LLC with foreign company as only member

[kmaynard]

I have an LLC formed in TN with the only member being a limited liability company in Austria. Since the owner is a foreign company and is the only member of the LLC, is the only option to file form 8832 and elect to file as a corporation? This LLC has US citizens as employees in their location here in the states. They are paid as employees. Is the foreign company then listed as the more than 25% foreign owner? Do the members of the Austrian company have to be listed individually on form 5472?

Thanks for any help on this!!

[Bees Knees]

A single member LLC is disregarded as an entity for federal tax purposes. You did not say what the Austrian LLC is. If the Austrian LLC that owns the TN LLC is an individual, then that individual would have to file Form 1040NR as a nonresident, unless the individual elects to file as a corporation. If the LLC is a foreign corporation, then it would have to file a return as a foreign corporation. I don't recall off hand how foreign corporations file and pay taxes. But the bottom line is that foreign individuals and foreign corporations doing business in the U.S. are subject to U.S. taxation. The fact that the TN LLC is a single member LLC simply means you disregard it and file the way any other foreign taxpayer would file and pay tax in the U.S.

[Black Bart]

Dear K-Mart Maynard,

You have to admit, this forum is the only place in the world (other than Austria) where you could have gotten any reply whatsoever to that question. Nice goin', Bees.

[kmaynard]

1120 or 1120F

I have a Tennessee LLC who has a single member which is an Austrian LLC. They have elected to file Form 8832 as a foreign eligible entity electing to be classified as an association taxable as a corporation. I am filing the corporate return for the TN LLC but am not sure if I should file an 1120 as the company making this election is a TN LLC or if I have to file an 1120F for a foreign corporation since the single member is an Austrian LLC. They will not owe any taxes for the year as they did not make a profit but I need to get their tax return on the correct form.

I appreciate any help on this as I am confused after reading all the instructions for forms 8832, 1120& 1120F.

THANKS!

[Bees Knees]

If the TN LLC elects to be taxed as a corporation so that it is no longer a disregarded entity, then it is not a foreign corporation because TN is a part of the U.S. So it would simply file Form 1120 as a U.S. corporation.

[JON]

Austrian LLC

Are you sure they have such a thing. LLCs in Europe or they formed it in TN and usually they have to have a local representative in TN. State law requires that in most states. There are some corprations that for a fee they will be your rep...

[kmaynard]

Jon,

I am sure. It is an LLC in TN and a limited liability company in Austria. The Austrian company is the only member of the TN LLC. The TN company is the USA location, they have 3 employees in the TN and one of them is their Chief Manager.

[JON]

Partnership

here in 10000 lakes outstate partners have to sign a document for liability or have the entity pay the taxes to the State. Foreign LLC I would be shocked if it has the same type governing documents as TN... Although I would think TN LLC (granted disregarded enity) law would require someone tangible as a member to even form a LLC. What you file would be the question and obviously the member of the TN LLC have to abide by TN tax law, no individual income taxes...

[kmaynard]

This return continues to haunt me. The LLC was formed in Sept. 2004 and began doing business then but does not have a profit for 2004. No tax return has been filed yet and I will need to file a 2004 tax return. Since they want to file as a corporation for federal tax puproses, they have completed the form 8832. They want the effective date of the election to be Sept. 2004. According to the instructions for form 8832, as this is more than 75 days prior to the date the election will be filed, they will need to request late election relief. I am assuming that this letter must be written and signed by the taxpayer and not me as the preparerer. Any and all thoughts and help on this are greatly appreciated.