- quote -

It is difficult to point you to one source for this
information, but below I refer to several applicable
sections of the Internal Revenue Code.

If the Delaware corporation is treated as a corporation for
tax purposes (i.e., if it is a regular C corp or an LLC that
has checked the box to be treated as a corporation), then
the net rental income is definitely taxable in the U.S.
Although there is definitely a filing requirement, due to
the foreign tax credit, no tax may ultimately be due.

If the Delaware corporation is an LLC that is treated as a
partnership, then it is likely that no U.S. tax is due. If
the rental income is FDAP, then it would be taxed on a gross
basis at 30% (IRC section 871). However, because it is not
U.S. source income (IRC section 861(a)(4)), none of it would
be subject to tax. If the rental income results from being
engaged in a U.S. trade or business, it may not be
considered effectively connected income (IRC section 864(c))
because it is not U.S. source income and the income may not
be attributable to a U.S. office or fixed place of business.

- quote -

You should definitely discuss this with a qualified tax
professional. It is a complicated area of U.S. tax law.

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CLA at cla_panama[at]hotmail.com wrote:

- quote -

I think you already answered your own question. This is way
outside the realm of free advice.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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I will appreciate if someone could please point me out to an
IRS publication or website that could help me answer the
following question.

A company incorporated in Delaware, owned 100% by foreign
nationals, sub-leases an aircraft registered in a third
country, to a foreign airline. It has no income generated in
the USA or any operations within the USA; not even a bank
account.

I am trying to find out if the Delaware corporation has to
pay US income tax on the lease payments received. I know
that this type of questions are better dealt by a
professional tax consultant, but I want to have a general
understanding on this subject before speaking to one.

Thanks in advance for your help

CLA

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