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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I HAVE A CFC WITH EFFECTIVELY CONNECTED INCOME US

Customer Question

Customer: ***** ***** I HAVE A CFC WITH EFFECTIVELY CONNECTED INCOME US SHAREHOLDER OWNS 90% ITS A CORP ORGANIZED IN THE PHILIPPINES SO I CANT ELECT A DISRREGARDED ENTITY HOW SHOULD I REPORT INCOME
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Submitted: 12 months ago.
Category: Tax
Expert:  Lev replied 12 months ago.

If that foreign corporation operates in the US - and the shareholder provides services to that corporation - the compensation for services is generally reported as wages.

However based on specific circumstances - such services may be classified as provided by a self-employed contractor - and in this case - that would be self-employment income.

Distributions from the corporation that are NOT a compensation for services but made to shareholders out of corporate earnings are classified as dividends and reported as such on shareholder's US tax return.

Any questions?

Expert:  Lev replied 11 months ago.

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