Looking for a Form 8288 Templates? Download it for free!

notify you. If notification is not provided,

on the distribution of a U.S. real property

an election to withhold upon distribution

the agent (or substitute) will be liable for

interest to its shareholders. Certain

rather than at the time of transfer. The

the tax that should have been withheld,

domestic corporations are required to

amount to be withheld from each

but only to the extent of the agent’s (or

withhold tax on distributions to foreign

distribution is 35% of the amount

substitute’s) compensation from the

shareholders.

attributable to the foreign beneficiary’s

transaction.

proportionate share of the current

No withholding is required on the

balance of the trust’s section 1445(e)(1)

If you (or the substitute) receive a

transfer of an interest in a domestic

account. This election does not apply to

notice of false certification or statement

corporation if any class of stock of the

any qualified investment entity or to any

from your agent, the transferor’s agent,

corporation is regularly traded on an

publicly traded trust. Special rules apply

or qualified substitute, you must

established securities market. Also, no

to large trusts that make recurring sales

withhold tax as if you had not received a

withholding is required on the transfer of

of growing crops and timber.

certification or statement. See

Late

an interest in a publicly traded

A trust’s section 1445(e)(1) account

notice of false

certification, earlier.

partnership or trust.

is the total net gain realized by the trust

on all section 1445(e)(1) transactions

An “agent” is any person who

No withholding will be required with

after the date of the election, minus the

represents the transferor or transferee in

respect to an interest holder if the entity

total of all distributions made by the trust

any negotiation with another person (or

or fiduciary receives a certification of

another person’s agent) relating to the

after the date of the election from such

nonforeign status from the interest

transaction or in settling the transaction.

total net gain. See Regulations section

holder. An entity or fiduciary may also

For purposes of section 1445(e), a

1.1445-5(c)(3) for more information.

use other means to determine that an

transferor’s or transferee’s agent is any

interest holder is not a foreign person,

Section 1445(e)(2)

person who represents or advises an

but if it does so and it is later determined

Transactions

entity, a holder of an interest in an entity,

that the interest holder is a foreign

or a fiduciary with respect to the

A foreign corporation that distributes a

person, the withholding may be

planning, arrangement, or completion of

U.S. real property interest must

collected from the entity or fiduciary.

a transaction described in sections

generally withhold 35% of the gain

Section 1445(e)(1)

1445(e)(1) through (4).

recognized by the corporation. No

Transactions

withholding or reduced withholding is

A person is not treated as an agent if

required if the corporation receives a

Partnerships. A domestic partnership

the person only performs one or more of

withholding certificate from the IRS.

that is not publicly traded must withhold

the following acts in connection with the

Section 1445(e)(3)

tax under section 1446 on effectively

transaction:

connected income allocated to its

Transactions

1. Receiving and disbursing any

foreign partners and must file Form

part of the consideration.

Generally, a domestic corporation that

8804, and Form 8805. A publicly traded

distributes any property to a foreign

2. Recording any document.

partnership or nominee generally must

person that holds an interest in the

3. Typing, copying, and other

withhold tax under section 1446 on

corporation must withhold 15% (10% for

clerical tasks.

distributions to its foreign partners and

distributions before February 17, 2016)

must file Forms 1042 and 1042-S.

4. Obtaining title insurance reports

of the fair market value of the property

Because a domestic partnership that

and reports concerning the condition of

distributed if:

disposes of a U.S. real property interest

the property.

The foreign person’s interest in the

is required to withhold under section

5. Transmitting documents between

corporation is a U.S. real property

1446, it is not required to withhold under

the parties.

interest under section 897, and

section 1445(e)(1).

The property is distributed in

6. Functioning exclusively in his or

Trusts and estates. If a domestic trust

redemption of stock under section 302,

her capacity as a representative of a

or estate disposes of a U.S. real

in liquidation of the corporation under

condominium association or

property interest, the amount of gain

sections 331 through 341, or with

cooperative housing corporation. This

realized must be paid into a separate

respect to stock under section 301 that

exemption includes the board of

“U.S. real property interest account.” For

is not made out of the earnings and

directors, the committee, or other

these purposes, a domestic trust is one

profits of the corporation.

governing body.

that does not make the “large trust

No withholding or reduced

Entities Subject to Section

election” (explained below), is not a

withholding is required if the corporation

qualified investment entity, and is not

1445(e)

receives a withholding certificate from

publicly traded. The fiduciary must

Withholding is required on certain

the IRS.

withhold 35% of the amount distributed

distributions and other transactions by

to a foreign person from the account

Section 1445(e)(4)

domestic or foreign corporations,

during the tax year of the trust or estate

Transactions

qualified investment entities, trusts, and

in which the disposition occurred. The

estates. A domestic trust or estate must

No withholding is required under section

withholding must be paid over to the IRS

withhold 35% of the amount distributed

1445(e)(4), relating to certain taxable

within 20 days of the date of distribution.

to a foreign beneficiary from a “U.S. real

distributions by domestic or foreign

Special rules apply to grantor trusts.

property interest account” that it is

partnerships, trusts, and estates, until

See Regulations section 1.1445-5 for

required to establish under Regulations

the effective date of a Treasury Decision

more information and how to compute

section 1.1445-5(c)(1)(iii). A foreign

under section 897(e)(2)(B)(ii) and (g).

the amount subject to withholding.

corporation that has not made the

election under section 897(i) must

Large trust election. Trusts with

withhold 35% of the gain it recognizes

more than 100 beneficiaries may make

Instructions for Form 8288 (Rev. 2-2017)

-5-

Instructions For Form 8288 - U.s. Withholding Tax Return For Dispositions By Foreign Persons Of U.s. Real Property Interests Page 5

Related Articles

Related forms

Related Categories