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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

Posted

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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Posted

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

If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.

Posted

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.

Please remember that if you find an answer particularly helpful, please mark it as helpful or "best answer" so that the attorneys who volunteer their time to answer these questions have feedback. This answer is only for informational purposes, is not legal advice, and does not create an attorney-client relationship. Every case is different and must be judged on its own unique facts

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