20 December 2018 BREAKING TAX NEWS | IRS and Treasury issue proposed regulations on calculating foreign person's gain or loss from sale or exchange of certain partnership interests On December 20, 2018, the IRS and Treasury released proposed regulations (REG-113604-18), providing guidance under Section 864(c)(8) on the treatment of foreign persons that recognize gain or loss from the sale or exchange of an interest held directly or indirectly in a partnership that is engaged in a trade or business within the United States. Specifically, the proposed regulations: - Provide rules for calculating Section 864(c)(8)(A) gain or loss and the limitation provided in Section 864(c)(8)(B)
- Provide that the amount of gain or loss determined under Section 741 (before application of Section 751) is not a limitation on the amount of gain or loss characterized as effectively connected with a US trade or business
- Do not address nonrecognition transactions specifically, but request comments and announce that the government is still considering the treatment of such transactions if they reduce the scope of assets subject to US taxation
The proposed regulations do not contain Section 1446 guidance. A more detailed Tax Alert on the proposed regulations is forthcoming. Document ID: 2018-9033 | 
