Table of Contents
- Part I – General Information
- Section A – Partner Information
- Section B – Partnership Information
- Section C – Partner Representations
- Section D – Updated Certificates
- Part II – Certifications of Deductions and Losses Under Regulations Section 1.1446-6(c)(1)(i)
- Part III – Certification Under Regulations Section 1.1446-6
- Part IV – Disclosure Consent and Signature
Check the box only if the partner is submitting a Form 8804-C to any partnership for the first time, and has never submitted a certificate to any partnership under the section 1446 regulations for any tax year.
If applicable, enter the foreign partner's first tax year for which it submitted a certificate under the section 1446 regulations to any partnership. For example, if the foreign partner is a calendar year taxpayer and previously submitted a certificate for its 2010 tax year, enter “January 1, 2010 – December 31, 2010.”
See Form 8804-C, line 5, for the circumstances when an updated certificate is required.
When providing a U.S. street address on Form 8804-C, include the suite, room, or other unit number after the street address. If the Post Office does not deliver mail to the street address and the foreign partner (or partnership) has a P.O. box, enter the box number instead of the street address. If the foreign partner (or partnership) receives its mail in care of a third party (such as an accountant or attorney), enter on the street address line “c/o” followed by the third party's name and street address or P.O. box. When providing a foreign address on Form 8804-C, enter the number and street, city, province or state, and the name of the country. Follow the foreign country's practice in placing the postal code in the address. Do not abbreviate the country name.
Enter the foreign partner's name. If the partner is an individual, enter the partner's last name (surname), then first name. For business entities, enter the complete and official business name (as set forth in the charter or other legal document creating it). If a “c/o” or another person's name is necessary, insert that information in the address line.
If the partner is an individual, the TIN is the individual's social security number or individual taxpayer identification number, and must be entered using a NNN-NN-NNNN format (for example, 123-45-6789). The TIN of any other foreign partner is its U.S. employer identification number (EIN), and must be entered using a NN-NNNNNNN format (for example, 12-3456789).
Enter the date when the foreign partner submits the certificate (Form 8804-C) to the partnership. Use a MM/DD/YYYY format (for example, 09/24/2012).
Enter the partnership's name. If a “c/o” or another person's name is necessary, insert that information in the address line.
Enter the partnership's EIN using a NN-NNNNNNN format (for example, 12-3456789).
A foreign partner must represent that the Form 8804-C is not being submitted to a publicly traded partnership. A publicly traded partnership is any partnership (a) whose interests are regularly traded on an established securities market or is readily tradable on a secondary market (or the substantial equivalent thereof), and (b) that is not treated as a corporation. See section 7704.
The only type of trust that may submit a certificate to a partnership is a grantor trust. A grantor trust is any trust over which the grantor or other owner retains the power to control or direct the trust's income or assets. See sections 671 through 679. A grantor trust may submit a certificate if the grantor or other owner of the trust has submitted the certificate and has met the documentation requirements of Regulations section 1.1446-1.
A partner may make estimated payments for both income tax and self-employment tax, as well as other taxes and amounts reported on its tax return. If the partner does not pay enough tax through withholding or estimated tax payments, it may be charged a penalty. If the partner does not pay enough tax by the due date of each payment period, it may be charged a penalty even if it is due a refund when it files its tax return. For more information see Forms 2210 and 2220.
The character of a loss includes whether the loss is ordinary or capital and whether or not it is passive.
See Form of certification in the Instructions for Forms 8804, 8805, and 8813 for a listing of documentation a foreign partner can provide to a partnership under Regulations section 1.1446-1 to establish its foreign status.
The following examples illustrate the required representations.
A foreign individual (NRA) and a U.S. individual (B) form a partnership (PRS) in 2012 to conduct a trade or business in the United States. NRA and B provide PRS appropriate documentation under Regulations section 1.1446-1 to establish their status for purposes of section 1446. NRA, B, and PRS are calendar year taxpayers. NRA submits a Form 8804-C to PRS on July 23, 2012, to be considered by PRS in determining its 1446 tax due with respect to NRA for the third installment period in 2012. The Form 8804-C indicates that NRA reasonably expects to have an effectively connected net operating loss of $5,000 available to offset his allocable share of ECTI from PRS in 2012. Prior to 2012, NRA had not submitted a certificate to a partnership. NRA filed his 2009 U.S. federal income tax return on March 14, 2011; his 2010 U.S. federal income tax return on February 13, 2012; and his 2011 U.S. federal income tax return on April 13, 2012. NRA will file his 2012 U.S. federal income tax return on May 14, 2013. NRA paid (or will pay) all amounts due with respect to the returns (including interest, penalties, and additions to tax, if any) by the date they are filed. NRA's 2009 through 2011 U.S. federal income tax returns report income or gain effectively connected with a U.S. trade or business or deductions or losses properly allocated and apportioned to such activities.
