I. Fundamentals of US tax for international clients II. Marriage III. Divorce IV. Death V. Q&A

Transcription

1 Until Death Do Us Part: International Couples and Their Challenges Presentation to the Financial Planning Association Orlando, Florida October 21, 2013 Leigh-Alexandra Basha, attorney at law Holland & Knight, LLP OVERVIEW I. Fundamentals of US tax for international clients II. Marriage III. Divorce IV. Death V. Q&A

2 WHO IS SUBJECT TO US TAXATION CITIZENSHIP US Citizens are taxable on income, gift, estate and GST transfers on a WORLDWIDE basis RESIDENCY Test for income tax purposes differs from that for gift, estate and generation skipping ( transfer ) tax purposes SITUS OF ASSETS The rules for determining situs of assets are different for income, gift and estate tax purposes 4 FUNDAMENTALS OF US TAX FOR FOREIGN CLIENTS US INCOME TAX: who is taxable? US citizen Permanent Resident (Green card holder) Substantial Presence Test (Physical Presence in US) 183 days in calendar year; or At least 31 days during that calendar year; and Satisfies the three-year look-back rule - Election Income Tax Considerations Determination of nonresident alien ( NRA ) v resident alien status Income tax consequences to NRAs 5 Exempt Individuals; temporarily present in the U.S as: Foreign government related (G or A visa holder) Teacher or trainee temporarily present in the US (J or Q visa holder) Student (F, J, M or Q visa holder) Professional athlete present to compete in a charitable sports event (O visa holder) 6 2

3 US INCOME TAX TREATMENT NON-RESIDENT ALIEN Effectively connected income (ECI): Net Graduated Rates US situs fixed, determinable, annual and periodic (FDAP) income: 30% Flat Tax (or reduced treaty rate) Withholding at Source US situs FDAP-like income: 30% Flat Tax (or reduced treaty rate) Withholding at Source Capital gains (excluding real property) Not Taxed No 3.8% Net Investment Income Tax US CITIZEN OR RESIDENT ALIEN: Worldwide income regardless of source Net graduated rates on ordinary income Or capital gains rates 3.8% Net Investment Income tax Possible foreign tax credit 7 US INCOME TAX TREATMENT (cont d.) Exceptions to US Source Income Rules (no withholding) Portfolio interest on bearer obligations or foreign-targeted registered obligations Bank deposit interest not effectively connected with a US trade or business Original issue discount on certain short-term obligations Nonbusiness gambling income of an NRA Amounts paid as part of the purchase price of an obligation sold between interest payment dates Original issue discount paid on the sale of an obligation other than a redemption Insurance premiums paid on a contract issued by a foreign insurer 8 TRANSFER TAX COMPARISON *2013 figures which are indexed for inflation * Top tax rate is 40% for 2013 US CITIZEN AND US NON-US CITIZEN/NON US DOMICILED DOMICILED ALIEN RESIDENT ALIEN (NCNR) Annual gift tax exclusion per donee Yes ($14,000)* Yes ($14,000)* Gift splitting between spouses Yes (provided both No spouses are US domiciliaries) Amount of lifetime exclusion amount for gifts $5,250,000* None Amount of GST exclusion $5,250,000* $5,250,000 * Unlimited exclusion of gifts to US citizen Yes Yes spouse (marital deduction) Unlimited exclusion of gifts to non-us citizen No No spouse Annual exclusion for gifts to non-us citizen Yes ($143,000)* Yes ($143,000)* spouse Exclusion for direct payment of qualified Yes Yes medical and educational expenses Amount of applicable exclusion amount for $5,520,000* $60,000 Estates not indexed for inflation Estate taxation on worldwide assets at death Yes No Gift taxation on worldwide assets Yes No. US gift tax only on certain US situs assets 9 3

