Hawaii International Real Estate Council 2016

Transcription

1 Hawaii International Real Estate Council 2016 Tetsuko S. Ho, C.P.A., Inc Kalakaua Ave., Suite 910 Honolulu, Hawaii Tel: (808) Fax: (808) Table of Contents Individual Taxpayer Identification Number (ITIN) Federal Employer Identification Number (FEIN) Hawaii Tax ID Number (GET/TAT) Real Property Tax FIRPTA/HARPTA 1031 Exchange Property Title Estate and Gift Tax Foreign Financial Asset Disclosure 1

2 Individual Taxpayer Identification Number (ITIN) What is an ITIN? An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. Who Needs an ITIN? IRS issues ITINs to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs. Most common reasons to obtain ITIN for real estate related transaction: Rental Income (Subject to 30% withholding unless ITIN is obtained. Form W-8ECI) Appendix A Disposition of Real Estate (Should apply together with FIRPTA form 8288/8288A otherwise Stamped copy B of Form 8288A (Proof of tax payment) will not be sent to the seller.) Acquisition (Buyer) of real estate when seller is a foreign person subject to FIRPTA withholding, Form 8288/8288A (Buyer is responsible to withhold and submit FIRPTA to IRS) How to Apply for an ITIN Documents needed to apply for ITIN: ITIN Application (Form W-7: Appendix B) Note: Preparer needs to be careful to check appropriate box reason for applying ITIN (a,b & h). Original Passport or Certified copy of passport * Supporting documents: Tax Return OR - Rental: Property management agreement AND letter from property manager requesting ITIN. - Disposition: Purchase contract, Settlement Statement AND Copy of Form 8288/8288A * Passport must be certified by one of the followings: Consulate General of Japan in Honolulu U.S. Embassy/Consulate in Japan (Appointment only) Appendix C IRS Office in Honolulu (300 Ala Moana Blvd. Honolulu, HI Appointment only) Certified Acceptance Agent Bella Tax & Accounting Hiroko Keister Crowe Horwath Trusta Ryosuke Tsuji 2

3 Processing Time 6 weeks for the IRS to process ITIN application (8 to 10 weeks if submitted during peak processing period: January 15 through April 30) Note: Starting from 2016, ITIN will expire if not used on a federal income tax return for any year during a period of five consecutive years. Employer Identification Number (EIN) What is an EIN? An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Who needs an EIN? Business entity is required to have an EIN if you have federal tax reporting or filing requirements. Most common reasons to obtain EIN for real estate related transaction: Rental Income (Subject to 30% withholding unless EIN is obtained) Disposition of Real Estate To open a bank account 3

4 How to apply for an EIN? Document needed to apply for EIN: EIN Application (Form SS-4) Appendix D Note: Verify company s fiscal year end and responsible party s name. Method of application Online (Available immediately) Telephone (Available immediately) Fax (Available within 4 business days) Mail (4 weeks) International Applications (Foreign Corporation) must call the IRS to obtain EIN. ( ) EIN assignment letter from the IRS is sent to the taxpayer within 4 weeks. Appendix E Hawaii Tax ID Number (GET/TAT License) General Excise Tax (GET) 4.5% Examples of income subject to GET Retail Professional Services (including consultation) Commission Rental Income Transient Accommodations Tax (TAT) 9.25% A Transient accommodation is an apartment, house, condominium, beach house, hotel room or suite, or similar living accommodation furnished to a transient person for less than 180 consecutive days in exchange for payment in cash, goods, or services. (Hotel operation, VRBO, Airbnb) 4

5 Filing Frequency Semi-annually: If you pay less than $2,000 in tax per year Quarterly: If you pay more than $2,000 but less than $4,000 in tax per year Monthly: If you pay more than $4,000 in tax per year Due Date Note: When assisting sale of rental property, confirm with property manager that all necessary (including final period) GET/TAT returns will be paid and filed. On or before the 20 th day of the calendar month following the close of the filing period. Return must be filed even if no income for that period. Penalty Failure to file a return on time is assessed on the tax due at a rate of 5% a month, or part of a month, from the due date to the filing date, up to maximum 25%. Interest at the rate of 2/3 of 1% a month, or part of a month. How to Obtain GET/TAT License File Form BB-1 (Appendix F)via paper or online - How to File Form G-45 (GET) and Form TA-1 (TAT) can be filed/paid online. 5

6 Real Property Tax Tax Rate for Fiscal Year July 1, 2015 to June 30, 2016 Appendix G Class Rate Residential $3.50/$1,000 net taxable property (0.35%) Residential A* $6.00 /$1,000 net taxable property (0.6%) Hotel and Resort $12.90 /$1,000 net taxable property (1.29%) * Residential A is a residential property with assessed value of $1,000,000 or more and does not have a home exemption. Example: Residential vs. Hotel and Resort: Property Assessed value = $1,200,000 Residential Use: $ 7,200 ($1,200,000/$1,000) x $6.00 Hotel and Resort: $15,480 ($1,200,000/$1,000) x $12.90 Difference: $ 8,280 Note: Confirm with owner the use of property (Residential or Hotel, i.e. Trump, Ritz Carlton, Waikiki Beach Tower, Ilikai and etc.) 6

