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Foreigner pass through
- Thread starter STEPHAN
- Start date
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Taxing Matters
Overtaxed Member
The owner of a S-corporation must be a U.S. person. So a nonresident alien cannot have a S-corporation. The person could, however, form the one member LLC in the U.S. and have it treated as though it were a sole proprietorship business for U.S. federal tax purposes. He or she could do that without ever stepping foot in the U.S. The problem is, of course, that actually doing any work (even for for his/her US LLC) in the U.S. is only possible if the alien meets the requirements to work here. If the alien is not eligible to work here, then the person would need to hire U.S. persons to run the U.S. business for him/her.
Whether having the LLC treated as a pass through entity is a good idea, though, is another matter. A big consideration would be how the arrangement would be taxed in the person's home country under that arrangement and exactly what kind of business it does.
Do I need to preach on how horrible an idea this is and what the compliance aspect of an NRA owned SMLLC is?
Answer doesn't change. They have to either meet the substantial presence test or elect to be treated as a full resident in the year of entry. For many reasons, making that full year election is not very wise.
