UK company implications for US tax

so how would you deal with a stiftung, Foundation or other entity without what you describe as owners?

In accordance with the legislation relating to such entities. But I doubt very much whether a UK company limited by guarantee falls within that definition. In the UK a company limited by guarantee is potentially liable for Corporation Tax, just like any other limited company.

Much earlier I asked :-

Is it suggested that FormicaLinoleum should have taken some action merely on account of the fact that she is a Director of the company?

Does anyone have an answer to that?

Do not get too worked up about the word "company" - this is the default entity classification given that that it is nothing else.

It is probably a PFIC based on failing the 50% or 75% test but this is still moot if there are never excess distributions...I don't invent the rules!

I don't understand how it can be a PFIC if no one can invest in it.  The company generates no investment income at all for anyone.

I am resurrecting this as I'm being advised again that being a director of this company has US tax implications.

I don't have the details yet, so I don't yet know how/why.  It is simply beyond my comprehension that I should have to pay tax on money I haven't received. 

Does anyone have experience being involved with a company limited by guarantee or doing taxes for an American involved in one?

Or how can I find out more information?  Can I contact an IRS help line or something?  I want to know the answer for sure.

I am resurrecting this as I'm being advised again that being a director of this company has US tax implications.

Can the person who is telling you that there are US tax implications tell you exactly what those implications are?

I have more information now.

Apparently, this person believes that the company is a CFC and we Americans therefore have to file form 5471.

We are allegedly a CFC because 3 of our 5 directors (and 2 of 3 before we expanded the board) are American.

According to the way our company was drawn up, all members of the leagues are owners of it, and the majority are not American.  So according to our own definition we are not a CFC, but this person says that the US would not recognize our members as owners and would therefore class as CFC based on our board of directors.

It is very difficult for me to understand stuff about CFCs and apply it to us as it all revolves around stock, which we don't have in any real sense.  No one can buy or sell any stock in our company.  So I don't know how to interpret "stock" in applying CFC regulation to us.

Still, as I have no personal income from the company, it seems I would not have to pay any tax?

I said last November it might be a CFC but you asserted it was not because the majority of owners were not US persons.  If you are now correct and it does after all hae majority US ownership then yes it is a CFC - this requires annual filing of Form 5471 - figured in accordance with US GAAP.  All 3 US persons will want to be filing these annually so you could share the accounting cost between you.

Failure to file or filing incomplete forms would result in automatic penalties for everyone so it will be worthwhile getting a qualified adviser to prepare the forms.

These are informational returns so carry zero tax but substantial penalties if incorrect or late.

Do the members appoint the board of directors?  If yes, and if more than 50% of the members are not US persons, then it seems very likely that the entity would not be a CFC.  As such, no annual filing of Form 5471 would be required.  If any of the U.S. persons own 10% or more of the entity, then a 5471 would need to be filed for the year of acquisition and disposition.

According to the company, all members are owners, so the company is not 50% owned by Americans.  That is, the members all have equal "share"; in this respect the directors are no different from all other members.  The way we are set up, each director "owns" about 2% of the company (there are about 60 members), not 20%.  But we've been told that the US won't acknowledge our members as owners so we have to go by directors only despite this. 

When a board position comes up, the members nominate candidates and if there are more candidates than positions, the existing directors interview them and make the final decision.  I guess that isn't exactly the members appointing the directors.

It sounds like one could argue that the directors control the entity.  Since more than half the directors are U.S. citizens, it is possibly a CFC.  To be safe, the directors should file Form 5471.