4 US TRANSFER TAX -RESIDENCY (DOMICILE) Transfer Tax Considerations Determination of noncitizen nonresident ( NCNR ) status v resident /domiciliary status Gift, estate and GST tax consequences to NCNR Assets includible in NCNR estate Covered Expatriates and IRC section 2801 Relevance: worldwide vs. situs taxation Domicile Defined: acquired by living there, even briefly, with no definite or present intention of leaving therefrom How determined: Facts & Circumstances Time spent US/abroad Size / location / use of homes Family, friends, contacts Location of church and club memberships Location of business interests 10 RESIDENCY (DOMICILE) (cont d.) Immigration Status Rev. Rul even illegal alien subject to deportation has been found a resident alien domiciliary for US transfer tax purposes. Est. of Khan (1998) decedent with a US green card presumed to have a US domicile for US transfer tax purposes unless the estate can show that the decedent never intended to return to the US to reside. Est. of Jack (2002) although decedent was in the US at the time of death on a temporary, non-immigrant visa, the IRS was not precluded from showing the decedent was domiciled in the US 11 GIFT TAX RULES FOR NCNRs Gift tax is imposed on gratuitous transfers of property by any individual citizen or resident of the US to the extent the value of the property transferred exceeds the deductions and exclusions available. NCNRs subject to federal gift tax only on transfers of US situs assets (i.e., US real property and tangible personal property located in the US). Non-US situs assets for gift tax purposes different than non- US situs assets for estate tax purposes Ex: cash deposit in a US banking institution is considered TPP for gift tax purposes but not estate tax purposes (thus NCNR should make all cash gifts outside the US Annual exclusion of $14,000/donee/year. No gift tax exemption. 12 4

5 NCNR Estate Tax Estate tax credit of $13,000 (equivalent to $60,000 exclusion amount) allowed for NCNR s estate Applicable treaty may allow higher exclusion amount Unlimited marital deduction for estate of NCNR who leaves US situs property to US citizen spouse (or to non-us citizen spouse in QDOT) 13 ESTATE TAX RULES FOR NCNRs US Estate Tax on US Situs Assets including: Real Property Tangible Personal Property Located in US Certain Debt Obligations Stock in US Corporations Certain Intangible Property with US Connection Generally, the following are excluded from NCNR s taxable estate: Amounts the NCNR owns at death on deposit with a US bank, savings and loan institution or credit union Life insurance proceeds on NCNR s life Stock in Foreign Corporations Portfolio debt 14 US AND NON-US SITUS PROPERTY US SITUS PROPERTY FOR ESTATE TAX Stock in US corporation US real property interests (USRPI) Tangible personal property in US, (e.g., art, cash) NON-US SITUS PROPERTY FOR ESTATE TAX Stock in foreign corporations Real property located without US Certain works of art on loan for exhibition Life insurance on life of another Life insurance proceeds on life of the insured US brokerage accounts & mutual US bank deposits including foreign funds except for underlying assets branch of US corporations or which are non-us situs partnerships in commercial banking business US debt obligations (including Portfolio debt obligations 401(k)s) REITS Certificates of Deposit Annuities ADRs 15 5

6 UNDERSTANDING THE SITUS RULES ASSET SUBJECT TO US ESTATE SUBJECT TO US GIFT TAX TAX (US SITUS) by NCNR (US SITUS) by NONRESIDENT ALIEN Annuities No Yes Currency in US safe deposit box Yes Yes Cash deposit in Bank (including checking, savings account) Yes No Debt enforceable against a US person or the US government No Yes, except portfolio debt obligations Intangible personal property No Yes, if enforceable against USP Lift insurance (US) on lift of insured No No Lift insurance (US) on lift of another No Yes Life insurance cash surrender value No Yes Mortgage No Yes Partnership/LLC Interest No (2501(a)(2)) depends Tangible personal property Yes, if located in US (unless art Yes, if located in US (unless art on loan for exhibition) on loan for exhibition) REITS No Yes Retirement Plan Benefits (US plans) No Yes Stock in US corporations No Yes ADRs (American Depository Receipts) No No US Real Property Yes Yes 16 GENERATION-SKIPPING TRANSFER TAX RULES FOR NCNRs Determination of NCNR status for GST tax purposes is the same as for gift and estate tax purposes (domicile) GST Tax applies only to gifts and estates that are otherwise subject to US gift or estate tax; thus GST tax only applies to an NCNR s US situs assets. GST tax exemption for NCNR is $5,250,000 (in 2013). 17 TRANSFER TAXES- COVERED EXPATRIATES GIFTS AND BEQUESTS FROM COVERED EXPATRIATES (IRC Section 2801) Waiting on guidance from Treasury/IRS Tax is on RECIPIENT Maximum gift or estate tax rate (40% in 2013) Based on FMV in excess of annual exclusion amount ($14,000/donee) No tax on qualifying transfers to spouses/charities Tax reduced by any foreign tax on covered gift or bequest Gifts to trusts No time limit 18 6

