Can a Foreigner, Non-citizen, Resident Alien Own an S Corporation?

Can a Foreigner, Non-citizen, Resident Alien Be an S Corp Shareholder?

Yes, under the U.S. tax code, a foreigner, non-citizen, resident alien may be an S corp shareholder. Said another way, an S corporation can be owned by a foreigner, non-citizen, resident alien. However, an S corporation generally cannot be owned by a nonresident alien.

Resident Aliens May Own S Corporations

Many owners of companies in the United States are not citizens. Informally, they are foreigners. They may want to have their company (including an LLC, partnership, or corporation) elect to be taxed as an S corp. This requires filing an S corp election. One key question is whether they are a resident alien or nonresident alien.

Under United States tax law, an S corporation generally cannot have a “nonresident alien as a shareholder.” IRC § 1361(b)(1)(C). A nonresident alien is neither a citizen of the United States nor a resident alien. Id. § 7701(b)(1)(B). A person qualifies as a “resident alien” if the person is “a lawful permanent resident of the United States,” fulfills the “substantial presence test,” or fulfills the “first-year election” requirements. Id. § 7701(b)(1)(A).