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When either a non-resident alien or a non-US corporation disposes of 'a United States real property interest', the tax consequences are dealt with in IRC Section §897. The associated obligation to withhold tax at source is set out in IRC Section §1445.

In this context, a 'United States real property interest' covers:

1. Ìý

   •ÌýÌýÌýÌý an interest in real property (including an interest in a mine, well, or other natural deposit) located in the United States or the Virgin Islands

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   •ÌýÌýÌýÌý any interest (other than an interest solely as a creditor) in any US domestic corporation that is a United States real property holding corporation

The onus is on the taxpayer to demonstrate to the IRS that a US corporation in which an interest is disposed is not a United States real property holding corporation. Such a corporation is one where the fair market value of its US real property interests exceeds 50% of the combined value of:

1. Ìý

   •ÌýÌýÌýÌý its world-wide interests in real property, plus

2. Ìý

   •