In July, the U.S. Tax Court rejected a long-standing Internal Revenue Service ruling and held that when a non-U.S. person sells an interest in a partnership or is completely redeemed from a partnership that is engaged in a trade or business in the United States, the non-U.S. seller is, in general, not subject to U.S. federal income tax on the gain from the sale (Grecian Magnesite Mining, Industrial and Shipping Co., SA v. Commissioner, 149 T.C. No. 3)
“This decision has major implications for non-U.S. persons who invest in the United States,” said tax attorney Seth Entin, a shareholder at Greenberg Traurig, who urged CPAs to take note and advise their foreign clients of the implications.
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