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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I own 33% of an LLC, while the other 67% is owned by a US Corporation.

Customer Question

I own 33% of an LLC, while the other 67% is owned by a US Corporation. The US Corporation is owned by a UK company as foreign companies/individuals cannot own an LLC. I recently found out that the UK company has sold items to the US which have not come through the LLC. I was wondering from a tax point of view if this may cause any taxation issues within the US company? Some of these customers we have worked with in the past, hoping they do not file a 1099 with the amounts sold (nothing has arrived, but I would liek to be prepared), some are new customers and do not know of the US branch.
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!
First of all - foreign companies and nonresident aliens (individuals) are allowed to own single member LLC or be members of multi member LLC - that is not a problem.
There is no issues if the LLC purchases assets from the affiliated foreign company.
Because that is a LLC with several m,embers - it is treated as a partnership and transactions between related taxpayers are separately reported on the income tax return.

JACUSTOMER-mdby5dvl- :

Okay, so with regards to the UK Ltd company selling direct to the US, this would not have any tax implications on the LLC even though they are related?

LEV :

There is no tax implications if there is no taxable income. However if the LLC - which is an US entity is re-selling these goods - and realized a taxable income - there will be taxable income passed to partners.

Expert:  Lev replied 3 years ago.
Just in case you were not able to use the chat - I am switching to Q&A mode and porting the answer below.
Please feel free to communicate if you need any clarification or have other tax related issues.

There is no tax implications if there is no taxable income. However if the LLC - which is an US entity is re-selling these goods - and realized a taxable income - there will be taxable income passed to partners.