Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

Question for a Tax Attorny who Knows US tax Laws regarding…

Question for a Tax Attorny...
Question for a Tax Attorny who Knows US tax Laws regarding Foreign Companies ?
My company is a Cayman Company (#1) (Foreign) owned by USA Citizens (2).
Company (#1) filed IRS Form 8832 to be Taxed as A Partnership under USA Tax Laws.
(#1) files its taxes and pays Tax on all of its Income.
Now (#1) has obtaining a Subsiduary Company (#2) formed in the Caymans.
(#2) is a Computer software Service and Support Company whis offers it Service from its Off shore Location, No
Management in the USA, Everthing from Offshore.
? How do we report this Company (#2). Income as dividends as received ? What IRS Forms , if any are required to be filed by (31) in regardsto USA Taxes ????
Show More
Show Less
Ask Your Own Tax Question
Customer reply replied 7 months ago
Mistake in last ? Not (31) What IRS Forms , if any are required to be filed by (31) in regardsto USA Taxes ????
What IRS Forms , if any are required to be filed by (#1) in regards ***** ***** Taxes ?
Customer reply replied 7 months ago
Just a Note. Company (#2) has a estimated Potential profit of $110,000 off shore Profit,
Company (#2) will pay a 15% Dividend to Copany (#1) forwarded to USA, Est $ 16,500.
So Company (#2) will retain $ 93,500. Off Shore !!
Customer reply replied 7 months ago
ANY Tax Atty's or Accountants with Informatii to Answer our Question ??
Answered in 6 hours by:
10/30/2017
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,106
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
Verified

Welcome to Just Answer! Thank you for giving me the opportunity to assist you! I will do my best to help!

Please give me a few minutes to type my response.

Ask Your Own Tax Question

I am not a tax attorney, but I am a CPA who has been practicing in the international tax area for over 30 years.

Your situation is pretty clear. Company #2 (Co2), if it is a corporation, will not be taxed on its income in the US. The shareholders of Company #2, which is Company #1 (Co1), taxed as a partnership, will not pay any tax on the income from Co2 until Co2 pays a dividend to its parent, Co1.

Co2 is a Cayman company, and we have no tax treaties with the Cayman Islands. So when Co2 pays a dividend to Co1, the shareholders of Co1 will have a taxable dividend reported to them on Co1's K-1 that is included with the Form 8865 (see next line).

Co1 will have to file a Form 8865, partnership tax return for a foreign partnership. This Form has a Schedule K-1 that will be given to each of the US partners to report their share of the partnership's income.

Additionally, since there is more than 50% ownership of Co2 (even though it is indirect through Co1) there is additional reporting required. Co1 will have to complete and file with its Form 8865 an informational return called a Form 5471 for Co2. This Form is complex, and it is required to be filed. There are significant penalties for failing to file this Form and ALL of the required schedules. The penalty is $10,000 per month that the company is not in compliance.

If Co2 is only paying 15% of its income as a dividend, then the remaining 85% is not taxed until it is brought back to the US through either a dividend, or a deemed dividend (a special type of income that is meant to catch "disguised" dividends, such as the foreign corp loaning the US partners cash, etc).

I hope this answers your questions, If you have any more, please feel free to ask and I will be happy to answer.

Thanks! Have a great week!

Roger

taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,106
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
Verified
taxmanrog and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 7 months ago
Another related question ?
Company (1) has obtained EIN #, and filed 8832 As a partnership ! ? We would like to open a checking account at our USAbank ? Opinion ?
Phone call session started

I see that you requested a phone call. Did someone already answer your question? When I tried this morning it said that another expert answered it already.

Please let me know.

Thanks!

Roger

Ask Your Own Tax Question
Customer reply replied 7 months ago
No, my request was for you!
Customer reply replied 7 months ago
Roger,
Waiting to speak with You,
Thanks
Customer reply replied 7 months ago
Waiting for call

I just called. It was a pleasure speaking with you.

Please don't forget to rate me so that this question can be closed. It is still showing up as an open question that needs my attention.

Thanks!

