Under FIRPTA, the withholding is 15% for sales above 1,000,000. Which option represents this rate?

• A. 10%
• B. 5%
• C. 15%
• D. 20%

Answer: (C)

Under FIRPTA, when a foreign person sells a U.S. real property interest, the buyer must withhold tax at closing. The rate depends on the sale price, and for sales exceeding one million dollars, the withholding is 15%. That means 15% of the amount realized (the sale price) is withheld and remitted to the IRS, unless an exemption or withholding certificate lowers it. This rate is used to ensure tax collection from foreign sellers. The other percentages would apply in different scenarios, but for this threshold, the rate is fifteen percent.