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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: 14,903
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

...

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: 14,903
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 8 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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