Discussion:Domestic SMLLC's member is a foreign partnership
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Discussion Forum Index --> Tax Questions --> Domestic SMLLC's member is a foreign partnership
Meyerbooya (talk|edits) said: | 23 April 2008 |
| Okay - new problem came along today.
A SMLLC was formed in State of Washington. Attorney setup for the SMLLC to be a disregarded entity for tax puroses. All okay, so far. Only member is a foreign partnership based out of the Netherlands. This foreign partnership does not have a US tax identification number. All sales and manufacturing for this new SMLLC will be based in the United States. How to be taxed? Would this type of scenario be better taxed as a corporation? From my research, the partnership is going to need a US tax identification number and that this partnership must pay a withholding tax on the taxable income that is allocable to its foreign partners. This could equal 30%. In order for the partners to even try to get a credit for this withholding tax is to file then individually in the states. HELP!!! | |
| 23 April 2008 | |
| You are on the right track. The partnership will file Form 1065 and will have to withhold at the highest marginal rate (35% for both corps and individuals). The partners will be required to file U.S. tax returns because they will be deemed engaged in a U.S. trade or business. If any of the foreign partners are individuals, then there are U.S. estate tax issues to contend with as well. | |
