Each week TaxConnections posts a question from one of our visitors. We encourage our members to provide their insight and comments:
Canadian resident looking to enter into some sort of partnership with US citizen (LLC or similar). What is the best arrangement? I’ve read on this forum that as Canadian citizen, owning part of a US LLC may not be the best. If we want to share equity and management of the entity, what is best? Is LLP a better option, or some other? Many thanks.
Tax Professional Members – Please submit your comments below if you are able to answer this question from a TaxConnections visitor. Your thoughts are greatly appreciated.
2 comments on “Tax Professionals – Question Of The Week”
LLP may work if formed prior to April 26, 2017 due to “administrative grandfathering” CRA granted to Canadian taxpayers with investments in US Limited Liability Limited Partnerships (LLLPs) and US Limited Liability Partnerships (LLPs).
LP can be a solution but US investors often seek corporate protection not provided by an LP. There is no one-answer-fits-all as there are numerous moving pieces and variables – such as whether US estate tax is an applicable concern. Some planning structures involve trusts, for some scenarios using a trust makes no sense, sometimes a structure can use multiple entities – trust, partnership, C Corp, LLC and these can be on either side or border or on both. Sometimes a ‘blocker’ entity is useful to sever Canadians from any US reporting requirements, such as when Cdn investors wary of reporting in any way shape or form to IRS, are involved.
In general, a LP structure works the best.
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