Investing in the US - E2, EB-5 Visa - working and medical rules - Canadian-USA-Global tax help - david ingram expert US CANADA

Hi, I spoke with you via telephone Friday night. I’d like to know how we could benefit from using your services. I found your name online and have not been referred to you by anyone. So I am not too aware of the services you offer.

We are looking at  investing in Real Estate in the US for approx the next 2 years. We would like to go back and forth and not have a restriction on how long we can do business there in a year. We would need to be there longer than 6 months of the year.

Please send me any information so we could better understand the service you offer.

Best Regards, XXXXX XXXXXX


david ingram replies;

I offer Income tax advice and preparation service with a deep understanding of the working visa and immigration rules surrounding cross border items for Canada, the USA, Mexico, New Zealand, Australia and The United Kingdom or great Britain.  If you type - income tax and immigration - into, as i just did on Aug 30, 2009, I manage to come up number one out of 8,590,000 possibilities in the world.  What you may find more interesting is that I started this in 1963 at 2000 Pembina Highway in  Winnipeg.  I think you actually live on Pembina yourself although 120 km away.

Back to your question after the intro

There is no easy visa for you that would guarantee that you could just go to the United States and live there and work there as much as you want.

In particular, If you are physically in the US for more than 6 months a year, two things will happen.

1.   You lose your Manitoba (and every province but Ontario) Medical
2.   Under the substantial Presence rules, you become  taxable  in the US on your world income  - see the April 1994 newsletter at in the top left hand box
All Canadian provinces and Territories require you to sleep more than 183 days in that province or territory.  the exception is Ontario which only requires you to be there for more than 153 days.

An EB-5 visa would work but for this you need to invest either $500,000 or $1,000,000 US into a US business and that business must have 10 full time employees.  This is designed for someone who is intending to live in the US and would not usually be what a person who is intending to live in Canada and the US would want although it does fit the venue for 7 months in the US and 5 months in Canada and does let you do everything but vote in the US.  It is possible to get this visa by making an investment in some projects such as that offered by David Andersson in Vancouver for the Bellingham area.   In other words, you can make a $500,000 investment that qualifies you for an instant green card and allows you to do what you want in the US.

the following is a lot more detailed.

What are the basic requirements for the EB-5 visa?

The three basic requirements for an EB-5 visa are as follows:

*     the alien must establish a business or invest in an existing business that was created or restructured after November 19,1990

*     the alien must have invested $1 million ($500,000 in some cases like Bellingham)  in the business

*     the business must create full-time employment for a minimum of 10 full time US workers

How does the investor meet the requirement for a qualifying business?

There are three ways of meeting the requirement a qualifying business

*     Create an original business

*      Purchase an existing business with simultaneous restructuring or reorganization such that a new commercial organization results

*     Expand an existing business created after November 1990 through the investment of the required amount and the creation of ten new jobs.

Any for-profit entity formed may include sole proprietorships, partnerships, holding companies, joint ventures, corporations, business trusts, etc. Evan, a holding company and its subsidiaries would qualify if each subsidiary is engaged in the active conduct of business.

Noncommercial activities, such as home ownership, do not qualify. In general. the alien must be actively involved in the business, and cannot be a passive investor although some passive investments are now allowed under the Pilot program mentioned below.

What types of investments meet the requirements?

Investment can be in the form of cash, equipment, inventory, other tangible property, cash equivalents and indebtedness secured by assets owned by the alien provided that he or she is personally and primarily liable and the assets of the new commercial enterprise are not used to secure any of the indebtedness. The definition specifically excludes capital acquired by unlawful means.

How much investment is required?

The basic investment amount is $1 million. The required investment is $500,000 for a business established in a "targeted employment area." Targeted employment areas include:

1.   Rural areas, defined as any area other than one within a metropolitan statistical area or within the boundary of a city or town with a population of 20,000 or more; and
2.   Areas having an unemployment rate that is at least 150% of the national average.

For a Pilot Program investment, the threshold is a $500,000 capital contribution to a designated Regional Center which allocates portions of the capital in the form of business loans to small business within the targeted area.

