Treatment of Services Under Section 482; Allocation of Income and Deductions From Intangibles; Stewardship Expense; Correction, 76902-76904 [E6-21908]
Download as PDF
<![CDATA[
76902
Federal Register / Vol. 71, No. 246 / Friday, December 22, 2006 / Rules and Regulations
(2) No. 058005 for use of 5 mg/mL
solution in swine as in paragraph (d)(4)
of this section.
(3) No. 000010 for use of 50 mg/mL
solution in dogs as in paragraph (d)(5)
of this section.
(4) No. 059130 for use of 100 mg/mL
solution in turkeys as in paragraph
(d)(2) and in chickens as in paragraph
(d)(3) of this section.
*
*
*
*
*
Dated: December 13, 2006.
Stephen F. Sundlof,
Director, Center for Veterinary Medicine.
[FR Doc. E6–21951 Filed 12–21–06; 8:45 am]
BILLING CODE 4160–01–S
List of Subjects in 21 CFR Part 812
Health records, Medical devices,
Medical research, Reporting and
recordkeeping requirements.
I Therefore, under the Federal Food,
Drug, and Cosmetic Act, and Public
Health Service Act, and under authority
delegated to the Commissioner of Food
and Drugs, 21 CFR part 812 is amended
as follows:
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 812
[Docket No. 2006N–0494]
Medical Device Regulations;
Disqualification of a Clinical
Investigator; Technical Amendment
AGENCY:
has regulatory responsibility for the
medical device subject to this regulation
is responsible for corresponding with
the investigator of the study concerning
any possible violations of the applicable
requirements. Therefore, FDA is
updating this regulation to include the
references to CBER and CDER.
Publication of this document
constitutes final action under the
Administrative Procedure Act (5 U.S.C.
553). FDA has determined that notice
and public comment are unnecessary
because this amendment to the
regulations provides only a technical
change to update references in the Code
of Federal Regulations, and is
nonsubstantive.
Food and Drug Administration,
HHS.
PART 812—INVESTIGATIONAL
DEVICE EXEMPTIONS
Final rule; technical
amendment.
I
SUMMARY: The Food and Drug
Administration (FDA) is amending a
medical device regulation to include
references to the Center for Biologics
Evaluation and Research (CBER) and the
Center for Drug Evaluation and Research
(CDER). This regulation pertains to the
disqualification of a clinical
investigator. Currently, only a reference
to the Center for Devices and
Radiological Health is listed in this
regulation. This action is being taken to
ensure the accuracy of FDA’s
regulations.
DATES: This rule is effective December
22, 2006.
FOR FURTHER INFORMATION CONTACT:
Stephen M. Ripley, Center for Biologics
Evaluation and Research (HFM–17),
Food and Drug Administration, 1401
Rockville Pike, suite 200N, Rockville,
MD 20852–1448, 301–827–6210.
SUPPLEMENTARY INFORMATION:
jlentini on PROD1PC65 with RULES
ACTION:
Authority: 21 U.S.C. 331, 351, 352, 353,
355, 360, 360c–360f, 360h–360j, 371, 372,
374, 379e, 381, 382, 383; 42 U.S.C. 216, 241,
262, 263b–263n.
1. The authority citation for 21 CFR
part 812 continues to read as follows:
I. Background
FDA is amending 21 CFR 812.119(a)
to include references to CBER and
CDER. This regulation pertains to the
disqualification of a clinical
investigator. Currently, only a reference
to the Center for Devices and
Radiological Health is listed in this
regulation. The appropriate Center that
VerDate Aug<31>2005
17:32 Dec 21, 2006
Jkt 211001
2. Section 812.119 is amended by
revising paragraph (a) to read as follows:
I
§ 812.119 Disqualification of a clinical
investigator.
(a) If FDA has information indicating
that an investigator has repeatedly or
deliberately failed to comply with the
requirements of this part, part 50, or
part 56 of this chapter, or has repeatedly
or deliberately submitted false
information either to the sponsor of the
investigation or in any required report,
the Center for Devices and Radiological
Health, the Center for Biologics
Evaluation and Research, or the Center
for Drug Evaluation and Research will
furnish the investigator written notice of
the matter under complaint and offer
the investigator an opportunity to
explain the matter in writing, or, at the
option of the investigator, in an informal
conference. If an explanation is offered
and accepted by the applicable Center,
the disqualification process will be
terminated. If an explanation is offered
but not accepted by the Center, the
investigator will be given an
opportunity for a regulatory hearing
under part 16 of this chapter on the
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
question of whether the investigator is
entitled to receive investigational
devices.
