Question

Assignment 2: Foreign Taxpayers Engaged in a Trade or Business in the U.S.
Due Week 4 and worth 200 points

Imagine you are an international tax consultant with a foreign client seeking to invest capital in the United States to take advantage of the growing economy. The client is trying to evaluate alternative forms of business to maximize available tax benefits. The foreign client is requesting advice on the best methods to avoid or reduce taxes on income from the investment in a new business with other U.S. investors.

Use the Internet and / or Strayer Learning Resource Center to research the rules related to foreign taxpayers engaged in a trade or business in the U.S. and the related tax effects.

Write a three to four (3-4) page paper in which you:

    Based on your research, identify at least two (2) methods of conducting business in the U.S. for your client, and compare the tax advantages and disadvantages of each that would have the greatest impact on the business. Provide examples to support the advantages and disadvantages identified.
    Examine at least three (3) categories of U.S. sourced income that will generate U.S. taxes for your client. Provide support for your results.
    Recommend the most advantageous method of conducting business in the U.S. for your client, and then provide two (2) recommendations for avoiding or reducing taxes on income from the investment. Provide examples to justify your recommendation.
    Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.

Answer 1

advantages of investing US:-

1. its a world's largest market.

2.it is a country with nexus of invention.

3. ease of doing business due to liberal laws.

4. huge workforce talent.

5. abundant resources.

6. free trade

7. larger access to capital

tax implications:-

Bonds:- interest income earned on US bonds by a non US investor is not taxable however it might be taxed in their home country. (advantage)

Bank deposits:- Interest income earned through bank deposits by a non US investor is not taxable in US. (advantage)

ADR:- dividend paid on ADR subject to with hold taxes but the same cannot be used for foreign tax credit. (disadvantage)