Record for a portfolio-interest exemption from withholding
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- List whether the payee is a nonresident individual, whether the obligation is in registered form, whether the file has a statement that the beneficial owner is not a United States person, and whether the payee is a 10 per cent owner. Do not decide that the interest is exempt.
- What the lawyer must review
- 26 U.S.C. § 871(h) provides that no tax is imposed under § 871(a)(1)(A) or (a)(1)(C) on portfolio interest received by a nonresident individual from United States sources. Portfolio interest is interest, including original issue discount, that would be taxed but for this subsection and that is paid on a registered-form obligation for which the withholding person receives a statement that the beneficial owner is not a United States person, unless the Secretary has determined that no statement is required. It does not include interest received by a 10 per cent shareholder: for a corporate issuer, 10 per cent of the voting power; for a partnership issuer, 10 per cent of the capital or profits interest. Section 318(a) applies to the corporate test, with the modifications in § 871(h)(3)(C). Certain contingent interest is also excluded. Registered form takes its meaning from § 163(f), which was not opened. Section 881, for a foreign corporation, was not opened. Section 1441 withholding mechanics were not opened. There is no Australian public-offer test in this version. Opinion 512: you decide whether the exemption applies.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Consider narrowly defined preparation support after confirming the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Obtain and inspect the relevant current official register or search result. Confirm identities, interests and the date and scope of the search.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.