Ah, perhaps I panicked a bit too fast again…
And the default rules are talking about the entity, and not its owner.
Foreign-Owned Domestic LLC
LLC is formed in Wyoming (U.S.) → domestic entity under IRS rules (§301.7701-5(a)).
Non-U.S. owner → foreign ownership, but the entity itself is domestic.
Key Rule:
For domestic entities, the default classification is disregarded (§301.7701-3(b)(1)) regardless of ownership.
Foreign ownership of a domestic entity does not trigger corporate classification (§301.7701-3(b)(2) only applies to entities formed outside the U.S.).
So this means:
U.S. domestic LLC is disregarded by default (Schedule C, not corporate return), even though non-U.S. owner.
Form 8832 is not required to change classification , it’s only needed for foreign entities (not domestic ones).
Am I seeing this correctly?
Would definitely︀ make sense as to why no tax expert or LLC pushers have brought form 8832︁ to my attention before.
I do not know what experts you have been in touch with. Normally, this frorm is among the basics of US into for European companies. But we are here in the nice of digital nomads that use US LLC. And then a bunch of jerks that illegally use it for tax evasion and that will get caught within the next few︀ years.
And that's where my confusion stemmed from, the definitions of domestic and foreign are about the entities, not the 25% or 100% owners of them. And that's why, indeed, the default rule for domestic companies = automatically treated as a disregarded-entity, when it’s a single-member LLC.
Yea, digital nomad perspective over here too.
And I don't want to break any rules myself, either, which is why I'm making sure I'm having my ducks in a row.
