Amounts Subject to Chapter 4 Withholding

U.S. source FDAP income for purposes of chapter 4 is similar to U.S. source FDAP income for purposes of chapter 3, subject to certain modifications such as the exclusion of certain types of non-financial payments and the inclusion (as U.S. source interest) of deposit interest paid by a foreign branch of a U.S. corporation or partnership. Also, see Fixed or Determinable Annual or Periodical Income (FDAP) , later.

A withholding agent must withhold on a payment of U.S. source FDAP income that is a withholdable payment to which an exception does not apply under chapter 4.

Amounts not subject to withholding under chapter 4. The following amounts are not subject to withholding under chapter 4.

• Interest or original issue discount from a short-term obligation.

• Payments made under a grandfathered obligation (for example, obligations outstanding on July 1, 2014).