Chapter 750 - 471: Taxes 2

Chapter 750: Chapter 471: Taxes 2

However, under normal circumstances.

Individual Indigenous People share certain similarities with other United States citizens when it comes to taxes.

Although tribes as a whole enjoy tax-exempt status, individual Indigenous People, like other United States citizens, are still required to pay federal income tax to the Internal Revenue Service as stipulated by law.

But here’s the key part.

If an Indigenous Person’s income is derived from land held in trust by the government for their benefit—for example, revenue from a casino operated by a tribe on such trust land—then that related income is not subject to federal taxes.

In addition, Indigenous People on reservations are also typically exempt from U.S. property taxes.

The reason for this is that most of this land is held in tax-exempt trusts.

The very root of the land ownership rights determines this special status regarding property tax payments.

This arrangement not only reflects respect for and protection of Indigenous land rights but also provides a more lenient tax environment for the utilization of land resources and economic development.

However, there are clear boundaries. If an Indigenous Person owns land that is not held in trust or is located off-reservation, they are required to pay property taxes according to normal regulations.

This means that as long as Indigenous People don’t leave their reservation or spend money outside of it, the IRS has little authority over them.

As for Feng Shan’s troubles, Jeff suddenly had a brilliant idea, his eyes sparkling with excitement as he grew eager to share it.

"Buddy, I have a great suggestion regarding the taxes for the River Beach and your future fishing fleet. How about you hear me out?"

"Of course!" Feng Shan nodded, curious to hear what this great idea was.

"Let’s go grab a beer over there and talk it over," Jeff said, pointing to an open-air beer truck across the street by the sea.

A few round tables and chairs were set up around the beer truck.

Some people were sitting there, leisurely drinking beer and enjoying the evening sea breeze.

The three of them then crossed the road and found a round table to sit at.

At that moment, pieces of ice on the sea, carried by the current, slowly bumped against the seawall before retreating with a crisp SPLASH.

The sound was exceptionally clear in the quiet night.

It was as if the sea were performing a unique symphony.

Jeff walked over to the beer truck.

He ordered three craft beers, scanned the menu, and also ordered some popular bar snacks like french fries, fried fish nuggets, and grilled reindeer sausage.

The nighttime temperature in Juno hovered around minus five degrees Celsius (23°F).

It wasn’t the biting cold of the Far North Tundra.

The cool sea breeze, like a gentle hand, slowly caressed their faces, bringing a refreshing chill.

The three of them drank their beer contentedly while quietly admiring the charming night view of the fjord.

The moonlight scattered across the drifting ice on the water, making it shimmer and sparkle.

The distant mountains were faintly visible in the darkness, creating a beautiful nocturnal panorama.

All of it came together to create a unique atmosphere with a distinct charm.

"Feng, here’s what I’m thinking." Jeff tilted his head back and took a large gulp of beer, letting out a satisfied sigh. He wiped his mouth with the back of his hand, cleared his throat, and said, "Alaska may not have state sales tax or personal income tax, but fishing operations have to pay hefty federal taxes, right?"

Feng Shan grunted and nodded, a hint of resignation in his eyes.

The River Beach’s earnings from the past two crab seasons had indeed been substantial.

Take the snow crab season, for example.

He was crystal clear on the details of its income, expenses, and taxes.

Over the entire snow crab season, the River Beach’s total revenue had reached $25.246 million.

However, after deducting all the expenses, the actual profit was significantly reduced.

First, there was vessel depreciation. To ensure every trip out to sea was a successful fishing operation, the vessel required regular maintenance and equipment upgrades, which was no small expense.

The crew’s hard work during the fishing season also came with salaries, another major expense.

Then there was the 30% fishing tax and the 10% snow crab-specific tax. These two taxes alone ate up a huge portion of the revenue.

On top of that, there were federal personal income tax and federal corporate income tax.

All these taxes combined caused the take-home profit to plummet.

When all was said and done, Feng Shan was left with only $6.8 million.

