Section 897

A foreign person is a nonresident alien individual foreign corporation that has not made an election under section 897 i of the internal revenue code to be treated as a domestic corporation foreign partnership foreign trust or foreign estate.

Section 897. 1954 to a related person within the meaning of section 453 f 1 of such code the basis of the interest in the hands of the person acquiring it shall be reduced by the amount of any nontaxed gain. An election under section 897 i may be made after any disposition of an interest in the corporation which would have been subject to section 897 a if the election had been made before that disposition but only if the requirements of either subdivision or of this paragraph d 2 are met with respect to all dispositions of interests during the period described in paragraph c 5 of this section. If a foreign person disposed of an interest in a domestic corporation between june 18 1980 and january 23 1987 and such person establishes under the rules of paragraph g of this section at any time that the interest disposed of was not a u s.

Real property interest then such person shall not be subject to tax under section 897 and shall not be subject to penalties or interest for failure to file an income tax return with respect to such disposition. Under irc 897 e the non recognition provisions generally apply to the sale or exchange of a usrpi only if it is exchanged for an interest that would be subject to the u s. Real property were equal to or less than c s 50 000 basis since the transfer then would not give rise to the realization of gain or loss under the internal revenue code.

If an interest in a domestically controlled qualified investment entity is disposed of in an applicable wash sale transaction the taxpayer shall for purposes of this section be treated as having gain from the sale or exchange of a united states real property interest in an amount equal to the portion of the distribution described in subparagraph b with respect to such interest which but for the disposition would have been treated by the taxpayer as gain from the sale or exchange of. However section 897 a would not be applicable to the transfer if the mortgage on the u s. If any portion of a distribution from a qualified investment entity as defined in section 897 h 4 to a nonresident alien individual or a foreign corporation is treated under section 897 h 1 as gain realized by such individual or corporation from the sale or exchange of a united states real property interest the qualified investment entity shall deduct and withhold under subsection a a tax equal to the highest rate of tax in effect for the taxable year under section 11 b or to the.

It does not include a resident alien individual. Regulation under irc section 897 e 2 is applicable.