The  advantage of an EB-5 visa is that it allows you to stay in the US if the business should fail or if you should decide to sell the business after a period of time.  You can also apply for and receive US citizenship.
End of EB5 section - 

A second type of visa might be an E-2 visa - for this i have reprinted my Jan 1995 newsletter.  I can say that the E2 visa has become a little easier to get since this newsletter but the principle remain the same.

Note that the author, Dennis Olsen, is no longer an immigration attorney. 

January 1995 CEN-TAPEDE - E2 Investor Visa

January 1995    Pages 78-81


david ingram's US/Canadian Newsletter


The U.S. Internal Revenue Service will be providing free assistance on U.S. income tax issues at the Vancouver Consulate from March 3 - 17, 1995. Please call the Consulate to schedule an individual appointment or to register for seminars. (604) 685-4311, ext 246

The E-2 U.S. Investor's Visa 78

Over the last few months, an amazing number of individuals have approached my office about going to the U.S. to work or about expanding into the U.S. or about claiming their U.S. citizenship.

We are also updating the "BORDER BOOK" which is running into a snag because of a shortage of newsprint. Because of the newsprint shortage, we are cutting a 260 page book down to 160 pages so the problem of what to take out and what to leave in is very real.

While looking for new information, I was fortunate enough to obtain a copy of the following which was written by Dennis Olsen, the U.S. Consul in Vancouver in 1992, 1993 and part of 1994. Mr Olsen's background includes a stint as law clerk for the U.S. Court of Appeals in Denver; Director of the Marshall Island Legal Services Corporation in Micronesia; Associate Professor at Gonzaga Law School; Fulbright Professor in Malawi, East Africa; and political and consular officer for the U.S. Foreign Service in the Philippines and Guatemala. Mr. Olsen is fluent in Spanish and has affiliations with immigration consultants in Taipei, Beijing and Manila.

He is available now as a U.S. Immigration Attorney in Everett, Washington at (206) 304-1030 or at the office of his Vancouver partner Michael Jacobsen at (604) 736-0065.




Dennis F. Olsen

In the fall of 1993, the U.S. State Department adopted new regulations which limit and complicate the kinds of investments Canadians must make when applying for investor visa status in the U.S. These regulations require the commitment of fixed percentages of capital when Canadians and citizens of other treaty signatory countries make capital investments in U.S. businesses in order to obtain "E" investor visas.

A long standing treaty provides for investment in a business as a basis for obtaining residence in the U.S. This is known as "treaty investor" status and is embodied in the E visa. The E visa provisions allow a Canadian - either an individual or a company - to purchase an existing American business or create a new business and then apply for a non-immigrant visa based upon this business ownership. In Western Canada, these applications are usually processed through the U.S. Consulates in Vancouver and Calgary.

The E visa regulations require the commitment of a fairly large amount of money, a "substantial" investment in the words of the regulations. Investments in the range of twenty-five to fifty thousand dollars are generally considered the minimum amount that satisfies this requirement. Next, the regulations require that this money be "committed," that is unconditionally paid toward the purchase or creation of the business. New regulations adopted in July of 1993, add a third financial requirement: the committed capital must represent a certain percentage of the over-all value of the business.


Before the new regulations, this requirement of investment as a percentage of the stated value of the business was present only as an implicit part of the more general "substantiality" test. The Consul adjudicating the case could make an over-all appraisal of the size of the investment to determine its "substantiality," decide if a reasonable portion of it was firmly "committed" and approve the visa based on these generalized criteria. This method of assessing E visa applications was compatible with investor practices. In cases where the value of the purchased business was high - over, say, $250,000 - the "substantiality" was easily found and payment of a reasonable amount of the large investment was generally accepted as a sufficient "commitment." In the case of the $250,000 business, a pay-in of $50,000 was probably enough.

