8288 Instructions for Form 8288

Caution: DRAFT—NOT FOR FILING
This is an early release draft of an IRS tax form, instructions, or
publication, which the IRS is providing for your information as a courtesy.
Do not file draft forms. Also, do not rely on draft forms, instructions, and
publications for filing. We generally do not release drafts of forms until we
believe we have incorporated all changes. However, unexpected issues
sometimes arise, or legislation is passed, necessitating a change to a draft
form. In addition, forms generally are subject to OMB approval before they
can be officially released. Drafts of instructions and publications usually
have at least some changes before being officially released.
Early release drafts are at IRS.gov/DraftForms, and may remain there
even after the final release is posted at IRS.gov/DownloadForms. All
information about all forms, instructions, and pubs is at IRS.gov/Forms.
Almost every form and publication also has its own page on IRS.gov. For
example, the Form 1040 page is at IRS.gov/Form1040; the Publication 17
page is at IRS.gov/Pub17; the Form W-4 page is at IRS.gov/W4; and the
Schedule A (Form 1040) page is at IRS.gov/ScheduleA. If typing in a link
above instead of clicking on it, be sure to type the link into the address bar
of your browser, not in a Search box. Note that these are friendly shortcut
links that will automatically go to the actual link for the page.
If you wish, you can submit comments about draft or final forms,
instructions, or publications at IRS.gov/FormsComments. We cannot
respond to all comments due to the high volume we receive. Please note that
we may not be able to consider many suggestions until the subsequent
revision of the product.

Instructions for Form 8288

Department of the Treasury
Internal Revenue Service

(Rev. May 2018)

(Use with the April 2018 revision of Form 8288.)
U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real
Property Interests

DRAFT AS OF
May 14, 2018

Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 8288 and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/form8288.

What's New

We made the following changes to the
prior version of Form 8288.
To meet your withholding, payment,
and reporting requirements under new
section 1446(f)(1), use Forms 8288 and
8288-A. Follow the instructions outlined in
Notice 2018-29. New section 1446(f)(1)
was added by section 13501 of P.L.
115-97. Also see Notice 2018-29, 2018-16
I.R.B. 495, for more information.
The withholding rate on Part II, Line 5c,
has changed from 35% to 21% for
distributions made after December 31,
2017.

General Instructions
Purpose of Form
Section 1445 withholding. A
withholding obligation under section 1445
is generally imposed on the buyer or other
transferee (withholding agent) when a
U.S. real property interest is acquired from
a foreign person. The withholding
obligation also applies to foreign and
domestic corporations, qualified
investment entities, and the fiduciary of
certain trusts and estates. This
withholding serves to collect U.S. tax that
may be owed by the foreign person. Use
Form 8288 to report and transmit the
amount withheld.
If an exception applies, you may

TIP be required to withhold at a

reduced rate, or you may not be
required to withhold. See Exceptions,
later.
Section 1446(f)(1) withholding. When
a transferor disposes of an interest in a
partnership, section 1446(f)(1) imposes a
withholding obligation on the buyer or
other transferee of the interest if:
1. The transferor is a foreign person;

May 14, 2018

2. The transferor realized a gain on
the sale; and
3. Any portion of the gain would be
treated under section 864(c)(8) as
effectively connected with the conduct of a
trade or business within the United States.

the case of a real restate investment trust
(REIT)) of that stock at any time during the
1-year period ending on the date of the
distribution.

These instructions do not include
the specific rules for withholding,
CAUTION payment, and reporting under
section 1446(f)(1), nor do the instructions
cover the specific exceptions to that
withholding. See Notice 2018-29 for these
rules and the instructions for completing
Forms 8288 and 8288-A.

Section 1446(f)(1) withholding.
Transferees are required to report the
section 1446(f)(1) tax withheld on Form
8828, and related information on Form
8288-A. Form more information, see
Notice 2018-29.

!

Who Must File

A buyer or other transferee of a U.S. real
property interest, and a corporation,
qualified investment entity, or fiduciary
that is required to withhold tax, must file
Form 8288 to report and transmit the
amount withheld. If two or more persons
are joint transferees, each is obligated to
withhold. However, the obligation of each
will be met if one of the joint transferees
withholds and transmits the required
amount to the IRS.

Do not use Forms 8288 and 8288-A for
the following distributions.
1. A distribution of effectively
connected income by a publicly traded
partnership is subject to the withholding
requirements of section 1446.
2. A distribution with respect to gains
from the disposition of a U.S. real property
interest from a trust that is regularly traded
on an established securities market is
subject to section 1445, but is not reported
on Forms 8288 and 8288-A.
3. A dividend distribution by a
qualified investment entity to a
nonresident alien or a foreign corporation
that is attributable to gains from sales or
exchanges by the qualified investment
entity of U.S. real property interests is not
subject to withholding under section 1445
as a gain from the sale or exchange of a
U.S. real property interest if:
a. The distribution is on stock
regularly traded on a securities market in
the United States, and
b. The alien or corporation did not
own more than 10% (for dispositions and
distributions before December 17, 2015,
did not own more than 5% of such stock in
Cat. No. 57528F

Use Form 1042, and Form 1042-S, to
report and pay over the withheld amounts.

