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.
952040
XXXXXXXXXX Jim Wilson
(613) 957-2123
Attention: XXXXXXXXXX
August 22, 1995
Dear Sirs:
Re: Residence Status of a Subchapter "S" Corporation ("S Corporation")
Article IV of the Canada-U.S Income Tax Convention (the "Treaty")
This is in reply to your letter dated August 2, 1995, in which you requested our opinion whether an S Corporation, as defined in section 1361 of the Internal Revenue Code, would be considered a resident of the United States for purposes of the Treaty.
In order for a corporation to be considered a resident of the United States under the Treaty, it must be liable to tax therein on its world wide income as are corporations incorporated pursuant to the laws of the United States. An S Corporation is such a corporation and is only treated as a flow through entity because of an election made by its shareholders. Notwithstanding the election, an S Corporation will be subject to tax in the United States on its world wide income if certain conditions are not met. It may also be taxed in the United States on certain types of income. As a result, we consider an S Corporation a resident of the United States for purposes of the Treaty.
We hope our comments are of assistance.
Yours truly,
for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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