TAX 9869 Lecture Notes - Lecture 37: Passive Income, Internal Revenue Code Section 1031, Payment
Document Summary
Rule: for fdap income there is a withholding tax @30% Fdap income is generally passive income, could be broader- service income. If non us individual/corp engaged in trade/biz in us, we shall talk about. If not engaged, just receiving passive income- div, interest, rents, royalties, then w-holding tax @30%. Holding agent has to collect w-8// forms to know person is a foreign person. The w-holding tax not only on nonus individual, also on foreign corp- 30% stat rate in us. Important exception to the w-holding tax rules: portfolio interest exception. Generally speaking: non-us person (foreign person) lends $ to a us corp. When a us corp pays interest, withhold 30% when pays foreign person interest pmt. If you lend us individual, would take 30% You are a person/individual/rez and citizen of china. Decide to invest $ and buy an apt in nyc. Hold it for investment purposes, plan on selling it.