Amount To Withhold

Generally, you must withhold 15% of the
amount realized on the disposition by the
transferor (see Definitions, later).
Note. Prior to February 17, 2016, the
transferor was generally required to
withhold 10% of the amount realized on
the disposition.
For information about:
Withholding at 21% (35% for
distributions made before January 1,
2018), see Entities Subject to Section
1445(e), later.
Withholding at a reduced amount, see
Purchase of residence for $1,000,000 or
less.
For information about applying for
reduction or elimination of withholding see
Withholding certificate issued by the IRS,
later.
Joint transferors. If one or more foreign
persons and one or more U.S. persons
jointly transfer a U.S. real property
interest, you must determine the amount
subject to withholding in the following
manner.
1. Allocate the amount realized from
the transfer among the transferors based
on their capital contribution to the
property. For this purpose, a husband and
wife are treated as having contributed
50% each.
2. Withhold on the total amount
allocated to foreign transferors.
3. Credit the amount withheld among
the foreign transferors as they mutually
agree. The transferors must request that
the withholding be credited as agreed
upon by the 10th day after the date of
transfer. If no agreement is reached, credit

the withholding by evenly dividing it
among the foreign transferors.

When To File

A transferee must file Form 8288 and
transmit the tax withheld to the IRS by the
20th day after the date of transfer.
You must withhold even if an
application for a withholding certificate is
or has been submitted to the IRS on the
date of transfer. However, you do not have
to file Form 8288 and transmit the
withholding until the 20th day after the day
the IRS mails you a copy of the
withholding certificate or notice of denial.
But, if the principal purpose for filing the
application for a withholding certificate
was to delay paying the IRS the amount
withheld, interest and penalties will apply
to the period beginning on the 21st day
after the date of transfer and ending on the
day full payment is made.

copy of Form 8288-A will not be provided
to the transferor if the transferor’s TIN is
not included on that form. The IRS will
send a letter to the transferor requesting
the TIN and providing instructions for how
to get a TIN. When the transferor provides
the IRS with a TIN, the IRS will provide the
transferor with a stamped Copy B of Form
8288-A.

A qualified foreign pension fund or any
entity wholly owned by such fund that
disposes U.S. real property interest or
receives a distribution from a REIT is not a
foreign person. See sections 897(l) and
1445(f)(3) for more information.
U.S. real property interest. Any interest,
other than an interest solely as a creditor,
in:
1. Real property located in the United
States or the U.S. Virgin Islands.
2. Certain personal property
associated with the use of real property.
3. A domestic corporation, unless it is
shown that the corporation was not a U.S.
real property holding corporation during
the previous 5 years (or during the period
in which the transferor held the interest, if
shorter).

DRAFT AS OF
May 14, 2018

Installment payments. You must
withhold the full amount at the time of the
first installment payment. If you cannot
because the payment does not involve
sufficient cash or other liquid assets, you
may obtain a withholding certificate from
the IRS. See the Instructions for Form
8288-B for more information.

Where To File

Send Form 8288 with the amount
withheld, and copies A and B of Form(s)
8288-A to:
Ogden Service Center
P.O. Box 409101
Ogden, UT 84409

Forms 8288-A Must Be
Attached

Anyone who completes Form 8288 must
also complete a Form 8288-A for each
person subject to withholding. Copies A
and B of Form 8288-A must be attached to
Form 8288. Copy C is for your records.
Multiple Forms 8288-A related to a
transaction can be filed with one Form
8288. You are not required to furnish a
copy of Form 8288 or 8288-A directly to
the transferor.
The IRS will stamp Copy B of each
Form 8288-A and will forward the stamped
copy to the foreign person subject to
withholding at the address shown on Form
8288-A. To receive credit for the withheld
amount, the transferor generally must
attach the stamped Copy B of Form
8288-A to a U.S. income tax return (for
example, Form 1040NR or 1120-F) or
application for early refund filed with the
IRS.

Transferor's TIN missing. If you do not
have the transferor's taxpayer
identification number (TIN), you still must
file Forms 8288 and 8288-A. A stamped

Penalties

Under section 6651, penalties apply for
failure to file Form 8288 when due and for
failure to pay the withholding when due. In
addition, if you are required to but do not
withhold tax under section 1445, the tax,
including interest, may be collected from
you. Under section 7202, you may be
subject to a penalty of up to $10,000 for
willful failure to collect and pay over the
tax. Corporate officers or other
responsible persons may be subject to a
penalty under section 6672 equal to the
amount that should have been withheld
and paid over to the IRS.

