My husband and I are US citizens living in the UK and we own two rental properties for investment purposes. We do not have a legal entity in the UK, so the properties are directly owned by the two of us. Should we be designated as a "foreign branch" and thus submit form 8858, or is it sufficient to report rental activity on Sched. E? If we did submit form 8858, does this have any adverse effect on our tax position? Thanks in advance.
If you are simply a married couple and did not set up a partnership then the rental is simply entered on a Sch E.
Read the 8858 instructions : https://www.irs.gov/instructions/i8858#en_US_202312_publink1000277262
An FDE is an entity that is not created or organized in the United States and that is disregarded as an entity separate from its owner for U.S. income tax purposes under Regulations sections 301.7701-2 and 301.7701-3. See the instructions for Form 8832 for more information.
If you are simply a married couple and did not set up a partnership then the rental is simply entered on a Sch E.
Read the 8858 instructions : https://www.irs.gov/instructions/i8858#en_US_202312_publink1000277262
An FDE is an entity that is not created or organized in the United States and that is disregarded as an entity separate from its owner for U.S. income tax purposes under Regulations sections 301.7701-2 and 301.7701-3. See the instructions for Form 8832 for more information.
I'm hoping you can help me with a quick follow-up question. Our tax adviser in the UK is insisting that we have to file form 8858, saying that we keep separate books and records because we compile a spreadsheet at tax time from our monthly rental statements that our property manager provides. If we do as he says, do you know if there are any adverse tax consequences for us, either now or possibly in the future? Thank you.