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Selling a Partnership Interest With Foreign Partners: Complying With Section 1446(f) Withholding Requirements

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, November 14, 2023

Recorded event now available

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This presentation will review the special compliance requirements for foreign partners and members of U.S. and foreign partnerships that have U.S. filing and withholding obligations. Our veteran international tax practitioner will review circumstances when the newest withholding rules apply, exceptions to the withholding rules, and the interaction of these rules with FIRPTA provisions surrounding the sale of partnership interests.

Description

Additional rules apply when a foreign person utilizes a partnership to invest in the United States. The foreign partner in the partnership and the partnership must navigate through a complex set of rules that vary depending on the nature of the investment and whether or not the investment is in U.S. real property.

When the investment is in U.S. real estate, the interaction between FIRPTA regulations and other withholding rules governs the relationship of partners with the partnership as well as the partnership's obligations to the IRS.

These rules are sprinkled across various IRC Sections from 1441 to 1446. The recent changes to Section 1446 added another layer of complexity to these already complicated requirements. Now, after changes in 2019, 2020, and 2021, a foreign partner's sale of partnership interest is subject to special withholding rules unless an exception applies.

Listen as our experienced foreign flow-through expert explores the complex rules associated with foreign partners investing in partnerships and outlines the governing rules under Section 1446(f) covering a foreign partner's sale of a partnership interest.

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Outline

  1. Introduction
  2. Rules related to the taxation of foreign persons investing in the U.S.
  3. Taxation of foreign partners engaged in a U.S. trade or business
  4. Taxation of foreign partners not engaged in a U.S. trade or business
  5. Taxation of a foreign partner in a partnership investing in U.S. real property
  6. Withholding requirements
  7. Examples

Benefits

The panelist will cover these and other critical issues:

  • When is a partnership required to withhold taxes?
  • What rules apply if the partnership is considered engaged in a U.S. trade or business?
  • What rules apply if the partnership is not considered engaged in a U.S. trade or business?
  • What rules apply if the partnership is not investing in U.S. real property as opposed to in U.S. real property

Faculty

Subramanian, Ragini
Ragini Subramanian
Senior Manager
Eisner Advisory Group

Ms. Subramanian is a Tax Senior Manager in the Private Client Services Group. With over 10 years of tax experience, she...  |  Read More

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