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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 focus on the sale of partnership interests. Anisa, we have 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, it 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. Basically, we end up right where we started. So, under our internal law and the treaty, it has always been clear that with respect to the sale of real property located in the US, the sale of that property, whether it was held directly or indirectly through a partnership, was always subject to taxes in the US and exempt with progression in Germany. In addition, we always had US withholding that was applied under our Foreign Investment in Real Property Tax Act, what we like to refer to as FIRPTA, 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, it is not a real property interest, and that has actually taken 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 have come all the way back around to the IRS's position and have said that this is definitely going to be taxable in the US. So, we thought for a while we were going to...