This approach reinforced the basic purpose of the treaty investor program which was - and still is - to induce responsible entrepreneurs to bring investment capital to the U.S. and establish businesses that will create jobs and otherwise benefit the local economy. The bigger the business that could be established with available capital, the more jobs and benefits to the U.S. economy. So if the purchase of a business whose total value was $50,000 where $25,000 had been committed would qualify for E status, then a down payment of the same $50,000 to buy a much more substantial business was even better since it represented a more serious undertaking in which the investor had a great deal more at stake and a great deal more to offer the local economy. NOT SO under the new rules.


The new regulations impose a recommended schedule of fixed percentages of capital that must be committed in order to qualify for a visa. The percentage required depends on the total value of the business. The "Proportionality Test," as it is called in the new E visa regulations, require a high percentage of committed capital in small businesses. In businesses valued below $100,000, the required capital commitment is 75 to 100%. In the $100,000 to $500,000 range, the requirement is 60%; between $500,000 and a million, 50% is required. In the case of big businesses above a million, only 30% is required.

If applied literally, the proportionality test will disqualify a high percentage of current E visa applications. In Vancouver or Calgary, the average E investment is in the $100,000 to $200,000 range. A typical case might be the purchase of a small restaurant or trailer park just across the border. The restaurant is for sale by the retiring American owner for $150,000. The American is willing to take $50,000 down and payment in a year of another $25,000, the balance to be paid in monthly installments over the next five years. In the past, if other routine requirements were met, an application based on this deal would likely have been approved. Under the proportionality test, the application faces probable rejection at the Consulate. The value of the business is $150,000 and the $50,000 down is only 33% of the total value. Even if the potential E investor were to raise the ante to $75,000 down, the deal 's still only 50% paid for and the E schedule requires 60%.

The proportionality test runs harshly against the grain of typical business practices. In the example above, a $50,000 down payment to buy a going concern valued at $150,000 would likely be accepted by the seller. Based on the many E cases I review in my law practice, $50,000 would be considered acceptable (even generous) by most sellers, especially in the case of high risk investments like restaurants.

Limiting Factor is Cash

In these small business cases, the limiting factor for the buyer is often the amount of ready cash. The restaurant buyer in our example may be willing to put up the 60% but often just doesn't have the money. Here the new rules are often an absolute bar with the investor who has $50,000 and needs $100,000 being no better off than the investor who is broke and needs $50,000. What about borrowing the extra fifty? More bad news: borrowed capital is generally not considered in assessing E applications.

Worse news yet is that the effects of the proportionality test on big investors are just as disconcerting. Where the small business person is limited by the amounts of available capital, the large investor seeks to maximize his market position by controlling the largest amount of assets with the least amount of money. Leverage for the large investor is the name of the game. Here's a direct quote from the regulations: "In the case of a million dollar business, a lesser percentage might be needed, but 50-60% investment would qualify." (Sadly, the drafting of these news laws is even more grotesque than their effect on business.) With huge price differentials in real estate, Canadian entrepreneurs look longingly at land just across the border.

New Rules are against General Business Practice

These proportionality rules strike at the heart of the typical - highly leveraged - real estate purchase. Let's say that a Canadian developer wants to buy a marina in Bellingham for one and a half million. The banks generally require 25% down to finance such a commercial enterprise, or $375,000. The E rules require $750,000, more than twice what the bank wants and hardly a clever leveraging of the buyer's investment capital.

These rules will not stimulate the southern flow of risk capital, to put it mildly. With NAFTA and economic free flow a goal actively mouthed by President Clinton as an important North American priority, the tightening of investor rules seems particularly ill-timed, even hypocritical. Yet the rules themselves do not dictate the unseemly results sketched above. The Foreign Affairs Manual (where the percentage requirements are found) states, "Assessing proportionality requires the use of judgment that takes into account the totality of the factors involved; it is not a simple arithmetic exercise. The following examples (where the ratios are found) are not to be viewed as bright-line requirements." I.E. a responsible developer with $300,000 and bank approved financing to buy a million dollar Marina that employs six Americans ought to be considered "substantial" within the meaning of the rules even if his down payment only represents 33% of the value of the business. This is especially so when the same investor could take a tenth of his $300,000, buy a real estate consulting firm which employs one secretary and obtain a visa easily; the value of the business is 100 percent of the amount of the investment.

