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18052009
Returning Member

Tax implication on Sales of a US incorporated Subsidiary

Hong Kong parent company hold BVI company,

 

BVI company holds a 100% limited liability company interest in the US LLC, the hong kong Company desires to purchase the BVI’s Equity Interest .

 

we know that no tax have to pay in HK and BVI.

 

Any tax implication in the US?

"The equity sold is US LLC, which is belong to BVI, no tax impact in the US." is it correct ?

 

6 Replies
pk
Level 13
Level 13

Tax implication on Sales of a US incorporated Subsidiary

@18052009  this is  not the  right forum for  M & A  related  issues / discussions.  However (a) need to know  about the structure  ( public/ private/ closely held etc. )/ type of the US entity  ( LLC, partnerships, C-corp, S-Corp etc. )  for any comments to your question;  (b)  you will / should probably  need to employ the services of an attorney for this type of transfer of ownership -- offshore.

 

Is there more I can do for you ?

18052009
Returning Member

Tax implication on Sales of a US incorporated Subsidiary

thank you for reply.

 

the US company is a private owned LLC. 

pk
Level 13
Level 13

Tax implication on Sales of a US incorporated Subsidiary

 how does it file  its  tax return ?   Generally , absent a  request to be treated as a corp, single member LLCs are treated as a disregarded entity for tax purposes -- its income  taxes are filed as part of the single member on Schedule-C.  Is this the case here?   Is this the first year of filing ?  

18052009
Returning Member

Tax implication on Sales of a US incorporated Subsidiary

I have googled  the  issue, but can't find anything related to the issue.

 

So I  raised the question here. 

 

More specific, BVI company holds a 100% limited liability company interest in the US LLC, the hong kong parent company desires to purchase the BVI’s Equity Interest , any tax implication ?

 

many thanks,

18052009
Returning Member

Tax implication on Sales of a US incorporated Subsidiary

it's not the first year of filing

Rick19744
Level 12

Tax implication on Sales of a US incorporated Subsidiary

I agree with @pk in that this is not the right forum to discuss this type of transaction.  There are too many questions that need to be addressed.  You need to have a one on one discussion with a tax professional that understands international tax.  Additionally, you need to be prepared to answer the following questions:

  1. You indicate that the HK company holds an interest in the BVI company and the BVI company owns the US LLC.  Based on these limited facts, the HK company in fact has an "ownership" the US LLC, just not directly.
  2. You don't indicate the ownership of the BVI company.  Does the HK own all of the BVI?
  3. You indicate that this is not the first year filing.  What has been filed in the past in the US?
  4. You still haven't indicated the structure of the US LLC.  Is this a true LLC (disregarded entity) or is it a corporation?
  5. What activity does the US LLC have?  US and foreign activity.

As you can see, this has some complications and beyond the scope of this forum.  

*A reminder that posts in a forum such as this do not constitute tax advice.*
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