The US Tax Effects Of Choice Of Entities For Foreign Investment - IIR

any related-party financing plans.
C. Specific Investor Planning Still Crucial. The foregoing discussion is
intended to provide the reader with a basic understanding of the principal planning alternatives
and the basic U.S. tax considerations of foreign investment in U.S. real estate and other U.S.
businesses. It should be evident from this summary, however, that this is a relatively complex
subject, especially if the foreign investor must consider reorganizing an existing U.S. real estate
or business structure. In addition, it is important to note that this area is constantly subject to
new developments and changes, as Congress continually entertains new tax laws, the Internal
Revenue Service promulgates new regulations, rulings, announcements and interpretations, and
the U.S. courts issue new opinions impacting these subject areas. As a result, it is crucial that
the foreign investor and his advisors review his particular circumstance with a qualified U.S. tax
advisor when planning a proposed U.S. real estate or business investment, both to ensure that
the proposed planning alternative is appropriate for the foreign investor's specific factual
circumstances, and to ensure that there has not been new developments or changes which would
render that planning approach inadvisable. With such careful, individualized planning, the
foreign investor may reduce substantially his U.S. tax liabilities emanating from the U.S.
business and real estate investments.
Robert F. Hudson, Jr., Esq.
Baker & McKenzie LLP
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