Penn State International Law Review


Lisa B. Petkun


For a number of years, foreign investors were able to invest in real property located in the United States and to avoid, to a great extent, the payment of United States income tax on the operating income from the property and on the gain realized upon the disposition of the property. However, with the enactment of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") the ability of foreigners to avoid the United States tax gains realized upon the sale of real property located in the United States has been greatly circumscribed. To accomplish this result, FIRPTA added to the Internal Revenue Code a section of enormous complexity, section 897, and also added section 6039C, which imposes reporting requirements on certain corporations and individuals. Conforming changes were made to other Code sections. This article will describe the more significant substantive provisions of FIRPTA and point out certain of the issues that need to be resolved.