Definitions
Transferee. Any person, foreign or
domestic, that acquires a U.S. real
property interest by purchase, exchange,
gift, or any other transfer.
Transferor. For purposes of this
withholding, this means any foreign
person that disposes of a U.S. real
property interest by sale, exchange, gift, or
any other disposition. A disregarded entity
cannot be the transferor for purposes of
section 1445. Instead, the person
considered as owning the assets of the
disregarded entity for federal tax purposes
is regarded as the transferor. A
disregarded entity for these purposes
means an entity that is disregarded as an
entity separate from its owner under
Regulations section 301.7701-3, a
qualified real estate investment trust
subsidiary as defined in section 856(i), or
a qualified subchapter S subsidiary under
section 1361(b)(3)(B).
Qualified substitute. For this purpose, a
qualified substitute is (a) the person
(including any attorney or title company)
responsible for closing the transaction,
other than the transferor’s agent, and (b)
the transferee’s agent.
Withholding agent. For purposes of this
return, this means the buyer or other
transferee who acquires a U.S. real
property interest from a foreign person.
Foreign person. A nonresident alien
individual, a foreign corporation that does
not have a valid election under section
897(i) to be treated as a domestic
corporation, a foreign partnership, a
foreign trust, or a foreign estate. A resident
alien individual is not a foreign person.

-2-

A U.S. real property interest does not
include:
1. An interest in a domestically
controlled qualified investment entity.
2. An interest in a REIT that is held by
a qualified shareholder. For the definition
of a qualified shareholder, see section
897(k)(3). But see section 897(k)(2)(B) for
the cut-back rule if the qualified
shareholder has one or more applicable
investors.
3. An interest in a corporation that:
Did not hold any U.S. real property
interest as of the date the interest in such
corporation is disposed,
Has disposed of all its U.S. real
property interests in transactions in which
the full amount of any gain was recognized
as provided in section 897(c)(1)(B), and
Neither such corporation nor any
predecessor of such corporation was a
REIT or a RIC at any time during the
shorter of the previous 5 years or the
period in which the transferor held the
interest.
4. An interest in certain publicly traded
corporations, partnerships, and trusts.
See Regulations sections 1.897-1 and
1.897-2 for more information. Also see
Transferred property that is not a U.S. real
property interest, later.
Qualified investment entity (QIE). A
QIE is:
Any REIT, and
Any RIC which is a U. S. real property
holding corporation or which would be a
U. S. real property holding corporation.
In determining if a RIC is a U.S. real
property holding corporation, the RIC is
required to include as U.S. real property
interests its holdings of stock in a RIC or
REIT that is a U.S. real property holding
company, even if such stock is regularly
traded and the RIC did not own more than
10% of such stock in the case of a REIT
(5% for dispositions before December 17,

Instructions for Form 8288 (Rev. 5-2018)

2015) or 5% of such stock in case of a
RIC, and even if such stock is
domestically controlled.
For more information, see Pub. 515.
Domestically controlled QIE. A QIE is
domestically controlled if at all times
during the testing period less than 50% in
value of its stock was held, directly or
indirectly, by foreign persons. The testing
period is the shorter of:
The 5-year period ending on the date of
the disposition (or distribution), or
The period during which the entity was
in existence.
For purpose of determining whether a
QIE is domestically controlled, the
following rules apply.
1. A person holding less than 5% of
any class of stock of a QIE which is
regularly traded on an established
securities market in the United States at all
times during the testing period will be
treated as a U.S. person unless the QIE
has actual knowledge that such person is
not a U.S. person.
2. Any stock in a QIE that is held by
another QIE will be treated as held by a
foreign person if:
Any class of stock of such other QIE is
regularly traded on an established
securities market, or
Such other QIE is a RIC that issues
certain redeemable securities.
Notwithstanding the above, the stock of
the QIE will be treated as held by a U.S.
person if such other QIE is domestically
controlled.
3. Stock in a QIE that is held by any
other QIE not described above will be
treated as held by a U.S. person in
proportion to the stock ownership of such
other QIE which is (or is treated as) held
by a U.S. person.

contract), a good-faith deposit, or any
similar amount primarily intended to bind
the parties to the contract and subject to
forfeiture. A payment that is not forfeitable
may also be considered earnest money, a
good-faith deposit, or a similar sum.

Exceptions
Withholding At a Reduced Rate

If you receive a certification (or
statement), the withholding tax cannot be
collected from you unless you knew that
the certification (or statement) was false or
you received a notice from your agent, the
transferor’s agent, or the qualified
substitute that it was false. The
certification must be signed by the
individual, a responsible officer of a
corporation, a general partner of a
partnership, or the trustee, executor, or
fiduciary of a trust or estate.
A disregarded entity may not certify
that it is the transferor for U.S. tax
purposes. Rather, the owner of the
disregarded entity is treated as the
transferor of the property and must
provide the certificate of nonforeign status
to avoid withholding under section 1445.
A foreign corporation electing to be
treated as a domestic corporation under
section 897(i) must attach to the
certification a copy of the
acknowledgment of the election received
from the IRS. The acknowledgment must
state that the information required by
Regulations section 1.897-3 has been
determined to be complete. If the
acknowledgment is not attached, you may
not rely on the certification. Keep any
certification of nonforeign status you
receive in your records for 5 years after
the year of transfer.
You may also use other means to
determine that the transferor is not a
foreign person. But if you do, and it is later
determined that the transferor is a foreign
person, the withholding tax may be
collected from you.

