Z Corporation Ltd., a foreign corporation organized in Ireland, is considering doing business in the United States. Z Corporation Ltd. developed a software as a service or SaaS product and contacted its local tax advisor who, in turn, contacted you to discuss business operations in the U.S. The local tax advisor asked a number of questions regarding doing business in the U.S. and specifically requested your advice regarding the following issues:

a)Choice of entity - what are the legal entity options for Z Corporation Ltd. to organize its U.S. business? Further, are there U.S. elections available regarding the tax classification of the entity;

b)If organizing a U.S. entity is not feasible what factors should Z Corporation Ltd. consider when licensing its software to U.S customers; and

c)U.S. tax treatment - are there differences from a U.S. income tax perspective between organizing a U.S. legal entity versus Z Corporation Ltd. directly licensing the SaaS product to U.S. based customers?