Because 2012 is NRA's first tax year for which he is submitting a certificate to any partnership (regardless of whether he was a partner in PRS or any other partnership during each of these years), he must meet the following requirements:
His U.S. federal income tax return for the 2011 tax year must be timely filed, including any extensions he obtained;
His U.S. federal income tax return for the 2009 and 2010 tax years must have been filed by the earlier of:
The date that is one year after the due date set forth in section 6072(c) for filing such return, not including any extensions of time to file; or
July 23, 2012, the date on which this certificate is submitted to the partnership;
All amounts due with each return (including interest, penalties, and additions to tax, if any) must have been (or will be) paid on or before these dates for filing such returns.
While NRA's 2009 and 2010 U.S. federal income tax returns were filed after their due dates, they were filed within one year of the due date and before NRA submitted his certificate to PRS. In addition, if NRA files his 2011 U.S. federal income tax return on April 13, 2012, and his 2012 U.S. federal income tax return on May 14, 2013, then such returns will be timely filed. Finally, all amounts due with each return (including interest, penalties, and additions to tax, if any) were (or will be) paid on or before these dates. Therefore, NRA is eligible to submit a certificate to PRS in 2012.
Assume the same facts as Example 1 except NRA had submitted a certificate to another partnership in 2009. Under these circumstances NRA was required to have timely filed his U.S. federal income tax return for 2009 and all subsequent tax years. Because NRA did not timely file his 2009 U.S. federal income tax return, NRA is not eligible to submit a certificate to any partnership, including PRS, for any subsequent tax year, including 2012.
A foreign partner submitting a Form 8804-C to the partnership must list all returns required under line 3a or 3b that have not been filed at the time of the Form 8804-C submission.
A foreign partner submits a Form 8804-C to its U.S. partnership on June 1, 2012, but has not yet filed its 2011 U.S. federal income tax return. The foreign partner discloses the required information on line 4a as follows.
Return Form: 1040NR
Tax Year Ended: December 31, 2011
Filing Due Date: June 15, 2012
A foreign partner must submit any updated certificate(s) required by line 5a, 5c, 5d, or 5e within 10 days of the occurrence of the event described on the applicable line(s). Like the first Form 8804-C, a partner must submit any updated Forms 8804-C to the partnership, not the IRS.
When the foreign partner submitted its first certificate to the partnership, it had not yet filed a prior year U.S. federal income tax return. When the foreign partner files the tax return, it determines that it had overstated the amount of the loss certified on its first certificate. The partner would check boxes 5a and 5d when it submits its updated certificate.
A foreign partner checks the box on line 5b or line 5c to provide the status update required by Regulations section 1.1446-6(c)(2)(ii)(B)(1), if applicable. This update informs the partnership that an un-filed prior year U.S. federal income tax return listed on a previous certificate remains un-filed. This updated certificate must be provided to the partnership before the partnership's final installment due date of 1446 tax. The partnership's installment due dates of 1446 tax are the 15th day of the 4th, 6th, 9th, and 12th months of its tax year. For calendar year partnerships, these correspond to the 15th day of April, June, September, and December.
If the first certificate submitted can continue to be considered by the partnership, check the box on line 5b. If the first certificate submitted can no longer be considered by the partnership, check the box on line 5c.
The foreign partner is also required to submit to the partnership another updated Form 8804-C when it files the prior year income tax return. On that updated Form 8804-C, the foreign partner will check the box on line 5a to inform the partnership of the occurrence of the event.
The character of a loss includes whether the loss is ordinary or capital and whether or not it is passive.
Examples of when another activity would give rise to effectively connected income, gain, loss, or deduction include if the foreign partner began a U.S. trade or business or invested in a partnership that is engaged in a U.S. trade or business.
In Part II, the foreign partner makes representations about the character and amounts of its deductions and losses that are available to offset its allocable share of ECTI. The foreign partner also lists the amounts and character of the eligible deductions and losses. Deductions and losses certified to a partnership for a tax year of the partnership may not be certified to another partnership whose tax year begins or ends with or within the tax year of the partnership to which the deductions and losses were certified.
If Part III is applicable, it is not necessary to complete Part II. However, under some circumstances, it may be advisable to complete both Part II and Part III. See the instructions for line 11, later, for more information.
A foreign partner may not certify a loss or deduction for a tax year that ends on the same date as or after the partnership's tax year ends. Seethe instructions for lines 3a and 3b, earlier, for the filing dates required for U.S. federal income tax returns on which the deductions and losses must be reflected.
Both the foreign partner and the partnership have calendar tax years. The foreign partner may certify a net operating loss (NOL) for its 2011 tax year to the partnership for the partnership's 2012 tax year. However, the foreign partner may not certify an NOL for its 2012 tax year for the partnership's 2012 tax year.