DRAFT AS OF
May 14, 2018

Amount realized. The sum of the cash
paid or to be paid (not including interest or
original issue discount), the fair market
value of other property transferred or to be
transferred, and the amount of any liability
assumed by the transferee or to which the
U.S. real property interest is subject
immediately before and after the transfer.
Generally, the amount realized for
purposes of this withholding is the sales or
contract price.
Date of transfer. The first date on which
consideration is paid or a liability is
assumed by the transferee. However, for
purposes of sections 1445(e)(2), (3), and
(4), and Regulations sections 1.1445-5(c)
(1)(iii) and 1.1445-5(c)(3), the date of
transfer is the date of distribution that
creates the obligation to withhold.
Payment of consideration does not include
the payment before passage of legal or
equitable title of earnest money (other
than pursuant to an initial purchase
Instructions for Form 8288 (Rev. 5-2018)

Purchase of residence for $1,000,000
or less. Withholding is required at a
reduced rate of 10% in the case of a
disposition of:
A property which is acquired by the
transferee for use by the transferee as a
residence, and
The amount realized for the property is
$1,000,000 or less. However, see
Purchase of residence for $300,000 or
less next.

Withholding Not Required
Purchase of residence for $300,000 or
less. If one or more individuals acquire
U.S. real property for use as a residence
and the amount realized (in most cases
the sales price) is $300,000 or less, no
withholding is required.
A U.S. real property interest is acquired
for use as a residence if you or a member
of your family has definite plans to reside
in the property for at least 50% of the
number of days the property is used by
any person during each of the first two
12-month periods following the date of
transfer. Do not take into account the
number of days the property will be vacant
in making this determination. No form or
other document is required to be filed with
the IRS for this exception; however, if you
do not in fact use the property as a
residence, the withholding tax may be
collected from you.
This exception applies whether or not
the transferor (seller) is an individual,
partnership, trust, corporation, or other
transferor. However, this exception does
not apply if the actual transferee (buyer) is
not an individual, even if the property is
acquired for an individual.
Transferor not a foreign person.
Generally, no withholding is required if you
receive a certification of nonforeign status
from the transferor, signed under penalties
of perjury, stating that the transferor is not
a foreign person and containing the
transferor’s name, address, and
identification number (social security
number (SSN) or employer identification
number (EIN)). The transferor can give the
certification to a qualified substitute
(defined on this page). The qualified
substitute gives you a statement, under
penalties of perjury, that the certification is
in the qualified substitute’s possession.

-3-

Late notice of false certification. If,
after the date of transfer, you receive a
notice from your agent, the transferor’s
agent, or the qualified substitute that the
certification of nonforeign status is false,
you do not have to withhold on
consideration paid before you received
the notice. However, you must withhold
the full 15% of the amount realized from
any consideration that remains to be paid,
if possible. You must do this by
withholding and paying over the entire
amount of each successive payment of
consideration until the full 15% has been
withheld and paid to the IRS. These
amounts must be reported and transmitted
to the IRS by the 20th day following the
date of each payment.
Transferred property that is not a U.S.
real property interest. If you acquire an
interest in property that is not a U.S. real
property interest (defined under U.S. real
property interest, earlier), withholding
generally is not required. A U.S. real
property interest includes certain interests
in U.S. corporations, as well as direct
interests in real property and certain
associated personal property.

No withholding is required on the
acquisition of an interest in a domestic
corporation if (a) any class of stock of the
corporation is regularly traded on an
established securities market, or (b) the
transferee receives a statement issued by
the corporation that the interest is not a
U.S. real property interest, unless you
know that the statement is false or you
receive a notice from your agent or the
transferor’s agent that the statement is
false. A corporation’s statement may be
relied on only if it is dated not more than
30 days before the date of transfer.

issued by the IRS to reduce or eliminate
withholding on dispositions of U.S. real
property interests by foreign persons.
Either a transferee or transferor may apply
for the certificate. The certificate may be
issued if:
Reduced withholding is appropriate
because the 10%, 15%, or 21% (35% for
distributions made before January 1,
2018) amount exceeds the transferor’s
maximum tax liability;
The transferor is exempt from U.S. tax
or nonrecognition provisions apply; or
The transferee or transferor enters into
an agreement with the IRS for the
payment of the tax.
An application for a withholding
certificate must comply with the provisions
of Regulations sections 1.1445-3 and
1.1445-6, and Rev. Proc. 2000-35,
2000-35 I.R.B. 211. You can find Rev.
Proc. 2000-35 at IRS.gov/pub/irs-irbs/
irb00-35.pdf. In certain cases, you may
use Form 8288-B to apply for a
withholding certificate. The IRS will
normally act on an application by the 90th
day after a complete application is
received.
If you receive a withholding certificate
from the IRS that excuses withholding,
you are not required to file Form 8288.
However, if you receive a withholding
certificate that reduces (rather than
eliminates) withholding, there is no
exception to withholding, and you are
required to file Form 8288. Attach a copy
of the withholding certificate to Form 8288.
See When To File, earlier, for more
information.

transaction, withholding generally is not
required. See section 897(h)(5).

