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Which of the following would be considered a foreign person according to FIRPTA?

a) A company incorporated in France with regional development offices in the U.S.
b) A global corporation headquartered in the U.S. with sales offices in six other countries
c) A individual green card holder currently living in the U.S.
d) A real estate investor with dual citizenship in the U.S. and in Canada

User Khalil M
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1 Answer

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Final answer:

Under FIRPTA, a foreign person includes non-resident aliens and entities not incorporated in the U.S. Of the provided options, a company incorporated in France with regional development offices in the U.S. would be considered a foreign person.

Step-by-step explanation:

The Foreign Investment in Real Property Tax Act (FIRPTA) deals with the taxation of foreign persons on the sale of U.S. real property interests. When determining who qualifies as a foreign person under FIRPTA various factors come into play. The options provided describe different business and individual scenarios but according to FIRPTA the definition of a foreign person mainly includes non-resident aliens foreign corporations that have not elected to be treated as domestic corporations, foreign partnerships foreign trusts or foreign estates.

Based on this definition:

  • A company incorporated in France with regional development offices in the U.S. would likely be considered a foreign person under FIRPTA, as its place of incorporation is outside the United States.
  • A global corporation headquartered in the U.S. with sales offices in other countries is not a foreign person since it is headquartered in the U.S.
  • An individual green card holder currently living in the U.S. would not be considered a foreign person under FIRPTA, because green card holders are treated as resident aliens for tax purposes.
  • A real estate investor with dual citizenship in the U.S. and Canada would not be considered a foreign person under FIRPTA for transactions involving U.S. real property interests if they meet the substantial presence test or are otherwise treated as a resident alien for tax purposes.

The scenario that clearly fits the FIRPTA definition of a foreign person is option a company incorporated in France with regional development offices in the U.S.

User Drskullster
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