3.3% withholding exemptions...

Dave,

To avoid the 3.3 % withholding requirement, a seller of real property has to qualify for one of the 9 exemptions found on the California Franchise Tax Board's form 503-C for 2015.

An exemption applies if the owner of a property simply conforms with the description of one of the exemptions. So, for example, a general partnership complies without regard to the makeup of who or what entities are its partners. By the same token, a trust does not comply, regardless of the makeup of its trustor(s), beneficiary(ies) or trustee(s).

So in your hypothetical it doesn't matter what entity the grantor is comprised of. What matters is the nature of the entity that actually holds title to the property.

------Ward

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In reading the FTB publication 'Real Estate Withholding Guidelines' (https://www.ftb.ca.gov/forms/misc/1016.pdf), FAQ 68-71 seems to be saying if title is held in a grantor trust, the trust is disregarded and the seller for withholding purposes is considered to be the grantor. Am I correct in assuming that if the grantor is a S-Corp (or any other exempted entity) that no withholding is required?

If so, what if I partner with other investors all of us beneficiaries in a THT, do they all have to be grantor's to qualify for the withholding exemption?