The US Internal Revenue Service has today published final and temporary (TD 9815) and proposed (REG-135122-16) tax regulations providing guidance to nonresident alien individuals and foreign corporations that hold financial products providing for payments that are contingent upon or determined by reference to US source dividend payments.
Guidance is also provided to withholding agents responsible for withholding US tax with respect to a dividend equivalent, as well as other parties to section 871(m) transactions and their agents.
The final regulations, effective January 19, adopt 2015 temporary (TD 9734) and proposed regulations on the topic, with some changes, and make technical amendments to final regulations in the 2015 guidance.
The new temporary and proposed regulations provide guidance relating to when the delta of an option that is listed on a foreign regulated exchange may be calculated based on the delta of that option at the close of business on the business day prior to the date of issuance.
The temporary and proposed regulations also provide guidance on identifying which party to a potential section 871(m) transaction is responsible for determining whether a transaction is a section 871(m) transaction when multiple brokers or dealers are involved in the transaction.
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