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Discussion Forum Index --> Tax Questions --> Sourcing of K-1 income
Axia (talk|edits) said:
| 21 June 2007
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| My client, a US citizen, living and working in Sigapore, is a limited partner of a partnership with registered address in Cayman Island in which the business activities are investment management of securities. The partnership is not a passive activity pursuant to temp reg section 1.469-1T(E)(6). In regard to the ordinary business income received as shown on line 1 of his K-1, how do we determine whether it is foreign or US source income? Any Code/Regulations reference?
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Sandysea (talk|edits) said:
| 21 June 2007
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| Cayman Islands is a tax free jurisdiction is it not? There is no treaty with the US since this is a tax haven country and he will be taxed in the US with no foreign credit since there is no foreign tax to begin with. Is any of the partnership activities in Singapore?
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Death&Taxes (talk|edits) said:
| 21 June 2007
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| Without the partnership making any entries on Line 16 of the K-1, it would appear none of the income was foreign sourced.
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Axia (talk|edits) said:
| 22 June 2007
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| Thanks for above. I believe Cayman is just the business registration address and my client is physically residing in Singapore and did not go to the U.S. for business throughout the year so I was about to conclude that the income was foreign sourced on the basis that his partnership activities were in Singapore. However, there were no entires on line 16 of the K-1 (is it specially used for indicating the foreign transactions only, not for the overall business activity?), that's why I was wondering any code regulation provide any reference for situations like this and whether any exceptions to the general rules that would apply provided the facts such as that he is a domestic partner of a domestic partnership.
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