§ 1445. Withholding of tax on dispositions of United States real property interests
(b)
Exemptions
(1)
In general
No person shall be required to deduct and withhold any amount under subsection (a) with respect to a disposition if paragraph (2), (3), (4), (5), or (6) applies to the transaction.
(2)
Transferor furnishes nonforeign affidavit
Except as provided in paragraph (7), this paragraph applies to the disposition if the transferor furnishes to the transferee an affidavit by the transferor stating, under penalty of perjury, the transferor’s United States taxpayer identification number and that the transferor is not a foreign person.
(3)
Nonpublicly traded domestic corporation furnishes affidavit that interests in corporation not United States real property interests
Except as provided in paragraph (7), this paragraph applies in the case of a disposition of any interest in any domestic corporation if the domestic corporation furnishes to the transferee an affidavit by the domestic corporation stating, under penalty of perjury, that—
(A)
the domestic corporation is not and has not been a United States real property holding corporation (as defined in section
897
(c)(2)) during the applicable period specified in section
897
(c)(1)(A)(ii), or
(4)
Transferee receives qualifying statement
(A)
In general
This paragraph applies to the disposition if the transferee receives a qualifying statement at such time, in such manner, and subject to such terms and conditions as the Secretary may by regulations prescribe.
(B)
Qualifying statement
For purposes of subparagraph (A), the term “qualifying statement” means a statement by the Secretary that—
(i)
the transferor either—
(5)
Residence where amount realized does not exceed $300,000
This paragraph applies to the disposition if—
(6)
Stock regularly traded on established securities market
This paragraph applies if the disposition is of a share of a class of stock that is regularly traded on an established securities market.
(7)
Special rules for paragraphs (2), (3), and (9)
Paragraph (2), (3), or (9) (as the case may be) shall not apply to any disposition—
(A)
if—
(B)
if the Secretary by regulations requires the transferee or qualified substitute to furnish a copy of such affidavit or statement to the Secretary and the transferee or qualified substitute fails to furnish a copy of such affidavit or statement to the Secretary at such time and in such manner as required by such regulations.
(c)
Limitations on amount required to be withheld
(1)
Cannot exceed transferor’s maximum tax liability
(A)
In general
The amount required to be withheld under this section with respect to any disposition shall not exceed the amount (if any) determined under subparagraph (B) as the transferor’s maximum tax liability.
(d)
Liability of transferor’s agents, transferee’s agents, or qualified substitutes
(1)
Notice of false affidavit; foreign corporations
If—
(A)
the transferor furnishes the transferee or qualified substitute an affidavit described in paragraph (2) of subsection (b) or a domestic corporation furnishes the transferee an affidavit described in paragraph (3) of subsection (b), and
(B)
in the case of—
(ii)
any transferee’s agent or qualified substitute, such agent or substitute has actual knowledge that such affidavit is false,
such agent or qualified substitute shall so notify the transferee at such time and in such manner as the Secretary shall require by regulations.
(2)
Failure to furnish notice
(A)
In general
If any transferor’s agent, transferee’s agent, or qualified substitute is required by paragraph (1) to furnish notice, but fails to furnish such notice at such time or times and in such manner as may be required by regulations, such agent or substitute shall have the same duty to deduct and withhold that the transferee would have had if such agent or substitute had complied with paragraph (1).
(3)
Transferor’s agent
For purposes of this subsection, the term “transferor’s agent” means any person who represents the transferor—
(4)
Transferee’s agent
For purposes of this subsection, the term “transferee’s agent” means any person who represents the transferee—
(5)
Settlement officer not treated as transferor’s agent
For purposes of this subsection, a person shall not be treated as a transferor’s agent or transferee’s agent with respect to any transaction merely because such person performs
1 or more of the following acts:
(e)
Special rules relating to distributions, etc., by corporations, partnerships, trusts, or estates
(1)
Certain domestic partnerships, trusts, and estates
In the case of any disposition of a United States real property interest as defined in section
897
(c) (other than a disposition described in paragraph (4) or (5)) by a domestic partnership, domestic trust, or domestic estate, such partnership, the trustee of such trust, or the executor of such estate (as the case may be) shall be required to deduct and withhold under subsection (a) a tax equal to 35 percent (or, to the extent provided in regulations, 15 percent) of the gain realized to the extent such gain—
(2)
Certain distributions by foreign corporations
In the case of any distribution by a foreign corporation on which gain is recognized under subsection (d) or (e) of section
897, the foreign corporation shall deduct and withhold under subsection (a) a tax equal to 35 percent of the amount of gain recognized on such distribution under such subsection.
(3)
Distributions by certain domestic corporations to foreign shareholders
If a domestic corporation which is or has been a United States real property holding corporation (as defined in section
897
(c)(2)) during the applicable period specified in section
897
(c)(1)(A)(ii) distributes property to a foreign person in a transaction to which section
302 or part II of subchapter C applies, such corporation shall deduct and withhold under subsection (a) a tax equal to 10 percent of the amount realized by the foreign shareholder. The preceding sentence shall not apply if, as of the date of the distribution, interests in such corporation are not United States real property interests by reason of section
897
(c)(1)(B). Rules similar to the rules of the preceding provisions of this paragraph shall apply in the case of any distribution to which section
301 applies and which is not made out of the earnings and profits of such a domestic corporation.
(4)
Taxable distributions by domestic or foreign partnerships, trusts, or estates
A domestic or foreign partnership, the trustee of a domestic or foreign trust, or the executor of a domestic or foreign estate shall be required to deduct and withhold under subsection (a) a tax equal to 10 percent of the fair market value (as of the time of the taxable distribution) of any United States real property interest distributed to a partner of the partnership or a beneficiary of the trust or estate, as the case may be, who is a foreign person in a transaction which would constitute a taxable distribution under the regulations promulgated by the Secretary pursuant to section
897.
(5)
Rules relating to dispositions of interest in partnerships, trusts, or estates
To the extent provided in regulations, the transferee of a partnership interest or of a beneficial interest in a trust or estate shall be required to deduct and withhold under subsection (a) a tax equal to 10 percent of the amount realized on the disposition.
(6)
Distributions by regulated investment companies and real estate investment trusts
If any portion of a distribution from a qualified investment entity (as defined in section
897
(h)(4)) to a nonresident alien individual or a foreign corporation is treated under section
897
(h)(1) as gain realized by such individual or corporation from the sale or exchange of a United States real property interest, the qualified investment entity shall deduct and withhold under subsection (a) a tax equal to 35 percent (or, to the extent provided in regulations, 15 percent (20 percent in the case of taxable years beginning after December 31, 2010)) of the amount so treated.
(7)
Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including regulations providing for exceptions from provisions of this subsection and regulations for the application of this subsection in the case of payments through 1 or more entities.
(f)
Definitions
For purposes of this section—
(1)
Transferor
The term “transferor” means the person disposing of the United States real property interest.
(2)
Transferee
The term “transferee” means the person acquiring the United States real property interest.
(4)
Transferor’s maximum tax liability
The term “transferor’s maximum tax liability” means, with respect to the disposition of any interest, the sum of—
(5)
Transferor’s unsatisfied withholding liability
The term “transferor’s unsatisfied withholding liability” means the withholding obligation imposed by this section on the transferor’s acquisition of the United States real property interest or on the acquisition of a predecessor interest, to the extent such obligation has not been satisfied.