Page 59 - Akerman | 2016 Guide to Doing Business in Florida

CHAPTER 5. TAXATION

Federal Taxation
William F. Sullivan, Esq. | (954) 468-2464 | william.sullivan@akerman.com

Florida State Taxation
Vit M. Gulbis, Esq. | (813) 209-5007 | vit.gulbis@akerman.com
Russell B. Hale, Esq. | (407) 419-8556 | russ.hale@akerman.com
Brian Goossen, Esq. | (813) 209-5010 | brian.goossen@akerman.com

The following is intended to provide a very general overview of the basic United States federal income
taxation of various types of taxpayers and a very general overview of the basic Florida taxation of
common business activities. There are many exceptions and special rules that could apply. Taxpayers
are urged to contact a Lex Mundi-affiliated tax advisor regarding the imposition of United States federal
and Florida state taxes on them and their business activities.

5.1 United States Federal Income Taxation
5.1.1 Federal Taxation of United States Individuals

United States citizens and tax residents are subject to United States federal income taxes on
their worldwide income. The United States tax on worldwide income requires the payment of
taxes on wages, salaries, gains, rents, dividends, interest, royalties and profits of every kind
from all foreign and United States sources. The tax base also includes certain income of
foreign companies controlled by United States citizens and tax residents, including certain
dividends, capital gains, royalties and rents earned by the foreign companies, even if the
income is not paid out to the owners of the companies. Investments in foreign companies and
foreign bank accounts for which a United States citizen or tax resident has signatory authority
must be disclosed annually.

5.1.2 Federal Income Taxation of United States Corporations

United States corporations are subject to United States federal income tax on their worldwide
income. State corporate income taxes are deductible for purposes of calculating the federal
income tax base.
5.1.3 Federal Income Taxation of Nonresident Foreign Individuals

Nonresident foreign individuals who are not classified as United States tax residents are subject
to United States income tax with respect to income which is effectively connected with the
conduct of a trade or business in the United States. This income is subject to tax at the
graduated income tax rates that normally apply to United States individual taxpayers. Such
taxpayers are required to file federal income tax returns in the United States.

A foreign individual generally is considered to be engaged in a United States trade or business
if the individual is engaged in business activities in the United States on a regular basis.
Foreign persons whose United States activities are limited to certain investment activities, such
as trading in stocks or securities for their own account, generally are not considered to be
engaged in a United States trade or business. Payments received for services rendered in the
United States as an employee, independent contractor or otherwise are considered to be

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