Withholding on Guaranteed Payments to a nonresident partner of a CA p-ship - Spidell

Withholding on Guaranteed Payments to a nonresident partner of a CA p-ship

Log in to Post

Message Board Withholding on Guaranteed Payments to a nonresident partner of a CA p-ship

This topic contains 1 reply, has 2 voices, and was last updated by Sandy Weiner 6 months, 2 weeks ago.

  • Author
    Posts
  • #142008
    Jonathan Resnick
    Participant

    Can you confirm that withholding on guaranteed payments is not required for a non-resident partner who does <u>not</u> perform services in California?

    Per Spidell’s Analysis and Explanation of CA Taxes Section 29-201 Withholding on nonresident nonwage income

    For apportionment purposes, service revenues of an apportioning trade or business are sourced according to where the benefit is received under 18 Cal. Code Regs. §25136-2.

    However for withholding-at-source for nonresidents, the focus is on where revenues for personal services performed by an individual should be sourced. Under 18 Cal. Code Regs. §17951-5, personal service revenues are sourced where the service is performed. So if a nonresident performs personal services in California for a business, then the business must withhold 7% from the payments made to the nonresident for those services performed in California.

  • #142244
    Sandy Weiner
    Participant

    Guaranteed payments to nonresident partners are subject to withholding. See FTB Pub. 1017.