Corporate Taxes

A US corporation must file an annual tax return (generally from 1120). Even if the corporation has a loss it musts till file a tax return (the loss carries forward and can be used to offset income in future years).

A US person who has more than 10% stake in a foreign corporation may need to report the foreign activity to the IRS. 

Business returns are quite complex and requires a lot of technical expertise. We recommend that you consult us if you have such a situation. We can guide you through the complexities of business laws and can provide you with business tax services including estimated taxes and quarterly obligations.

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Are you an American citizen living in France or considering relocation?  Are you looking for American or French tax assistance?  Our team provides American and French tax services of the highest quality to clients who are a good match for our services.

What to file ?

A corporation is an entity formed separately to the owners (called “shareholders”). This form of business entity is very popular and has numerous advantages.

  • It is relatively easy to form
  • Individuals can own small pieces (“shares”) of the entity
  • The shareholders liability is limited to their investment

However, since a corporation is an entity of its own, it also must pay corporate taxes. Currently US corporate tax is 21% (of the net profit after expenses).

Distributions to shareholders from the corporation are called dividends. Dividends are not considered expenses, do not lower the corporate tax and are also subject to their own taxes, hence the term that corporate income is “double taxed”. While this might seem so, it is not exactly true since usually the shareholders are not required to pay other taxes. It would be more accurate to say that a corporation is taxed extra.

Foreign corporations that are owned by US persons are required to report annually to the IRS. The key term here is CFC (controlled Foreign Corporation). In short, a foreign corporation that;

  • More than 50% of it is owned by US persons, and
  • Each US person owns at least 10% of the corporation

Is considered a CFC. Along with the reporting, the foreign corporation can generate additional taxable income called GILTI. 

These calculations are very complex. It is vital that you work with a competent CPA to make sure that you file all the required forms. Failure to file the forms correctly can incur a fine of $10,000.

We can help you file the necessary forms and help you navigate the pitfalls of this very complex part of the tax code.