7 Declaration Regarding Condominium Use Appendix H If the property is used as a Residential but the property is classified as Hotel & Resort, owner should file a Declaration Regarding Condominium Use to correct the classification. City and County of Honolulu is sending out notices to owners of mixed used condominium who are claiming residential rate to update their record. Appendix I Home Exemption (Residents Only) Basic Exclusion: $80, years and older: $120,000 Qualification: You own and occupy the property as your principal home. (Principal home requirement may be evidenced by: occupancy of a home in the city for more than 270 calendar days, registered to vote, filing tax return as a resident of the State of Hawaii. File Form P-3 or apply online by September 30. Check your own house to see if you currently have home exemption. -> 7

8 Caution: Real property tax bill may not be delivered to new owner s address if sales transaction takes place a few months before real property tax due date. Remind new owner of property that due date of real property tax payment is February and August 20th every year. FIRPTA/HARPTA What is FIRPTA/HARPTA withholding? Foreign person who dispose U.S. real property interest is subject to Income tax withholding. Appendix J FIRPTA (Federal) 15% of Gross sales price HARPTA (State) 5% of Gross sales price FIRPTA Exempt from FIRPTA if sales price is less than $300,000 and buyer acquires the property for use residence. *You or a member of your family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. The 10% rate will still apply for those transactions in which the property is to be used by the buyer as a residence, provided the sales price does not exceed $1,000,000. Foreign person includes: nonresident alien individual and foreign corporation. 8

9 Withholding Certificate Seller can eliminate or reduce withholding amount by obtaining a withholding certificate from the IRS/State. Withholding certificate can be applied if there is no gain or maximum tax liability is less than the tax otherwise required to be withheld. Federal Appendix K File Form 8288B to request for withholding certificate. It takes about 90 days for the IRS to reply. Most escrow company does not hold the FIRPTA fund after the closing date. State Appendix L It has to be a loss to apply for withholding certificate from State Tax Office. Form N-288B must be filed 10 business days before the closing date. Foreign Corporation is exempt from HARPTA if company is registered with DCCA Early Refund If applying for withholding certificate is not an option, seller can request for an early refund of FIRPTA/HARPTA. Processing time is 4-6 months. Note: Tax return must be filed in the following year even if you obtained a withholding certificate or requested for an early refund. If transaction takes place after September, it may be better to request refund through normal tax filing. 9

10 1031 Exchange What is a 1031 Exchange? Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free. What Properties Qualify? Must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. 10

11 Other Requirement for 1031 Exchange Replacement property must be identify within 45 days after you sell the old property and exchange must be completed no later than 180 days after the sale of the exchange property OR the due date (with extension) of the income tax return, whoever is earlier. Reverse 1031 Exchange Buy new property first and sell old property later. Safeharbor format Taxpayer have 180 days to sell the old property. Traditional format Taxpayer have 6 years to sell the old property. Election to choose safeharbor or traditional format must be made when 1031 was initially set up (purchased). 11

12 Different Tax Treatment in Japan 1031 exchange is a tax-deferred transaction in the United State, but it may be a taxable event in Japan. In this case, there will be no foreign tax credit to offset tax in Japan. Example: - Purchased property in 2010 for $600,000 - Exchanged for $1,000,000 property in Sold exchanged property for $1,200,000 in Assuming tax rate of 20% Some exceptions apply Property Title Property Title Tenancy by the Severalty: Tenancy by the severalty is held by one person. Tenancy by the Entirety: Tenancy by the Entirety is held by husband and wife. Title automatically transfer to surviving spouse upon death. Joint Tenancy: Joint Tenancy is equally owned by two or more people. Title automatically transfers to co-owner upon death. Tenancy in Common: Tenancy in Common owned by two or more individual/rlt/todd/llc/inc. Does not need to be equal share. 12

13 Type of Ownership Individual (Also LLC-Disregarded entity, RLT-Grantor Trust) Appendix M Subject to FIRPTA/HARPTA if nonresident Unlimited liability (Need adequate insurance coverage) Domestic Limited Liability Company (LLC) Pass-through: Subject to FIRPTA/HARPTA if nonresident Limited liability Taxed as Corporation: Not Subject to FIRPTA/HARPTA Domestic Corporation Not subject to FIRPTA/HARPTA Limited liability Foreign Corporation Subject to FIRPTA/HARPTA (HARPTA exempt if registered at DCCA) Need adequate insurance coverage To avoid probate, you may consider the following: Transfer on Death Deed (TODD) Hawaii allows Transfer on Death Deed where it allows you to select beneficiary who will receive your property upon death, thus eliminating cost of creating a will or a trust and avoid probate at the same time. TODD is available for tenancy by the severalty and tenancy in common. Additional planning may be necessary in case of owner s incapacitation (i.e. durable power of attorney). Payable on Death Account (POD) POD account is a type of bank account where it allows you to select the beneficiary and money will transfer upon death without going to probate. Revocable Living Trust The out-of-court affidavit procedure (simplified probate) is available in Hawaii if the value of property the deceased person owned is $100,000 or less. 13

