Readers’ forum: Foreign profits

I have recently been approached by a high net worth husband and wife who have financial interests in several jurisdictions. They have US passports and are of Korean heritage but both of them live in the UK and I am certain that they are UK tax resident.

The husband is UK domiciled but the wife is not and will soon fall foul of the seven out of nine-year rule.

They are limited partners in a NY LLC which holds residential real estate. They plan to incur very significant costs in improving the property (in the region of $1m) and will then rent it out before selling it. For US tax purposes they are treating the distributions from the LLC (both in respect of rent and the ultimate disposal proceeds) as a return of capital.

I am not advising on the US tax aspects but would like to...