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Once a foreign corporation qualifies with the Secretary of State to do business in California it is subject to the franchise tax. Important: A foreign corporation that does not qualify with the Secretary of State, but does business in California, is also subject to the franchise tax.
For tax purposes, the IRS treats an LLC as a sole proprietorship (since both have a single owner). If the LLC generates non-US sourced income, the LLC owner pays no income tax, LLC members pay no income tax.
Form 1120-F differs from Form 1120 in that it excludes interest, dividends and royalties derived outside of the US, as well as rent paid to unrelated parties outside of the US, while Form 1120 includes such items in taxable income on Line 11 of Part I.
A flat 30 percent rate (or lower treaty rate) of tax is imposed on the gross income from those items. Capital gains are not subject to tax. A foreign corporation engaged in a U.S. trade or business but which has no U.S. office or fixed place of business is taxed only on its U.S. source income.
A foreign corporation that maintains an office or place of business in the United States must generally file Form 1120-F by the 15th day of the 4th month after the end of its tax year. A new corporation filing a short-period return must generally file by the 15th day of the 4th month after the short period ends.
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The United States asserts jurisdiction to tax foreign corporations only if they are engaged in business in the United States or receive income from sources within the United States.
Foreign corporations that are engaged in a trade or business in the United States are subject to net-basis income tax under 882 on any of their income that is effectively connected with that business.
Every foreign corporation that is engaged in trade or business in the United States at any time during the tax year or that has income from United States sources must file a return on Form 1120-F, U.S. Income Tax Return of a Foreign Corporation.

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