A company's taxable status depends on whether it is incorporated.
A corporation is a taxable entity, taxed on net profits
at the corporate level. No deduction is permitted
for corporate profits distributed as dividends to
shareholders. Dividends are taxable to the shareholders
as income, subject to certain dividends-received
deductions allowable to corporate shareholders. A
partnership or a sole proprietorship is not a taxable
entity; items of income and loss are passed through
and taxed directly to the owners.
Corporations Subject to Tax
Domestic corporations are subject to tax on their worldwide
income. A foreign corporation engaged in a trade or business
in the United States is taxed on certain US-source investment
and other passive income and on income that is effectively
connected with the conduct of a trade or business in the
United States. A foreign corporation not engaged in a US
trade or business is taxed only on certain US-source investment
and other passive income. Gains from the disposition of US
real property interests are taxable to foreign corporations
whether or not otherwise engaged in a US business.
The Residency Test
For US tax purposes, a domestic corporation is one created
or organized under the laws of the United States, or any
state of the United States, or the District of Columbia.
A foreign corporation, for US tax purposes, is one created
or organized in any other place. The situs of a corporation's
management and control does not determine its residency for
US tax purposes.
Disclaimer
|
"The
information contained herein is of a general nature and
is not intended to address the circumstances of any particular individual
or entity. Although we endeavor to provide accurate and
timely information, there can be no guarantee that such information
is accurate as of the date it is received or that it
will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough
examination
of the particular situation.
KPMG and the KPMG logo are registered trademarks of KPMG
International, a Swiss cooperative.
© 2006 KPMG LLP, the
Canadian member firm of KPMG International,
a Swiss cooperative. All rights
reserved."
|
|
|