7 GIFTING Between Spouses U.S. Citizen Resident Alien (U.S. Domiciliary) Non-Resident Alien (Non-U.S. Domiciliary) U.S. Citizen unlimited unlimited unlimited Resident Alien Non-Resident Alien $143,000 annual exclusion, $143,000 annual exclusion, adjusted for inflation; adjusted for inflation; $5.25 million lifetime $5.25 million lifetime exclusion exclusion $143,000 annual exclusion, $143,000 annual exclusion, adjusted for inflation; adjusted for inflation; $5.25 million lifetime $5.25 million lifetime exclusion exclusion $143,000 annual exclusion, $143,000 annual exclusion, adjusted for inflation (no adjusted for inflation (no lifetime exclusion amount) lifetime exclusion amount) Adapted from article published in Journal of Financial Planning, January 2009Alien Concepts: Navigating the Labyrinth of Rules Applying to Gifts and Estates of Non U.S. Citizens. by Leigh-Alexandra Basha and Cal Brown. Figures are based on 2013 figures 19 GIFTING Transfers to Others NOTE: The same tax rates apply to all U.S. Citizen Resident Alien decedents, after the gift exclusion amount $14,000 annual $14,000 annual exclusion U.S. Citizen exclusion per donee; per donee; $5.25 million $5.25 million lifetime exclusion lifetime exclusion Non-Resident Alien $14,000 annual exclusion per donee; $5.25 million lifetime exclusion Resident Alien (U.S. Domiciliary) Non-Resident Alien (Non-U.S. Domiciliary) $14,000 annual $14,000 annual exclusion exclusion per donee; per donee; $5.25 million $5.25 million lifetime exclusion lifetime exclusion $14,000 annual $14,000 annual exclusion exclusion per donee; per donee; no lifetime no lifetime exclusion; no gift splitting exclusion; no gift splitting $14,000 annual exclusion per donee; $5.25 million lifetime exclusion $14,000 annual exclusion per donee; no lifetime exclusion; no gift splitting Adapted from article published in Journal of Financial Planning, January 2009Alien Concepts: Navigating the Labyrinth of Rules Applying to Gifts and Estates of Non U.S. Citizens. by Leigh-Alexandra Basha and Cal Brown. Figures are based on 2013 figures 20 ESTATES Between Spouses U.S. Citizen Resident Alien Non-Resident Alien U.S. Citizen Resident Alien Non- Resident Alien 100% marital deduction 100% marital deduction 100% marital deduction $5.25 Million exclusion (2013), 100% marital deduction, only if transfer meets QDOT requirements $5.25 Million exclusion (2013), 100% marital deduction, if transfer meets QDOT requirements $60,000 applicable exclusion applies in 2013 to U.S. gross estate, 100% marital deduction, only if transfer meets QDOT requirements $5.25 Million exclusion (2013), 100% marital deduction, only if transfer meets QDOT requirements $5.25 Million exclusion (2013), 100% marital deduction, only if transfer meets QDOT requirements. $60,000 applicable exclusion applies in 2013 to U.S. gross estate, 100% marital deduction, only if transfer meets QDOT Requirements Adapted from article published in Journal of Financial Planning, January 2009Alien Concepts: Navigating the Labyrinth of Rules Applying to Gifts and Estates of Non U.S. Citizens. by Leigh-Alexandra Basha and Cal Brown. Figures are based on 2013 figures 21 7

8 ESTATES Transfers to Others NOTE: The same tax rates apply to all U.S. Citizen decedents, after the exclusion amount $5.25 million U.S. Citizen applicable exclusion amount (2013) $5.25 million Resident Alien applicable exclusion (U.S. Domiciliary) amount (2013) $60,000 applicable Non-Resident Alien exclusion amount in (Non-U.S. Domiciliary) 2013 for U.S. assets; no scheduled increases Resident Alien Non-Resident Alien $5.25 million applicable $5.25 million applicable exclusion amount (2013) exclusion amount (2013) $5.25 million applicable $5.25 million applicable exclusion amount (2013) exclusion amount (2013) $60,000 applicable $60,000 applicable exclusion amount in 2013 exclusion amount in 2013 for U.S. assets; no for U.S. assets; no scheduled increases scheduled increases Adapted from article published in Journal of Financial Planning, January 2009Alien Concepts: Navigating the Labyrinth of Rules Applying to Gifts and Estates of Non U.S. Citizens. by Leigh-Alexandra Basha and Cal Brown. Figures are based on 2013 figures 22 Marriage I DO! 23 TYPES OF MARRIAGE COMBINATIONS US citizen with US citizen US citizen with US resident US citizen with Non US citizen/nonresident ( NCNR ) US resident with US resident US resident with NCNR NCNR with NCNR 24 8