The rules are new and hopefully the U.S. Consulates in Canada will apply them in a way that serves the over-all purpose of stimulating rather than thwarting responsible investment. Certainly the rules themselves allow latitude in applying the stated percentages. In fact, these are not really stated as rules but general criteria. If the rules are not - as they self-announce - "bright-line requirements" then they should be interpreted in a way that serves the over-all purpose of the investor treaty and is consistent with American policy statements on free trade.

Unfortunately, numbers, once stated, take on a life of their own. This is especially so in administrative decision making. If the marina investor can depart from the 50% requirement because of the solidity of the over-all investment package, then the consular officer must decide - by how much? And if the Marina case is approved with a $300,000 down payment, then how is the next case where the down payment is slightly less to be decided? However much the rules may undercut normally packaged investment proposals, they will tend to be applied as stated. For under-staffed Consulates with large numbers of cases that must be decided within a short time, this approach achieves both consistency and efficiency. There may be some departures from the stated percentages but not very much.

Rules are Rules

So expect the E rules to be stringently applied. On the bright side, with responsible advice, many responsible investment plans can be structured in a way that allows compliance with the proportionality rules. For example, the rules still allow latitude in the valuation of a business. The proportionality test requires comparison of the amount of investment as a percentage of the "cost of the business."  

Good Will not necessarily Part of Business

Elsewhere, the regulations state that "the cost of an established business is generally its purchase price, normally considered its fair market value." Sometimes an investor is buying different assets, not all of which need to be included in the fair market value of the business. For example, small business sales often contain a covenant not to compete. In our restaurant example, the seller may have agreed within the sales contract not to open a another similar business in the same area. If the total price is $150,000, the fair market value of the covenant not to compete may be $50,000. This latter sum is arguably not part of the "purchase price". When providing criteria for the calculation of purchase price, the E rules generally rely on a listing of "assets necessary to run the business." The covenant not to compete is not necessary to run the business and therefore excludable from the purchase price. The Canadian buyer pays $75,000 down for the $100,000 purchase price and enters into a collateral contract to pay an additional $50,000 on mutually agreeable terms for the covenant not to compete. The E investment ratio is satisfied.

In the same way, where the seller agrees to actively assist the new owner during a transition period, a consultation agreement between buyer and seller can be fairly valued and agreed to outside the of the actual purchase agreement. This is, in effect, a severing of the part of a sales contract often included as "good will." Since it is not actually necessary as an asset "needed to run the business," it could be appropriately excluded. In our example, such a sale of good will could be worth a lot if it included performance of services over a period of time. If the fair market value of the consultation agreement is $50,000, the real assets can be sold for $100,000 and the down payment of $75,000 satisfies the proportionality criteria.

Creative Offers will Qualify

In other cases, many businesses are, in fact, incremental sales where purchase of the first increment is independently sufficient to qualify for an E visa. A 75 unit trailer park whose total value is $300,000 could be sold in three parcels. If the sale of the first parcel is otherwise valid under the E criteria - substantial, committed, not marginal and so forth - it may be permissible to base the E application on the independent sale of the first increment and substantially reduce the percentage of committed capital required by the E ratios.

Lastly, in many common situations, other types of visas may more appropriately fit the need of Canadian businesses. The L visa allows for transfers of employees from the Canadian parent company to a U.S. affiliate under a variety of circumstances. The Free Trade agreement allows Canadians from many different occupations to work in the U.S. for American employers. The Immigrant investor visa provides for permanent residence for large investors.

In all these examples, it is important to take the demands of the E visa regulations into account at the earliest possible stage of the negotiations. With good business and legal advice, sales can be structured to both meet the demands of buyer and seller and the E visa ratios. If the requirements of the Canadian buyer's visa application are made known to the seller early on, this structuring can include provisions which responsibly satisfy U.S. visa regulations and still meet the business needs of both parties. Alternatively, other visa provisions may exist which allow residence in the U.S. under suitable circumstances.


