Corporate structure for US/CA Citizen

USA Discussion in 'General Tax Discussion' started by taxesanddeath, Dec 23, 2018.

  1. taxesanddeath

    taxesanddeath

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    Current scenario:
    •$150,000 CAD yr taxable sole-prop income (Canadian sourced)
    •US/CA citizen
    •Canadian resident

    Wishful scenario:
    •Canadian Corp (SBD) tax rate (15%)
    •$47,630 Non-Eligible Dividend Salary (6.87%)

    Not sure if Canadian Corp is viable because CFC and Subpart F / GILTI tax. With "current scenario" whats the most economical tax strategy? Is a Canadian Corp still advantageous tax wise?
     
    taxesanddeath, Dec 23, 2018
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  2. taxesanddeath

    kirby VIP Member

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    The good news is at your income level you can afford to hire a tax person to give you tax advice based on your own unique situation.
     
    kirby, Dec 23, 2018
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  3. taxesanddeath

    taxesanddeath

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    $150,000 is not my income. This is a scenario im asking for advice on potential future income. All I want is to create dialogue on this scenario.

    It appears I can deduct Canadian Corp tax (15%) from US subpart F tax liability which would be ordinary dividends. This "works" for lower incomes but gets bad as income increases. Between ~$38,000 - $500,000 USD tax brackets ill be paying 7% - 20% in additional taxes after deducing the 15% Canadian corp FTC.

    Subpart F "High Tax Exemption" is 18.9%. Decline the Small Business Deduction for Federal corp taxes the corps tax rate would be 18.5%. If I could increase that >18.9% this could be one solution.
     
    taxesanddeath, Dec 23, 2018
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