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As a boutique international tax advisory firm, we’re finding international tax issues arising for individuals and companies of all sizes. Many of them never thought they’d have any cross-border activities. We thought it might be helpful to do a series of discussions on International Tax for the Non-Specialist. They are overviews designed to assist practitioners and taxpayers identify issues. The overviews dive into some level of detail, but we envision separate sessions to more fully explain various technicalities.

There is no need to view the presentations in any particular order. This course is #7 in the series, following:
- #1 on tax residency and foreign financial account disclosures [FBAR / FinCen 114 / Form 8938];
- #2 on earning foreign income and an employee being transferred to a foreign affiliate [including the foreign earned income and
housing exclusions];
- #3 on the anti-deferral rules of Subpart F and identifying a controlled foreign corporation (CFC);
- #4 on US income taxation of Nonresidents;
- #5 on the anti-deferral rule of Internal Revenue Code §956, Investment of Earnings in US Property; and
- #6 on the entity classification (check the box) rules.

The presentation is a practical overview of how the US taxes foreign persons investing in US real property under FIRPTA (the Foreign Investment in Real Property Tax Act). It reviews the different ways property is typically owned, the differences between taxation of current operating income, such as rent, versus FIRPTA’s taxation on the disposition of property.

  1. The presentation includes a discussion of, but is not limited to:
  2. Definition of real property.
  3. Identifying how the US treats different foreign real property owners (corporation, individual, flow-through vehicle, etc.), including a brief review of entity classification.
  4. How the US taxes a foreign investor on operational income depending on the entity classification of the both the US investment and the foreign person (what forms need to be filed; how tax is computed).
  5. Identifying how a US company becomes a “tainted” asset under FIRPTA.
  6. Introducing the withholding rules and their exceptions, including how to obtain a withholding certificate (potentially eliminating withholding).
  7. Walking-through the relevant forms to be filed.

Course Key Concepts: International tax, Global tax, Entity classification, Check the Box, Association taxable as a corporation, FIRPTA, FDAP, USRPI – US Real Property Interest, USRPHC - US real property holding corporation, Section 897, Section 1445, Form 8288, Form 8288-A, Form 8288-B.

Course Series

This course is included in the following series:

7 CoursesPractical International Tax for the Non-Specialist

  1. Practical International Tax for the Non-Specialist #1: Tax Residency and Foreign Financial Account Disclosures
  2. Practical International Tax for the Non-Specialist #2: Case Study - US Person Earning Foreign Income and then Transferred to Foreign Subsidiary.
  3. Practical International Tax for the Non-Specialist #3: Anti-deferral overview– Subpart F and CFCs.
  4. Practical International Tax for the Non-Specialist #4: US Taxation of Nonresident Individuals
  5. Practical International Tax for the Non-Specialist #5: Section 956, Investment of Earnings in US Property
  6. Practical International Tax for the Non-Specialist #6: Check The Box Overview (Entity Classification Election)
  7. Practical International Tax for the Non-Specialist #7: Foreign Investment in US Real Property - FIRPTA

Learning Objectives

  • Explore the different types of tax entities and how the US will tax them under FIRPTA or other provisions.
  • Identify why and how the US taxes dispositions of real property.
  • Discover when a US company becomes a USRPHC and therefore a USRPI.
  • Recognize the transactions that are considered dispositions.
Last updated/reviewed: Aug 24, 2020

Prerequisites

Course Complexity: Intermediate

No advanced preparation or prerequisites are required for this course. However it is recommended to take other Tax courses by Marc Schwartz: Practical International Tax for the Non-Specialist

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  6:46Introduction to Foreign Investment in US Real Property - FIRPTA
  12:11Taxation of Current Income
  7:29USRPIs and Calculation Rule
  6:17An Alternative Book Value Test for Determining USRPHC Status
  11:32Form 8288
CONTINUOUS PLAY
  44:15Practical International Tax for the Non-Specialist #7: Foreign Investment in US Real Property - FIRPTA
SUPPORTING MATERIAL
  PDFSlides: Practical International Tax for the Non-Specialist #7: Foreign Investment in US Real Property - FIRPTA
  PDFPractical International Tax for the Non-Specialist #7: Foreign Investment in US Real Property - FIRPTA Glossary/ Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM