Section 864(c)(8) not only is relevant to foreign persons that directly sell partnership interests, but also affects partnerships that dispose of a partnership interest and that, directly or indirectly, have foreign persons as partners (tiered partnerships). 91-32, which relied on a look-through approach similar to the approach subsequently taken in Section 864(c)(8). Grecian Magnesite Mining invalidated Rev. The Tax Court applied entity principles to a foreign partner’s sale of an interest in a partnership engaged in the active conduct of a trade or business within the United States and, therefore, did not treat gain as effectively connected to the conduct of that trade or business subject to tax. Section 864(c)(8) was added by the 2017 tax reform act in apparent response to the holding in Grecian Magnesite Mining, Ind.
The amount of effectively connected gain or loss is determined by reference to the amount of effectively connected gain or loss that the foreign person would have been allocated had the partnership sold all its assets at fair market value as of the date of the sale or exchange of the partnership interest. Section 864(c)(8) provides that all or a portion of the gain or loss derived by a foreign person from the sale or exchange of a partnership interest is treated as gain or loss effectively connected with the conduct of a US trade or business (ECI). Treasury and the IRS on September 21 released Final Regulations under Section 864(c)(8) (the Final Regulations). America Uruguay Uzbekistan Venezuela Vietnam Zambia Zimbabwe eSwatini/Swaziland Rep.) Costa Rica Croatia Cyprus Czech Republic Denmark Dominican Republic Ecuador El Salvador Equatorial Guinea Estonia Finland France Gabon Georgia Germany Ghana Gibraltar Global Greece Guatemala Guinea Honduras Hong Kong SAR, China Hungary ILC Legal Iceland India Indonesia Interaméricas Ireland (Republic of) Isle of Man Israel ישראל Italy Jamaica Japan Kazakhstan Kenya Kosovo Laos Latvia Liberia Liechtenstein Lithuania Luxembourg Macedonia Madagascar Malawi Malaysia Maldives Malta Mauritius Middle East Region Middle East Bahrain Egypt Iraq Jordan Kuwait Lebanon Libya Oman Qatar Saudi Arabia United Arab Emirates West Bank Gaza Moldova Mongolia Montenegro Mozambique México Mexico Namibia Netherlands Netherlands Antilles New Caledonia New Zealand Nicaragua Nigeria Norway Pakistan Panama Papua New Guinea Paraguay Peru Philippines Poland Portugal Romania Russia Россия Rwanda Senegal Serbia Singapore Slovakia Slovenia South Africa South Korea Spain Sri Lanka Sweden Switzerland Taiwan 臺灣 Tanzania Thailand Trinidad and Tobago Turkey Türkiye Uganda Ukraine Україна United Kingdom UK United States US USA U.S.
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