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Tax-Structuring for Canadians or Foreigners Investing in the USA alone or with a US Partner

If a Canadian resident seeks to invest in the USA either alone or in partnership with a US citizen or entity, what tax structures may work best?

 

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 Canadian investors wary of reporting in any way shape or form to IRS, are involved.

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