14 Capital Gain Tax Rate: Individual (nonresident) vs. Corporation If property is held for more than 1 year, long-term capital gain tax rate applies: Individual - Federal: 0% - 20% - State: 7.25% Corporation - Federal: Marginal income tax rates (15% - 39%) - State: 4% Corporation Federal Marginal Income Tax Rate Transfer of Ownership Ownership transfer or title name change is considered taxable event and must be transferred at fair market value and reported on tax return. Loss is not recognized if transaction is between related parties. 14

15 Estate and Gift Tax Tax Rate Maximum Estate and Gift Tax rate is 40%. Exclusion Amount Resident Applicable exclusion amount for U.S. resident is $5,450,000 in Non-resident Applicable exclusion amount for Non-resident alien is $60,000. Non-resident alien must file Form 706NA if he/she had a real property located in the U.S. and the fair market value of the property is more than $60,000. Japan U.S. Estate, Inheritance and Gift Tax Treaty can be used to reduce tax liability. Example of Tax Treaty Benefit Hawaii property $1,000,000 Japan Asset $4,000,000 Worldwide asset $5,000,000 U.S. Estate and Gift Tax without tax treaty $ 322,400 [((1,000,000 60, ,000) x 39%) + 248,300] U.S. Estate and Gift Tax with tax treaty $ 0 Exclusion available: [$5,450,000 x (1,000,000/5,000,000)] = $1,090,000 15

16 Foreign Financial Asset Disclosure U.S. person are required to report their foreign financial assets every year if they meet the filing threshold. There are two different filing requirements. Report of Foreign Bank and Financial Accounts (FBAR) Statement of Specified Foreign Financial Assets (FATCA) 16

17 Report of Foreign Bank and Financial Accounts (FBAR) U.S. Dept. of Treasury Financial Crimes Enforcement Network oversees FBAR. Every United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. United States person includes: U.S. citizen (including minor children), U.S. residents, and Domestic entities Foreign Financial Account includes: Bank accounts, investments accounts, retirement or life insurance account with cash surrender value. Also includes foreign financial accounts held under foreign corporation in which you have control. Continue(FBAR): Due Date: Penalty: 2015: June 30 th (No Extension) 2016: April 15 th (6 month extension available) Non-willful: up to $10,000 per violation Willful: Greater of $100,000 or 50% of the balance in the account at the time of the violation. Criminal penalties may also apply. 17

18 Statement of Specified Foreign Financial Assets (FATCA) U.S. Dept. of Treasury Internal Revenue Service Certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding the reporting threshold must file Form 8938 and attach to the taxpayer s annual income tax return. United States person includes: U.S. citizen (including minor children), U.S. residents. Domestic entity are exempt for now. Continue (FATCA): Reporting Threshold: Highest Balance is or year End Balance is Living in U.S. More than More than Single 75,000 50,000 Married 150, ,000 Living abroad Single 300, ,000 Married 600, ,000 18

19 Continue (FATCA): Foreign Financial Account includes: Bank accounts, investments accounts, retirement or life insurance account with cash surrender value. Also includes loan to foreign person, interest in foreign corporation/partnership and other assets not held in an account. Due Date: Income tax return due date including extension. Penalty: $10,000 (and a penalty up to $50,000 for continue failure after IRS notification). Underpayment of tax resulting from nondisclosed foreign financial assets will be subject to additional understatement penalty of 40 percent. Continue (FATCA): Compliance procedure There are two procedure currently available for those who failed to report foreign financial assets in prior years. Streamlined Procedure Voluntary Disclosure Program 19

20 Streamlined Procedure Streamlined procedure is available for taxpayers who failed to report foreign financial assets in prior years due to non-willful conduct. Penalty: 5% of the highest aggregate balance/value of the taxpayer s foreign financial assets during the past 6 years. Must file: Past three years of amended income tax return and most recent six years of foreign financial asset reporting (FBAR) Different streamlined procedure is available for U.S. taxpayer residing outside the U.S. There is no penalty under this procedure if U.S. taxpayer did not have U.S. abode and physically outside the United States for at least 330 full days in any of the most recent three years for which the U.S. tax return due date has passed. Voluntary Disclosure Program Voluntary Disclosure Program is available for taxpayer who failed to report foreign financial asset in prior years and uncertain as to if he/she will be considered non-willful and wants to avoid criminal prosecution. Penalty: 27.5% of the highest aggregate value of the taxpayer s foreign financial assets during the past 8 years (Penalty increase to 50% if the financial institution has been publicly identified as being under investigation by the IRS or cooperating with the government in connection with those accounts.) 20

21 Form 3520 Foreign Gifts and Inheritance In general, a foreign gift is money or other property received by a U.S. person from a foreign person that the recipient treats as a gift or inheritance and excludes from gross income. A foreign person is a nonresident alien individual or foreign corporation, partnership or estate. You must file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, if, during the current tax year, you treat the receipt of money or other property above certain amounts as a foreign gift or Inheritance. Gifts or bequests valued at more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate); 21

