Hi everyone, I’m trying to sanity-check something.

Person A: Chinese citizen, lives in China, owns a Hong Kong company.
Person B: Also Chinese, can form a US LLC.

Here’s the situation:

• Person A wants to use a US-based copyright protection tool of YouTube.
• The tool requires a US AdSense account in order to receive revenue from claims.
• If Person A (foreign entity) opens the AdSense account directly, YouTube/AdSense would generally withhold 30% tax on payments, unless there’s a treaty reduction (there is none for China/Hong Kong).

So here’s the proposed idea:

1. Person B forms a US LLC, single-member, foreign owned (thinking Wyoming, but open to better suggestions).
2. The LLC elects to be taxed as a C-Corp.
3. A US AdSense account is opened under the LLC.
4. The LLC submits a W-9, which would mean 0% withholding from YouTube.
5. The Hong Kong company signs a contract with the US LLC saying the HK company owns the content, and the US LLC is only providing copyright enforcement + monetization services.
6. Revenue comes into the US LLC. Example:
   • YouTube pays $100,000 to the LLC.
   • LLC keeps 10% ($10,000) as service fees/profit.
   • LLC pays 90% ($90,000) to the Hong Kong company as business expense (client payment).
7. The US LLC pays tax only on the $10,000 profit.
8. Hong Kong company gets paid without US withholding.

Questions:

• Does this structure technically work under US tax rules?
• Any IRS issues with a HK company receiving 90% of revenue while the US LLC keeps 10%? (90/10 split is very common in copyright protection because the LLC is only providing protection, the HK company owns all the rights)
• Is Wyoming actually the best state for this, or would a different state be smarter (Delaware, etc.)?
• Any transfer-pricing, treaty, or anti-avoidance issues to watch out for?
• Is this actually legal and safe long-term, or is this likely to raise red flags?

Big question:

When the U.S. LLC sends money to the HK company, does the LLC have to withhold taxes?
(All content creation/editing is done outside the U.S. and the U.S. LLC only provides copyright enforcement and claims revenue.)

Not trying to do anything illegal, just want to make sure this setup is allowed and compliant before going forward.

Would appreciate any insight from people who have dealt with this. Thanks!