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  • Foreign Owned LLC

    From Stuart O. Bronstein@21:1/5 to All on Sat Sep 24 13:31:00 2022
    I ran across something I don't understand and I hope you can help.

    A non-citizen has a single-member LLC in the US. He's required to file
    Form 5472 - no problem there.

    But does he file Form 1040-NR, 1120 or both? I've seen conflicting information, and couldn't find specific information on the IRS website.
    Perhaps the people saying that a foreign owned single-member LLC is automatically taxed as a corporation think it's a foreign entity rather
    than a foreign owned entity.

    In any case, I'm confused.

    Can anyone help straighten me out?

    Thanks.

    --
    Stu
    http://DownToEarthLawyer.com

    --
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  • From Tempuser@21:1/5 to Stuart O. Bronstein on Sat Sep 24 18:05:26 2022
    On 9/24/22 10:31 AM, Stuart O. Bronstein wrote:
    I ran across something I don't understand and I hope you can help.

    A non-citizen has a single-member LLC in the US. He's required to file
    Form 5472 - no problem there.

    But does he file Form 1040-NR, 1120 or both? I've seen conflicting information, and couldn't find specific information on the IRS website. Perhaps the people saying that a foreign owned single-member LLC is automatically taxed as a corporation think it's a foreign entity rather
    than a foreign owned entity.

    In any case, I'm confused.

    Can anyone help straighten me out?

    Thanks.

    GW Carter CPAs has a US Tax Guide for just this purpose. See link below.

    What it tells you is assuming the LLC has not elected to be a
    corporation then it is a disregarded entity and would file 1040-NR with
    a Schedule C if a business or Schedule E if rental property. The 5472
    would go with the 1040-NR. Section 6038(a) of the Internal Revenue Code
    states that because it is owned by a foreign person it is a separate
    entity classified as a corporation. BUT, this is for reporting purposes
    only. Taxes are still done on the 1040NR. So, it means that you have
    to attach a pro-forma 1120 with the 5472 and 1040-NR. Pay careful
    attention as there are stiff penalties for failing to conform to these
    rules.

    The tax guide below goes into this with a lot of detail and instructions.

    https://gwcarter.com/us-tax-guide-for-nonresident-aliens-with-single-member-llc

    --
    Alan

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

    --- SoupGate-Win32 v1.05
    * Origin: fsxNet Usenet Gateway (21:1/5)
  • From ira smilovitz@21:1/5 to Stuart O. Bronstein on Sat Sep 24 17:59:57 2022
    On Saturday, September 24, 2022 at 1:35:13 PM UTC-4, Stuart O. Bronstein wrote:
    I ran across something I don't understand and I hope you can help.

    A non-citizen has a single-member LLC in the US. He's required to file
    Form 5472 - no problem there.

    But does he file Form 1040-NR, 1120 or both? I've seen conflicting information, and couldn't find specific information on the IRS website. Perhaps the people saying that a foreign owned single-member LLC is automatically taxed as a corporation think it's a foreign entity rather
    than a foreign owned entity.

    In any case, I'm confused.

    Can anyone help straighten me out?

    Thanks.

    --
    Stu
    http://DownToEarthLawyer.com

    --

    The LLC is created under US state law, so it is a US entity, regardless of ownership. The SMLLC elects to be taxed either as a sole proprietorship or a corporation (SP is the default). If taxed as a corporation, S-corp is off-limits because the owner is
    not a US tax resident. Once you've determined the answers to the previous statements, the choice of return type should be obvious.

    Ira Smilovitz, EA
    Leonia, NJ

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

    --- SoupGate-Win32 v1.05
    * Origin: fsxNet Usenet Gateway (21:1/5)
  • From Stuart O. Bronstein@21:1/5 to Tempuser on Sat Sep 24 19:43:39 2022
    Tempuser <[email protected]> wrote:
    Stuart O. Bronstein wrote:

    I ran across something I don't understand and I hope you can
    help.

    A non-citizen has a single-member LLC in the US. He's required
    to file Form 5472 - no problem there.

    But does he file Form 1040-NR, 1120 or both? I've seen
    conflicting information, and couldn't find specific information
    on the IRS website. Perhaps the people saying that a foreign
    owned single-member LLC is automatically taxed as a corporation
    think it's a foreign entity rather than a foreign owned entity.

    In any case, I'm confused.

    Can anyone help straighten me out?

    Thanks.

    GW Carter CPAs has a US Tax Guide for just this purpose. See link
    below.

    What it tells you is assuming the LLC has not elected to be a
    corporation then it is a disregarded entity and would file 1040-NR
    with a Schedule C if a business or Schedule E if rental property.
    The 5472 would go with the 1040-NR. Section 6038(a) of the
    Internal Revenue Code states that because it is owned by a foreign
    person it is a separate entity classified as a corporation. BUT,
    this is for reporting purposes only. Taxes are still done on the
    1040NR. So, it means that you have to attach a pro-forma 1120
    with the 5472 and 1040-NR. Pay careful attention as there are
    stiff penalties for failing to conform to these rules.

    The tax guide below goes into this with a lot of detail and
    instructions.

    https://gwcarter.com/us-tax-guide-for-nonresident-aliens-with-singl e-member-llc

    Thanks Alan. That not only makes it clear but it makes sense.

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

    --- SoupGate-Win32 v1.05
    * Origin: fsxNet Usenet Gateway (21:1/5)