The taxation of distribution from Washington LLC - Ask an expert

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Q: My client has a 50% interest in a Washington LLC (which I have assumed behaves like a Delaware LLC). The LLC receives rental income from commercial properties of around $200,000 pa, with total profits of $100,000. There is an unrealised capital gain of $500,000. Tax returns have been filed in the US. Following Anson [2013] EWCA Civ 63, I am assuming that there will be no UK tax until a distribution is made and that there will be no UK tax on dividends within the basic rate of tax. If the dividend exceeds the basic rate tax, presumably there will be no credit for the US tax paid? If so, would it be worth restructuring as an LP? Would deferral relief apply?

The answer to this question was provided by Thomas Dick, Partner, DLA Piper

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