9 NON-TRADITIONAL MARRIAGES Common law marriage. 11 US states authorize common law marriages: AL, CO, IA, KS, MT, NH, OK, RI, SC, TX, UT, and DC. Full faith and credit. Same-Sex Marriages. 11 countries recognize same-sex marriages nationwide: Argentina, Belgium, Canada, Denmark, France, Iceland, the Netherlands, Norway, Portugal, South Africa, Spain and Sweden. Some countries have variations on the rule (MX, Israel, Brazil). The US has same sex marriage in 14 states (CA, CT, DC, DE, IA, ME, MD, MA, MN, NH, NY,RI, VT and WA). PACs, Civil Unions. 25 PRE AND POSTMARITAL AGREEMENTS A premarital agreement ( PMA ) is a contract between a couple prior to marriage or a civil union that provides for choice of marital regime and how property acquired before or during marriage will be divided upon divorce or death. It can also provide for alimony or maintenance. In the US, it cannot cover child custody or child support. A post marital agreement is entered into after the couple is married. Not valid in all jurisdictions. An international premarital agreement. No single approach. Not all countries recognize premarital agreements. Always consult local counsel

10 Requirements for most prenups The agreement must be entered into voluntarily and without duress. The parties must have access to independent legal representation. If the parties did not have legal counsel, they should waive their rights in the agreement. There must be adequate financial disclosure. 28 PRE PACS AGREEMENT Need for PMAs in non traditional marriages e.g., PrePacs agreement Opposite-sex couple: male was French, female was DC resident. Entered a PACs agreement in France. DC has common law marriage. As couple was opposite sex and could be deemed married under DC law, the couple entered into a prepacs agreement to protect the assets of the spouses from marital claims in the event of separation or death. 29 TYPES OF MARITAL REGIMES Separate Property- all property is separate unless designated as marital property. Community Property of Acquets/Ganancial Property- property acquired before marriage or during marriage by gift or inheritance is separate property, all the reset is community property and deemed owned 50/50 by the spouses. Universal Community Property all property is community property and there is no separate property. Only a few countries have as a default: Burundi, Namibia, the Netherlands, Philippines, Rwanda and South Africa. Some jurisdictions permit election e.g., France

11 US COMMUNITY PROPERTY STATES *Alaska by election 31 US COMMUNITY PROPERTY POPULATION VS. COMMON LAW POPULATION Community Property Common Law Population 32 TAX TREATMENT OF COMMUNITY PROPERTY In US, 10 states have CP marital regime: (AZ, CA, ID, LA, NV, NM, TX, WA, WI and AK by election). Tax treatment of community property marital regimes Income tax: ½ of community property income is deemed earned by each spouse. Special rules when one spouse is NRA. Gift tax: a gift of CP to a third party is deemed ½ from each spouse. Estate tax: ½ of CP is includable in the 1 st spouse to die s estate. Better balanced when surviving spouse is non US citizen. QDOT may not be needed

12 COUPLES ON THE MOVE The Uniform Dispositions of Community Property Rights at Death Act adopted by 16 states (AK, AR, CO, CT, FL, HI, KY, MI, MN, MT, NY, NC, OR, UT, VA, WY). Provides community property characteristics is retained when moved to a common law property state. Ex: CA couple moves to NY (see p. 16) Change of marital regime. Caveat: separate property to CP with a non US citizen spouse: income, gift, estate, reporting etc. Estate of Charania v. Commissioner. 34 TAX EFFECTS OF COMMUNITY PROPERTY MARITAL REGIME Example: W is a US citizen and inherited a sizable fortune from her wealthy grandparents. W meets H, a debonair Frenchman and NRA. Her parents insisted on a premarital agreement. W obliges. They marry at W s parents home in CT where W was raised and thereafter move to Paris where H works as a businessman. They change their marital regime to universal community property to avoid forced heirship and other issues. What consequences to W and H? 35 CP MARITAL REGIME (cont d) Gift tax: W is deemed to have gifted ½ of her assets to H a NCNR. $143,000 qualify for marital annual exclusion. She needs to file a Form 709 and reduce her $5.25 million applicable exclusion amount. Amounts in excess are taxable up to 40%. Note CT has a gift tax. Income tax: H must now include ½ of income generated from W s assets and report it on a US income tax return if it is US source income. W must report ½ of H s income (with some exceptions) on her Form Reporting: W must report her ½ interest in H s foreign assets including potentially FBAR, Form 8938, , PFIC form etc. Unexpected: W s family business was established years ago as an S corp. With H as a ½ owner of her shares and as an NRA (an ineligible S corp. shareholder) H as caused an inadvertent termination of the S status so the corp. is now a C corp. subject to double taxation for W s entire family

