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New IRS Section 1446(f) regulations

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peter2

peter2

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I'm concerned by this new US IRS regulation. It seems that US brokers will withhold 10% of all sale proceeds of PTP securities held by foreign persons. Starting Jan 1 2023.

1446a.PNG


This list includes many ETFs (ETNs, ETPs) that I frequently swing trade. If the IRS is going to withhold 10% on every sale then it won't take long to empty my brokerage account.
 
I made a decision a few years ago that I thought the geopolitical risk of foreign assets (on a number of very nuanced levels) is too high.

Even as I type, I am in a pretty big conflagration with His Majesty's Internal Pilfering Service, or whatever the @#$& they call themselves. They owe me a six-figure sum and it is like getting blood from a stone (and costing me heaps in the interim)

Not worth it, we have enough thieves of our own.
 
I'm hoping that I've misinterpreted the regs and that only 10% of winnings will be withheld but I'm not so sure. Even this would be too much. I'm compiling a do not trade list from my brokers. It's just that many of the ETFs that appear on this list are very handy to trade due to their volume and sector.
 
peter2 said:
I'm hoping that I've misinterpreted the regs and that only 10% of winnings will be withheld but I'm not so sure. Even this would be too much. I'm compiling a do not trade list from my brokers. It's just that many of the ETFs that appear on this list are very handy to trade due to their volume and sector.
Click to expand...
And very hard to know before hand
vix etf, some short etf included in list but not others by same company .really scary....
I was using more and more etfs on the us market as mr @ducati916 introduced me to their advantages.
This resolution has potential for big damages
 
A list (probably not comprehensive):

The list of US PTP securities 美国PTP证券列表

Tiger Brokers is an online broker listed on NASDAQ. A powerful, licensed broker for global trading. Tiger's platform is convenient, easy to use, and provides a rich range of securities.
www.tigerbrokers.com.sg www.tigerbrokers.com.sg

The reason (probable) is that these ETF's (for the most part) are LP and MLP corporate structures and do not pay US Tax. Their dividend payouts can be quite high.

Looks as if the tax man is looking to grab some of that back.

Probably best to avoid. Shame.

jog on
duc
 
... following on from this ... I'm guessing that the same thing will happen in Australia in the next few years.

There are many public funds / trusts which pay dividends / distributions that are effectively tax free at the time of payment.

The ATO have had their eyes on these for a long time, and my perception is that the current Federal government is much more likely to implement some form of tax in this area than the previous governments.

KH
 
So i'm revisiting this problem after the christmas break and prior to Dec 31.

@Richard Dale I read somewhere that you can use Norgate's custom Dynamic watchlist and create a watchlist like this.

1672011780964.png


It seems that this watchlist isn't exhaustive though. When i compared this list with the lists from the internet, it's missing some companies. I am still only scratching the surface of this issue at the moment.

I have decided to use the exclusion list from here as it seems to be the most reliable.
https://ibkr.info/node/4706

The problem with this list though as well as the Norgate solution is that it doesn't take into account the partnerships that have exemptions. Partnerships have until Dec 31 to draft their Qualified notices for exemption. Basically it's an over cautious approach, but better than under cautious.

Hmmmmm .... This weeks rabbit hole. !!!!!
 

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