@Scott Letourneau These are not income tax definitions, definitions under IRC § 7701 explicitly apply to entire IRC : "(a)When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—" Furthermore in 26 CFR § 20.0-1 "The term “United States”, as used in the estate tax regulations, includes only the States and the District of Columbia. The term also includes the Territories of Alaska and Hawaii prior to their admission as States."" and finally in Instructions for Form 706-NA there is: "Definitions The following definitions apply in these instructions. United States. The United States means the 50 states and the District of Columbia." We can go even further - under IRC § 2209 - natural residents of US possessions who die as US citizens and still possession residents at death are considered nonresident not a citizen of the United States - so they only have $60k exemption and if Puerto Rico situs assets were US-situs assets then Puerto Ricans would be really screwed by estate tax since most of their property is in PR. I've also found this article which aligns with my findings: https://kozlaw.com/wp-content/uploads/2021/06/ILOexampleSpecific.pdf?utm_source=chatgpt.com "The term 'United States' when used in a geographical sense includes only the states and the District of Columbia. This means that corporations incorporated in the US Virgin Islands or Puerto Rico (two US territories) are not domestic corporations for estate tax purposes." If you have any materials or court cases to the contrary please share them

@Scott Letourneau Thanks for the reply As for 1120-F/5472, I think US trade or business that would lead to ECI and especially real estate should be done with US C-Corp as intermediary I wouldn't actually rely on CTB election here, PR LLC does not even need to file form 8832, let me explain. Domestic LLC by default is not a corporation, it's either disregarded entity or partnership, but rules are different for foreign entities. Under 26 CFR § 301.7701-3(b)(2)(B) (Classification of eligible entities that do not file an election) -> (Foreign eligible entities) unless the entity elects otherwise, a foreign eligible entity is (B) An association if all members have limited liability; This clearly makes foreign LLC a corporation by default under 26 CFR § 301.7701-2 (b)(2), would it be more reliable as corporation if it was per se corporation as defined under 26 CFR § 301.7701-2 (b)(8)? Perhaps, but I don't think it would make much difference though, if anything IRS would be more likely to attack lack of substance than form itself here. I could also make here an argument to the contrary - since PR corporation requires more formalities than PR LLC it would be easier for IRS to attack corporation if corporate formalities weren't properly observed. Pierre v. Commissioner put emphasis on state law - so in this case it would be PR law which makes LLC an entity separate from its owners. Furthermore I'd say Pierre v. Commissioner would be further supportive here because it suggests that even if PR LLC would be classified as partnership or disregarded entity it would still be opaque for US estate tax - in that link it says "decision suggests that a nonresident alien could use a foreign disregarded entity to hold U.S. property and avoid U.S. gift and estate taxes on what would otherwise be taxable U.S. situs property." To sum it up - what I think would build up substance here to prevent IRS from saying that LLC was a sham would be following and properly documenting all PR corporate formalities required for LLC (and even going overboard). I would need to look deeper into it but I think PR LLC should also be able to issue stock-like membership units. I guess filling 1120-F could also be something supportive.

For Corp I like Ohio - I think it's only state in US that allows anonymous corporations and doesn't require annual report/fees

@P S It depends on purpose of that LLC, for operational LLC it probably doesn't matter, but for piggy bank LLC I'd avoid that

@P S No idea, I haven't done this myself and process should be fully online through here https://wyobiz.wyo.gov/Business/ARWizard.aspx

@James Baker Thanks for reply! I'm also thinking about making C-Corp member of stock investing LLC and routing all dividend income to it so I wouldn't have to fill 1042-S and c-corp would get 50% DRD