Tax related questions

howdy folks,

I met my Filipina wife in Thailand while I was an ESL teacher and now we will soon be celebrating our 9th anniversary.    She is now a green card holder and we are in the beginning stages  of obtaining her US citizenship.   Upon returning to America I was blessed in finding a relatively high paying job and we would like to start investing in the Philippines.

There are two areas that I would like to focus on.   First, her university offers a "co-opt" in which those who has sufficient funds can contribute.   The monies that are collected are then lent out by the university who then charges interest.   After 1 year the funds are returned to the owners with the interest.      Would this be considered a unregulated "dividend" on my taxes?

The second investment area is through buying/renting farmland and growing a variety of crops through farms that my wife's family owns.    There is a huge up front charge to get started and any potential returns are down further down the road.    How would I go about reporting this on my taxes while we are still in america or is this even considered taxable income?

Our endgame is to retire in the Philippines and raise a family.

US citizens are required to report and pay taxes on their world wide income.  The interest paid on the loan would be reported as interest income, similar to if you sold your house but financed the deal and collected interest and principle on the loan, paying tax on the interest.

The farm deal is more complicated, for if your wife bought the land, that PURCHASE price does not figure into the taxes until you sell the land.  On a yearly basis you are in the farm land renting business and must report it as such.  Are you renting the land to others or are you also financing the planting of the crops.  You should take this information to your tax professional.  If you have actual losses in early years you can have the losses reduce your taxable income from other sources.  However, if you never make any money or are renting to family then the losses cannot be taken until you sell the business.  The IRS could also determine that you do not have a business but a hobby and therefore disallow any losses.

Good luck!!!

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