Dennis Olsen J.D.

Remember again - That Free US Tax Assistance from the IRS. Call (604) 685-4311, ext 246 to register for individual appointments or for a seminar.

BANKERS / ACCOUNTANTS! Put this Page in your diary for Future Help!

Tax Preparation and Other US / CANADA Information Sources

some of our own CEN-TA RESOURCE Personnel at (604) 980-0321 - Fax (604) 980-0325 are:


* David Ingram - US / CANADIAN Tax Advice and preparation for individuals and corporations. Author of the multi-user, multi-office in house computer personal tax program. Also a Specialist in TN Visa applications and advisor on E2, E5,  L1, H1 and P and O visas. -


*     Gillian Bryan - US  / Canadian Tax Advice and preparation.



Peter Ingram - US / Canadian Tax advice and preparation for individuals and corporations.



Mitchell Ingram - US / Canadian Tax Advice and Preparation for individuals and Corporations


David Holroyd - US / Canadian TAX Preparation

Other Outside US / Canada resource persons I should mention are:



David Stoller, LLB at (604) 922-4702 (Fax 922-0374)


United States Immigration (to the U.S.) (in alphabetical order)



David Andersson, LLB in Vancouver at (604) 608-0818 or (360) 671-5945


Greg Boos, LLB in Bellingham at (360) 671-5945 (Fax 676-5459) (Greg Boos is extremely knowledgeable in Native Indian Cross border Issues as well)


Ruben Briones at (360) 332-1308 is an ex US Immigration Officer who specializes (as i do) in TN visas. When he was with the INS, Ruben was my main source of information for those seeking a Treaty Canada or Treaty NAFTA Visa to the US.


Mark Carmel, J.D. at 366 North Broadway, Jericho, New York, 11753, or 1500-5600 Yonge St., Toronto, ON, M2M 4G3, (905) 736-1792, Fax (905) 738-0756, or


Michael Jacobsen J.D. at (604) 736-0065 - Fax (604) 736-0032 or his Everett partner




Terry Preshaw, J.D., in Vancouver at (604) 689-8472 (Fax 688-0099);




US TAX preparation



Gary Gauvin (Dallas 469-273-3399)


Kevyn Nightingale (Toronto 416-250-1212),


Gary Gauvin (Dallas 469-273-3399),


Brad Howland (Victoria 250-598-6258),


Steve Peters (Halifax 902-492-6011),


Steve Katz (Vancouver 604-732-1515),


Sonja Clark (West Vancouver 604-913-3376)  and


Len Vandenberg (Kelowna 250-763-7600) are others that I regularly recommend when someone needs someone else to look after their US / Canada Income Tax Returns.



Last updated for names and addresses above (only) on Aug 20, 2009 by d ingram
End of E2 visa information
If your intention is just to go to the US and buy investments and not to work there for anyone else and not to start repairing and fixing up your investments, you do NOT need a paper visa.

When you go across the border you are automatically issued a paperless B1 (business visitor) status.  You can find out more about all the visas at under "Entering the US" under "FEATURES INDEX in the top left hand box, (

However,under the terms of a B1 status you can


1.  Stay up to 6 months or the time that the border official allows.  If you say you are going for the weekend, you get the weekend.  If you say you are going for a month, you get a month.  If you say you are going for six months, you will get more questions but might be issued permission for a month.


WARNING - If you say you are going for six months and come back two weeks later, you start over again the next time you cross into the border.  With the passport scanning and or enhanced driver's licence scanning, YOU ARE BEING MONITORED.  Do not assume that since the nice lady told you six months was okay a month ago, that it still applies now.  It does NOT.  You start over.




If you are going down to BUY investments, that is all you can do.  You can NOT fix the investments, work on or in the investments, and the purchase of an operating business without an E2 or L1 or E5 visa can actually seriously hamper your entrance to the US without making sure that you have clearly delineated your limited duties to that business.  Basically, your duties to that business are limited to buying it, hiring people and making suggestions to anyone working in it. It does not give you the right to answer the phone for that business because if you did so, you would be taking a job away from an American resident.


