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If I am investing in Foreign Stocks through an LLC, what is my tax rate?

Atlanta, GA |

I am investing in Foreign "Non-qualified" stocks through a single member LLC, what would be my tax rate on the basis that my only income is through dividends? No other source of income. What alternative structures would you suggest if any to lower my US Taxes.

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Attorney answers 3


Depends on the foreign countries tax rate and any applicable exclusions or treaty. Generally a taxpayer is allowed to claim a foreign tax credit for taxes paid in a foreign country; however, there are some limitations. If you are a U.S. citizen the U.S. government will tax you on your worldwide income regardless of taxes paid in a foreign jurisdiction. The tax rate on the sale of stock is generally the long term capital gains rate, assuming you have held the stock for more than a year.

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Why are you using a LLC to invest in publicly traded stock? Is it for estate planning purposes? Normally, there is very little liability being a shareholder of a publicly traded company, so there really is not much protection. If the brokerage account is in the US (even though you have foreign company shares) there is only tax in the US. Might I suggest that you sit down with a good tax and estate planning attorney to help you with this?

Good luck!

Ron Cappuccio

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I would suggest consulting with an attorney who has experience dealing with estate planning in the international arena. Investing in foreign stocks can cause many issues. Namely, that you stated that the stocks are "non-qualified" means you may be running into Passive Foreign Investment Company income which is taxed in a much different manner than other stock income. Alternatively it would be worth consulting with a CPA who is familiar with taxation of foreign investments. Best of luck to you.

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