When is a company considered a US resident?
A business entity (including an entity that is disregarded as separate from its owner under § 301.7701-2(c)) is domestic if it is created or organized as any type of entity (including, but not limited to, a corporation, unincorporated association, general partnership, limited partnership, and limited liability company) in the United States, or under the law of the United States or of any State. Accordingly, a business entity that is created or organized both in the United States and in a foreign jurisdiction is a domestic entity. A business entity (including an entity that is disregarded as separate from its owner under § 301.7701-2(c)) is foreign if it is not domestic. The determination of whether an entity is domestic or foreign is made independently from the determination of its corporate or non-corporate classification.
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Criteria |
Description |
| It is incorporated in US | A company (or partnership) is “domestic” (resident) if created or organized in the U.S. or under the laws of the U.S. (one of the 50 states or the District of Columbia) |
U.S. tax law determines residency of a corporation based on the jurisdiction of formation, but
certain other countries determine residency based on where the corporation is managed or
controlled. As a result, a corporation could be considered resident in two countries—raising the
possibility of double taxation. Many income tax treaties resolve this problem. However, for
transactions not covered by treaty, this situation can cause significant double taxation issues.
