially stealing from everyone who follows the rules. Like others have mentioned, I never heard directly from the IRS about what happened. But about 8 months later, the person became much more private about their business practices and stopped giving that "tax avoidance advice" at professional events. Could be coincidence, but the timing seemed pretty telling. My advice: if you have clear evidence of someone openly bragging about tax evasion, trust your instincts and file the report. They made their choice to break the law publicly - you're just ensuring there are consequences for that choice.

Just to add a quick data point - we're a local bakery and donated desserts for a charity gala last year. Our CPA classified it under 170(e)(3) and we were able to deduct our cost plus half the difference between our cost and retail price (limited to twice our cost basis). Made a nice deduction! Just make sure you document EVERYTHING - we took photos, kept all correspondence, got a formal acknowledgment letter, etc.

Based on all the great advice here, I wanted to share what I ended up finding for anyone else dealing with this situation. The key code sections are: **IRC Section 170(e)(3)** - This is the enhanced deduction for food inventory donations that everyone mentioned. It allows businesses to deduct cost basis plus half the difference between cost and fair market value (capped at twice the cost basis) when donating food to qualifying organizations. **IRC Section 162** - Ordinary and necessary business expenses, which applies if you received substantial marketing benefits in return. The IRS also has specific guidance in **Publication 526** (Charitable Contributions) and **Regulation 1.170A-4A** that covers the documentation requirements for food donations. What really helped me was realizing that the classification depends on your primary intent and what you received in return. If it was purely charitable with minimal recognition, go with 170(e)(3). If you got significant marketing value, you might need to split it between charitable contribution and business expense. My boss was impressed when I presented both the code sections AND the documentation requirements. Thanks everyone for pointing me in the right direction - this community is amazing!

Has anyone dealt with currency conversion issues when reporting foreign property sales? I sold a house in Europe last year and the exchange rate fluctuated like crazy between when I inherited it, when I sold it, and when I transferred the money. My tax guy said I needed to use the exchange rate on the day of the sale for reporting capital gains, but use a different method for basis calculation?

This is a complex situation that definitely requires careful handling! One thing I haven't seen mentioned yet is the importance of getting proper documentation of the property's fair market value at the time of inheritance. Your cousin will need this for the stepped-up basis calculation everyone's discussing. I'd strongly recommend he get an official appraisal or valuation from the foreign country dated as close as possible to when his mother passed away. Without proper documentation of the stepped-up basis, the IRS might challenge his calculations and assume a much lower basis (or even zero), which would result in much higher taxes. Also, since he's bringing $300k into the US, he should be aware of the requirement to report large cash transfers. If he's wiring the money or bringing in more than $10,000 in monetary instruments, there are additional reporting requirements beyond just the tax return. Given all the complexities with foreign property, dual citizenship, currency conversion, and multiple forms (Schedule D, 8949, FBAR, possibly 8938), I'd really encourage him to work with a tax professional who specializes in international tax issues. The potential penalties for getting this wrong are significant, and the cost of professional help is usually much less than the cost of mistakes.

Great question about the home office deduction! Yes, you can absolutely still claim the home office deduction after marriage when filing jointly, as long as you meet the IRS requirements. The key is that the space must be used "regularly and exclusively" for business purposes - meaning it's your dedicated workspace and not used for personal activities like watching TV or as a guest bedroom. You have two options for calculating the deduction: the simplified method (up to $5 per square foot, max 300 sq ft = $1,500 max deduction) or the actual expense method where you calculate the percentage of your home used for business and deduct that percentage of qualifying home expenses like utilities, insurance, repairs, etc. Since your business is breaking even now, maximizing these deductions becomes even more important for reducing your self-employment tax liability. Keep detailed records of your home office measurements and any business-related expenses. When you file jointly, this deduction will help offset your self-employment income regardless of your spouse's W-2 income.

One additional consideration that hasn't been mentioned yet - when you get married, your filing status changes for the ENTIRE tax year, even if you only get married on December 31st. So if you're getting married this fall, you'll need to decide on your filing status for the full 2024 tax year. This means you should start planning now for how marriage will affect your quarterly estimated payments for the rest of the year. If filing jointly will result in tax savings (which it sounds like it will based on the other responses), you might be able to reduce your remaining quarterly payments slightly. Also, once you're married, you can choose to make joint estimated tax payments rather than separate ones, which can simplify the process. Just make sure to recalculate your estimates based on your combined income and the filing status you plan to use. Given your income levels and his dependent child, I'd strongly recommend running the numbers both ways before your wedding so you can adjust your tax withholding and estimated payments accordingly for Q4.