U.S. Code > Title 26 Internal Revenue Code > Subtitle A—Income Taxes (§§ 1—1564) > CHAPTER 3—WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS (§§ 1441—1465) > Subchapter A—Nonresident Aliens and Foreign Corporations (§§ 1441—1446) > § 1446. Withholding 1 tax on foreign partners’ share of effectively connected income

§ 1446. Withholding 1 tax on foreign partners’ share of effectively connected income

(a) General rule
If—
(1) a partnership has effectively connected taxable income for any taxable year, and
(2) any portion of such income is allocable under section 704 to a foreign partner,
such partnership shall pay a withholding tax under this section at such time and in such manner as the Secretary shall by regulations prescribe.
(b) Amount of withholding tax
(1) In general
The amount of the withholding tax payable by any partnership under subsection (a) shall be equal to the applicable percentage of the effectively connected taxable income of the partnership which is allocable under section 704 to foreign partners.
(2) Applicable percentage
For purposes of paragraph (1), the term “applicable percentage” means—
(A) the highest rate of tax specified in section 1 in the case of the portion of the effectively connected taxable income which is allocable under section 704 to foreign partners who are not corporations, and
(B) the highest rate of tax specified in section 11 (b)(1) in the case of the portion of the effectively connected taxable income which is allocable under section 704 to foreign partners which are corporations.
(c) Effectively connected taxable income
For purposes of this section, the term “effectively connected taxable income” means the taxable income of the partnership which is effectively connected (or treated as effectively connected) with the conduct of a trade or business in the United States computed with the following adjustments:
(1) Paragraph (1) of section 703 (a) shall not apply.
(2) The partnership shall be allowed a deduction for depletion with respect to oil and gas wells but the amount of such deduction shall be determined without regard to sections 613 and 613A.
(3) There shall not be taken into account any item of income, gain, loss, or deduction to the extent allocable under section 704 to any partner who is not a foreign partner.
(d) Treatment of foreign partners
(1) Allowance of credit
Each foreign partner of a partnership shall be allowed a credit under section 33 for such partner’s share of the withholding tax paid by the partnership under this section. Such credit shall be allowed for the partner’s taxable year in which (or with which) the partnership taxable year (for which such tax was paid) ends.
(2) Credit treated as distributed to partner
Except as provided in regulations, a foreign partner’s share of any withholding tax paid by the partnership under this section shall be treated as distributed to such partner by such partnership on the earlier of—
(A) the day on which such tax was paid by the partnership, or
(B) the last day of the partnership’s taxable year for which such tax was paid.
(e) Foreign partner
For purposes of this section, the term “foreign partner” means any partner who is not a United States person.
(f) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including—
(1) regulations providing for the application of this section in the case of publicly traded partnerships, and
(2) regulations providing—
(A) that, for purposes of section 6655, the withholding tax imposed under this section shall be treated as a tax imposed by section 11 and any partnership required to pay such tax shall be treated as a corporation, and
(B) appropriate adjustments in applying section 6655 with respect to such withholding tax.

[1] So in original. Probably should be followed by “of”.