C-corp Dividend question

client is a C-corp owned 100% by a Candian company. the C-corp wants to reparitate all of the earnings back to Candian shareholde and close the corp. the retained earning is about 150K and cash is 150k, for simplicy sake. I informed the client that the only way to do this is do a dividend but then it will be double taxation as the Candian corp has to pay tax on the dividend again. Client says when they set up the company, they were told any earnings back to them are not subjected to US tax. Is there a US/Canada tax treat that pemits this?

Are you suggesting that the dividends will be subject to US tax? Or that the Canadian company would be filing a US tax return?

Liquidating distributions are not dividends. If the distribution is not a dividend, there would be no dividend withholding tax.

Are you suggesting that the dividends will be subject to US tax? Or that the Canadian company would be filing a US tax return?

i am asking if the dividend will be subjected to US tax.

Liquidating distributions are not dividends. If the distribution is not a dividend, there would be no dividend withholding tax.

liquidating distribution is non-taxable to the extent of the basis of the stock, the excess would be taxable as capital gain, no?

If the FIRPTA rules apply to the liquidation, then the capital gain would be taxable. Otherwise it would not be taxable.

Most questions in tax can be answered by the phrase, it depends.

While complete liquidations of subs are not taxable in a US context, in an outbound context, you want to ensure that you meet the US trade or business provisions and regs in 367(e).

You also want to look into the US Real Property Holding Company provisions under 897(c)(1).