JamesandTeresajointlyownrealpropertyand are selling it toBobfor$1,200,000. James and Teresa arenotU.S.citizens,arenotresidentsoftheU.S.,theyare nonresidentsforU.S.incometaxpurposes,andhaveneverhadaSSNor ITIN.

• Would there be aFIRPTAwithholdingrequired?Ifso,why?
• Whatwould be therateofwithholdingthatisapplicable?
• Onwhatamountdoesthewithholdingapply? The purchase price? andwhatwould be theamountof withholding?

There is a mortgage on the property for $1,000,000, does this mortgage affect the withholding rate? what would be the applicable withholding rate.

• Whoshouldbethewithholdingagent? And what form does the withholding agent have to file? Is there a deadline for the form to be filed?
• If withholding agent would have to file a form, then how many forms would the withholding agent have to file?
• IfJamesandTeresapaid$1,500,000forthepropertywhentheypurchaseditthreeyears ago,whatcantheydotoreduceoreliminatewithholding?

What if Bobispaying$120,000fortheproperty,how muchshouldbewithheld? IfFIRPTAisnot filedwho wouldhaveapenaltyriskandwhat would be thepenalty?