Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: whether an Arizona LLC is a corporation for Canadian tax purposes
Position: yes
Reasons: legislation indicated that the LLC is a separate entity and members have limited liability
XXXXXXXXXX D. Yuen
2003-000441
October 23, 2003
Dear XXXXXXXXXX:
Re: Arizona Limited Liability Company
We are writing in response to your facsimile dated February 20, 2003 wherein you requested our view whether a limited liability company formed under Chapter 4 of the Arizona Revised Statutes would be considered a corporation for purposes of the Income Tax Act (Canada), R.S.C. 1985 (5th supp.) c. 1, as amended (the "Act").
1. We are of the opinion that a company formed as a limited liability company ("LLC") under Chapter 4 of the Arizona Revised Statutes would be a corporation for purposes of the Act.
2. In accordance with Interpretation Bulletin IT-392, the LLC is considered to have a capital stock consisting of 100 issued shares and each owner of a beneficial interest in the LLC is then considered to own a number of shares proportionate to his or her beneficial interest in the LLC. Each amount distributed on account of profits by the LLC to its owners will be considered dividends for purposes of the Act and the Regulations made thereunder.
3. If the LLC is treated as a partnership or disregarded entity for the purposes of the United States Internal Revenue Code (the "Code") such that the shareholders ("partners") rather than the LLC are liable to tax under the Code on the income of the LLC, it will not be considered resident in the United States under paragraph 1 of Article 4 of the Canada-U.S. Income Tax Convention.
Yours truly,
Olli Laurikainen
Section Manager
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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