13 GIFTS TO NONCITIZEN SPOUSE Example: In 2013, H buys his fiancée a NRA ( W ) a $50,000 diamond engagement ring set in a platinum gold setting For a wedding present, H buys W a Bentley H pays for their honeymoon in Boa Boa H pays W s American Express card bill H adds W to the title to his principal residence in Miami, Florida H adds W to LLC making her 50% owner. LLC is valued at $2 million H wire transfers from his US account to W s US account the sum of $100,000 H wire transfers from his foreign account to W s foreign account $500,000 What are the gift tax consequences to H? 37 GIFTS TO NONCITIZEN SPOUSE Gift to W when she was a mere fiancée was limited to $14,000 annual exclusion so he has made a taxable gift of $36,000 Gifts to W of the following are taxable gifts: Wedding present Honeymoon AmEx bill Wire transfers Adding wife to LLC (value depends on state law) Total value of gifts in 2013 less his marital annual exclusion of $143,000 (minus the $14,000 used in same year prior to marriage) will be taxed up to 40% if H is a US person and H and W were married under a separate property marital regime. He will need to file a US gift tax return (Form 709) and pay tax on amounts in excess of his applicable exclusion amount ($5.25 Million in 2013) 38 FOREIGN TRUST REPORTING Example: H is a NCNR and is married to W who has a US green card. H establishes a revocable trust in Florida to hold his Miami home (to avoid probate) and his Florida bank account. W lives in the Miami property and H transfers funds each month from the trust bank account to W s account. What consequences? 39 13

14 TRUST CONTINUED W s uncompensated use of the Miami property is considered a distribution from a foreign trust. All distributions to W (a US person) must be reported on Form 3520 or face up to a 35% penalty on amount of distribution. No filing threshold. Distributions to W of US situs assets are considered gifts taxable to H and he must file US gift tax return if over $143,000/year. He has no other exemptions (except for W s qualified medical and educational expenses). 40 JOINTLY HELD PROPERTY ISSUES WITH NON US CITIZEN SPOUSE Rule with US citizen spouses: 50/50 Rule with one non US citizen spouse: contribution furnished Inadvertent gifting: No gift for creation of real property interest before 1/1/82 and after 7/13/88 (outside the window) Special rules for creation of JTROS/TBE in real property between 1/1/82 and 7/14/88 ( window ) otherwise no gift upon creation. During window, look to local law; if unilaterally severed then gift of ½; if not unilaterally severable use actuarial values Special rules for creation of JTROS/TBE in personal property starting 1/1/54. Gift unless certain exceptions for bank accounts and brokerage accounts. Termination of JTROS/TBE in real property other than by death during window/outside window. Gift if one spouse receives more than contribution. Termination of JTROS/TBE in personal property; same rule if no gift upon creation 41 RETITLING ASSETS W/O TRACING Example: H and W are both Canadian citizens living in Toronto. H built a successful mining business and W raised their 3 children. All their Canadian assets were titled jointly. They moved to a warmer climate in Naples, FL and obtained green cards. Their FL attorney did not inquire of their citizenship as they spoke with no accent. He advised them to establish revocable trusts and split their assets 50/50 into each. What consequences? 42 14

15 RETITLING (cont d) Since H was the sole income earner, all source of funds will be attributable to H. When assets are split 50/50, H is deemed to have gifted 50% of the value to W. If the value exceeds $143,000 in 2013, he must file a US gift tax return (Form 709). If he is a US domiciliary, then he can gift up to $5.25 million in 2013 without gift tax (but then his assets will be exposed to US estate tax at death). If he is not a US domiciliary, all gifts in excess of $143,000 are taxable up to 40%. H and W should check the US Canadian Protocol. H may have triggered Canadian income tax when he transferred assets to trust. If H had transferred funds outside the US to W before immigrating to the US, H could have avoided US gift tax. 43 GIFT SPLITTING Example: H is a US citizen with $30 million titled in his name. H establishes an irrevocable dynasty trust fbo W a US green card holder. W has nominal assets in her name. H wishes to transfer $10 million to the trust using H s and W s combined applicable exclusion amounts and made a split gift election. What consequences? W cannot split gift if she is a beneficiary of the trust. 44 DIVORCE I DON T! 45 15

