Video instructions and help with filling out and completing Will Form 4797 Partnerships

Instructions and Help about Will Form 4797 Partnerships

Music welcome back to our video series on the US tax reform today we would like to have a focus on the sale of partnership interests Anisa we talked in previous videos about the taxation of pass-through entities but what happens now if I decide I want to sell my interest in the partnership well the short answer is is taxable in the US not an answer I guess people want to hear better not yeah how we get there though is a little interesting maybe for some and basically we end up right where we started so under our internal law and the treaty it's always been clear that with respect to the sale of real property located in the US so the sale of that property whether it was held directly or indirectly through a partnership was always such attacks in the US and exempt with progression in Germany in addition we always had us withholding that was applied under our foreign investment in the real property tax act what we like to refer to as FERC done another nice acronym for us and that's true with respect to real property interest and that has not changed but regarding the sale of a US partnership interest is not a real property interest and that is actually taken you know gone a full-circle really so the IRS has always taken the position that this should be taxable in the US and then we had a case not that long ago that actually held that it was not going to be taxable in the US and now under the new law they've come all the way back around to the IRS s position and has said this is definitely going to be taxable in the US so we thought for a while we were gonna you know have some benefit and be able to maybe take the position under this court case that it wasn't gonna be taxable here if that was beneficial but now that they've actually written it into the law we're not going to be able you know to do that but we've been told by our German colleagues that we think that it should still receive exemption with regression treatment you know in Germany but he said I think you said earlier that the sale of shares in a corporation are not text in the US is that actually true yes that's actually true and that has always been the case under our in both our internal law and under the treaty the sale of shares is considered the sale of an intangible asset and it's taxed where the based on the residence of the seller and you say they say anything has or any other requirements out if I'm selling my partnership interests in the US yes actually so it's really more on the buyer but we now have a new rule in place that when someone is selling a partnership interest the buyer is actually required to withhold 10% of the proceeds of the sale unless the seller can certify that they're a US citizen or a u.s. resident which most of our obviously German sellers are not going to be able to certify that there are u.s. you know resident or US citizens so they can look forward to 10 percent withholding on their sale okay okay but I think it is important to know and that you fulfill your obligations at least I think this was very helpful thank you thank you very much and yes please please look at our web page you will find other videos on the US tax reform where we go into detail on other important topics thank you you