When providing a U.S. address on Form 8804, 8805, or 8813, include the suite, room, or other unit number after the street address. If the Post Office does not deliver mail to the street address and the partnership (or withholding agent) has a P.O. box, show the box number instead of the street address. If the partnership (or withholding agent) receives its mail in care of a third party (such as an accountant or an attorney), enter on the street address line “c/o” followed by the third party's name and street address or P.O. box.
When providing a foreign address on Form 8804, 8805, or 8813, enter the number and street, city, province or state, and the name of the country. Follow the foreign country's practice in placing the postal code in the address. Do not abbreviate the country name.
Figure the partnership's ECTI using the definition on page 2. Enter the total ECTI allocable to foreign partners (by income type) on lines 4a, 4e, 4i, and 4m. With respect to lines 4e, 4i, and 4m, enter the specified types of income allocable to non-corporate partners if appropriate documentation is received and such partners would be entitled to use a preferential rate on such income or gain. See Regulations section 1.1446-3(a)(2) for additional information.
If the partnership has net ordinary loss, net short-term capital loss, or net 28% rate loss, each net loss should be netted against the appropriate categories of income and gain to determine the amounts of income and gain to be entered on lines 4e, 4i, and 4m, respectively. See section 1(h) and Notice 97-59, 1997-45 I.R.B. 7, for rules for netting gains and losses.
Note.
Partnership ECTI on which a foreign partner is exempt from U.S. tax by a treaty or other reciprocal agreement is not allocable to that partner and is exempt from withholding under section 1446. However, this exemption from section 1446 withholding must be reported on Form 8805. See instructions for line 8b of Form 8805 below.
Enter the reduction amounts for state and local taxes under Regulations section 1.1446-6(c)(1)(iii). See Reductions for State and Local Taxes on page 3 for additional information. The netting rules under section 1(h) and Notice 97-59 must be considered in determining the category of income the reduction amounts offset.
Enter the reduction amounts resulting from certified partner-level items received from foreign partners using Form 8804-C. See Certification of Deductions and Losses on page 3 for additional information. The netting rules under section 1(h) and Notice 97-59 must be considered in determining the category of income the reduction amounts offset.
Add lines 5a through 5d.
Alternative tax for foreign corporate partners with qualified timber gain. In the case of a foreign corporate partner, if the amount included on line 4d for that foreign corporate partner includes both a net capital gain and qualified timber gain, an alternative maximum 15% capital gains tax may apply to the qualified timber gain. For this purpose, a qualified timber gain means the net gains described in sections 631(a) and (b), determined by taking into account only trees held more than 15 years. Only qualified timber gains for the period that begins after May 22, 2008, and before May 23, 2009, are eligible for the alternative tax.
With respect to a foreign corporate partner with both a net capital gain and a qualified timber gain, include on line 5e the smaller of the alternative tax or the amount included on line 5a for that foreign corporate partner. Use Form 1120-W, Part II to compute the alternative tax for the foreign corporate partner. For these purposes, the following modifications must be made to Form 1120-W, Part II:
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On lines 30, 32, and 35, substitute “the amount included on Form 8804, line 5a for that foreign corporate partner” for “Part I, line 1.”
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On line 33, enter the product of line 32 times 35%.
As mentioned above, the Form 1120-W, Part II, line 37 result (computed with the modifications noted above) is compared to the amount entered on Form 8804, line 5a for that foreign corporate partner, and the smaller of these two amounts is included on Form 8804, line 5e. Also, enter “QTG” on the dotted line to the left of the line 5e entry space.
If the partnership is an upper-tier partnership in one or more lower-tier partnerships, enter on line 6b the amount of section 1446 tax withheld by lower-tier partnerships with respect to ECTI allocable to the upper-tier partnership (see Tiered Partnerships on page 4). The amount withheld will be shown on line 10 of the Form 8805 the partnership receives from the lower-tier partnership. If the partnership receives a Form 1042-S from a lower-tier PTP, the amount withheld will be shown in box 7 of the Form 1042-S. (Box 1 of the Form 1042-S will show income code 27.)
Line 6c applies only to partnerships treated as foreign persons and subject to withholding under section 1445(a) or 1445(e)(1) upon the disposition of a U.S. real property interest.
Enter on line 6c the amount of tax withheld under section 1445(a) and shown on Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests, for the tax year in which the partnership disposed of the U.S. real property interest.
Also enter on line 6c the amount of section 1445(e)(1) tax withheld on a distribution by a domestic trust to the partnership with respect to the disposition of a U.S. real property interest by the trust. The amount withheld will be shown in box 7 of the Form 1042-S the partnership receives from the trust. (Box 1 of the Form 1042-S will show income code 25 or 26.)
For both of the situations described above, do not enter more than the amount allocable to foreign partners (as defined in section 1446(e)). Enter amounts allocable to U.S. partners on line 15f of Schedule K (Form 1065) and in box 15 (using code P) of Schedule K-1 (Form 1065). For Form 1065-B, enter amounts on line 15 of Schedule K and in box 9 of Schedule K-1.
