US Citizen Being a Member of a UK LLP?


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Suppose a US citizen becomes a member of a UK LLP, along with 2 other foreigners (non-US citizens). Assume each one of the three has a 33.3% share in the UK LLP.

The LLP starts working, and has a profit by year end; Then, the 2 foreigners withdraw their portion of the profits, yet the US citizen herself does not withdraw her portion and have it remain the UK LLP's bank account.

What are the tax implications from the IRS perspective, as far as the US citizen is concerned? (again, just to clarify, I am talking about a scenario where the US citizen has no income whatsoever from the UK LLP).

UK Tax International USA

asked May 17 '12 at 00:59
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User3262424
107 points

1 Answer


1

In the US partnership income CANNOT be retained. Even if the partner doesn't withdraw the income, it is considered withdrawn (and then reinvested into the partnership, raising the partner's basis), and the tax must be paid.

Regardless of the income and taxes, the US citizen is likely to be required to file the FATCA and FBAR forms, as well.

Note that if the US citizen resides in the US, the LLP might be required to register as a foreign entity in the State the US citizen resides in, and file taxes in the US.

Better consult with a tax professional for more details.

answered May 17 '12 at 04:03
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Littleadv
5,090 points
  • Thank you littleadv for your advice. – User3262424 9 years ago

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