SOI Tax Stats - Foreign Recipients of U.S. Partnership Income Study Terms and Concepts
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This page contains information about selected terms and concepts used in SOI's Foreign Recipients of U.S. Partnership Income Study articles and tables.
Please visit Foreign Recipients of U.S. Partnership Income Statistics to access these articles and tables.
Country of residence
The country of residence is the home jurisdiction for tax purposes of the foreign partner.
Effectively connected taxable income (ECTI)
Gross income of a partnership that is effectively connected under Internal Revenue Code (IRC) section 864(c), or treated as effectively connected with the conduct of a U.S. trade or business, minus the allowable deductions that are connected to such income, is the effectively connected taxable income.
Foreign persons include (a) individuals whose residence is not within the United States and who are not U.S. citizens and (b) corporations and other organizations (including foreign partnerships and foreign trusts and estates).
Partner's share of ECTI
The amount of a partnership's ECTI for the partnership’s tax year allocable to a foreign partner equals (a) the foreign partner's distributive share of effectively connective gross income minus (b) the foreign partner's distributive share of deductions.
Total tax credit allowed to partner
The share of the tax withheld by a partnership under IRC section 1446 that is allocable to each partner. Foreign partners may claim a withholding credit for their share of the tax withheld by the partnership on their U.S. tax return.
Withholding tax rate
For all foreign partners, the IRC section 1446 applicable percentage is generally 35%. However, in some circumstances, the partnership may consider the highest rate applicable to a particular type of income allocated to a non-corporate partner if such partner would be entitled to use a preferential rate on such income or gain.