QUESTION: First, when forming a Nevis LLC at the start of the new
year, if the intent is to treat it as a pass through entity by filing
a form 8832, by what date does the form need to be filed. At the time
of formation of the LLC, or prior to filing that years tax return in
April of the following year?

Second, it's my understanding that once an 8832 is filed and an LLC is
treated as a pass through entity, the social security number
associated with the LLC is that of the single person owner, as in this
case. Would the LLC component of the single owner's tax return would
be associated with and filed with his/her return?

Third, if though the LLC is instead placed in an offshore trust, and a
"relationship" is established rather than an actual evidence of
ownership, is a new tax I.D. established completely irrespective of
the original owner with it's own seperate return? If so, is evidence of
trust ownership apparent when examining the settlor/ beneficiary's
individual return?


REPLY: The form 8832 needs to be filed within 75 days after the
formation of an eligible foreign entity such as a foreign LLC. If it
is not filed on time, a request can be made as described in Revenue
Procedure 2002-59 by March 15 after the first tax year of the entity.

In order to file a Form 8832, it is necessary to request a tax ID
number for the foreign entity by calling a special phone number for
foreign TIN requests. That number is included in the instructions to
Form SSN.

The foreign disregarded entity is required to file a Form 8858 with
the tax return of the owner and that form would include the TIN of the
foreign LLC and the SSN of the taxpayer.

A foreign trust with a U.S. founder/settlor and one or more U.S.
beneficiaries is treated as a grantor trust for U.S. tax purposes.
That means the U.S. grantor is deemed to be the owner of the assets in
the trust for tax purposes (but not for asset protection purposes) and
is subject to tax on any income of the foreign trust. If a foreign
trust owns a foreign LLC, it's as if the U.S. trust grantor owned the
LLC and the same procedures would be followed to request that the
foreign trust be treated as a disregarded entity.

Vern

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