QUESTION: Are foreighn incorparted corparations allowed to own
property in the united states? i.e. planes, cars,boats, homes etc etc?
Also are foreighn incorparetd buisness required to pay income taxes?
What if a foreighn individual owns a corparation in the united states
that owns the property?

REPLY: If a foreign based corporation simply owns tangible assets in
the U.S. that do not generate any income, then the foreign corporation
should not be required to file any U.S. tax return. A return is only
required if the foreign corporation is engaged in any kind of trade or
business in the U.S. and receives income from within the U.S.

If a foreign person (i.e. not a U.S. citizen or permanent resident)
controls a U.S. corporation that is engaged in business in the U.S.,
that corporation is required to file a U.S. tax return on Form 1120 to
report the income and to pay a tax on any taxable income (income minus
allowable deductions). If the corporation has no income or if the
allowable deductions exceed the income, the corporation will not owe
any tax but it is still required to file a tax return. There is a
minimum penalty of $100 for a return that is filed late. If the IRS
asserts that a failure to file a return is willful, other penalties
might be imposed. The U.S. tax law includes dozens of different
penalties for as many different infractions and a complete discussion
of those penalties would be very time consuming (and boring).

Where a U.S. based corporation only owns personal assets that do not
produce any income, it should not owe any tax, but a return (Form
1120) should be filed to avoid the penalty.

IRS Regulations require that I include the following statement with
any written explanation of the tax law. The comments in this
memorandum are not intended to constitute an opinion regarding any
specific tax issues because additional tax issues may exist that could
affect the tax treatment of the tax issues addressed in this memo.
This memorandum does not consider or reach a conclusion with respect
to those additional issues and was not written and cannot be used for
the purpose of avoiding penalties under code section 6662(d). For
further details see
http://www.offshorepress.com/vkjcpa/disclosurerules.htm

Vern Jacobs