Gross proceeds

FATCA

Gross proceeds defined [§1.1473-1(a)(3)]

(3)(i) Sale or other disposition [§1.1473-1(a)(3)(i)]

(i)(A) In general [§1.1473-1(a)(3)(i)(A)]

Except as otherwise provided in this paragraph (a)(3)(i), the term sale or other disposition means any sale, exchange, or disposition of property described in paragraph (a)(3)(ii) of this section that requires recognition of gain or loss under section 1001(c), determined without regard to whether the owner of such property is subject to U.S. federal income tax with respect to such sale, exchange, or disposition. The term sale or other disposition includes (but is not limited to) sales of securities; redemptions of stock; retirements and redemptions of indebtedness; entering into short sales; and a closing transaction under a forward contract, option, or other instrument that is otherwise a sale. Such term further includes a distribution from a corporation to the extent the distribution is a return of capital or a capital gain to the beneficial owner of the payment. Such term does not include grants or purchases of options, exercises of call options for physical delivery, transfers of securities for which gain or loss is excluded from recognition under section 1058, or mere executions of contracts that require delivery of personal property or an interest therein. For purposes of this section only, a constructive sale under section 1259 or a mark to fair market value under section 475 or 1296 is not a sale or disposition.

(i)(B) Special rule for sales effected by brokers [§1.1473-1(a)(3)(i)(B)]

In the case of a sale effected by a broker (with the term effect defined in §1.6045-1(a)(10)), a sale means a sale as defined in §1.6045-1(a)(9) with respect to property described in paragraph (a)(3)(ii) of this section.

(i)(C) Special rule for gross proceeds from sales settled by a clearing organization [§1.1473-1(a)(3)(i)(C)]

In the case of a clearing organization that settles sales and purchases of securities between members of such organization on a net basis, the gross proceeds from sales or dispositions are limited to the net amount paid or credited to a member’s account that is associated with sales or other dispositions of property described in paragraph (a)(3)(ii) of this section by such member as of the time that such transactions are settled under the settlement procedures of such organization.

(3)(ii) Property of a type that can produce interest or dividend payments that would be U.S. source FDAP income [§1.1473-1(a)(3)(ii)]

(ii)(A) In general [§1.1473-1(a)(3)(ii)(A)]

Property is of a type that can produce interest or dividends payments that would be U.S. source FDAP income if the property is of a type that ordinarily gives rise to the payment of interest or dividends that would constitute U.S. source FDAP income, regardless of whether any such payment is made during the period such property is held by the person selling or disposing of such property. Thus, for example, stock issued by a domestic corporation is property of a type that can produce dividends from sources within the United States if a dividend from such corporation would be from sources within the United States, regardless of whether the stock pays dividends at regular intervals and regardless of whether the issuer has any plans to pay dividends or has ever paid a dividend with respect to the stock.

(ii)(B) Contracts producing dividend equivalent payments [§1.1473-1(a)(3)(ii)(B)]

In the case of any contract that results in the payment of a dividend equivalent as defined in section 871(m) and the regulations thereunder (including as part of a termination payment), such contract shall be treated as property that is described in paragraph (a)(3)(ii)(A) of this section, without regard to whether the taxpayer is a foreign person subject to U.S. federal income tax with respect to such transaction. To the extent that the proceeds from a termination payment include the payment of a dividend equivalent, the gross amount of such proceeds will not include the amount of such dividend equivalent.

(ii)(C) Regulated investment company distributions [§1.1473-1(a)(3)(ii)(C)]

The amount of a distribution that is designated as a capital gain dividend under section 852(b)(3)(C) or 871(k)(2) is a payment of gross proceeds to the extent attributable to property described in paragraph (a)(3)(ii)(A) of this section.

(3)(iii) Payment of gross proceeds [§1.1473-1(a)(3)(iii)]

(iii)(A) When gross proceeds are paid [§1.1473-1(a)(3)(iii)(A)]

With respect to a sale that is effected by a broker that results in a payment of gross proceeds as defined in this paragraph (a)(3), the date the gross proceeds are considered paid is the date that the proceeds of such sale are credited to the account of or otherwise made available to the person entitled to the payment.

(iii)(B) Amount of gross proceeds [§1.1473-1(a)(3)(iii)(B)]

Except as otherwise provided in this paragraph (a)(3)-

(1) The amount of gross proceeds from a sale or other disposition means the total amount realized as a result of a sale or other disposition of property described in paragraph (a)(3)(ii) under section 1001(b); [§1.1473-1(a)(3)(iii)(B)(1)]

(2) In the case of a sale effected by a broker, the amount of gross proceeds from a sale or other disposition means the total amount paid or credited to the account of the person entitled to the payment increased by any amount not so paid by reason of the repayment of margin loans. The broker may (but is not required to) take commissions with respect to the sale into account in determining the amount of gross proceeds; [§1.1473-1(a)(3)(iii)(B)(2)]

(3) In the case of a corporate distribution, the amount treated as gross proceeds excludes the amount described in paragraph (a)(2)(vii)(A) of this section that is treated as U.S source FDAP income; [§1.1473-1(a)(3)(iii)(B)(3)]

(4) [Reserved]. For further guidance, see §1.1473-1T(a)(3)(iii)(B)(4). [§1.1473-1(a)(3)(iii)(B)(4)]

In the case of a sale of an obligation described in paragraph (a)(2)(vi), gross proceeds includes any interest accrued between interest payment dates other than an amount described in paragraph (a)(2)(vi) of this section that is treated as U.S. source FDAP income and (5) In the case of a sale, retirement, or redemption of a debt obligation, gross proceeds excludes the amount of original issue discount treated as U.S. source FDAP income under paragraph (a)(2)(iii) of this section. [§1.1473-1(a)(3)(iii)(B)(5)]

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