Late Filing of Certification or
Notices
You may be eligible for relief for a late
filing if a statement or notice was not
provided to the relevant person or the IRS
by the specified deadline and if you have
reasonable cause for the failure to make a
timely filing. Once you become aware that
you have failed to timely file certain
certificates or notices, you must file the
required certification or notice with the
appropriate person or the IRS. Also
include the following.
A statement at the top of the
document(s) that it is “FILED PURSUANT
TO REV. PROC. 2008-27.”
An explanation describing why the
failure was due to reasonable cause.
Within the explanation, provide that you
filed with, or obtained from, an appropriate
person the required certification or notice.

DRAFT AS OF
May 14, 2018

Late notice of false statement. If,
after the date of transfer, you receive a
notice that the statement is false, see Late
notice of false statement, earlier.
Generally, no withholding is required
on the acquisition of an interest in a
foreign corporation. However, withholding
may be required if the foreign corporation
has made the election under section
897(i) to be treated as a domestic
corporation.

Transferor’s nonrecognition of gain or
loss. You may receive a notice from the
transferor signed under penalties of
perjury stating that the transferor is not
required to recognize gain or loss on the
transfer because of a nonrecognition
provision of the Internal Revenue Code
(see Temporary Regulations section
1.897-6T(a)(2)) or a provision in a U.S. tax
treaty. You may rely on the transferor’s
notice, and not withhold, unless (a) only
part of the gain qualifies for
nonrecognition, or (b) you know or have
reason to know that the transferor is not
entitled to the claimed nonrecognition
treatment.
No particular form is required for this
notice. By the 20th day after the date of
transfer, you must send a copy of the
notice of nonrecognition (with a cover
letter giving your name, address, and
identification number) to:
Ogden Service Center
P.O. Box 409101
Ogden, UT 84409
See Regulations section 1.1445-2(d)(2)
for more information on the transferor’s
notice of nonrecognition.
Note. A notice of nonrecognition cannot
be used for the exclusion from income
under section 121, like-kind exchanges
that do not qualify for nonrecognition
treatment in their entirety, and deferred
like-kind exchanges that have not been
completed when it is time to file Form
8288. In these cases, a withholding
certificate issued by the IRS, as described
next, must be obtained.
Withholding certificate issued by the
IRS. A withholding certificate may be

No consideration paid. Withholding is
not required if the amount realized by the
transferor is zero (for example, the
property is transferred as a gift and the
recipient does not assume any liabilities or
furnish any other consideration to the
transferor).
Options to acquire U.S. real property
interests. No withholding is required with
respect to any amount realized by the
grantor on the grant or lapse of an option
to acquire a U.S. real property interest.
However, withholding is required on the
sale, exchange, or exercise of an option.
Property acquired by a governmental
unit. If the property is acquired by the
United States, a U.S. state or possession
or political subdivision, or the District of
Columbia, withholding is generally not
required.
For rules that apply to foreclosures, see
Regulations section 1.1445-2(d)(3).

The completed certification or notice
attached to the explanation must be sent
to:
Ogden Service Center
P.O. Box 409101
Ogden, UT 84409
For more information, see Rev. Proc.
2008-27, 2008-21 I.R.B. 1014, available at
IRS.gov/irb/2008-21_IRB/ar14.html.

Liability of Agents

If you (or the qualified substitute) received
(a) a transferor’s certification of nonforeign
status, or (b) a corporation’s statement
that an interest is not a U.S. real property
interest, and the transferee’s or
transferor’s agent, or the substitute, knows
the document is false, the agent (or
substitute) must notify you. If notification is
not provided, the agent (or substitute) will
be liable for the tax that should have been
withheld, but only to the extent of the
agent’s (or substitute’s) compensation
from the transaction.
If you (or the substitute) receive a
notice of false certification or statement
from your agent, the transferor’s agent, or
qualified substitute, you must withhold tax
as if you had not received a certification or
statement. See Late notice of false
certification, earlier.

Applicable wash sale transaction. If a
distribution from a domestically controlled
qualified investment entity is treated as a
distribution of a U.S. real property interest
only because an interest in the entity was
disposed of in an applicable wash sale

An “agent” is any person who
represents the transferor or transferee in
any negotiation with another person (or
another person’s agent) relating to the
transaction or in settling the transaction.
For purposes of section 1445(e), a
transferor’s or transferee’s agent is any
person who represents or advises an
entity, a holder of an interest in an entity,
or a fiduciary with respect to the planning,

-4-

Instructions for Form 8288 (Rev. 5-2018)

arrangement, or completion of a
transaction described in sections 1445(e)
(1) through (4).
A person is not treated as an agent if
the person only performs one or more of
the following acts in connection with the
transaction:
1. Receiving and disbursing any part
of the consideration.
2. Recording any document.
3. Typing, copying, and other clerical
tasks.
4. Obtaining title insurance reports
and reports concerning the condition of
the property.
5. Transmitting documents between
the parties.
6. Functioning exclusively in his or her
capacity as a representative of a
condominium association or cooperative
housing corporation. This exemption
includes the board of directors, the
committee, or other governing body.