22 Form W-8ECI (Rev. February 2014) Department of the Treasury Internal Revenue Service Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States Section references are to the Internal Revenue Code. Information about Form W-8ECI and its separate instructions is at Give this form to the withholding agent or payer. Do not send to the IRS. Note. Persons submitting this form must file an annual U.S. income tax return to report income claimed to be effectively connected with a U.S. trade or business (see instructions). OMB No Do not use this form for: Instead, use Form: A beneficial owner solely claiming foreign status or treaty benefits W-8BEN or W-8BEN-E A foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U.S. possession claiming the applicability of section(s) 115(2), 501(c), 892, 895, or 1443(b).... W-8EXP Note. These entities should use Form W-8ECI if they received effectively connected income and are not eligible to claim an exemption for chapter 3 or 4 purposes on Form W-8EXP. A foreign partnership or a foreign trust (unless claiming an exemption from U.S. withholding on income effectively connected with the conduct of a trade or business in the United States) W-8BEN-E or W-8IMY A person acting as an intermediary W-8IMY Note. See instructions for additional exceptions. Part I Identification of Beneficial Owner (see instructions.) 1 Name of individual or organization that is the beneficial owner 2 Country of incorporation or organization HANAKO YAMADA 3 Name of disregarded entity receiving the payments (if applicable) 4 Type of entity (check the appropriate box): Individual Corporation Partnership Simple trust Complex trust Estate Government Grantor trust Central bank of issue Tax-exempt organization Private foundation International organization 5 Permanent residence address SAMPLE (street, apt. or suite no., or rural route). Do not use a P.O. box or in-care-of address NIHON City or town, state or province. Include postal code where appropriate. Country TOKYO JAPAN 6 Business address in the United States (street, apt. or suite no., or rural route). Do not use a P.O. box or in-care-of address. 223 SARATOGA RD #1000 City or town, state, and ZIP code HONOLULU HI U.S. taxpayer identification number (required see instructions) 8 Foreign tax identifying number SSN or ITIN EIN Reference number(s) (see instructions) 10 Date of birth (MM-DD-YYYY) 1/1/ Specify each item of income that is, or is expected to be, received from the payer that is effectively connected with the conduct of a trade or business in the United States. (attach statement if necessary) RENTAL INCOME FROM 223 SARATOGA RD #1000 HONOLULU HI Part II Certification Under penalties of perjury, I declare that I have examined the information on this form and to the best of my knowledge and belief it is true, correct, and complete. I further certify under penalties of perjury that: I am the beneficial owner (or I am authorized to sign for the beneficial owner) of all the payments to which this form relates, The amounts for which this certification is provided are effectively connected with the conduct of a trade or business in the United States, Sign Here The income for which this form was provided is includible in my gross income (or the beneficial owner s gross income) for the taxable year, and The beneficial owner is not a U.S. person. Furthermore, I authorize this form to be provided to any withholding agent that has control, receipt, or custody of the payments of which I am the beneficial owner or any withholding agent that can disburse or make payments of the amounts of which I am the beneficial owner. I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect. Signature of beneficial owner (or individual authorized to sign for the beneficial owner) Print name Date (MM-DD-YYYY) I certify that I have the capacity to sign for the person identified on line 1 of this form. For Paperwork Reduction Act Notice, see separate instructions. Cat. No D Form W-8ECI (Rev ) APPENDIX A

23 Form W-7 (Rev. August 2013) Department of the Treasury Internal Revenue Service Application for IRS Individual Taxpayer Identification Number For use by individuals who are not U.S. citizens or permanent residents. See instructions. OMB No An IRS individual taxpayer identification number (ITIN) is for federal tax purposes only. FOR IRS USE ONLY Before you begin: Do not submit this form if you have, or are eligible to get, a U.S. social security number (SSN). Getting an ITIN does not change your immigration status or your right to work in the United States and does not make you eligible for the earned income credit. Reason you are submitting Form W-7. Read the instructions for the box you check. Caution: If you check box b, c, d, e, f, or g, you must file a tax return with Form W-7 unless you meet one of the exceptions (see instructions). a Nonresident alien required to get ITIN to claim tax treaty benefit b Nonresident alien filing a U.S. tax return c U.S. resident alien (based on days present in the United States) filing a U.S. tax return d Dependent of U.S. citizen/resident alien Enter name and SSN/ITIN of U.S. citizen/resident alien (see instructions) } e Spouse of U.S. citizen/resident alien f Nonresident alien student, professor, or researcher filing a U.S. tax return or claiming an exception g Dependent/spouse of a nonresident alien holding a U.S. visa h X Other (see instructions) EXCEPTION 4, DISPOSITION OF U.S. REAL PROPERTY INTEREST Additional information for a and f: Enter treaty country and treaty article number Name 1a First name Middle name Last name (see instructions) HANAKO YAMADA Name at birth if 1b First name Middle name Last name different.. 2 Street address, apartment number, or rural route number. If you have a P.O. box, see separate instructions. Applicant s C/O 1833 KALAKAUA AVE STE 910 mailing address City or SAMPLE town, state or province, and country. Include ZIP code or postal code where appropriate. HONOLULU HI Foreign (non- 3 Street address, apartment number, or rural route number. Do not use a P.O. box number. U.S.) address NIHON (if different from above) City or town, state or province, and country. Include ZIP code or postal code where appropriate. (see instructions) TOKYO JAPAN Birth 4 Date of birth (month / day / year) Country of birth City and state or province (optional) 5 Male information 1/1/1950 JAPAN X Female 6a Country(ies) of citizenship 6b Foreign tax I.D. number (if any) 6c Type of U.S. visa (if any), number, and expiration date Other JAPAN information 6d Identification document(s) submitted (see instructions) X Passport Driver s license/state I.D. USCIS documentation Other Date of entry into the United States Issued by: JAPAN No.: TH Exp. date: 12 / 31 / 2020 (MM/DD/YYYY) / / 6e Have you previously received a Internal Revenue Service Number (IRSN) or employer identification number (EIN)? X No/Do not know. Skip line 6f. Yes. Complete line 6f. If more than one, list on a sheet and attach to this form (see instructions). 6f Enter: IRSN or EIN and Name under which it was issued 6g Name of college/university or company (see instructions) City and state Length of stay Sign Here Under penalties of perjury, I (applicant/delegate/acceptance agent) declare that I have examined this application, including accompanying documentation and statements, and to the best of my knowledge and belief, it is true, correct, and complete. I authorize the IRS to disclose to my acceptance agent returns or return information necessary to resolve matters regarding the assignment of my IRS individual taxpayer identification number (ITIN), including any previously assigned taxpayer identifying number. Signature of applicant (if delegate, see instructions) Date (month / day / year) Phone number HANAKO YAMADA 10 / 21 / 2015 (808) Keep a copy for Name of delegate, if applicable (type or print) Delegate s relationship Parent Court-appointed guardian your records. to applicant Power of Attorney Signature Date (month / day / year) Phone Acceptance Agent s / / Fax Use ONLY Name and title (type or print) Name of company EIN PTIN Office Code For Paperwork Reduction Act Notice, see separate instructions. Cat. No L Form W-7 (Rev ) APPENDIX B

