Understand how the company structure can influence taxes, annual obligations and tax organization for Brazilians with real estate, rentals, holdings or businesses in the United States.
If you are Brazilian and own real estate, a rental, a holding company or an operating business in the United States, the choice of company structure makes a difference in how taxes are reported and tracked.
The most common structures are the LLC and the Corporation. Each one has its own rules, tax obligations and different impacts in the U.S. and in Brazil.
With the publication of Solução de Consulta COSIT 56/2026, this topic has gained even more attention, especially for Brazilians who own American LLCs treated as transparent for U.S. tax purposes.
LLC or Corporation: why does it matter?
The chosen structure changes how the company reports taxes in the U.S. and how the result can be analyzed in Brazil.
An LLC with two owners, for example, is normally treated as a Partnership for U.S. tax purposes. In that case, the company files Form 1065 and issues a Schedule K-1 for each partner.
A Corporation, on the other hand, is treated as a separate entity for tax purposes. It files its own return, typically Form 1120, and computes the tax at the company level.
Simply put: in an LLC, depending on the tax classification, the result may flow through to the partners. In a Corporation, the company usually has its own taxation, separate from its partners or shareholders.
The IRS explains that the business structure influences which tax return must be filed and that an LLC can be treated as a corporation, partnership or disregarded entity, depending on the number of members and the tax election made.
Source: IRS: Business Structures
Annual obligations in the U.S.
Even when the company has no profit, the annual obligations may still apply.
An LLC treated as a Partnership usually needs to file Form 1065 and issue a Schedule K-1 to its partners.
A Corporation typically files Form 1120, as a separate taxpayer.
In other words, having no profit in the year may mean no tax to pay, but it does not mean the company is exempt from meeting its annual tax obligations.
Real estate and businesses: most common scenarios
For real estate, it is common for the annual result to be zero or negative, mainly due to expenses such as HOA fees, insurance, maintenance, property tax, mortgage interest and other property-related costs.
In these cases, an LLC may make sense, as long as there is annual control, organized documentation and returns properly filed.
When the property generates rental income with profit, it is necessary to compute the result and assess the tax impacts in the U.S. and in Brazil.
For operating businesses, holdings or larger structures, a Corporation may be a more suitable alternative in many cases, especially when the goal is to better separate the company's taxation from the personal taxation of its partners.
The point is not to say that one structure is always better than the other. The main idea is to understand the company's purpose before opening or maintaining the current structure.
What changed with COSIT 56/2026?
The Brazilian Federal Revenue Service published Solução de Consulta COSIT 56/2026, treating American transparent LLCs, whose ownership is composed of non-U.S. residents, as a privileged tax regime.
In practice, this brought more attention to Brazilians who are tax residents in Brazil and own LLCs in the U.S., especially when the company is transparent for U.S. tax purposes.
This does not mean that every U.S. company is wrong, nor that every Brazilian will automatically owe tax. What changes is the need to review the structure more carefully.
This analysis becomes even more important when there is a transparent LLC, a partner who is a Brazilian tax resident, profit abroad, a holding or an operating company.
For general business or holding purposes, a Corporation may reduce the exposure to the specific discussion about transparent LLCs, because the company has its own taxation in the U.S. and does not automatically pass the result through to its partners' personal taxation.
Even so, analysis in Brazil is still necessary. Law 14,754/2023 addresses the taxation of foreign-source income earned by individuals who are tax residents in Brazil, including financial investments, controlled entities and trusts abroad.
Source: Law 14,754/2023
Why is monthly tracking important?
With monthly tracking, you don't need to wait until the end of the year to know whether the company had a profit, a loss or any tax risk.
Throughout the year, it is possible to monitor revenues, expenses and accumulated results. This control helps you understand in advance whether there will be tax due, which documents need to be organized and whether the structure remains suitable for the company's purpose.
For example, a company that owns real estate may earn rental income in some months, but also have recurring expenses with HOA fees, insurance, maintenance, property tax and other costs.
By tracking these numbers monthly, it is possible to know before year-end whether the company is heading for a profit or a loss.
If there is a loss for the year, there may be no income tax in the U.S. Even so, the returns and tax obligations remain important.
Frequently asked questions
Does my LLC owe tax in the U.S.?
It depends on the result. If there was no profit, there may be no tax to pay, but the company's return may still be required.
Do I need to file a return in the U.S. even with no profit?
Yes. The company needs to meet its annual obligations, even when the result is zero or negative.
Does a Corporation avoid the COSIT discussion?
A Corporation can reduce the exposure to the specific discussion about transparent LLCs, but it does not eliminate the need for tax analysis in Brazil.
Do I need monthly tracking?
Yes. Monthly tracking helps you know the result before year-end, organize documents and avoid tax surprises.
Need to open or review your U.S. company?
Weexy Accounting assists Brazilians with the formation, structuring and tax follow-up of companies in the United States.
Our team can help with the analysis of the best structure, evaluating whether an LLC or a Corporation makes more sense for your case.
We also assist with the company's annual returns, such as Form 1065, Schedule K-1 or Form 1120, depending on the chosen structure.
When needed, we also provide guidance on ITIN applications for foreign partners, the partners' personal returns and monthly tracking of the company's results.
Contact Weexy Accounting to evaluate the best path for your case.
About this content
This material was prepared by Weexy Accounting with the goal of guiding Brazilians who own or intend to open companies in the United States, especially for real estate, rentals, holdings and operating businesses.
The content is informational and does not replace an individual analysis. Each case must be evaluated considering the partners' tax residency, the type of activity, the company's structure, the profit expectation and the tax obligations in the U.S. and in Brazil.
Author: Jessica Diringer
Company: Weexy Accounting
Specialty: formation, structuring and tax follow-up of U.S. companies for Brazilians.
Official sources and references
IRS: Business Structures
Explains that the business structure influences which tax return the company must file in the U.S.
https://www.irs.gov/businesses/small-businesses-self-employed/business-structures
IRS: LLC Filing as a Corporation or Partnership
Explains that an LLC can be treated as a corporation, partnership or disregarded entity, depending on the number of members and the tax election.
https://www.irs.gov/businesses/small-businesses-self-employed/llc-filing-as-a-corporation-or-partnership
IRS: About Form 1120
Official IRS page about the U.S. corporate income tax return.
https://www.irs.gov/forms-pubs/about-form-1120
IRS: Partnerships
Official IRS page about partnership obligations.
https://www.irs.gov/businesses/partnerships
Solução de Consulta COSIT 56/2026
Ruling on American transparent LLCs and their classification as a privileged tax regime.
https://www.legisweb.com.br/legislacao/?id=494207
Law 14,754/2023
Brazilian law on the taxation of financial investments, controlled entities and foreign trusts held by individuals who are tax residents in Brazil.
https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2023/lei/l14754.htm