Section 1445(e)(1)
Transactions
Partnerships. A domestic partnership
that is not publicly traded must withhold
tax under section 1446 on effectively
connected income allocated to its foreign
partners and must file Form 8804, and
Form 8805. A publicly traded partnership
or nominee generally must withhold tax
under section 1446 on distributions to its
foreign partners and must file Forms 1042
and 1042-S. Because a domestic
partnership that disposes of a U.S. real
property interest is required to withhold
under section 1446, it is not required to
withhold under section 1445(e)(1).

recognized by the corporation. No
withholding or reduced withholding is
required if the corporation receives a
withholding certificate from the IRS.

Section 1445(e)(3)
Transactions

Generally, a domestic corporation that
distributes any property to a foreign
person that holds an interest in the
corporation must withhold 15% (10% for
distributions before February 17, 2016) of
the fair market value of the property
distributed if:
The foreign person’s interest in the
corporation is a U.S. real property interest
under section 897; and
The property is distributed in
redemption of stock under section 302, in
liquidation of the corporation under
sections 331 through 341, or with respect
to stock under section 301 that is not
made out of the earnings and profits of the
corporation.

DRAFT AS OF
May 14, 2018

Entities Subject to Section
1445(e)

Withholding is required on certain
distributions and other transactions by
domestic or foreign corporations, qualified
investment entities, trusts, and estates. A
domestic trust or estate must withhold
21% (35% for distributions made before
January 1, 2018) of the amount distributed
to a foreign beneficiary from a “U.S. real
property interest account” that it is
required to establish under Regulations
section 1.1445-5(c)(1)(iii). A foreign
corporation that has not made the election
under section 897(i) must withhold 21%
(35% for distributions made before
January 1, 2018) of the gain it recognizes
on the distribution of a U.S. real property
interest to its shareholders. Certain
domestic corporations are required to
withhold tax on distributions to foreign
shareholders.
No withholding is required on the
transfer of an interest in a domestic
corporation if any class of stock of the
corporation is regularly traded on an
established securities market. Also, no
withholding is required on the transfer of
an interest in a publicly traded partnership
or trust.
No withholding will be required with
respect to an interest holder if the entity or
fiduciary receives a certification of
nonforeign status from the interest holder.
An entity or fiduciary may also use other
means to determine that an interest holder
is not a foreign person, but if it does so
and it is later determined that the interest
holder is a foreign person, the withholding
may be collected from the entity or
fiduciary.
Instructions for Form 8288 (Rev. 5-2018)

Trusts and estates. If a domestic trust or
estate disposes of a U.S. real property
interest, the amount of gain realized must
be paid into a separate “U.S. real property
interest account.” For these purposes, a
domestic trust is one that does not make
the “large trust election” (explained
below), is not a qualified investment entity,
and is not publicly traded. The fiduciary
must withhold 21% (35% for distributions
made before January 1, 2018) of the
amount distributed to a foreign person
from the account during the tax year of the
trust or estate in which the disposition
occurred. The withholding must be paid
over to the IRS within 20 days of the date
of distribution. Special rules apply to
grantor trusts. See Regulations section
1.1445-5 for more information and how to
compute the amount subject to
withholding.
Large trust election. Trusts with
more than 100 beneficiaries may make an
election to withhold upon distribution
rather than at the time of transfer. The
amount to be withheld from each
distribution is 21% (35% for distributions
made before January 1, 2018) of the
amount attributable to the foreign
beneficiary’s proportionate share of the
current balance of the trust’s section
1445(e)(1) account. This election does not
apply to any qualified investment entity or
to any publicly traded trust. Special rules
apply to large trusts that make recurring
sales of growing crops and timber.
A trust’s section 1445(e)(1) account is
the total net gain realized by the trust on
all section 1445(e)(1) transactions after
the date of the election, minus the total of
all distributions made by the trust after the
date of the election from such total net
gain. See Regulations section 1.1445-5(c)
(3) for more information.

Section 1445(e)(2)
Transactions

A foreign corporation that distributes a
U.S. real property interest must generally
withhold 21% (35% for distributions made
before January 1, 2018) of the gain
-5-

No withholding or reduced withholding
is required if the corporation receives a
withholding certificate from the IRS.

Section 1445(e)(4)
Transactions

No withholding is required under section
1445(e)(4), relating to certain taxable
distributions by domestic or foreign
partnerships, trusts, and estates, until the
effective date of a Treasury Decision
under section 897(e)(2)(B)(ii) and (g).

