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If I gift someone their EB-5 investment funds, what documentation do I have to provide to help them along in their application process?

I have a friend who wants to come to the United States from Canada. Unfortunately, even though his career would be much more successful in the U.S., it does not qualify for any work visas because it is based in the entertainment industry. However, I am wealthy enough to afford to spot him $500,000 as either a loan or gift. I would be able to track the funds and show where they came from precisely and provide it to him, so that would not be a problem. Would he be eligible for EB-5 with the gifted funds and what documentation would we need to provide to show the legal transfer?

Answers

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    Answered on

    Gifts can be used for EB-5 and you look to be on the right track. However, with the help of an immigration attorney, the best case for an authenticated source and transfer of funds can be prepared.

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    Answered on

    A legal declaration referring to the gift will be part of the evidence.The person making the gift will need to show the source of funds to make the gift came from a lawful source.

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    Answered on

    Loan proceeds may be used as EB-5 capital only if it is secured by collateral personally owned by the EB-5 investor (such as real estate) and if the value of the collateral is equal to or greater than the amount of loan. You may certainly gift funds to your friend. Generally, you would need to execute gift declaration and prove lawful source of funds for the gifted amount and trace gifted funds from your personal account to the EB-5 investor''s personal account. You will also need to file IRS Form 709 Federal Gift Tax Return for the year of you gave the gift to claim your federal gift tax exemption use.

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    Answered on

    A loan would work if your friend has assets that he primarily owns and that which could be appraised at the value of your loan. But, if he does have such valuable assets, it may be better to have a financial institution granting the loan. A gift based on your longtime friendship might be suitable. It is also important to note there has been recently proposed legislation that restricts gifts to certain immediate relatives such as spouses, parents, sons or daughters (not children), siblings and grandparentshowever, Congress has not yet passed this. The same proposed legislation may limit loans originating only from financial institutions. If you gift or loan the funds to your friend, he or she may need to file their petition before this becomes law. Advising you on how much documentation would be needed to prove your lawful source and path of the gifted funds would be done on an individual basis. Best to consult with an experienced immigration attorney for guidance.

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    Answered on

    Yes, you may make a gift or a loan. If it is a loan, it must be secured by the petitioner. You can give the funds as a gift, as well. In both cases, you would have to document a lawful source of funds for the $500,000. The documentation for the gift, of course, would be an obvious transfer of the funds and an appropriate statement, preferably notarized, whereby you are attesting the fact that you are making the gift without any restrictions. The loan should be documented by appropriate documents, i.e. a promissory note with evidence of the collateral that is used to secure the loan.

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    Answered on

    Gifted funds and loans are acceptable funding mechanisms for the EB-5 petition. However, in this circumstance, it appears your description sounds like a loan because you do expect the funds to be paid back. Also, be on notice that all EB-5 investment funds are considered investment at risk, meaning the investor may lose the entire investment amount. Before you proceed further, it is advisable that both of you should consult an EB-5 attorney for further analysis, so that you may understand the EB-5 requirements and implications of your plan.

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    Answered on

    At this time gifts from nonfamily members are still considered an acceptable source of funds. However, this may change in the future and non-family gifts are usually subject to more scrutiny. I usually recommend to give the funds as a loan, but only if your friend has enough personal assets (real estate, retirement funds, etc.) that he can fully guarantee the loan. He cannot guarantee the loan with future income. If you choose to give the funds as a gift, then you need to provide the documents evidencing your source of the funds.

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    Answered on

    Yes, gifted funds may be used as qualifying capital for the EB-5 investment. However, since it is likely USCIS would closely examine the loan to make certain it is as represented, adequate documentation should be prepared and both donor and donee should be able to provide further documentation showing conduct consistent with the gift being real. There should be a written document (that need not be voluminous) along the lines of a loan agreement that describes the donative intent and commits both sides to reporting the gift appropriately and consistently for income tax purposes. Tax returns should be properly prepared showing the gift made (by the donor) and received (by the donee), keeping in mind that, for gift tax purposes, the amount of the gift will far exceed the annual per-gift exclusion amount allowed by law and will be subject to taxation which must be paid as legally required (as to the payor and amount of tax). That documentation (the gift agreement and tax returns) will back up the reality of the gift transaction and USCIS certainly will look for those documents for that reason. Assuming the gift is confirmed as legitimate, it should prove satisfactory to USCIS.

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    Answered on

    While the Grassley bill may only allow gifts between close relatives, at the moment you can gift the money. The money that is gifted must be sourced carefully to show that it was legally earned. A loan is not viable unless collateralized by the assets of the giftee.

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    Answered on

    If you gift the funds to your friend, the burden of proof regarding the legal source of funds will be on you. You need to provide documents to show how you accumulated the wealth that is gifted to your friend. The documents may include your W-2, personal tax returns, bank statements and/or corporate tax return if the EB-5 money was from your business. A detailed document checklist depends on the exact source of funds. I suggest you contact an experienced EB-5 attorney for professional assistance.

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    Answered on

    You will have to show how you earned the $500,000 so that USCIS can be sure the funds are legal.

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    Answered on

    You will need to execute an Affidavit of Gift, giving an irrevocable gift of the funds. Additionally, you will need to show the source of the gifted funds. Your Investment Immigration Attorney should be able to help you draft these items.

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    Answered on

    You should execute a gift instrument to show that the money was gifted from you to your friend. Also, you will need to provide your financial standing documents to demonstrate the legitimate source of your funds (ie., tax filings, bank statements, etc).

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    Answered on

    Yes. You can gift cash to your friend. You would need to show: (1) This is a true gift. This means no expectation of return now or in the future. Because you are not related to your friend by blood, you will have to convince USCIS why you are nice enough to part with that sum of money. (2) You need to show that the $500,000 came from a lawful source. This means you would need to provide your income documentation. The type of documents would depend on your personal circumstances. (3) The legal transfer of the gift can be done through an affidavit. Though, I would suggest consulting with your accountant on local gift taxes, if any.

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    Answered on

    Gifted funds may be used for the EB-5 investment. The donor should be prepared to document his/her lawful source of funds, just as if he/she were the EB-5 investor. The type of documentation required depends on the actual source of the gifted fundsfor example, how/when/where they were lawfully earned. The regulations talk about providing five years of tax returns, bank statements, property title/sales records, business documentation, court judgments, etc. In practice, each case is unique because people lawfully acquire funds in diverse ways. Therefore, the actual documentation required will depend upon the actual source of the funds.

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