Copy
International Joint Ventures: Partnerships and Corporations 
Forward to a Friend


         THE INTERNATIONAL TRANSACTIONS UPDATE

Structuring The International Joint Venture Partnerships and Corporations 
The most basic – and most important decision that a U.S. partner in an International Joint Venture (IJV) will need to make is whether the foreign business entity is a partnership or corporation. As difficult as this decision often is, with respect to domestic businesses, it is infinitely more difficult with respect to foreign entities.
 
For starters, the foreign jurisdiction will likely not even have “corporations” or “partnerships” at all, but a potpourri of strange-sounding entities that may or may not correspond to what we understand in the U.S. to be corporations or partnerships. For example, if the IJV will be located in Germany, will it be an “Aktiengesellschaft” or a "Gesellschaft mit beschränkter" (“GmbH”), or something else? Needless to say, it is foolhardy to attempt to traverse this minefield without the assistance of knowledgeable local counsel. And let’s not forget that the decision whether or not the foreign entity will be a corporation or a partnership should be made from a U.S. not foreign point of view. 
 
  1. Partnerships or Corporation- General Tax Principles
An IJV that elects to be taxed as a partnership for U.S. tax purposes will be taxed in much the same fashion as a domestic partnership, i.e., the partnership will be a “pass-through” entity, with the partnership itself not subject to tax and the partners subject to tax on their allocable shares of partnership income and loss.

If, as is often the case, the venture expects to incur losses in the first year of years of operation, operating in partnership form will result in the U.S. being able to use the IJV’s losses against its U.S. or other foreign income. If the IJV is taxed as a corporation, the losses cannot be allocated to the U.S. parent. 

Read Full Article Here 
 

Upcoming Seminars

Structuring Foreign Investment in the U.S. 
by Jacob Stein on December 12, 2014
Location: CalCPA International Tax Conference - San Francisco


International Business and Taxation
by Jacob Stein on  December 16, 2014
Location: Rossdale CLE Live Webinar


Lawyers' Guide to International Taxation
by Jacob Stein on January 16, 2015
Location: State Bar of California Board of Legal Specialization - 
Pasadena, CA 

Articles

Speaking Engagements
If you would like to book us for a speaking engagement, please call (818) 933-3838

   

             
Robert F. KluegerJD, LLM 
Robert F. Klueger (J.D.; LL.M) received his B.A. from the University of Pennsylvania (cum laude), his law degree from Fordham Law School, and his Master of Laws in Taxation from the University of Denver. He is a Certified Tax Law Specialist (State Bar Board of Legal Specialization) and is AV rated by Martindale-Hubbell (highest possible rating). 
View complete profile here



       
Jacob Stein, JD, LLM
Jacob Stein (J.D.; LL.M) received his law degree from the University of Southern California, and his Master’s of Law in Taxation from Georgetown University. He has been accredited by the State Bar of California as a Certified Tax Law Specialist, is AV-rated (highest possible rating) by Martindale-Hubbell and has been named “A Super Lawyer” by the Los Angeles Magazine.
View complete profile here
 © 2014 Klueger & Stein, LLP, 
All rights reserved         
16000 Ventura Boulevard, Suite 1000, Los Angeles, California 91436
T: +1 818-933-3838    
www.ksilaw.com     F: +1 818-933-3839