24 SAMPLE APPENDIX C

25 SS-4 Form (Rev. January 2010) Department of the Treasury Internal Revenue Service 1 Type or print clearly. 8a 8c 9a 2 4a 4b 6 Application for Employer Identification Number (For use by employers, corporations, partnerships, trusts, estates, churches, government agencies, Indian tribal entities, certain individuals, and others.) See separate instructions for each line. Keep a copy for your records. Legal name of entity (or individual) for whom the EIN is being requested JAPAN CORP Trade name of business (if different from name on line 1) 3 EIN Executor, administrator, trustee, care of name OMB No Mailing address (room, apt., suite no. and street, or P.O. box) 5a Street address (if different) (Do not enter a P.O. box.) 1833 KALAKAUA AVE STE JAPAN City, state, and ZIP code (if foreign, see instructions) 5b City, state, and ZIP code (if foreign, see instructions) HONOLULU HI TOKYO JAPAN County and state where principal business is located 7a Name of responsible party HANAKO YAMADA Is this application for a limited liability company (LLC) (or a foreign equivalent)? If 8a is Yes, was the LLC organized in the United States? Type of entity (check only one box). Caution. If 8a is Yes, see the instructions for the correct box to check. 12 Sole proprietor (SSN) Estate (SSN of decedent) Partnership Plan administrator (TIN) X Corporation (enter form number to be filed) 1120F Trust (TIN of grantor) Personal service corporation National Guard State/local government Church or church-controlled organization Farmers cooperative Federal government/military Other nonprofit organization (specify) REMIC Indian tribal governments/enterprises Other (specify) Group Exemption Number (GEN) if any 9b If a corporation, name the SAMPLE state or foreign country State Foreign country (if applicable) where incorporated JAPAN 10 Reason for applying (check only one box) Banking purpose (specify purpose) X Started new business (specify type) Changed type of organization (specify new type) REAL ESTATE INVESTMENT Purchased going business Hired employees (Check the box and see line 13.) Created a trust (specify type) Compliance with IRS withholding regulations Created a pension plan (specify type) 11 Date business started or acquired (month, day, year). See instructions. Closing month of accounting year DECEMBER Other (specify) 14 If you expect your employment tax liability to be $1, Highest number of employees expected in the next 12 months (enter -0- if none). or less in a full calendar year and want to file Form 944 If no employees expected, skip line 14. annually instead of Forms 941 quarterly, check here. (Your employment tax liability generally will be $1,000 Agricultural Household Other or less if you expect to pay $4,000 or less in total wages.) If you do not check this box, you must file Form 941 for every quarter. 15 First date wages or annuities were paid (month, day, year). Note. If applicant is a withholding agent, enter date income will first be paid to nonresident alien (month, day, year) Indicate principal line of merchandise sold, specific construction work done, products produced, or services provided. REAL ESTATE 18 Has the applicant entity shown on line 1 ever applied for and received an EIN? Yes X No If Yes, write previous EIN here Third Party Designee Signature 7b SSN, ITIN, or EIN FOREIGN PERSON - NOT REQUIRED 8b If 8a is Yes, enter the number of LLC members Complete this section only if you want to authorize the named individual to receive the entity s EIN and answer questions about the completion of this form. Designee s name Designee s telephone number (include area code) Address and ZIP code Yes Check one box that best describes the principal activity of your business. Construction X Rental & leasing Transportation & warehousing Real estate Manufacturing Finance & insurance X ( ) Designee s fax number (include area code) ( ) Under penalties of perjury, I declare that I have examined this application, and to the best of my knowledge and belief, it is true, correct, and complete. Applicant s telephone number (include area code) Name and title (type or print clearly) HANAKO YAMADA, REP. DIRECTOR ( 808 ) Applicant s fax number (include area code) ( ) HANAKO YAMADA Date 10/21/ For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. Cat. No N Form SS-4 (Rev ) No Health care & social assistance Accommodation & food service Other (specify) Yes No Wholesale-agent/broker Wholesale-other Retail APPENDIX D

