--- title: FINAL REGULATIONS ON SALE OF US PARTNERSHIP BY FOREIGN PARTNER description: Foreign investors should consider these rules when investing in a US partnership that does business or owns real estate in the US. image: https://info.mooredm.com/hubfs/real_estate_rsz%20for%20blog.jpg --- [![Moore_Doeren Mayhew_Logo_RGB_500px](https://info.mooredm.com/hs-fs/hubfs/Moore_Doeren%20Mayhew_Logo_RGB_500px.png?width=500&height=55&name=Moore_Doeren%20Mayhew_Logo_RGB_500px.png "Moore_Doeren Mayhew_Logo_RGB_500px")](https://info.moorestephensdm.com/blog) - [ABOUT](https://www.mooredm.com/about) - [SERVICES](https://www.mooredm.com/services) - [INDUSTRIES](https://www.mooredm.com/industries) - [LOCATIONS](https://www.mooredm.com/locations) - [PEOPLE](https://www.mooredm.com/people) - [RESOURCES](https://www.mooredm.com/publications) - [GLOBALVIEW](https://info.mooredm.com/blog) [![GlobalVIEW-Webpage-Header-final-2](https://info.mooredm.com/hs-fs/hubfs/GlobalVIEW-Webpage-Header-final-2.jpg?width=2000&height=500&name=GlobalVIEW-Webpage-Header-final-2.jpg "GlobalVIEW-Webpage-Header-final-2")](https://info.mooredm.com/blog/mooredm.com) October 14, 2020 # FINAL REGULATIONS ON SALE OF US PARTNERSHIP BY FOREIGN PARTNER ![topicIcon](http://www.sparkreaction.com/hubfs/Oceania%20Theme%202016/Images/topicIcon.png) [International Tax](https://info.mooredm.com/blog/topic/international-tax) [![FINAL REGULATIONS ON SALE OF US PARTNERSHIP BY FOREIGN PARTNER](https://info.mooredm.com/hubfs/real_estate_rsz%20for%20blog.jpg)](https://info.mooredm.com/blog/sale-us-partnership-foreign-partner) Prior to the enactment of Sec 864(c)(8) as part of the TCJA-2017, a foreign partner could sell an interest in a US partnership without being subject to US tax. This was similar to the treatment if a foreign person sold stock in a US company. This was thanks to the “*Grecian”* court case decided on October 13, 2017. See prior *GlobalVIEW* article of October 31, 2017. If there was real estate that was a major asset of the partnership or corporation, then there was US tax that could be triggered. Since the IRS lost the *“Grecian”,* they simply changed the law as part of the TCJA-2017 Act. This not only required that assets of the partnership be deemed to have been sold and subjected to tax as if this had occurred, but also withholding requirements on the purchaser of the interest is required. **Final Regulations** Guidance was issue on September 23, 2020 that addresses the gain or loss of certain foreign persons on the sale or exchange of an interest in a partnership that is engaged in a trade or business in the US. Proposed regulations on information reporting and withholding on a sale or exchange will be finalized at a later date. Certain nonrecognition transactions are excluded from these rules. There is a three-step process to determine the amount of the foreign partner’s share of the gain or loss. The final step involves a deemed sale, which raises the specter of a possible need for an appraisal on each of the assets of the partnership, even though the individual assets were not sold but only an interest in the entire partnership. The regulations also address the situation if the foreign partner is a resident of a treaty country. The treaty provisions are considered as part of Step 3 and require that the partner meet all applicable limitation of benefits (LOB) requirements. Step 3 excludes gross income: 1. Excluded under a treaty article. 2. Exempt under an applicable Code provision. 3. Excepted under Sec. 897. Foreign investors should consider these rules when investing in a US partnership that does business or owns real estate in the US. There may also be certain action that can be taken to limit the foreign partner’s exposure to US taxation, depending upon the type of activity of the partnership. [Moore Doeren Mayhew](https://info.mooredm.com/contact-mooredm) would be pleased to discuss your particular situation and the issue you should be addressing prior to investment or sale of a US partnership. Thank you.   ![Linus Ostberg](https://info.mooredm.com/hs-fs/hubfs/Linus%20Ostberg.jpg?width=100&name=Linus%20Ostberg.jpg) Linus Ostberg, Co-Author   ![](https://info.mooredm.com/hs-fs/hubfs/Kenneth%20Bransom.png?height=100&name=Kenneth%20Bransom.png) Written by [Kenneth Bransom](https://info.mooredm.com/blog/author/kenneth-bransom) SHARE THIS ARTICLE | [NEXT POST](https://info.mooredm.com/blog/final-downward-attribution-ownership-regulations) ## Get this information delivered straight to your mailbox. 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