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Does a US corporation organized under the laws of the US become a "foreign" corporation for IRS purposes if owned by foreign co?

San Diego, CA |

We have a Delaware corp. but it is currently entirely owned by a Chinese company, based on what I've found on the IRS/Treasury website this does not change the fact that the corporation is still considered a "domestic" corporation. Is this true?

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Attorney answers 5



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-----Original message-----

THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is

Dana Howard Shultz

Dana Howard Shultz


There is a danger in providing a one-word answer when, as in this case, the detailed Q is the opposite of the title Q.

Phillip Monroe Smith

Phillip Monroe Smith


This does not change the fact that a Delaware Corporation is always going to be considered a domestic corporation to which three attorneys agreed.


Correct. The Delaware corporation is still considered a domestic corporation for IRS purposes.

The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.


If your corporate entity is incorporated in a US state or territory, it is considered to be a company within the United States, notwithstanding who owns the shares.

If you don't want the Chinese company (or its officers/directors) to be subject to US laws, I would suggest incorporating your corporation somewhere outside the US.

The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.


Why the question?


If the goal is to avoid US taxes, I would caution that there are other considerations. For example, those that meet a substantial presence test, green card holders, and US citizens must file US taxes, as well as comply with other reporting requirements (FBAR, FATCA, etc.).

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