26 SAMPLE APPENDIX E

27 ATTACH CHECK OR MONEY ORDER AND FORMS VP-1 AND VP-2 HERE FORM BB-1 (Rev. 2014) STATE OF HAWAII BASIC BUSINESS APPLICATION (Note: Form BB-1 can be filed electronically through Hawaii Business Express at hbe.ehawaii.gov) TYPE OR PRINT LEGIBLY 1. Type of application (Check the appropriate box(es) that best describes your purpose in filing this application) X General Excise/Use GE One-Time Event Seller s Collection Use Tax Only This Space For Office Use Only 02 Identification number W - UI Registration Number X Transient Accommodations Liquid Fuel Distributor Retail Tobacco Permit Liquor Employer s Withholding Liquid Fuel Retail Dealer Cigarette and Tobacco (Non-Retail) Unemployment Insurance Rental Motor Vehicle, Tour Vehicle, and Car-Sharing Vehicle 2. Taxpayer s/employer s Name (Individuals, enter Last, First, Middle Initial) 3. Trade name or doing business as (DBA) name, if any HANAKO YAMADA 4. FEIN 5. Type of ownership X Sole Proprietorship Corporation S Corporation Other (Explain) Federal Agency General Partnership Limited Partnership LLC Single-Member LLC 6. Date Business Began in Hawaii (MM/DD/YYYY) 7. Date of Organization (MM/DD/YYYY) 8. State of Organization 10/1/ Accounting period, check only one 10. Accounting method, check only one 11. NAICS(See Instructions) and business activity X Calendar Year X Cash Accrual Fiscal Year ending (MM/DD) / REAL ESTATE RENTAL 12. Mailing address C/O Street address or P.O. Box City State Postal/Zip Code C/O 1833 KALAKAUA AVE STE 910 HONOLULU HI Physical location of business in Hawaii Street address City State Postal/Zip Code SAMPLE 1777 ALA MOANA BLVD APT 1111 HONOLULU HI If no physical business location in Hawaii, provide the name, address, and telephone number of the individual performing services in Hawaii 15. Phone Number Business Residential Fax address ( 808 ) ( ) ( ) 16. For GE One-Time Event applicants ONLY: Name of the Event (See Instructions) 17. Does all or part of this business qualify for a disability exemption? (See Instructions) Yes No 18. Name of Parent Corporation 19. Parent Corp. s FEIN 20. Parent Corporation s Mailing Address 21. List all sole proprietors, partners, members, or corporate officers (See Instructions) ATTACH A SEPARATE SHEET OF PAPER IF MORE SPACE IS REQUIRED. SSN Name (Last, First, Middle Initial) Title Residential Address Contact Phone No. YAMADA, HANAKO OWNER NIHON, TOKYO JAPAN ( 03 ) No. of establishments or branches in Hawaii 24. Date employment began in Hawaii 22. (a) Did you acquire an existing business? Yes X No 0 N/A / / (b) If yes, was all or part of the business acquired? 25. No. of employees on date employment began 26. Date first wages paid in Hawaii (c) When was it acquired? (MM/DD/YYYY) (d) Previous owner s/business name, dba, address, Hawaii Tax I.D. No., 0 N/A / / and UI Account No. (If you answered No to (a) enter N/A) 27. If no employees, when do you anticipate hiring employees? N/A / / 28. How many Retail Tobacco Permits are you applying for? Attach a list of (1) the name and address of each retail location you are obtaining a permit for, and (2) for those retail locations that are vehicles, include the Vehicle Identification Number (VIN) of each vehicle. Have you ever been cited for either a tobacco and/or liquor violation? Yes No 29. Attach a list, by island, of the address(es) of your rental real property, noting TA, if transient accommodations, and/or the address(es) of your rental motor vehicle, tour vehicle, or car-sharing vehicle (RVST) and your Liquid Fuel Retail Dealer s Permit (Fuel) business locations, noting the location as either RVST, or Fuel. 30. (a) How many TA units are you registering for? 33. Enter the amount from line i. of the registration fee worksheet on the X 1-5 units 6 or more units back of the form here and on the Total Payment line for (b) Date TA activity began in Hawaii Form VP-1, Tax Payment Voucher. Attach Form VP-1 to this form. $ / 1 / Enter the amount from line o. of the registration fee worksheet on the 31. Date RVST activity began in Hawaii back of the form here and on the Total Payment line for Form VP-2, / / Miscellaneous Fee Payment Voucher. Attach Form VP-2 to this form. $ 32. Filing period, Check 1 box for each tax type applicable TOTAL REGISTRATION FEE DUE Add lines 33 and 34. Attach Tax Type Mo Qtr Semi 35. a check or money order made payable to HAWAII STATE TAX a) GE/Use X COLLECTOR in U.S. dollars drawn on any U. S. Bank $ b) GE One-Time Event CERTIFICATION: The above statements are hereby certified to be correct to the best of the c) TA X knowledge and belief of the undersigned who is duly authorized to sign this application. d) RVST e) WH Mail the completed application to: Signature of Owner, Partner or Member, Officer, or Agent HAWAII DEPARTMENT OF TAXATION HANAKO YAMADA OWNER 10/1/15 P.O. Box 1425 Print Name Title Date Honolulu, HI Form BB-1 02 APPENDIX F

