---
title: "Record for a portfolio-interest exemption from withholding"
url: "https://ailawframework.com/practice/banking-and-finance/build-the-public-offer-test-record-for-an-interest-withholding-tax-exemp/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A3-J20261018-4-US"
practice_area: "Banking & Finance (Lending, Securities, Project Finance)"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Record for a portfolio-interest exemption from withholding

> 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…

Canonical page: https://ailawframework.com/practice/banking-and-finance/build-the-public-offer-test-record-for-an-interest-withholding-tax-exemp/united-states  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Banking & Finance (Lending, Securities, Project Finance)](https://ailawframework.com/practice/banking-and-finance.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| 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 | United States |
| Applies to | [Build the public offer test record for an interest withholding tax exemption](https://ailawframework.com/practice/banking-and-finance/build-the-public-offer-test-record-for-an-interest-withholding-tax-exemp.md) |

## Checking plan

- What the AI does: 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.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- Do not apply an Australian public-offer test.
- Do not treat a foreign corporation as covered. Section 881 was not opened.
- Open § 163(f) before you decide that an obligation is in registered form.

## Sources

- [26 U.S.C. § 871, Tax on nonresident alien individuals](https://www.law.cornell.edu/uscode/text/26/871) (checked 2026-10-22)
- [ABA Formal Opinion 512, Generative Artificial Intelligence Tools (29 July 2024)](https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/ethics-opinions/aba-formal-opinion-512.pdf) (checked 2026-10-22)
- [ABA Model Rule 1.1, Competence](https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_1_competence/) (checked 2026-10-22)

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*