A foreign partner is selling their interest to a new investor. Who actually handles the 10% withholding under section 1446(f)?
We have a foreign partner exiting and a new buyer stepping in. The transaction is being handled like a standard ownership transfer, but one adviser raised section 1446(f) and said someone may need to withhold 10% of the amount realized. That sounded large enough that the deal team froze immediately.
What we are struggling with is responsibility. Does the selling partner handle it on their own, does the buyer have to withhold, or does the partnership itself do the withholding from inside the entity? We need to know who the law points to first before we can structure the closing documents correctly.
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