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LLC taxed as a C Corp. a good choice?

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nydana8

Junior Member
What is the name of your state? California

I am planning to open up a 2 member LLC where one of the members is a foreigner. He is here on an extended visa but not allowed to work. The idea is that he will put in capital but not receive any income from the LLC.

QUESTION: Is this legal? I know other people in the same situation, for ex. a teacher who was teaching in the US but requested that his pay be donated to a charity, for the reason that he was on a visa that did not allow him to work in the US. From what I understand it is not about "working" per se, but about receiving income.

In this situation I assume that the only choice is to elect to be taxed as a C Corp? Can we elect taxation as a Partnership if the Foreign member does not take any income? The LLC's line of business is Media Production with focus on Internet based radio. We do not expect to keep a lot of the profit in the company except for the first year or so, when we would need to buy inventory.
Also, because from what I understand the method of taxation stays with the company for 5 years: if we elect to be taxed as a C Corp., ibut later find out that it does no longer apply and we would want to be taxed as a Partnership, can we just close the company & open up another? What are the downs of doing this?


Thanks a lot!

Danielle
 


LdiJ

Senior Member
nydana8 said:
What is the name of your state? California

I am planning to open up a 2 member LLC where one of the members is a foreigner. He is here on an extended visa but not allowed to work. The idea is that he will put in capital but not receive any income from the LLC.

QUESTION: Is this legal? I know other people in the same situation, for ex. a teacher who was teaching in the US but requested that his pay be donated to a charity, for the reason that he was on a visa that did not allow him to work in the US. From what I understand it is not about "working" per se, but about receiving income.

In this situation I assume that the only choice is to elect to be taxed as a C Corp? Can we elect taxation as a Partnership if the Foreign member does not take any income? The LLC's line of business is Media Production with focus on Internet based radio. We do not expect to keep a lot of the profit in the company except for the first year or so, when we would need to buy inventory.
Also, because from what I understand the method of taxation stays with the company for 5 years: if we elect to be taxed as a C Corp., ibut later find out that it does no longer apply and we would want to be taxed as a Partnership, can we just close the company & open up another? What are the downs of doing this?


Thanks a lot!

Danielle
An LLC with foreign members can be taxed as a partnership. I was a member of an LLC with that exact set up about six years ago.

The income will flow through to the individual partners on a K1, so your foreign partner will be responsible for US taxes on his/her share of the partnership income. This doesn't count as "working" it counts as owning a business. A foreign individual is not prohibited from owning, or investing in a business in the US, or from receiving profits from the business.

Its only an S corp that cannot have foreign individuals as shareholders.
 

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