Personal Finance & Money Asked on April 15, 2021
As a tax resident of the US, if I plan to start a company with a relative (Aunt, Parent, Sibling, Cousin) in a foreign country with informal funds that we manage in the family (for ex: by pooling together, part loan or a major-minor stakeholder) does it have to be declared in the US?
Does it matter if my contribution is from taxed money earned in the US that I send to the relative who then combines and does all the remaining work to start the company?
Your question isn't entirely clear, but the answer is fairly simple:
With respect to that foreign partnership, you are either a lender, a partner, or both. In all these cases, you will have to report your interest income on the loan, your distributive share of partnership income, or both, as applicable.
If you lent the money to your relative, you are a lender and you, again, have to report your interest income.
Note that since this all foreign source income, you may have to deal with foreign currency translation issues, foreign taxes on the income and foreign tax credits in the US.
Answered by Jack Fleeting on April 15, 2021
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