Income Tax on New York State LLC?

[Matt Willis]

I'm looking at purchasing some sfr or small multi families in the western New York area. Does anyone know the income tax rate an LLC would pay in New York State? Besides being able to write off expenses, and depreciation, are there any other advantages in being set up as an LLC ? Thanks in advance I really need to learn more about business taxes and the advantages that can be realized when it is understood.

[Roy N.]

Originally posted by @Matt Willis:

@Nicholas Aiola Thanks Nicholas. Another question, I am a Canadian citizen, living in Canada. My partner(s) will most likely be the same. Do you have an understanding of the tax treaty between the US and Canada? My understanding is that as long as I am not a US citizen, and do not spend 184 days of a 12 month period in the US, than I am except from paying and filing US taxes. The income earned through the LLC would than be taxed as part of my income in Canada? Is that correct?

Matt:

You will not be exempt from U.S.A. taxes.

The CRA does not recognized LLCs, as a disregarded (pass-through) entity, but treats them as a body corporate regardless of how you elect for the LLC to be taxed in the U.S.A.

If you elect for the LLC to be a disregarded entity in the U.S.A., the IRS will tax the income in your hands. However, because the CRA sees an LLC as a corporation, your will not be able to use your U.S.A. paid income tax as a credit on your Canadian taxes.

If your plan is to elect for the LLC to be taxed as a corporation, then you will have no disconnect between the tax treatment in both countries ... and if this LLC is a 100% child subsidiary of a Canadian corporation, you will be able to repatriate retained earnings to the parent corporation with little to no taxation from the CRA.

You, and your partner, should spend a little money and sit down with a {Canadian} accountant, and possibly an attorney, experienced in cross-boarder business and determine the best ownership stricture to meet your current and anticipated needs ... before you start shopping.