Reg. § 1.1445-7 Treatment of foreign corporation that has made an election under section 897(i) to be treated as a domestic corporation.
(a) In general Pursuant to section a foreign corporation may elect to be treated as a domestic corporation for purposes of sections and . A foreign corporation that has made such an election shall also be treated as a domestic corporation for purposes of the withholding required under section , in accordance with the provisions of this section.
(b) Withholding under section 1445(a)
(1) Dispositions by corporation A foreign corporation that has made an election under section may provide a transferee with a certification of non-foreign status in connection with the corporation's disposition of a U.S. real property interest. However, in accordance with the provisions of and -5(b)(3)(ii)(C), such an electing foreign corporation must attach to such certification a copy of the acknowledgment of the election provided to the corporation by the Internal Revenue Service pursuant to which states that the information required by has been determined to be complete.
(2) Dispositions of interests in corporation Dispositions of interests in electing foreign corporations shall be subject to the withholding requirements of section and the rules of through . Therefore, if a foreign person disposes of an interest in such a corporation, and that interest is a U.S. real property interest under the provisions of section and regulations thereunder, then the transferee is required to withhold under section .
(c) Withholding under section 1445(e) Because a foreign corporation that has made an election under section is treated as a domestic corporation for purposes of determining withholding obligations under section , such a corporation is not subject to the requirement of section that a foreign corporation withhold at the corporate capital gain rate from the gain recognized upon the distribution of a U.S. real property interest. Such a corporation is subject to the provisions of section . Thus, if interests in an electing corporation constitute U.S. real property interests, then the corporation is required to withhold with respect to the non-dividend distribution of any property to an interest-holder that is a foreign person. See . Dividend distributions (distributions that are described in section ) shall be treated as provided in sections , and . In addition, if interests in an electing foreign corporation do not constitute U.S. real property interests, then distributions by such corporation shall be treated as provided in sections (if applicable), 1441 and 1442.
(Approved by the Office of Management and Budget under control number 545-0902)
[T.D. 8113, 51 FR 46650, Dec. 24, 1986; 52 FR 3796, Feb. 6, 1987]