Understand how foreign persons holding interests in entities classified as partnerships are subject to United States federal income tax.
In July 2017, the United States Tax Court issued the Grecian Magnesite decision, which held that contrary to prior IRS guidance foreign partners were largely not subject to tax on such a disposition, even if the partnership was engaged in a U.S. business. The congressional response was swift. In a manner of months and as part of the legislation commonly referred to as the Tax Cuts and Jobs Act, the Internal Revenue Code was amended to make clear that such dispositions did raise the potential for U.S. tax. The TCJA further enacted a new withholding regime applicable to transferees of such partnership interests as a collection mechanism, similar in structure to the FIRPTA regime. In the months that followed, the IRS issued notices and proposed regulations, and in October/November 2020, final regulations on the statutory amendments. This topic will offer tax professionals an understanding of the contours of the administrative guidance that has been promulgated in this area to date. The manner of calculating the gain treated as effectively connected with a U.S. business, and the amount realized base for withholding will also be discussed. This topic will explore the exceptions from withholding and required information to satisfy relevant safe harbors and will also identify areas of remaining uncertainty and guidance that the IRS has noted is still forthcoming.
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Agenda
History
- Prior to the Enactment of the TCJA
- TCJA Statutory Amendments
- Regulatory Guidance Issued Subsequent to TCJA Amendments
Substantive Tax Liability Arising From a Sale of a Partnership Interest by a Foreign Person
- Tax Liabilities of Foreign Partners Generally
- Characterization of Gain and Hypothetical Sale of Assets
Liability of Transferees to Withhold on Proceeds
- Amount Realized Base
- Determination Date
- Deadlines and Forms
Exceptions and Limitations on Withholding
- Available Certifications
- Information and Parties Necessary for Certain Certifications
- Maximum Tax Liability Exception
Obligations Imposed on Partnerships in Connection With Dispositions
- Certifications and Information That Must Be Sourced From the Partnership
- Residual Liability to Withhold on Distributions to the Transferee
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Why Lorman?
Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Credits
OnDemand Course
This course was last revised on March 4, 2022.
Call 1-866-352-9540 for further credit information.
- AK CLE 1.5
- Alaska attorneys may receive 1.5 hours of continuing legal education for completing this program. Please contact the Alaska Bar Association or go to www.alaskabar.org for details regarding reciprocity with other states.
- AL CLE 1.5
- This course or a portion thereof has been approved by the Alabama State Mandatory Continuing Legal Education Commission for a maximum of 1.5 hours credit.
- Arizona CLE 1.5
- The Arizona State Bar does not pre-approve or pre-certify MCLE programs. However, records of this program and attendance will be maintained by Lorman Education Services for auditing purposes. This activity may qualify for up to 1.5 hours toward your annual CLE requirement for the State Bar of Arizona.
- CA MCLE 1.5
- Lorman Education Services is a State Bar of California approved MCLE sponsor and this course qualifies for 1.5 CLE hours of participatory credit.
- CT CLE 1.5
- Neither the Connecticut Judicial Branch nor the Commission on Minimum Continuing Legal Education approve or accredit CLE providers or activities. This course has been approved for CLE credit in jurisdictions aside from CT and therefore it automatically meets the content and delivery requirements in Connecticut. Credit is based on a 60 minute credit hour and shall be awarded as follows: 1.5 CLE credit(s).
- GA CLE 1.5
- This program has been approved by the Georgia Commission on Continuing Lawyer Competency for 1.5 CLE hours.
- MO CLE 1.8
- This course qualifies for self-study CLE credit in Missouri.
- NM CLE 1.5
- This program has been approved by the New Mexico Minimum Continuing Legal Education Board for 1.5 hours of credit.
- RI CLE 1.5
- This program has been approved by the Rhode Island Mandatory Continuing Legal Education Commission for 1.5 hours of CLE credit.
- VT CLE 1.5
- This self-study program has been approved by the Mandatory Continuing Legal Education Board of Vermont for 1.5 hour(s) of CLE credit. Please note: Attorneys may only claim 12 credits per compliance period in this format. This course is considered "Non-Moderated Programming without Interactivity".
To earn each credit Lorman offers through the OnDemand learning platform, you need to watch 100% of the program. Also, for certain credits you will need to fulfill additional requirements which will be displayed on the "credits" tab when viewing the course.
This program does NOT qualify, nor meet the National Standard for NASBA accreditation.
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Why Lorman?
Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Faculty
Christopher Marotta
Holland & Knight LLP
- Partner at Holland & Knight LLP
- Assists private equity and strategic clients with the tax aspects of acquisitions, divestitures, and restructurings of multinational enterprises
- Advice given with respect to negotiation of public and private mergers and acquisitions, borrowings, and other credit facilities, as well as joint venture formations involving entities taxed as partnerships
- Published in the Bloomberg Tax Management Memorandum, the Banking Law Journal, the Journal of Intellectual Property Law & Practice, and the American Bankruptcy Law Journal
- Admitted to practice in New York and Florida
- LL.M. degree, New York University School of Law; J.D. degree, University of Wisconsin Law School; B.A. degree, Bowdoin College
- Can be contacted at or [email protected]
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Why Lorman?
Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
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