Dear ,

The SERAPH Global Summit held from June 1st–3rd, 2016 in Del Mar, California, was a huge success and marks a turning-point in the evolution of our unique offshore asset protection structures.

Our "Private Label Trust"product is world-class and currently one of the only IRS compliant offshore investment solutions that by law exempts American's from reporting overseas assets.

This Hong Kong ORSO 402(b) has the FATCA ID number issued by the U.S. Treasury to make it Government registered, recognized, regulated, retirement plan (offshore).

Invest offshore - On the grid, secure and private.

We provide clients with a private label trust platform that is consolidated international occupational retirement law and is government regulated, registered and recognized in over 130 countries. A Fairbrook Alliance Private Label Trust is not a tax haven, insurance product or company, or personal trust; it is a globally-recognized occupational retirement plan providing far greater permissions and benefits.

Deferring income on gains and accumulations

Acknowledged by the Foreign Account Tax Compliance Act (FATCA); this is the only type of existing foreign financial account that can be used to defer income on gains and accumulations outside the U.S. that is Internal Revenue Service (IRS) and U.S. Treasury acknowledged on W8-BEN-E box 29b and 29e and is Global International Intermediary Number (GIIN) registered as being exempt from FATCA reporting. Banks, law firms, insurance companies and secular trusts are not recognized in any Intergovernmental Agreements (IGA).

The key is knowledge of your regulatory reporting position and legitimacy

This plan is exempt from insurance and securities regulations, thus eliminating additional capital raising costs, while providing the benefits of purchasing investments in a tax free environment which is recognized regulatory compliant and tax-advantaged.

Investors will not be subjected to taxation within the plan. Members can enjoy the benefit of accruing tax-free roll up and in some cases ultimately distributing the income on a tax-exempt basis in many jurisdictions.

For plan members, this represents the ability to seamlessly invest and trade capital offshore through an IRS, FATCA, AEOI and CRS acknowledged exempt from financial institution reporting occupational retirement plan vehicle.

Fairbrook Alliance extensive expertise in supporting clients’ cross-border funding and distribution strategies in numerous countries, combined with ensuring ongoing compliance with an evolving regulatory environment is to take advantage of new business opportunities.

The affect of efficient retirement planning is the lower cost of tax

The occupational retirement plan law regime increases the yield on your wealth and protects assets while avoiding double-taxation regulations, overlapping taxes, and unnecessary taxation through poor future planning and a mere ignorance of taxation law.

It is possible for individuals to establish a retirement plan that has significant neutral tax implications,

• no withholding tax,
• no wealth tax,
• no VAT,
• no annual net worth tax,
• elimination of estate and inheritance tax on succession,
• and discretion to choose from a nearly unfettered class and location of investments.

The key is knowledge of your regulatory reporting position and legitimacy. Working in an increasingly regulated world where global recognition is critical, it is important for each of us to accept the greater responsibilities and permissions.

The Fairbrook Alliance Turn-Key Capability is a Real Competitive Advantage

• Outsourcing all fiduciary administrative functions
• Outsourcing management of all regulatory matters
• Outsourcing fiduciary administration risk

Our advisory approach gives a real competitive advantage to institutional clients such as banks, law firms, CPA firms, investment advisors and family offices to offer occupational retirement law structuring to their clients by way of outsourcing the administration, overhead costs and fiduciary liability.

A Private Label Trust can be designed to cater to issuers of investment products who are seeking opportunities in new markets where licensing requirements are restricting their progress. In reliance on its permissions and exemptions the Trust will facilitate issuers’ access to new markets streamlining the issuers’ licensing and compliance requirements.

Fairbrook Alliance helps you to drive new clients forward; while you keep the continuity of your own services.

My “Flippín” House?

I seem to be perpetually out to lunch. When I step on the scale too, this point is further confirmed. I do not know why I have waited so long to write an article for the benefit of real estate investors who “flip” houses. It is almost a decade since the real estate debacle of 2008 which has lingered for some time. Nevertheless, this article needed and deserved to be published some time ago. Nevertheless, I hope that there are at least a few home flippers and their advisors that can benefit from the strategies in this article.

Real estate is a capital asset. Normally when you purchase investment real estate, fix it up and sell it later, the profit is taxed under the capital gains tax rules. However, the rules are different for real estate investors who actively purchase and remodel real estate for profit on a continuing basis. The investors are considered “dealers” by the IRS and the real estate is treated as inventory rather than as a capital asset. The profits from the sale on these properties are treated as ordinary income subject to self-employment tax. House flipping is not eligible for a 1031 exchange.

Additionally, many of the expenses of the house flipping endeavour are not immediately deductible as expenses but must be capitalized. These projects within a self-directed IRA or pension plan would generate unrelated business taxable income (UBTI). The income would be taxed to the pension plan at trust or corporate tax rates. Not a good result!

The proposed strategy implements the use of several planning strategies in order to maximize a favorable result. The strategy uses a series of qualified retirement plans such as a cash balance defined benefit plan, profit sharing and 401k. The strategy uses a private placement variable deferred annuity contract owned within the pension trust(s). Lastly, the strategy uses a limited liability company with two classes of LLC membership interests- Class A common equity and Class B preferred.

The Class B interests are owned by the trustee of the cash balance defined benefit plan. The Class B interests have voting rights and a par value of one dollar per unit. The Class B interests enjoy a preferred return equal to the long term applicable federal rate. The Class A interests are owned by the trustee of the profit sharing plan and have voting rights. The Class A interests are entitled to the investment return in excess of the long term applicable federal rate. This structure preserves the taxpayer’s ability to make larger contributions for a longer period of time into the cash balance defined benefit plan regardless of investment returns. The excess investment return is pushed to the profit sharing plan which does not have a limit for how much it can accumulate within the plan.