28 REAL PROPERTY TAX RATES In HAWAII FISCAL YEAR JULY 1, 2015 To JUNE 30, 2016 * Tax Rate County Class Per $1,000 Net Taxable Property HONOLULU 1 Residential $ Commercial Industrial Agricultural Preservation Hotel and Resort Public Service Vacant Agricultural Residential A 6.00 Tax Rate Tax Rate County Class Per $1,000 Net Per $1,000 Net Taxable Building Taxable Land MAUI 1 Residential $ 5.40 $ Apartment Commercial Industrial Agricultural Conservation Hotel and Resort Homeowner Time Share Commercialized Residential HAWAII 1 Residential $ $ Apartment Commercial Industrial Agricultural or Native Forests Conservation Hotel and Resort Homeowner Affordable Rental Housing * Tax Rate County Class Per $1,000 Net Taxable Property KAUAI 1 Residential $ Vacation Rental Commercial Industrial Agricultural Conservation Hotel and Resort Homestead Residential Investor Commercialized Home Use 5.05 Administration / Technical Branch Real Property Assessment Division Department of Budget and Fiscal Services City and County of Honolulu June 23, 2015 * Single (one) rate for each class APPENDIX G

29 Parcel ID (Tax Map Key) In space above enter 12-digit Parcel ID For example: DECLARATION REGARDING CONDOMINIUM USE For Assessment Year 2017 Sec 8-7.1(c)(3), Revised Ordinances of Honolulu (This is a one-time declaration until use changes. Owner(s) must notify this office should use change) PRINT NAME CONDOMINIUM PROJECT CONDOMINIUM UNIT NUMBER HANAKO YAMADA ILIKAI 1111 ADDRESS OF CONDOMINIUM PROJECT 1777 ALA MOANA BLV 1111 HONOLULU HI MAILING ADDRESS 1833 KALAKAUA AVE SUITE 910 HONOLULU HI REAL PROPERTY ASSESSMENT DIVISION DEPARTMENT OF BUDGET AND FISCAL SERVICES CITY AND COUNTY OF HONOLULU TELEPHONE ALTERNATE TELEPHONE ADDRESS TETSUKOHO001@HAWAII.RR.COM The purpose of this declaration is to establish the general land class for the 2017 assessment year. During the one-year period beginning October 2, 2015, and ending October 1, 2016, the above referenced condominium unit was used as follows (indicate all uses that apply during this period): X I lived in the condominium unit and/or used it exclusively for my own personal use. The condominium unit was rented to one or more tenants on a month-to-month basis or for periods greater than 30 days. Attach a signed copy of the rental agreement(s) or any other written evidence indicating rental for 30 consecutive days or longer during the relevant period (long SAMPLE term lease). The condominium unit participated in a rental program or was under management in which the unit was provided for compensation to transient occupants for periods of less than 30 days (short term lease). The condominium unit may have been placed in a hotel or timeshare pool, made available by individual owners, or made available by any means where occupants rented this condominium unit for less than 30 days. Other, explain and provide documentation: Submit completed Declaration Worksheet (page 2) to show the actual use and occupancy of the condominium unit for the entire 1-year period from October 2, 2015, to October 1, Submit copies of all applicable lease agreements (signed by both, lessee and lessor). Lease agreement(s) attached: Yes No CERTIFICATION I/We hereby declare the above and the attached Declaration Worksheet to be true and correct under penalty of law. HANAKO YAMADA HANAKO YAMADA 8/31/15 Signature Print Name Date Signature Print Name Date Deliver or mail (post office cancellation mark) this completed form and the Declaration Worksheet with supporting documentation on or before September 30, 2016 to: Real Property Assessment Division 842 Bethel Street, Basement Honolulu, HI Telephone: (808) Real Property Assessment Division 1000 Uluohia Street #206 Kapolei, HI Telephone: (808) This claim cannot be filed by facsimile transmission or via . For a receipted copy, submit with a self-addressed stamped envelope. FOR OFFICIAL USE ONLY Received By: Date Received (post office cancellation mark) For Tax Year: Declaration Worksheet attached: Yes No Signed lease(s) attached: Yes No BFS-RP-P-71 (Rev10/15) 1 APPENDIX H

