The IRS today released an advance version of Notice 2018-29 concerning the rules on withholding when there is a transfer of non-publicly traded partnership interests, by a nonresident alien or foreign corporation, under new measures added to the Code by the new U.S. tax law (Pub. L. No. 115-97, enacted December 22, 2017).
The purpose of this report is to provide text of Notice 2018-29 [PDF 188 KB] (22 pages). Initial impressions will be provided in future reports by KPMG LLP.
As the IRS explained in a related release—IR-2018-81—the new tax law treats a foreign taxpayer’s gain or loss on the sale or exchange of a partnership interest as effectively connected with the conduct of a trade or business in the United States to the extent that gain or loss would be treated as effectively connected with the conduct of a trade or business in the United States if the partnership sold all of its assets. In these situations, the new law also imposes a withholding tax on the disposition of a partnership interest by a foreign taxpayer.
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