Canadian citizen owns part of US corporation. Works only in Canada.
US company intends to convert to S Corporation. Cannot because Canadian citizen cannot own S shares.
US Company next intends to convert to US LLC to gain flow through status. What effect does this have on Canadian citizen who will continue to work only in Canada. It appears to me that he will still report as Canada income any distribution he receives from the US LLC and those payments will still be deducted by the US LLC.
Also appears taht eventual sale of company will be reported by Canadian citizen as a sale of an investment which also would be canadian income since it will include no real estate int he US.
Any thoughts will be appreciated.
Canada citizen with company ownership in US
Moderator: Mark T Serbinski CA CPA
Your right about the S corp can not be owned by non residents.
As for the LLC its not so simple, CRA will treat the income as a dividend to to the unit holder since the LLC is treated as a corp in Canada, and the at risk rules apply for any loss if any created just like any US aor CND partnerships the at risk rules limit any loss as being received up to what ever capital is at risk.
As for the LLC its not so simple, CRA will treat the income as a dividend to to the unit holder since the LLC is treated as a corp in Canada, and the at risk rules apply for any loss if any created just like any US aor CND partnerships the at risk rules limit any loss as being received up to what ever capital is at risk.
JG