Common use of Exception to foreign use through partnership interest Clause in Contracts

Exception to foreign use through partnership interest. (i) Facts. (A) P owns 80 percent of HPSX, a Country X entity subject to Country X tax on its worldwide income. FSZ, an unrelated foreign corporation, owns the remaining 20 percent of HPSX. HPSX is classified as a partnership for Federal tax purposes and carries on operations in Coun- try X that, if carried on by a U.S. person, would constitute a foreign branch within the meaning of § 1.367(a)–6T(g)(1). P’s interest in HPSX and P’s indirect interest in the Coun- try X branch are individual separate units that are combined into a single separate unit (Country X separate unit) pursuant to § 1.1503(d)–1(b)(4)(ii).