Section 1445(e)(5)
Transactions

The transferee of a partnership interest
must withhold 15% (10% for dispositions
before February 17, 2016) of the amount
realized on the disposition by a foreign
partner of an interest in a domestic or
foreign partnership in which at least 50%
of the value of the gross assets consists of
U.S. real property interests and at least
90% of the value of the gross assets
consists of U.S. real property, interests
plus any cash or cash equivalents.
However, no withholding is required under
section 1445(e)(5) for dispositions of
interests in other partnerships, trusts, or
estates until the effective date of a
Treasury Decision under section 897(g).
No withholding is required if, no earlier
than 30 days before the transfer, the
transferee receives a statement signed by
a general partner under penalties of
perjury that at least 50% of the value of the
gross assets of the partnership does not
consist of U.S. real property interests or
that at least 90% of the value of the gross
assets does not consist of U.S. real
property interests, plus cash or cash
equivalents. The transferee may rely on
the statement unless the transferee knows
it is false or the transferee receives a false

statement notice pursuant to Regulations
section 1.1445-4.

Section 1445(e)(6)
Transactions

A qualified investment entity must withhold
21% (35% for distributions made before
January 1, 2018) of a distribution to a
nonresident alien or a foreign corporation
that is treated as gain realized from the
sale or exchange of a U.S. real property
interest. No withholding under section
1445 is required on a distribution to a
nonresident alien or foreign corporation if
the distribution is on stock regularly traded
on a securities market in the United States
and the alien or corporation did not own
more than 10% (for distributions before
December 17, 2015, did not own more
than 5% of such stock in case of a REIT)
of that stock at any time during the 1-year
period ending on the date of distribution.

mortgage company, etc. unless it happens
to be the actual entity responsible for
withholding under section 1445(e).
The IRS will contact the person or
entity listed on line 1 to resolve
CAUTION any problems that may arise
concerning underwithholding and/or
penalties.

!

Line 5b. Enter amounts subject to
withholding at 10%. Amounts entered on
line 5b, include the following.
Withholding for the purchase of a
residence with an amount realized of more
than $300,000, but less than or equal to
$1,000,000. Generally, no withholding is
required for the purchase of a residence if
the amount realized is $300,000 or less.
For more information, see Exceptions,
earlier.
Any dispositions of property prior to
February 17, 2016, subject to a 10% rate
of withholding under section 1445(a).

DRAFT AS OF
May 14, 2018

A distribution made after December 17,
2015, by a REIT generally is not treated as
gain from the sale or exchange of a U.S.
real property interest if the shareholder is
a qualified shareholder (as described in
section 897(k)(3)).

Specific Instructions
Note. If you are using Forms 8288 and
8288-A to meet the withholding, payment,
and reporting requirements under new
section 1446(f)(1), you must write Section
1446(f)(1) withholding at the top of both
Forms 8288 and 8288-A. For additional
specific instructions related to the
reporting of section 1446(f)(1) withholding,
see Notice 2018-29.
Amended return. Check the box at the
top of the page to indicate the Form 8288
you are filing is an amended return.
Complete Part I or Part II, but not
both. Also, you must complete
CAUTION and attach Copies A and B of
Form(s) 8288-A. Attach additional sheets
if you need more space.

!

Part I, To Be Completed By The
Buyer or Other Transferee
Required to Withhold Under
Section 1445(a)
Line 1. In Part I, enter the name, address,
and identifying number of the buyer or
other transferee responsible for
withholding under section 1445(a). Do not
enter the name, address, and identifying
number of a title company, mortgage
company, etc. unless it happens to be the
actual buyer or transferee.
In Part II, enter the name, address, and
identifying number of the entity or fiduciary
responsible for withholding under section
1445(e). Do not enter the name, address,
and identifying number of a title company,

Name and address. If you are a
fiduciary, list your name and the name of
the trust or estate. Enter the home
address of an individual or the office
address of an entity.

Identifying number. For a U.S.
individual, the identifying number is a
social security number (SSN). For any
entity other than an individual (for
example, corporation, QIE, estate, or
trust), the identifying number is an
employer identification number (EIN). If
you do not have an EIN, you can apply for
one online at IRS.gov/businesses/smallbusinesses-self-employed/apply-for-anemployer-identification-number-ein-online
or by telephone at 1-800-829-4933. Also,
you can file Form SS-4 by fax or mail.
For a nonresident alien individual who
is not eligible for an SSN, the identifying
number is an IRS individual taxpayer
identification number (ITIN). If the
individual does not already have an ITIN,
he or she should complete Forms 8288
and 8288-A and mail the forms along with
any payment to the address shown under
Where To File, earlier. In a separate
package, mail a completed Form W-7 with
supporting documentation and a copy of
Forms 8288 and 8288-A to the IRS at the
address given in the Form W-7
instructions.

