Treasury releases proposed Section 864(c)(8) regulations

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December 2018

Overview

Today Treasury released proposed regulations under Section 864(c)(8). Section 864(c)(8), enacted by the 2017 tax reform act, provides that gain or loss derived by a non-US person on the sale or exchange of a partnership interest that is engaged in a US trade or business is generally treated as effectively connected income and, therefore, subject to US tax. The proposed regulations also affect partnerships that, directly or indirectly, have foreign persons as partners.

The regulations contain 20 pages of preamble language and 16 of regulatory text, including 3 examples. Public comments on the proposed regulations are due 60 days after publication in the Federal Register. The proposed regulations contain effective dates that are tied to the date of publication in the Federal Register.

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Oren Penn

Principal, US Inbound Tax and International Tax Services, PwC US

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