Reg 114463c2i in the case of a foreign partnership

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Reg. § 1.1446–3(c)(2)(i). In the case of a foreign partnership that has tax withheld by the transferee under section 1445(a), the Regulations permit the partnership a credit against its section 1446 liability. Reg. § 1.1446–3(c)(2)(ii). 200 § 6.06 INFORMATION REPORTING In addition to the return and withholding requirements, taxpayers may also be subject to information reporting requirements that are imposed to provide the IRS with information needed to verify a taxpayer’s tax liability. For example, suppose that a U.S. subsidiary of a foreign corporation purchases inventory from its foreign parent and resells the inventory in the United States. If the purchase price paid by the U.S. subsidiary to the foreign parent is more than an arm’s-length price, then the gain taxable in the United States from the subsidiary’s sales to customers will be understated (and the foreign parent’s income which is not typically taxable in the United States will be overstated). To determine whether, the subsidiary has paid an arm’s-length price, it may be helpful to know the foreign parent’s costs of production or the price which the foreign corporation sells to unrelated purchasers, if any.
Congress has enacted I.R.C. §§ 6038A and 6038C which require certain U.S. taxpayers or foreign taxpayers doing business in the United States to provide a variety of information to enable the IRS to police arm’s-length pricing between related taxpayers. The details of these disclosure provisions and the intercompany pricing problem in general are discussed infra at § 9.11. 201 § 6.07 FATCA REPORTING AND WITHHOLDING (A) BACKGROUND It has been estimated that the United States loses hundreds of billions in tax revenues each year as a result of offshore tax abuse primarily from the use of concealed and undeclared accounts held by U.S. taxpayers or their controlled foreign entities. In 2009 Congress enacted the “Foreign Account Tax Compliance Act of 2009” (“FATCA”). See I.R.C. §§ 1471–1474 and accompanying Regulations. The FATCA withholding rules are coordinated with existing withholding rules to prevent duplicate withholding. These rules are designed to combat offshore tax evasion by requiring non-U.S. financial institutions (foreign financial institutions or FFIs) and other offshore vehicles to report certain information pertaining to U.S. taxpayers holding financial assets abroad. The intent behind the law is to require FFIs to identify and report U.S. persons holding assets abroad and for certain non-financial foreign entities (NFFEs) to identify substantial U.S. owners. In order to comply with these rules, FFIs are required to enter into an FFI Agreement with the U.S. Treasury or comply with intergovernmental agreements (IGAs) entered into by their local government. U.S.

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