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Tax Experts Taxation of foreign partner in US partnership.

Customer Question

Tax Experts
Taxation of foreign partner in US partnership.Quick Summary: California state partnership has been created in 2014 by three foreign partners.Partner #1 owns 42.50% interest in CA partnership through single member LLC created in US. He applied and received TIN for his personal tax. Planning to file 1040 NR and report income from K-1 (single member LLC) on the Schedule C. Is this correct? Are there any other filing requirements?Partner #2 does not have TIN and want his income to be allocated (special allocation) to other partner #1 with TIN. His ownership interest is 15%. He will not have income and will not be required to file tax return. Any other filing requirements for partner #2?Partner#3 is foreign corporation and does not have US tax id. Ownership interest 42.5%. Partnership 8813 Form has been filed and tax related to the partner # ***** has been paid. Is partner #3 required to file 1120F?What are filing requirement of CA Partnership? Do partnership need to pay CA tax for partner #3.
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.

Partner 1:

A single member LLC does not have any partners. A single member LLC is just that, a single member. Is this partner the only owner of the single member LLC? Please advise.

Partner 2:

If you haven't already done so, please read the document at the following link regarding special allocation of income.

http://www.ipbtax.com/media/publication/23_CBC%20Insuring%20special%20allocations%20of%20partnership%20income.pdf

Partner 3:

Refer to instructions for the /form 1120-F under the Who Must File section/page 2. If any of the listed items apply, then the foreign corporation is required to file the Form 1120-F

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I will be away from the computer for a few hours. If you need further assistance, I will have to get back to you later.

Customer: replied 1 year ago.
Partnership will file 1065.
Partner 1 is single member LLC (owned by foreign individual with TIN). I am assuming income from k-1 should be reported on his 1040 NR (schedule C). Is this correct?
Partner 3 - Foreign corporation. Tax was paid on income allocated to this partner. Is corporation required to file 1120f if they do not need to claim refund?
Customer: replied 1 year ago.
Partner 3 - tax was paid on partnership level with 8813 form
Expert:  Tax.appeal.168 replied 1 year ago.

Partner 1: Yes, this is correct.

Partner 3, I referred you to the instructions of the Form 1120-F which lists the situation when a corporation is required to file the 1120-F.

Link to From 1120-F instructions:

https://www.irs.gov/pub/irs-pdf/i1120f.pdf

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