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Tuesday, December 29, 2009

Taxation

This is a work in progress. There are both US (IRS) and Canadian (CRA)taxes to file, and the usage of an entity to hold and rent the property is definitely a complication.

At an overview level:
- For a simple entity (LLP or LLC) the entity must file taxes as a "partnersip", which means filing a 1065 return
- Rental income and expenses go on form 8825, which is attached to the 1065
- The Partnership also generates K-1 forms that tell individuals what income they should report on their personal tax forms
- Non-Resident Aliens (e.g. Canadians) file 1040NR returns
- A K-1 provided by the LLP/LLC is attached to the 1040NR

Entities such as an LLP or LLC need an EIN number, which can be readily provided by the IRS. Individuals need an ITIN number, which is harder to get and probably must be applied for in conjunction with filing the first tax return.

There are quite a few more details, such as requirements for withholding taxes for Non-Resident Aliens.

Detail will evolve in the Detailed Notes as it unfolds during tax season.
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