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Amounts received by other taxpayers (that are not individuals or governments) that have been properly reported on Form 1042-S and do not exceed $500,000 (increased from $10,000) and are not received through an intermediary or flow-through entity. Whether the process creates a tax liability depends on the mechanics of transferring the money to the shareholder and how the transfer affects the accounts of the flow-through entity. For example, to obtain the practical equivalent of a flow-through entity without sacrificing limited liability in a foreign jurisdiction, the taxpayer may use a domestic subsidiary with a foreign operating branch. |
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