FIRPTA Certificate
(Stock or Asset Purchase Transaction) (Disregarded Entity, Entity Owner)

Summary

This is a template FIRPTA certificate (or certificate of non-foreign status) for use in connection with a stock or asset purchase transaction where the seller is classified as "disregarded from its owner" for U.S. federal income tax purposes and is owned by an entity. This template includes practical guidance and drafting notes. The Foreign Investment in Real Property Tax Act (I.R.C. § 1445) (FIRPTA) provides that a buyer of real property located in the United States who purchases real property from a foreign seller must withhold a portion of the amounts realized by the foreign seller upon closing of the sale unless the buyer receives a certificate from the seller certifying as to its non-foreign status (a FIRPTA Certificate). FIRPTA applies to a broad range of transactions in which real property is transferred, including many M&A transactions. In asset transactions involving the sale of real estate, the application of FIRPTA is generally unambiguous. Buyers of stock of a U.S. corporation will also generally request a FIRPTA certificate as a protective measure in case the corporation's stock or assets are classified as "U.S. real property interests" (see I.R.C. § 897(c)). If the seller in transaction that would otherwise require buyer to withhold a portion of the purchase price under FIRPTA is a disregarded entity (DRE), the FIRPTA Certificate must be delivered on behalf of the DRE by its owner. You should use this template only if the seller in a stock or asset purchase transaction is classified as a DRE for U.S. federal income tax purposes and is itself owned by an entity (that is not a DRE). If the seller is a DRE and its immediate owner is also a DRE, this certificate should be delivered by the first non-DRE owner of seller within the seller's ownership structure. For a template FIRPTA certificate that you can use if an individual owns the DRE, see FIRPTA Certificate (Stock or Asset Purchase Transaction) (Disregarded Entity, Individual Owner). For template FIRPTA certificates for sellers that are not considered DREs, see FIRPTA Certificate (Certification of Non-Foreign Status) (Individual) and FIRPTA Certificate (Certification of Non-Foreign Status) (Business Entity). For further discussion of FIRPTA, Foreign Investment in Real Property Tax Act​ Fundamentals.