Final and proposed FIRPTA regulations published


The IRS recently published final regulations (T.D. 9971) under Sections 897(l), 1441, 1445 and 1446 providing guidance regarding gain or loss of a qualified foreign pension fund attributable to certain interests in U.S. real property (USRPIs). The final regulations offer rules for certifying that a qualified foreign pension fund is not subject to FIRPTA withholding on certain dispositions of, and distributions with respect to, certain USRPIs.


The final regulations generally apply with respect to disposition of USRPIs and distribution in Section 897(h) occurring on or after Dec. 29, 2022. However, some aspects of the regulations apply to earlier dates based on the respective date the rule was proposed to apply.


The IRS also recently published proposed regulations (REG-100442-22) regarding the treatment of certain entities—including qualified foreign pension funds—for purposes of the exemption from taxation afforded to foreign governments under Section 892 and the determination of whether a qualified investment entity is domestically controlled under Section 897, including the treatment of qualified foreign pension funds for this purpose.


The proposed regulations under Section 892 generally apply to tax years ending on or after Dec. 28, 2022, while the proposed regulations under Section 897 generally apply to transactions occurring on or after the date these regulations are published as final regulations in the Federal Register.


Impacted taxpayers should immediately evaluate the potential impacts of the final and proposed regulations on their facts and circumstances.



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