What is PTP?

A PTP (publicly traded partnership) is a commercial entity held by two or more co-owners whose shares are listed on a securities market. Just think of them like an ETF but with a different tax structure.
On the surface, PTPs trade like stocks on major U.S. and global markets and are frequently indistinguishable from equities and ETFs, which is why you may be holding them without realizing it. However, there are differences between them, and if you are holding on to PTPs, you need to note specific tax implications.

What is the new regulation about?

The U.S. Internal Revenue Section has introduced Section 1446(f) with effect from 01/01/2023, which states how publicly traded partnerships (“PTPs”) should report and pay taxes on certain income from foreign sources. These changes have been brought about to ensure that PTPs are not avoiding tax and pay their taxes accurately.

A publicly traded partnership (PTP) is any partnership with interests in the partnership that are traded on an established securities market or with interests in the partnership that are readily tradable on a secondary market or its substantial equivalent. 

With effect from 3rd January 2023, Publicly Traded Partnership (PTP) securities sold by non-US holders will be subject to a 10% withholding tax on the sales proceeds from this investment.

What is the impact of this regulation?

You can find the list of the PTP securities impacted here.

Support from Stockal

While DriveWealth is working on automating this solution. In the interim, if the customer wishes to sell any security, you will have to contact the Support Team.

In case you want to read more about the directive, you can read the same on the IRS portal or the Drivewealth portal.