A partnership must pay the withholding tax for a foreign partner even if it does not have a U.S. TIN for that partner. See Taxpayer Identifying Number on page 1 for details.
Enter the type of partner (for example, individual, corporation, partnership, trust, estate).
Check the box on this line if any of the partnership's ECTI is treated as not allocable to the foreign partner identified on line 1a and therefore exempt from section 1446 withholding because the income is exempt from U.S. tax for that foreign partner by a treaty, reciprocal exemption, or a provision of the Internal Revenue Code.
Enter the partnership ECTI allocable to the foreign partner (before considering any state and local income tax reduction permitted under Regulations section 1.1446-6(c)(1)(iii) or any reduction amounts resulting from certified partner-level items received from foreign partners using Form 8804-C).
The partnership must provide a statement (generally Schedule K-1 (Form 1065)) to the foreign partner that lists each income type of ECTI included on line 9. The income types of ECTI that may be included on line 9 are:
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Net ordinary income and net short-term capital gains.
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28% rate gains (non-corporate partners only).
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Unrecaptured section 1250 gains (non-corporate partners only).
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Qualified dividend income and net long-term capital gains (including net section 1231 gains) (non-corporate partners only).
The partnership must also provide any additional information to foreign partners that they may reasonably need to complete Schedule P (Form 1120-F).
To calculate the total tax credit allowed to a foreign partner under section 1446, subtract from each type of ECTI allocable to the foreign partner the amount of any state and local income tax reduction permitted under Regulations section 1.1446-6(c)(1)(iii), or any reduction amounts resulting from certified partner-level items received from foreign partners using Form 8804-C, that the partnership considered in determining that partner's portion of the section 1446 withholding tax due. Then multiply each net amount by the applicable percentage (see page 3 for definition). Finally, total the resulting amounts.
Note.
If the partnership relied on a certificate the partner submitted under Regulations section 1.1446-6(c)(1)(ii) to determine that the partnership is not required to pay any section 1446 tax with respect to that partner, enter -0- on line 10. See Form 8804-C, Part III.
The partnership is required to attach the computation described above, as well as a computation showing how the partnership determined that it is not required to pay any section 1446 tax with respect to a partner that submitted a certificate under Regulations section 1.1446-6(c)(1)(ii), to the Form 8805 (see Regulations section 1.1446-6(d)(3)(i)). The partnership is also required to attach any Forms 8804-C received that the partnership considered in whole or in part in making this calculation. The partnership is also required to attach the statement described under and on page 3.
If the foreign partner is a foreign trust or estate, the foreign trust or estate must provide to each of its beneficiaries, a copy of the Form 8805 furnished by the partnership. In addition, the foreign trust or estate must complete Schedule T for each of its beneficiaries and must provide that Schedule T information to each beneficiary.
The foreign trust or estate may provide all of the information listed in the previous paragraph on a single Form 8805 for each of its beneficiaries. In this case, the information provided in boxes 1a through 10 will be the same for all of the beneficiaries, but the information provided on Schedule T may vary from beneficiary to beneficiary, depending on the ownership interests of the respective beneficiaries.
Enter the amount of ECTI on line 9 to be included in the beneficiary's gross income. The foreign trust or estate must provide a statement (generally Schedule K-1 (Form 1041)) to each of its beneficiaries that lists each income type of ECTI included on line 12. The income types of ECTI that may be included on line 12 are:
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Net ordinary income and net short-term capital gains.
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28% rate gains (non-corporate beneficiaries only).
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Unrecaptured section 1250 gains (non-corporate beneficiaries only).
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Qualified dividend income and net long-term capital gains (including net section 1231 gains) (non-corporate beneficiaries only).
A partnership without a U.S. EIN must obtain one and must pay any section 1446 withholding tax due. If the partnership has not received an EIN by the time it files Form 8813, indicate on line 1 of Form 8813 the date the partnership applied for its EIN. On receipt of its EIN, the partnership must immediately send that number to the IRS using the address as shown in Where To File on page 1. Failure to provide an EIN may delay processing of payments on behalf of the partners.
See Amount of each installment payment of withholding tax on page 3 for information on calculating the amount of the payment.
If the total section 1446 tax paid for an installment period has been reduced as a result of the state and local income tax reduction permitted under Regulations section 1.1446-6(c)(1)(iii) or as a result of relying in whole or in part on a partner's Form 8804-C, then the documentation described below must be attached to all Forms 8813 starting with the first installment period in which the certificate was considered. Under these circumstances, a partnership must file Form 8813 for an installment period even if no section 1446 withholding tax is due.
The required documentation is as follows:
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If the partnership reduced an installment payment because it relied on Forms 8804-C, attach all such Forms 8804-C to Form 8813.
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A computation of the tax due relating to each partner whose Form 8804-C it relied on. See Regulations section 1.1446-6(d)(3)(i).
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If the partnership reduced an installment payment based on state and local income tax deductions permitted under Regulations section 1.1446-6(c)(1)(iii), attach the statement described in Reductions for State and Local Taxes on page 3.
Note.
With respect to the last two bulleted items, a statement showing one computation for both items is permitted.
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