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Paul Taliefero
Paul Taliefero, Enrolled Agent
Category: Tax
Satisfied Customers: 239
Experience:  19 years of experience in income taxes
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I own a foreign software company, in jordan. I am selling

Customer Question

I own a foreign software company, in jordan. I am selling equity shares to American Investors. What reporting do I need to do in the US? What tax liabilities would the American Investors have? How would they report their foreign income to the IRS?
Submitted: 8 years ago.
Category: Tax
Expert:  Paul Taliefero replied 8 years ago.

As for reporting, I can only give you a brief overview. Here is an explanation of securities registration from the Securities and Exchange Commission:

 

The Registration Process

In general, securities sold in the U.S. must be registered. The registration forms companies file provide essential facts while minimizing the burden and expense of complying with the law. In general, registration forms call for:

  • a description of the company's properties and business;

     

  • a description of the security to be offered for sale;

     

  • information about the management of the company; and

     

  • financial statements certified by independent accountants.

Registration statements and prospectuses become public shortly after filing with the SEC. If filed by U.S. domestic companies, the statements are available on the EDGAR database accessible at www.sec.gov. Registration statements are subject to examination for compliance with disclosure requirements.

Not all offerings of securities must be registered with the Commission. Some exemptions from the registration requirement include:

  • private offerings to a limited number of persons or institutions;

     

  • offerings of limited size;

     

  • intrastate offerings; and

     

  • securities of municipal, state, and federal governments.

By exempting many small offerings from the registration process, the SEC seeks to foster capital formation by lowering the cost of offering securities to the public.

 

There are forms that international companies have to file. Here is a link to the possible, international forms that you may have to file:

 

http://www.sec.gov/about/forms/secforms.htm#intl

 

 

Go down to "International Business Forms, Regulations, and Rules" to find the forms that apply to you.

 

Your American investors will, ordinarily, have the same tax liabilities on shares in a foreign company, as they have on shares in an American company. If they are major shareholders, or you become a major shareholder in an American firm, then there are additional reporting requirements.

 

The same thing applies to reporting the income from your company.

 

As I said, this is just a brief overview. You will definitely need an American attorney who specializes in securities. The attorney will determine the specific regulations and reports that apply to you.

Paul Taliefero and other Tax Specialists are ready to help you
Customer: replied 8 years ago.
Thanks, XXXXX XXXXX very helpful. I am only selling a few shares in the company for just $80,000 dollars so very small investment. I am assuming I will not need to register with such a small sale but do intend to report income.

thanks

Heath