![]() Real Property Interests by Publicly Traded Trusts and Qualified Investment Entities, later. See Distributions Attributable to Dispositions of U.S. Use Form 1042-S to report certain distributions that are made by publicly traded trusts and QIEs (as defined under section 897(h)(4)(A)). ![]() Use Form 1042-S to report payments of eligible deferred compensation items or distributions from nongrantor trusts to covered expatriates that are subject to withholding under section 877A. Use Form 1042-S to report specified federal procurement payments paid to foreign persons that are subject to withholding under section 5000C. Use Form 1042-S to report income described under Amounts Subject to Reporting on Form 1042-S, later, and to report amounts withheld under chapter 3 or chapter 4. ![]() ![]() These instructions reflect that, starting in 2023, the section 1446(f) regulations permit PTPs (and their nominees) and brokers selling PTP interests to use the reimbursement and set-off procedures for purposes of sections 1446(a) and (f). See also the instructions for Form W-8IMY regarding this reporting requirement for when a nonqualified intermediary is paid an amount realized. A similar requirement is added for the issuance by a broker of a recipient copy of Form 1042-S to a nonqualified intermediary paid an amount realized subject to withholding under section 1446(f) when the broker issues Forms 1042-S to the account holders of the nonqualified intermediary receiving the amount realized (even though 10% withholding is applied to the full amount of the payment). These instructions add a requirement that a broker, PTP, or nominee making a payment of an amount realized or PTP distribution to a QI acting as a disclosing QI provide to the disclosing QI a recipient copy of the Form 1042-S issued to the QI's account holder. New chapter 3 status code 39 (Disclosing QI) is added starting for 2023 for when a broker, PTP, or nominee makes a payment of an amount realized or PTP distribution to a QI acting as a disclosing QI (reporting the disclosing QI's information in boxes 15a through 15i of the form). For information on reporting of PTP distributions generally, see Publicly Traded Partnerships (Sections 1446(a) and (f) Withholding Tax), later. Forms 1042-S reporting this income code are required to be issued with respect to each PTP making the distribution (reporting the PTP in the payer's box (including payer's chapter 3 status code 38)). New income code 58 is added starting for 2023 for nominees to report on Form 1042-S when they are unable to determine the characterization of income associated with a PTP distribution and therefore apply Regulations section 1.1446-4(d)(1) to withhold on the distribution in the absence of a qualified notice specifying the income attributable to the distribution. Brokers should use this code to report amounts realized paid to a recipient for sales of PTP interests that are subject to reporting and when section 1446(f) withholding applies to a PTP distribution under Regulations section 1.1446(f)-4(c)(2)(iii). Income code 57 was added to the 2022 Form 1042-S for use by brokers (starting for 2023) to report amounts realized and related withholding from transfers of PTP interests for purposes of section 1446(f) that are subject to reporting on Form 1042-S under Regulations section 1.1461-1(c)(2)(i). ![]() Highlights of these changes are as follows: These instructions are updated to reflect the requirements of the section 1446(f) regulations that apply beginning January 1, 2023. For further information regarding the effective date of these provisions, see Notice 2021-51, 2021-36 I.R.B. branches to act as withholding agents for the distributions. Certain provisions of the section 1446(f) regulations begin on January 1, 2023, including the requirements for withholding on transfers of interests in PTPs under section 1446(f) and certain changes to the withholding requirements under Regulations section 1.1446-4 for distributions made by PTPs (PTP distributions), which include an allowance for Qualified Intermediaries (QIs) and U.S. 9926 (85 FR 76910), published on Novem(as corrected at 86 FR 13191), contains final regulations (section 1446(f) regulations) relating to the withholding and reporting required under section 1446(f), which include withholding requirements that apply to brokers effecting transfers of interests in publicly traded partnerships (PTPs). Withholding and Reporting under sections 1446(a) and (f) starting in 2023. ![]()
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