30 DECLARATION WORKSHEET Use worksheet below to show the actual use and occupancy of the condominium unit for the entire 1-year period previous to declaration. Example of Declaration Worksheet Starting Date Ending Date Actual Use Occupied by: Signed Lease Attached: Yes or No October 2, 2015 January 31, 2016 Leased to same tenant Rented on February 1, 2015 October 1, 2016 month-tomonth lease Parcel ID (Tax Map Key): Declaration Year: 2017 Declaration Worksheet Tenant Tenant Starting Date Ending Date Actual Use Occupied by: Signed Lease Attached: Yes or No Yes Yes JANUARY 1, 2015 JUNE 30, 2015 LEASED TO TENANT TENANT YES RENTED ON MONTH JULY 1, 2015 AUGUST 31, 2015 TENANT TO MONTH LEASE SAMPLE YES Explain if actual use will change before October 1, 2016: DECLARATION WORKSHEET CERTIFICATION I/We hereby declare the above Declaration Worksheet to be true and correct under penalty of law. HANAKO YAMADA HANAKO YAMADA 8/31/15 Signature Print Name Date Signature Print Name Date BFS-RP-P-71 (Rev10/15) 2

31 DEPARTMENT OF BUDGET AND FISCAL SERVICES CITY AND COUNTY OF HONOLULU REAL PROPERTY ASSESSMENT DIVISION 842 BETHEL STREET, 2" FLOOR *HONOLULU, HAWAII PHONE: (808) * FAX (808) KIRK CALDWELL MAYOR NELSON H. KOYANAGI, JR. DIRECTOR GARY T. KUROKAWA DEPUTY DIRECTOR August 28, 2015 TETSIKO HO CPA 1833 Kalakaua Ave# 91 O Honolulu HI RE: CONDOMINIUM UNITS IN MIXED-USE PROJECTS Our records indicate the properties listed below were classified as "Residential" for the tax year. In order to update our records for the tax year, we are requesting owners of units in mixed-use condominium projects to file Form BFS-RP-P-71, Declaration Regarding Condominium Use, and attach the requested documentation by September 30, If a fully completed form and supporting documentation are not filed by the deadline, the classification of your unit will be based upon the highest use allowed by zoning and your condominium declaration. In most cases, this will be "Hotel and Resort" or "Commercial." Alternatively, you may file Form BFS-RP-P-3, Claim for Home Exemption, if you own and occupy your unit as your primary residence. A copy of Form BFS-RP-P-71 and BFS-RP-P-3 has been enclosed for your convenience. Additional forms are available at the Real Property Assessment Division locations listed below, or you may visit our website at If you already submitted a form and supporting documentation for the tax year, please disregard this letter. Should you have any questions or need assistance in completing the form, please contact our office at (808) Downtown Office 842 Bethel Street, Basement Honolulu, HI Kapolei Office 1000 Uluohia Street, #206 Kapolei, HI Tax Map Kev Site Address Owner APPENDIX I

32 APPENDIX J

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34

35 SAMPLE APPENDIX K

36 Copy B - To be returned to Transferor/seller STATE OF HAWAII -- DEPARTMENT OF TAXATION FORM N-2888 (REV.2012) Application for Withholding Certificate for Dispositions by Nonresident Persons of Hawaii Real Property Interest File Copies A and B of this form with the Department of Taxation. DO NOT file Form N-2886 if the transfer of property has already taken place. The Department of Taxation will not approve Form N-2888 after the date of transfer reported on Line 4a has passed. Please be sure to complete ALL lines and attach ALL supporting documentation OR your application will be rejected. See Instructions on the back of Copy B. 1 Name of applicant (Transferor/seller) Daytime phone no. of applicant Mailing address where you want withholding certificate sent C/O TETSUKO S. HO CPA INC, (BOB) B33 KALAKAUA AVE STE 910 City, State, and ZIP code (province, postal code, and country) HONOLULU HI 96Bl5 2 Names of all transferors/sellers (Attach additional sheets if more than one transferor/seller.) Address (number and street) City, State, and ZIP code (province, postal code, and country) 3 l.d. no. (Last 4 numbers of the SSN or FEIN) Names of all transferees/buyers (Attach additional sheets if more than one transferee/buyer.) -- Address (number and street) " -"- SAMPLE City, State, and ZIP code (province, postal code, and country) 4 Description of Hawaii real property transaction : a Date of transfer (month, day, year). DO NOT file Form N-2888 if the transfer of property has already taken place. The Department of Taxation will not approve Form N-2888 after the date of transfer has passed. b Location and general description of property (Include tax map key number) S Check the box to indicate the reason a withholding certificate should be issued. NOTE: The transferor/seller is required under section , HRS, to file an income tax return whether or not the person derives a taxable gain. llj D 6 a The transferor/seller will not realize any gain with respect to the transfer. (Complete Sa on the back of Copy A.) b There will be insufficient proceeds to pay the withholding required under section (b), Hawaii Revised Statules, after payment of all costs, including selling expenses and the amount of any mortgage or lien secured by the property. (Complete Sb on the back of Copy A.) Was the property used at anytime as a rental? Yes D No [lj Please Sign Here Hawaii Tax l.d. Number w--,, ,. If yes, enter your Hawaii Tax l.d. Number. I hereby declare under penalties provided by section , HRS. that I have examined lhis application and accompanying attachments, and, to the best of my knowledge and belief, they are true, correcl, and complete. > Title (If applicable)... tiiiii(ifaiiiiiicaiiiiii FOR OFFICIAL USE ONLY: Approved: /0 1-0ll( Day Year Disapproved: Month Day Year Amount required to be withheld RECEIVED DEf'T. Of TAXATION HONOWW, tu Signature ' 3 SEP OA FORM N-2 88 APPENDIX L

37 APPENDIX M

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