Roger

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask taxmanrog Your Own Question
taxmanrog
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,106
1,106 Satisfied Customers
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.

taxmanrog is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,495 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,272 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
Income from Trust. Have attached copy of Schedule K-1. I put
Income from Trust. Have attached copy of Schedule K-1. I put the amount on line 17. Mistake? Where? They want a Schedule E if line 17 is correct … read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Tax adviser filed taxes incorrectly using US-Spain treaty.
tax adviser filed taxes incorrectly using US-Spain treaty. Tax office says not valid and sent me a bill for 2 years a big amount, I cannot pay what are my options … read more
taxmanrog
taxmanrog
Certified Public Accountant (CPA)
1,106 satisfied customers
TurboTax has included a schedule k-1 that doesn't apply to
TurboTax has included a schedule k-1 that doesn't apply to me and won't get rid of it. … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,238 satisfied customers
A Schedule K-1 has been received. Beneficiary share of
A Schedule K-1 has been received. Beneficiary share of fiscal year deductions reported in box 11A. 2017 returned has been filed and an amended return must be filed. Where do I get the detailed instruc… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,043 satisfied customers
Looking for estimated tax rate for 500,000 income in 2017.
looking for estimated tax rate for 500,000 income in 2017 … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,495 satisfied customers
Schedule K-1, Form 1041. Sorry. On Schedule K-1, Form 1041.
Sorry. On Schedule K-1, Form 1041. Line 14 Other Information: H, the amount is in parenthesis, does this mean it is a negative $amount. … read more
Carter McBride
Carter McBride
LLM
1,132 satisfied customers
I am trying to enter information from a schedule K-1 form
I am trying to enter information from a schedule K-1 form into turbotax it is asking me to enter code P detail. On my information sheet for box 12, code P the wording is different from what turbo tax … read more
Mike-USACPA
Mike-USACPA
9 satisfied customers
I received a Schedule K-1 Form 1041 for 2017. Do I need to
I received a Schedule K-1 Form 1041 for 2017. Do I need to file this with my 2017 tax return? … read more
abci168
abci168
Principal
27 satisfied customers
I received a schedule K-1 form 1041. My father passed away
I received a schedule K-1 form 1041. My father passed away and had a trust. It is indicated on the form that there were net long term capital gains of $6600. I believe that I have to pay taxes on that… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,363 satisfied customers
Do i pay income tax,on dividends on stocks,if they are
do i pay income tax,on dividends on stocks,if they are rolled over into more stocks. Or when i withdrawl, from my stocks… read more
abci168
abci168
Principal
27 satisfied customers
How to report foreign income on which Tax has been withheld
How to report foreign income on which Tax has been withheld in foreign country and tax return in the country is filed as per their rules. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,272 satisfied customers
I received a schedule k-1 (form 1065) this year as an
i received a schedule k-1 (form 1065) this year as an individual partner and a '2017 supplemental information' sheet. do i just submit this info with my tax return. do i need to include any of the inf… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,363 satisfied customers
I received a Schedule K-1 for a investment that is held
I received a Schedule K-1 for a investment that is held within my IRA Account. I was informed by the issuing LP that I need to file a form that replaces the need to put the information from the K-1 on… read more
Cole Parker
Cole Parker
Principal/CPA
Bachelor\u0027s Degree
111 satisfied customers
I have a question regarding a Schedule K-1 that i received.
hello, i have a question regarding a Schedule K-1 that i received … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,272 satisfied customers
Taxes Where doe do you report foreign source income from a
TaxesWhere doe do you report foreign source income from a 1099-div There are amounts in boxes 1a-6 that I already entered in Schedule B and the dividend income statement. I entered the Foreign tax pai… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Where do report for Partnership (LLC) returns using Form
Where do report for Partnership (LLC) returns using Form 1065 income recipient from taxable federal grant? Specifically, 1099-G, Box 6.… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,043 satisfied customers
Tax Experts - Foreign partner US LLC partnership had one
Tax Experts - Foreign partnerUS LLC partnership had one foreign partner (42.50%) from Italy. In order to get k-1 and pay taxes, foreign partner applied for federal ID which was used by US LLC to repor… read more
taxmanrog
taxmanrog
Certified Public Accountant (CPA)
1,106 satisfied customers
Does a US domestic partnership that has foreign partners and
does a US domestic partnership that has foreign partners and sustained a loss in 2017 have to file any IRS forms on behalf of the foreign partners. I know the partnership has to file Form 1065 but are… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,238 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x