16 Countries with highest divorce rate: Russia, Aruba, US, Panama, Ukraine, Belarus, Moldova, Cuba, Czech Republic, South Korea In US rate of divorce for 1 st marriages- 50% 2 nd marriages- 60% 3 rd marriages- 70% 46 Divorce Tax Issues with NRA spouse IRC Section 1041(a) provides that no gain or loss is recognized on a transfer of property from an individual to or in trust for a spouse or former spouse incident to a divorce. This does not apply to transfers to non-resident alien spouses. The nonrecognition rule shall not apply if the spouse or former spouse of the individual making the transfer is a nonresident alien. Caveat: If NRA spouse, normal nonrecognition rules do not apply and potentially have gain recognition when divorcing couple divides up the assets. (Also potential gift tax concerns). 47 UNTIL DEATH DO US PART 48 16

17 TRANSFERS TO NON-CITIZEN SPOUSES: QDOTs Purpose of a QDOT: defer tax on assets otherwise passing to a non US citizen surviving spouse. Requirements: All income to spouse for life Only spouse may receive principal distributions Taxable Hardship exception At least one trustee must be US citizen or domestic corporation Must have power to withhold tax on principal distributions QDOT election QDOT of $2 million or more has additional security requirements 49 DOMA The Defense of Marriage Act (DOMA) section 3 was ruled unconstitutional by the US Supreme Court in United States v. Windsor (2013). Held that same-sex couples are entitled to the same rights as opposite sex couples at least for those married same-sex couples residing in states that recognize their marriages. Congressional Research Service issued a report examining selective issues including the marriage penalty, the marriage bonus etc. The Pentagon extends federal benefits to samesex spouses of military personnel and civilian defines employees retroactively. 50 PORTABILITY Portability is the ability of a surviving spouse to use the deceased spouse s unused applicable exclusion ( DSUE ) amount. The DSUE is available for the surviving spouse to use for lifetime gifts and estate at death. A NCNR cannot use her deceased spouse s DSUE. A NCNR s estate cannot make a DSUE election. Special rules for QDOTs

18 Estate of Charania v. Commissioner Facts: H and W (both NCNRs) were married in Uganda under a separate property regime. They were expelled from Uganda and moved to Belgium, a community property regime. H died with Citigroup shares (a US corp). H s estate claimed only ½ was includible in his estate b/c H and W were domiciled in Belgium, a community property jurisdiction. 52 Charania Ruling US Supreme Court held English marital property regime, a regime of separate property, governed the property rights of the decedent and his wife in the CitiGroup stock and they were 100% includable in his gross estate for U.S. federal estate tax purposes. They could have adopted a CP regime when they moved to Belgium, but did not. Belgium applied Uganda law which applied English law. 53 PLANNING FOR NON US CITIZEN SPOUSE Try to balance estates of spouses by: Making gifts of jointly owned property Considering gift splitting Considering loans to non US citizen spouse Consider treaty provisions Consider QDOT Consider foreign tax credit Consider the marital regime Consider portability 54 18

19 CONCLUSION Consider a pre or post marital agreement for both traditional and non traditional couples Consider the tax implications in the marital agreement Consider the tax implications of the choice of marital regime Plan ahead both during marriage and upon divorce or death Consider the implications of a move from a common law property jurisdiction to a community property jurisdiction and vice versa 55 FOR QUESTIONS Contact me: Leigh-Alexandra Basha Holland & Knight, LLP 1600 Tyson's Bd. Suite 700 McLean, VA Tel Fax leigh.basha@hklaw.com 56 DISCLOSURE To ensure compliance with Treasury Regulations (31 CFR Part 10, 10.35), we inform you that any tax advice contained in this correspondence was not intended or written by us to be used, and can not be used by you or anyone else, for the purpose of avoiding penalties imposed by the Internal Revenue Code. If you desire a formal opinion on a particular tax matter for the purpose of avoiding the imposition of any penalties, we will discuss the further Treasury requirements that must be met and whether it is possible to meet those requirements under the circumstances, as well as the anticipated time and additional fees involved