IRS statutes require a buyer to withhold how much from a foreign seller of U.S. property?

The correct choice indicates that IRS statutes require a buyer to withhold 10% of the sale proceeds in excess of $300,000 when dealing with a foreign seller of U.S. property. This requirement is established under the Foreign Investment in Real Property Tax Act (FIRPTA), which aims to ensure that the U.S. effectively collects taxes owed by foreign investors on gains they may realize from the sale of real estate.

The withholding applies to the amount received by the seller over the threshold of $300,000, which means if the sale price is higher than that, the percentage is calculated only on the amount above that figure. This withholding requirement helps the IRS secure tax obligations in situations where it might be more challenging to collect from foreign entities after the sale transaction has concluded.

In contrast, the thresholds in other options do not align with FIRPTA guidelines. For instance, withholding at a flat rate such as 20% or 5% does not accurately reflect IRS requirements, while stating that there is no withholding obligation is incorrect as it negates the established practice set forth by FIRPTA that mandates action in these circumstances. Thus, understanding the specific withholding percentage as it relates to the sale price is crucial for compliance when dealing with foreign