Line 2. Enter the location and a
description of the property, including any
substantial improvements (for example,
“12-unit apartment building”). For an
interest in a corporation that constitutes a
U.S. real property interest, enter the class
or type and amount of the interest (for
example,“10,000 shares Class A
Preferred Stock XYZ Corporation”). For an
interest in a partnership, enter the class or
type and amount of the partnership
interest (for example, “40% of the capital
interest in the ABC Partnership”).
Line 4. Enter the number of Forms
8288-A attached to Form 8288. Copies A
and B of each Form 8288-A should be
counted as one form.
Line 5a. Enter amounts subject to
withholding at 15%. Generally, this is the
rate of withholding for transactions
required to be reported under section
1445(a) in Part I.
Include withholding for the purchase of
a residence with an amount realized of
more than $1,000,000.
-6-

Line 5c. If withholding is at a reduced
rate, check the box. See Exceptions,
earlier. Include the amount withheld in the
total reported on line 6, Part I.
Example 1. B, a corporation,
purchases a U.S. real property interest
from F, a foreign person. On settlement
day, the settlement agent pays off existing
loans, withholds 15% of the amount
realized on the sale, and disburses the
remaining amount to F. B, not the agent,
must complete Part I of Form 8288 and
Form 8288-A.

Part II, To Be Completed By an
Entity Subject to The
Provisions of Section 1445(e)
Line 3. If you are a qualified investment
entity, domestic trust or estate, or you
make the large trust election, enter the
date of distribution for the date of transfer.
Line 5a. Enter amounts subject to
withholding at 15%. Generally, this is the
rate of withholding for transactions
required to be reported under section
1445(e) in Part II. However, see the
discussion of various section 1445(e)
transactions under Entities Subject to
Section 1445(e), earlier.
Line 5b. Enter amounts subject to
withholding at 10%. Report on line 5b
withholding for any dispositions of
property prior to February 17, 2016,
subject to a 10% rate of withholding under
section 1445(e).
Line 5c. Enter amounts subject to
withholding at 21% (35% for distributions
made before January 1, 2018). See the
discussion of various section 1445(e)
transactions under Entities Subject to
Section 1445(e), earlier.
Line 5d. If withholding is at a reduced
rate, check the box. Include the amount
withheld in the total reported on line 6,
Part II. See the discussion of various
section 1445(e) transactions under
Entities Subject to Section 1445(e),
earlier.
Line 5e. If withholding is from a large trust
election to withhold upon distribution,
check the box, and include the amount
Instructions for Form 8288 (Rev. 5-2018)

withheld in the total reported on line 6,
Part II. See Large trust election, under
Section 1445(e)(1) Transactions, earlier.
Example 2. C, a domestic
corporation, distributes property to F, a
foreign shareholder whose interest in C is
a U.S. real property interest. The
distribution is in redemption of C’s stock
(section 1445(e)(3) transaction). C must
withhold 15% of the fair market value of
the property distributed to F. C must
complete Part II of Form 8288, and Form
8288-A.

You are required to provide this
information. Section 6109 requires you to
provide your identification number. We
need this information to ensure that you
are complying with the Internal Revenue
laws and to allow us to figure and collect
the right amount of tax. Failure to provide
this information in a timely manner, or
providing false information, may subject
you to penalties. Routine uses of this
information include giving it to the
Department of Justice for civil and criminal
litigation, and to cities, states, the District
of Columbia, and U.S. commonwealths
and possessions for administration of their
tax laws. We may also disclose this
information to other countries under a tax
treaty, to federal and state agencies to
enforce federal nontax criminal laws, or to
federal law enforcement and intelligence
agencies to combat terrorism.

The time needed to complete and file
these forms will vary depending on
individual circumstances. The estimated
burden for business taxpayers filing this
form is approved under OMB control
number 1545-0123. The estimated burden
for all other taxpayers who file these forms
is shown below.

DRAFT AS OF
May 14, 2018

Paid Preparer

Generally, anyone you pay to prepare
Form 8288 must sign it and include their
Preparer Tax Identification Number (PTIN)
in the space provided.

Privacy Act and Paperwork Reduction
Act Notice. We ask for the information on
this form to carry out the Internal Revenue
laws of the United States. Section 1445
generally imposes a withholding obligation
on the buyer or other transferee
(withholding agent) when a U.S. real
property interest is acquired from a foreign
person. Section 1445 also imposes a
withholding obligation on certain foreign
and domestic corporations, QIEs, and the
fiduciary of certain trusts and estates. This
form is used to report and transmit the
amount withheld.

Instructions for Form 8288 (Rev. 5-2018)

You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.

-7-

Form 8288

Form 8288-A

Recordkeeping

5 hr., 30 min.

2 hr., 52 min.

Learning about
the law or the
form . . . . .

5 hr., 13 min.

30 min.

Preparing and
sending the
form to the
IRS . . . . . .

6 hr., 44 min.

34 min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making these forms
simpler, we would be happy to hear from
you. You can send us comments from
IRS.gov/FormComments. You can write to
the Internal Revenue Service, Tax Forms
and Publications, 1111 Constitution Ave.
NW, IR-6526, Washington, DC 20224. Do
not send the form to this address. Instead,
see Where To File, earlier.