The foreign partner has a fiscal tax year ending on June 30, and the partnership has a calendar tax year. The foreign partner may not certify an NOL for its tax year ending June 30, 2012, to the partnership until after June 30, 2012. If the foreign partner certifies the NOL on July 16, 2012, the partnership is not permitted to consider that NOL until its September 15, 2012, installment due date.
The following instructions explain the responsibilities of the partner and the partnership with respect to this line.
A partner submitting its first certificate for the current tax year should complete column (a) only. A partner submitting an updated certificate should complete columns (a), (b), and (c).
A partner submitting an updated certificate should enter in column (a) the amounts from its first certificate submitted to the partnership for the current tax year. If the first certificate has been superseded, enter in column (a) the amounts from the most recent certificate submitted to the partnership.
Show any negative numbers (losses or decreases) in columns (a), (b), or (c) in parentheses.
Attach a statement that indicates the type and amount of each capital loss. The foreign partner must distinguish short-term capital losses from long-term capital losses in the attachment.
Enter only those losses suspended under section 704(d) that are attributable to the partnership to which this certificate is being submitted. Section 704(d) limits the amount of losses (that flow through a partnership to a partner) to the partner's basis in the partnership. Any excess losses are suspended and may not be used by the partner until the partner's basis increases. A partner may certify its losses suspended under section 704(d) only to the partnership to whom those losses are attributable.
Enter only those suspended activity losses that meet the requirements of Regulations section 1.1446-6(c)(1)(i)(D). Attach a statement identifying the partnership activity to which each loss relates. For more information regarding passive activity losses, see Form 8582 and Pub. 925.
Enter only those suspended at-risk losses that meet the requirements of Regulations section 1.1446-6(c)(1)(i)(D). Attach a statement identifying the partnership activity to which each loss relates. For more information regarding at-risk loss limitations, see Form 6198 and Pub. 925.
Enter other ordinary deductions and losses described in Regulations section 1.1446-6(c)(1)(i) that are subject to partner level limitation or warrant special consideration. A foreign partner must identify in an attachment any other certified losses or deductions that are subject to special limitations at the partner level.
If a foreign partner is a partner in more than one partnership, the partner may certify some of its deductions and losses to one partnership and some to another. However, the total of any one type of deduction or loss certified to all partnerships may not exceed the amount of that deduction or loss carried forward from a prior year that the partner may claim on its current year U.S. federal tax return.
The foreign partner may not utilize deductions and losses that have been disallowed or proposed to be adjusted by the IRS. This refers not only to loss disallowances or proposed adjustments resulting from an IRS audit of the foreign partner, but also to those resulting from an administrative proceeding of a partnership (in which the partner is or was a partner) that affects the foreign partner's original distributive share of deductions and losses from a prior year.
When applicable under Regulations section 1.1446-6(c)(1)(ii)(B), a foreign partner may certify that its investment in the partnership is (and will be) the sole activity that will give rise to effectively connected income, gain, deduction, or loss during the partner's tax year in which Form 8804-C is submitted to the partnership. The foreign partner must make this determination based on the partnership's tax year that ends with or within the partner's tax year. A qualifying foreign partner makes this certification by checking the box on line 11.
A foreign partner may make the certification on line 11 without making the certifications in Part II. However, see the next paragraph for the only circumstance under which a partnership may consider a certification on line 11. A foreign partner making the certifications in Part II need not make the certification on line 11.
A partnership that receives this certification from a foreign partner, and that may reasonably rely on such certification, is not required to pay 1446 tax (or any installment of such tax) with respect to such partner if the partnership estimates that the annualized (or, in the case of a partnership completing its Form 8804, the actual) 1446 tax otherwise due with respect to such partner is less than $1,000, without taking into account any deductions or losses the foreign partner certified to the partnership or any state and local taxes the partnership withholds on behalf of the partner.
Foreign partners should note the importance of the two statements on the form to which they are consenting and certifying under penalties of perjury. The first statement reads as follows:
“Consent is hereby given to disclosures of return and return information by the Internal Revenue Service pertaining to the validity of this certificate to the partnership or other withholding agent to which this certificate is submitted for the purpose of administering section 1446.”
The foreign partner's consent gives the IRS authority to contact the partnership or withholding agent directly with questions to ensure processing of the certificate. The foreign partner will receive copies of all IRS correspondence with the partnership regarding the certificate.
The second statement on the form is a penalty of perjury statement required by the regulations. The statement requires the signature of the partner, or its authorized representative, under penalties of perjury, and the date that the Form 8804-C was signed.
If a representative of the partner signs and dates the Form 8804-C, a power of attorney specifically authorizing this representation must be attached to the Form 8804-C.
A partnership will not be able to consider a Form 8804-C unless all the above requirements are met.
|Recordkeeping||10 hrs., 16 min.|
|Learning about the law or the form||3 hr., 26 min.|
|Preparing the form||4 hrs., 41 min.|
|Copying, assembling, and sending the form to the IRS||16 min.|
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