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What rate of withholding is applicable for a domestic

What rate of withholding...

What rate of withholding is applicable for a domestic partnership with 2 foreign partners upon the selling of a rental property in US.

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I need to know if the withholding rate when filing Form 8813 would be 39% or 20% capital gains rate.

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Answered in 26 minutes by:
11/29/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,215
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name's Lane

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, on three continents, since 1986.

...

A foreign partner that is engaged in US trade or business (ETB) and has effectively connected income (ECI) is liable for net basis taxation in the US at graduated rates

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Then, Section 875 specifies that foreign partner of a partnership that is ETB is deemed also engaged in a US trade or business

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So, the rate of withholding is 39.6% for foreign individual partners (35% for corporate partners), 20% for LT capital gain.

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If this is for the SALE of property then the rate of withholding IS 20%

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,215
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Customer reply replied 5 months ago
the withholding rate on the sale of the property is 20% of gain?

That's right. It's a set amount. If the actual tax ends up being less becasue of the progressive rates then there will be a refund or more owed if they file a 1040NR. ut the withholding rate is a fixed 20% under the code

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Lane
Lane
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Category: Tax
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