The private placement variable deferred annuity (PPVA) contract is owned within the pension LLC which is wholly owned by the pension trusts – cash balance defined benefit plan and profit sharing plan. The PPVA contract offers the ability to customize investment options within the annuity. An insurance dedicated fund is create to invest in private equity real estate deals, i.e. house flipping.

Absent the PPVA structure, the real estate income would generate unrelated business taxable income (UBTI) to the pension plans. The PPVA serves as a structure to completely eliminate any UBTI. Specifically, IRC Sec 512 exempts annuity income from the definition of UBTI. The tax rules for pension annuities found in IRC Sec 818(a) also exempt pension annuities from the investment diversification requirements of variable annuities found in IRC Sec 817(h). As a result, the PPVA contract can have a single investment and still meet all of the tax requirements of a variable annuity for tax purposes.

Bob Da Builder, age 50, is a skilled tradesman and real estate investor. He purchases single family homes, renovates them and sells the real estate investment at a gain every month or two. He does the work himself with a small crew of contractors. He is quite successful at this making $300,000-500,000 per year. He has a “day job” working for his local municipality. He would like to maximize his investment returns by reducing the current tax treatment as ordinary income. He does not need any of this income currently to live on.

Bob sets up a series of qualified retirement plans – cash balance defined benefit, profit sharing and 401(k). Bob takes a salary of $25,000 per year and his wife takes a salary. Both make pre-tax contributions of their salary of $18,000 along with a catch up provision of $6,000 each. The business makes a pre-tax contribution of $250,000 into the cash balance defined benefit plan for the benefit of Bob and his wife. The business also contributes an additional $6,000 into the profit sharing plan for the benefit of Bob and his wife.

Bob creates a Pension LLC which is wholly owned by the profit sharing and cash balance defined benefit plans. The defined benefit plan owns the Class B interests and the profit sharing plan owns the Class A interest. The preferred return for the Class B members is the long term AFT of 2.25 percent. The Class A return is the excess investment return above the 2.25 percent.

The Pension LLC is the applicant, owner, and beneficiary of a PPVA contract issued by Acme Life. The pension contributions will be used as the premium payment for the PPVA contract. The PPVA contracts features an insurance dedicated fund (IDF) which has private equity real estate as its investment strategy. The IDF will invest house flipping deals.

None of the real estate gains captured within the PPVA contract will be taxable to Bob or his wife or treated as UBTI, i.e. taxable to the pension plans. The allocation of the income within the Pension LLC is such that the majority of the investment return will accrue for the benefit of the profit sharing plan allowing bob to make the largest contributions possible the longest period of time to the defined benefit plan.

The strategy allows for the initial contribution of real income and gains on a pre-tax basis into a series of retirement plans. These contributions are further deployed within a Pension LLC designed to preserve the highest contributions possible for the longest period of time within the Pension LLC. The real estate investment is effected through the IDF within the PPVA contract wholly owned within the Pension LLC. None of the gain will be taxable to the taxpayer or the pension plans. The original contribution and gains will be reinvested into additional real estate deals within a tax environment that is tax deferred until distribution at retirement.

The strategy outlined above is an effective method for real estate investors engaged in buy and “flip” projects to reposition the investments on a more tax-advantaged basis. The tax results are significant. The taxpayer with a “day job” can use this strategy to accumulate wealth on a tax deferred basis. The professional real estate investor can use this strategy to minimize taxation while reinvesting into new projects.

Q: How will negative interest rates affect the price of gold?
A: On a fundamental level and for obvious reasons, negative interest rates are another reason to own precious metal assets: they refute the objection that gold does not earn interest.

Q: Why have the BOJ and ECB gone to negative interest rates?
A: Officially it's just a ramping up of the low and then zero interest rate policy designed to stimulate the economy, increase GDP and promote full employment.

Q: But Japan has been following this policy for twenty years without success. Why the continuation and ramping up?
A: I am tempted to quote Einstein: Doing the same thing over and over and expecting a different result is the definition of insanity.

Q: Are you saying that the world’s central bankers are stupid and insane?
A: No. The people that actually control and own them know exactly what they are doing, why and what the consequences will be. They are among the smartest. It is just that they have a different agenda. This was made clear to me during a 3 hour lunch on the top floor of the Bank of America building in San Francisco. I got the invite from the recently appointed president of a regional Fed bank. He previously was a vice president of Wells Fargo bank. They have their own agenda.

Q: And what is that?
A: To advance the interests of the owners. This was expressly stated in letters from the president of the ABA to his member banks in the decades leading up to founding the Fed. It is the same policy today. They only have one central policy: advance the interests of the major banks that own them. Everything else is camouflage.

Q: How do negative interest rates advance the interest of the owners of the major banks?
A: It will speed up the collapse of the existing monetary system. It is an attempt to control the timing of the collapse and therefore control what happens afterwards. I do not think they will succeed. I think the future will be more prosperity and freedom for all of mankind. But then, I have always been an optimist. The trend over the last 50, 150 and 500 years has clearly been one of increasing freedom. The Soviet Union and chattel slavery has faded and now most women can vote. The information economy dictates a free flow of information. It could not prosper otherwise. The communist leaders of the USSR and Red China understood this. We should too.

by Arthur Fixed

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