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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14842
Experience:  15years with H & R Block. Divisional leader, Instructor
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I'm a dual French and US citizen. My husband and I own a SCI

Customer Question

I'm a dual French and US citizen. My husband and I own a SCI (Societe Civile Immobiliere) in France 50%-50%. This SCI has rental income form a residential property:
1. Do I have to fill out Form 8865? what filer category?
2. In addition to this Form 8865, do I have to fill out a Form 8858 "Foreign Disregard Entity"? I understand the SCI is similar to a Partnership but I 'm not sure if it is also a FDE?
3. What Part of Form 8938 should I complete?
Thanks for your help
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello

1. Do I have to fill out Form 8865? what filer category?

Form 8865 is required to report information with respect to controlled foreign partnerships, transfers to foreign partnerships, or acquisitions, dispositions, and changes in foreign partnership ownership. You would each be Cat 2 as you each own more than 10%.

2. In addition to this Form 8865, do I have to fill out a Form 8858 "Foreign Disregard Entity"?

Complete only the identifying information on page 1 of Form 8858 (for example, everything above Schedule C) and Schedules G and H on page 2 of Form 8858. Do not complete the separate Schedule M (Form 8858). You are not required to complete Form 8858 if there is a Category 1 filer of Form 8865 that completes the entire Form 8858 and separate Schedule M (Form 8858) with respect to the FDE.

3. What Part of Form 8938 should I complete?

Your Foreign Partnership interests are reported on Form 8938. The property is not reported but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate.

Part II would be a summary of the partnership assets.

I would strongly suggest you have a tax professional complete these forms for you at leats if this is your first year.

Customer: replied 1 year ago.
Thanks Robin,are you 100% that a Societe Civile Immobiliere is a FDE? I've searched extensively on the Web and I always find that a SCI is a Partenrship subject to complete the Form 8865 and 8938 but I've never found anything about the Form 8858. Can a Foreign Partnership also be a Foreign Disregard Entity? am I in that situation? Please advise.
Thanks
Expert:  Robin D. replied 1 year ago.

An FDE is an entity that is not created or organized in the United States and that is disregarded as an entity separate from its owner for U.S. income tax purposes under Regulations sections(###) ###-####2 and(###) ###-####3.

The rental income is not separate from you as an individual as it flows to you for taxation in US.

I remember too that an SCI doe snot give limited liability but cannot find that ruling at the moment.