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What are tax implications for an Arizona LLC company (Image Garments) having 2 foreign members.

Our LLC company is registered in Arizona state on Jan-02-08. It has 2 foreign memebers (capital contribution of each member is $1,000.00). It has one marketing consultant being paid $4,000.00 per month. It has a turnover of $13K and is in loss of $35K as of Dec-08. Its business is to import knit apparels into USA from foreign countries and to sell goods to wholesaler/distributors/intermediaries and end users across USA (all states). Its looking for to file first time all applicable taxes returns (Fedreal/State).

Questions:

  1. How should LLC opt to tax in this case as C Corporation or Partnership to gain tax benefit?

  1. What is its financial year or tax year? I mean the year ending on Dec-31-08 or some other date.

  2. What are applicable tax rates (Federal/State) or fillings if it opts as Partnership or as C Corporation.

  1. What are other applicable taxes or fees payable to Federal or State?

  2. Should LLC pay to Marketing Consultant as consultant's fee or emplyee's salary to gain tax advantage.
Reply to
ishaq.beryar
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You need professional help and you need it NOW!

You did not say, but if the foreign owners hold more than a certain percentage (I think 20% or 25%) then you may be classified as a tax shelter and you may have to register as such. If this is the case then you are in a whole different ball park and you have to play by a whole different set of rules.

Go find a local pro who knows about tax shelters - start with the National Association of Enrolled Agents at

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You can do a search for an EA in your area. Your local Board of Accountancy may also have a list of CPA firms in your area. I would quip that the likelihood is that you'll need to work a larger firm rather than a small local accountant - Tax Shelter work is highly specialized and is not the kind of thing the small shop (or the storefront shop like HRB, JH or LT) work with often.

Good luck, Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

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I took "foreign" to mean not AZ residents not as US nonresidents. I think the OP should clarify that first. However I still agree with Gene, see a local tax professional. These aren't the type questions that can be easily handled in an online forum. I don't answer questions like that for my clients via e-mail, just too many questions and issues to discuss.

-- Drew Edmundson, CPA Cary, NC

Reply to
Drew Edmundson

You know Drew, I thought a bit about the "foreign" members issue too and I concluded (or assumed) that the OP meant NOT U. S. Citizens. Here's how I got there:

1 - In more than 25 years in this business I have NEVER met a client who understood that "foreign" could mean a non-resident of the state in question; 2 - nothing in the OP led me to believe that the Poster was a professional or anyone else familiar enough with "our" world and vocabulary to even have a clue that foreign could mean anything other than a non U. S. Citizen.

Which brings me to the point of this little diatribe - most of us pros are more than willing to help out by answering quesitons whenever we can. The problem we face, as professional contributors, is that most of those asking questions don't understand enough about what they are doing to post enough relevant information so that we can make an accurate assessment of their situation. This isn't a complaint really, it is the nature of this type of forum and those of who frequent here know this.

I mean more as a suggestion to those who may post in the future - try to be as clear as you can about the issues involved.

Drew - I'll bet more people would read your posts if you posted as Drew Cary from Edmundson, NC!

Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

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