Form 8804

[anepcar]

I have a two Mexico foreign member in a LLC, one is an individual and the other is a foreign corporation. There is a treaty with Mexico, according to article II of the treaty their withholding is 10 % for an individual and 5 % for company owning more than 10%. 

I am filling the 8804 and the required withholding is 37% on regular earnings from the LLC. Where do you adjusts the withholding amount according to the Mexico treaty on the  8804.

[itonewbie]

So, you're preparing a partnership return... Do you have a W-8BEN and W-8BEN-E from these nonresident members?

Where in Article II do you see these withholding rates?  Article II refers to the types of taxes that are covered by the treaty but not the withholding rates.  You must refer to the article that governs the specific type of income to determine the rate applicable.

Isn't it a bit late to deal with withholding when that should have been managed during the tax year?

[anepcar]

Double checked it and it was article 11 and it pertained to dividend only . This is a new client and I have filled out a W8BEN and W8BEN-E for both. 

[itonewbie]

F.8804 is only for US-ECI (Effectively Connected Income).

Dividend is covered by Article 10 instead 11.  Unless it meets one of the exceptions to be treated as ECI, dividend is FDAP and subject to 30% withholding unless modified by treaty rates as outlined in Article 10.  Withholding on FDAP is reported on K-1 instead of F.8804.