As a US citizen, you absolutely need to report this capital gain on your personal tax return. The fact that your corporation is in the Cayman Islands doesn't shield you from US tax obligations - US citizens are taxed on worldwide income regardless of where it's earned. Since you and your brother likely own more than 50% of this foreign corporation, you're dealing with Controlled Foreign Corporation (CFC) rules. This means you may have had ongoing reporting obligations (Form 5471) even before the sale. The capital gain from selling your shares is definitely taxable as a long-term capital gain since you held them over a year. A few critical things to consider: 1) You may owe taxes on undistributed earnings from prior years under Subpart F or GILTI rules, 2) Don't forget FBAR filing requirements if you had signature authority over company accounts exceeding $10k, and 3) You might also need Form 8938 depending on the value of your foreign assets. I'd strongly recommend getting a qualified international tax attorney or CPA who specializes in foreign corporations. The penalties for getting this wrong can be severe - I've seen cases where people owed more in penalties than the actual tax due. This is definitely not a DIY situation given the complexity of CFC rules and international reporting requirements.

This is exactly the kind of complex international tax situation where you need professional help ASAP. Based on what you've described, you're looking at multiple compliance issues beyond just the capital gains tax. First, yes - you absolutely owe US capital gains tax on the share sale. As US citizens, you're taxed on worldwide income regardless of where the corporation is located or does business. Since you held the shares for 3+ years, it would be long-term capital gains rates. But here's the bigger issue: if you and your brother each own 50% of this Cayman corporation, you've been subject to CFC rules since day one. This likely means you should have been filing Form 5471 annually and potentially paying current US tax on certain types of corporate income even before any distributions. The penalties for missing these filings can be $10,000+ per person per year. You also need to check if you had FBAR filing obligations if you had signature authority over corporate bank accounts exceeding $10k aggregate value at any point. My strong recommendation is to immediately consult with an international tax specialist who can review your entire situation from incorporation to present. You may want to consider the IRS voluntary disclosure programs to minimize penalties if you've missed required filings. This isn't something to handle without professional guidance - the compliance requirements for foreign corporations owned by US citizens are incredibly complex and the penalties severe.

Just to add some practical advice from my experience as a small business owner: Make sure you're keeping VERY detailed records of your business use for any vehicle you're claiming Section 179 on. The IRS looks closely at vehicle deductions. I recommend keeping a mileage log (there are good apps for this) and documentation of business activities conducted using the vehicle. This is especially important if you're using the vehicle for both business and personal purposes, as you'll need to calculate the percentage of business use. Also, if you're on the border with the 6,000 lb GVWR requirement, it might be worth looking for a slightly heavier vehicle just to be safe. My accountant advised me to avoid vehicles that are exactly at 6,000 since there's no wiggle room if the IRS questions it.

Just to throw a wrench in things - has anyone looked into the electric vehicle tax credits instead of Section 179? I was originally going for a heavy SUV for the Section 179 deduction but ended up with an EV truck because the tax credit structure was more beneficial for my situation. With some commercial EVs, you can get up to $7,500 tax credit as a business AND still take depreciation. Haven't seen this mentioned yet but might be worth considering alongside the GVWR discussion.

Has anyone dealt with a situation where the insurance payout was MORE than what you're spending on the replacement vehicle? I got $28,500 for my totaled work truck but only need to spend about $24,000 on the replacement. Do I still report everything on Form 4684 and 4797? Will I have to pay tax on the $4,500 difference?

Another important detail to keep in mind - make sure you're calculating your adjusted basis correctly when determining the gain. For business vehicles, you need to account for all the depreciation you've claimed over the years. Your adjusted basis is typically your original purchase price minus all depreciation deductions you've taken. So if you bought the truck for $30,000 and claimed $18,000 in depreciation over 4 years, your adjusted basis would be $12,000. If insurance pays you $25,000, you'd have a $13,000 gain to potentially defer. The depreciation recapture portion (up to the amount of depreciation you claimed) gets treated as ordinary income, while any remaining gain is typically capital gain. Also worth noting - if you're using the truck for both business and personal use, the involuntary conversion rules only apply to the business portion. You'll need to allocate the gain based on your actual business use percentage. Keep good records of your business mileage to support this if the IRS ever questions it.

The SECURE Act 2.0 rollover provision is a game-changer that I think more people need to know about. The ability to move unused 529 funds to a Roth IRA essentially eliminates the biggest downside of overfunding these accounts. One thing to note though - the rollover is subject to annual Roth IRA contribution limits, so you can't move the full $35,000 at once. You're limited to the beneficiary's annual IRA contribution limit each year, which means it could take several years to fully utilize this option. I've been using a hybrid approach for investment allocation - keeping accounts for younger beneficiaries (my great-nieces and nephews who are still toddlers) in aggressive growth portfolios since they have potentially 40+ years before needing the funds. For beneficiaries closer to college age, I'm using moderate allocations rather than age-based since there's always the possibility the money gets redirected to a younger family member. Regarding state plans, Utah and Nevada consistently rank highly for low fees and good investment options, making them popular choices for rollovers after capturing initial state tax benefits. Just make sure to check your state's recapture rules before rolling over too quickly.

This has been an incredibly informative discussion! I'm relatively new to thinking about 529 plans beyond basic college savings, and the multi-generational wealth transfer angle is fascinating. One question I haven't seen addressed: Are there any practical limits to how many 529 accounts one person can own across different states? I'm wondering if there's a strategy benefit to having multiple smaller accounts in different state plans versus fewer larger accounts, especially when considering the flexibility to optimize for different beneficiaries' timelines and needs. Also, with all this talk about the SECURE Act 2.0 Roth rollover provision, I'm curious about the mechanics. Does the beneficiary need to have earned income to be eligible for the rollover, similar to regular Roth IRA contributions? This could be a consideration for younger beneficiaries who might not have qualifying income yet. The state tax benefit optimization strategy is really clever - start local for immediate deductions, then potentially roll to better investment platforms. I'm going to look into my state's specific recapture rules before moving forward.

Has anyone used the free IRS Taxpayer Advocate Service for help with this? I'm trying to figure out the S corp election forms too but can't afford to pay for help.

Just want to echo what others have said about Form 2553 being sufficient for single-member LLCs electing S corp status. I went through this process in 2023 and filed only Form 2553 - no issues with the IRS at all. One tip I'd add is to make sure you have your EIN ready when filling out Form 2553, and double-check that all your business information matches exactly what's on file with the IRS. Also, consider sending it certified mail or filing electronically if possible to have proof of timely filing. The March 15th deadline is firm, so don't wait until the last minute. If you miss it, you'll have to wait until the following tax year unless you qualify for late election relief (which requires jumping through additional hoops). Good luck with your election!