The following will give you a little bit more.

I am available for phone consultations at a minimum fee of $450 Canadian for up to an hour.  In general a follow up 5 min call is not charged for.  You can also try for a free 5 minute call on Wednesday evenings when we do the 6 to 9 PM WEB cast at

I plan on buying a house and paying cash.
Can I rent this out?
If I get a property manager is that ok?
When I go across the border can I say I have an investment property or is this called a vacation property?
I understand I can clean the kitchen, bathroom and vacuum but I cannot do repairs or any improvements.
Also it is in Arizona do I declare the income?
With thanks,


david ingram replies:

If you are going down to buy the property, say you are going down to buy a property.


If you are intending to rent it out, get a property manager.

If this is a rental property, you can NOT clean the kitchen, bathroom, or anything else if the purpose is to get it ready for rent.
If you happen to be staying in the unit yourself for a month, you are welcome to vacuum, clean the kitchen and bathroom and make the beds for yourself while you are there and clean it well when you finish your month's stay. However, do NOT stay one night and give it that super dooper cleaning or decide to paint the unit while you are there.  A resident property manager or someone else in the complex (if a condo) could report that you are making improvements and doing repairs and maintenance without a visa.  You could be arrested a year later just as if you robbed a bank.

You need to file a US 1040NR with Schedule E and 4562  and an Arizona 140PY and then report the income and expenses again in Canada on Form T776 and the accompanying CCA schedule (capital cost allowance).

These older questions will help and if you want to get a 5 minute conversation in, call 1-866-980-0499 (or 604) 980-0321 locally between 6 PM and 9 PM on Wednesday night when I do an open line show on money, finance, and other interesting topics.  The guest from 6 to 7 PM (PDT) this next Wednesday, July 22, 2009 will be Carey Linde a Vancouver divorce lawyer whose specialty is child access and custody for fathers.  If you know any man who is having a problem with visitation rights, etc., tell him or her to log on this next Wednesday  to
Note that there is no charge for calls to the program.  I charge $450 for this type of consultation by phone or in person.  See price list at end
These older questions will help as well. Please note that this address is NOT a Q & A address.  Questions should be sent to [email protected]



Sent: Thursday, November 13, 2008 10:45 PM


Subject: Request Information - Buying Rental Investment Property In WA

Dear David,
I am a Canadian Citizen planning to buy a 4 plex rental investment property in Bellingham, WA.
Request if you could provide more information and have you seen cases of Canadians owning rental properties  south of the border.
Secondly, will it be better if I form a LLC in Washington state - I understand I have to get a business visa under NAFTA or in your opinion should I just keep in under my personal name.
Say, If I do buy it under my personal name - and later want to transfer it under LLC - how hard it is and is there a financial burden ....reason in canada is the property transfer tax etc.
My contact cell number is 778 2xx-xxxx and I am in Surrey,BC.
Many Thanks
david ingram replies:
This was a Nov 13th question that only surfaced because i lost all of my email from Nov 17th on.  This was sitting there unanswered.
Since Nov 13th, I have spoken to over 2,000 people at seminars in Calgary, Vancouver, Victoria and Nanaimo about buying US property.  I am going to send you the main handout which was given out at those seminars.
In particular, I want to point out the danger of the 4-plex in Bellingham when you live in the lower mainland.
It is so close that if something needs fixing, you are going to be tempted to go down and fix it yourself.
As a Canadian, you can NOT work on that property in any way as the following will show you.
If you have a question, feel free to phone the show tonight.  Because you are local, you can use 604-980-0321 as a phone line. 
The older questions following will / should help you in your quest.
Good luck.
david ingram
My question is: US-specific

QUESTION: I am thinking of buying a property in Phoenix for personal use. I also want to rent it out as a vacation rental for most of the year. I see most people
just list their properties on Craigslist or and then collect by Paypal or certified cheque. My question is this: If you are doing this from home in
Canada, while all the cleaning and maintenance is being contracted out to Americans, are you still in violation of their laws? Thanks for your reply.


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