27 June 1994 External T.I. 9406005 - CORPORATE STATUS OF A DELAWARE LLC (4093-U5-100-4)

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 Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

	Corporate status of a Delaware limited liability 	company.

Position TAKEN:

It is a corporation for purposes of the Act.

Reasons FOR POSITION TAKEN:

It is a seperate legal entity.

							940600

XXXXXXXXXX							Jim Wilson

Attention: XXXXXXXXXX

June 27, 1994

Dear Sir:

Re: U.S. Limited Liability Company

This is in reply to your letter dated February 28, 1994, in which you asked whether the Department would treat a limited liability company formed under Chapter 18, Subtitle II of Title 6 of the laws of Delaware ("Delaware LLC") as a corporation for purposes of the Income Tax Act (the "Act"). We have reviewed the copy of the Delaware LLC legislation which was enclosed with your letter.

We are of the opinion that a Delaware LLC would be a corporation for purposes of the Act. If the Delaware LLC is a foreign affiliate pursuant to paragraph 95(1)(d) of the Act, a computation of its surplus accounts for purposes of the foreign affiliate regulations will be done in a manner similar to that of any other foreign affiliate.

If the Delaware LLC is treated as a partnership for the purposes of the Internal Revenue Code (the "Code") such that the shareholders ("partners") rather than the company are liable to tax under the Code on the income of the company, such company will not be considered to be a resident of the U.S. under paragraph 1 of Article IV of the Canada-U.S. Income Tax Convention (the "Convention"). If such company's mind and management is in Canada, it will only be a resident of Canada for the purposes of paragraph 1 of Article IV of the Convention, paragraph 3 of Article IV of the Convention will not apply and subsection 250(5) of the Act will not apply. The company will not be a foreign affiliate but will be taxed under the Act as a resident of Canada.

We trust you will find the above comments to your satisfaction.

Yours truly,

for Director
Reorganizations and Foreign Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch