U.S. citizens are legally allowed to own offshore corporations as long as they declare them to the IRS. I'm thinking about setting one up, primarily for asset protection and privacy reasons - NOT for tax avoidance. So I intend to do everything by the book, meaning declare it, and actually do business via that corporation, the corporation would have a bank account in the offshore country, etc.

What are the pitfalls of doing business via an offshore corporation and declaring it to the IRS? For example, would the corporation be able to deduct its expenses and then only net income would be taxable by the U.S. ? Would the net income from the corporation be repatriated to me from offshore and then taxed?

Thanks!

you should ask a CPA familiar with such rules.

This is outside the wheelhouse of 99% of CPAs I'm quite sure.

Walkers SPV, Ltd is an International Law Firm with extensive experience in these matters. They have no US offices, but if you're serious about this, they one of the most experienced firms in the business. They have a couple offices in George Town, Grand Cayman if I recall correctly.

Mostly this strikes me as the kind of idea that seems really awesome, until you realize how much it will cost to get off the ground. The kind of attorneys and accountants specialized in this kind of work aren't cheap, and this will require a not insignificant amount of time for a decent attorney.

Good luck.