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Author: markdonnell Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121453  
Subject: Question for criser on non-resident taxes Date: 4/20/2001 5:33 PM
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Hi

Late last year I posted a message on this board (#42153) re taxes for non-resident investors. I'm a non-resident alien and I understand that:

* If I invest in US shares as a non-resident alien the only US taxes I'm liable for are US tax on any dividends.
* If I invest in US shares via a non-resident trust, which has NRA grantors and beneficiaries, then again I'm only liable for US tax on any dividends.

But now I have two questions related to how companies are treated when they invest in the US.

The first is simple ... I figure that a "standard" limited-liability company investing in US shares would be liable for US taxes on both dividends and on capital gains. Is that right?

But the second is a little more complicated ... in Australia & New Zealand (& I believe the UK) we have "nominee companies". You see these most often with solicitors but anyone can create one. A nominee company is similar to a trust, the nominee company is a bare trustee of the assets it holds, and holds them in trust for whoever placed them in the nominee company.

My question is if a non-resident nominee company invested in US shares (at the direct request of its "investors") would the IRS consider it to be liable for US taxes on capital gains? It is legally considered to be a form of company, albeit of a type I don't think you have in the US. The complication is that here a nominee company is seen very much as more an administrative convenienc really, which acts as a bare trustee to simply action whatever requests the "investors" make.

Hope that's not too garbled or confused a question.

Regards

Mark
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