Out of over twenty-five million in revenue, only a little over six million remained. The difference was staggering.

After all, he had invested his own hard-earned cash into purchasing and maintaining the vessel, paying labor costs, and covering all sorts of depreciation. Yet the IRS, which had contributed nothing, effortlessly took more than half the profits.

’It would be a lie to say I don’t feel bitter about it,’ he thought.

Feng Shan had been constantly trying to figure out how to legally reduce his tax burden.

"What’s your plan?" Feng Shan asked in a low voice, his eyes full of anticipation.

Jeff smiled faintly.

He picked up his beer, took a leisurely sip, and savored the malty aroma that filled his mouth before speaking unhurriedly. "I have two methods."

He then paused, deliberately building suspense to whet Feng Shan’s appetite, before continuing.

"The first is to have the company that owns the River Beach join an Indigenous Company. As you know, Indigenous People get some special treatment on tax policy. Then, you make donations to the Alaska Native Settlement Trust—the ANST—through that Indigenous Company. If you handle it correctly, you can apply for federal tax-exempt status."

"How so?" Feng Shan was instantly intrigued. He leaned forward, eager to hear Jeff explain the method in detail.

Jeff put down his beer mug, cleared his throat, and began to explain.

"The Alaska Native Settlement Trust, or ANST, was established under the authority of the Alaska Native Claims Settlement Act. It’s a special trust institution, formed under the leadership of an Alaska Native Corporation."

He paused after speaking, his gaze sweeping over Feng Shan’s face to ensure he was listening attentively before he continued.

"Essentially, an ANST is a type of private permanent fund. Its original purpose is to promote the health, education, and welfare of its beneficiaries—that is, the shareholders of the Alaska Native Corporation. What’s more, this fund is special because it can be passed down through generations, providing long-term, stable support for the Indigenous community."

Jeff picked up a napkin from the table, wiped his mouth, and continued.

"Here’s the key part. According to the provisions of the Tax Cuts and Jobs Act and the U.S. Tax Reform Bill, any donation an Alaska Native Corporation makes to an Alaska Native Settlement Trust, or ANST, is eligible for tax benefits."

"The fishing company that owns the River Beach can do the same." Jeff leaned forward, looking at Feng Shan with a confident gaze. "By joining an Indigenous Company, making donations, and applying for federal tax-exempt status, you can lighten your tax burden to a certain extent."

At this point, Feng Shan basically understood.

Jeff’s idea was for the Crown Colony Fishing Company to join an Indigenous Company—either by buying shares or through an acquisition, becoming a subsidiary—and then make donations to an ANST through that Indigenous Company to obtain tax reductions.

Feng Shan narrowed his eyes slightly, quickly weighing the pros and cons in his mind.

"If we do that, how much can be deducted?"

"I’m not too sure about that. I’ll have to call my company’s CFO to get the details."

Jeff admitted frankly.

Although he knew this method could potentially reduce the tax burden, he didn’t actually know the specific details of the deduction.

With that said, he took out his phone and dialed a number.

He then stood up and walked over to a relatively quiet corner

so he could speak with the CFO more clearly.

A little while later, Jeff finished his call and returned to the table, sitting down.

His expression was a bit grim, as if the news wasn’t as optimistic as he’d hoped.

"A company can deduct cash contributions to an ANST annually, and the company does not recognize a gain or loss on such contributions. However, the deduction is limited to the company’s taxable income. Any excess can be carried forward for 15 years."

As Jeff spoke, he looked at Feng Shan with an embarrassed expression.

’The excess can be carried forward for 15 years!’

’This restriction is a bit troublesome.’

’The Crown Colony Fishing Company was just established last year.’

’It has basically no accumulated taxable income from previous years.’

’Even if we make a donation now, that donation can’t be effectively used to offset the federal taxes we currently owe.’

Feng Shan frowned slightly, lost in thought.

He gently stroked his chin, weighing the feasibility of this method.

"What’s the second method, then?"

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