*
*
*
*
*
Dated: December 12, 2006.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. E6–21952 Filed 12–21–06; 8:45 am]
BILLING CODE 4160–01–S
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9278]
RIN 1545–BB31, 1545–AY38, 1545–BC52
Treatment of Services Under Section
482; Allocation of Income and
Deductions From Intangibles;
Stewardship Expense; Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correcting amendments.
AGENCY:
SUMMARY: This document contains
corrections to final and temporary
regulations (TD 9278) that was
published in the Federal Register on
Friday, August 4, 2006 (71 FR 44466)
regarding the treatment of controlled
services transactions under section 482
and the allocation of income from
intangibles, in particular with respect to
contributions by a controlled party to
the value of an intangible owned by
another controlled party. This document
also contains corrections to final and
temporary regulations that modify the
regulations under section 861
concerning stewardship expenses to be
consistent with the changes made to the
regulations under section 482.
DATES: Effective Date: The amendments
are effective on January 1, 2007.
FOR FURTHER INFORMATION CONTACT:
Thomas A. Vidano, (202) 435–5265, or
Carol B. Tan (202) 435–5159, for matters
relating to section 482, and David F.
Bergkuist, (202) 622–3850, for matters
relating to stewardship expenses (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations
that are the subject of these corrections
are under sections 482 and 861 of the
Internal Revenue Code.
Need for Correction
As published, the final and temporary
regulations (TD 9278) contains errors
that may prove to be misleading and are
in need of clarification.
E:\FR\FM\22DER1.SGM
22DER1
Federal Register / Vol. 71, No. 246 / Friday, December 22, 2006 / Rules and Regulations
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Correction of Publication
6. Paragraph (l)(5), Example 20. (i),
second sentence is revised.
I 7. Paragraph (m)(5), Example 1. (ii),
fourth sentence is revised.
The revisions read as follows:
Accordingly, 26 CFR part 1 is
corrected by making the following
correcting amendments:
§ 1.482–9T Methods to determine taxable
income in connection with a controlled
services transaction (temporary).
I
I
*
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
I
Authority: 26 U.S.C. 7805 * * *.
Par. 2. Section 1.482–0T is amended
by removing the entries for paragraphs
(i)(1) through (i)(10), (j)(1), (j)(2) and
(j)(3) from § 1.482–1T.
I Par. 3. Section 1.482–1 is amended by
revising paragraph (i) introductory text
to read as follows:
I
§ 1.482–1 Allocation of income and
deductions among taxpayers.
*
*
*
*
*
(i) [Reserved]. For further guidance,
see § 1.482–1T(i) introductory text.
*
*
*
*
*
I Par. 4. Section 1.482–1T is amended
as follows:
I 1. Paragraphs (i)(1) through (i)(10) are
added and reserved.
I 2. Paragraphs (j)(1) through (j)(5) are
amended by adding ‘‘§ ’’ before the
language ‘‘1.482–1(j)(1)’’.
The addition reads as follows:
§ 1. 482–1T Allocation of income and
deductions among taxpayers (temporary).
*
*
(b) * * *
(6) * * *
*
*
Example 22. (i) * * *
(vi) In contrast, if aggregated services AB
were allocated by reference to the total U.S.
dollar value of sales to uncontrolled parties
(trade sales) by each company, the following
results would obtain:
*
*
*
(g) * * *
(2) * * *
*
*
Example 2. * * *
(iv) * * * In the bid on the Country 2
contract for Level 1 waste remediation,
Company B proposes to use a
multidisciplinary team of specialists from
Company A and Company B. * * *
*
*
*
*
*
(i) * * *
(2) * * * For purposes of this
paragraph (i), an arrangement will be
treated as a contingent-payment
arrangement if it meets all of the
requirements in paragraph (i)(2)(i) of
this section and is consistent with the
economic substance and conduct
requirement in paragraph (i)(2)(ii) of
this section.
*
*
*
*
*
(5) * * *
*
*
*
*
(i)(1) through (i)(10) [Reserved]. For
further guidance, see § 1.482–1(i)(1)
through (i)(10).
*
*
*
*
*
I Par. 5. Section 1.482–8T is amended
by revising paragraph (b) Example 12.
(iv), second sentence to read as follows:
Example 1. (i) * * *
(iii) The years under examination are years
6 through 9. * * *
§ 1.482–8T Example of the best method
rule (temporary).
Example 20. (i) * * * Y, a Country B
corporation, is a distribution and marketing
company that also performs clinical trials for
X in Country B. * * *
*
*
*
*
(b) * * *
*
*
Example 12. (i) * * *
(iv) * * * USP contributed the long-term
endorsement contracts with professional
athletes. * * *
jlentini on PROD1PC65 with RULES
*
*
*
*
*
I Par. 6. Section 1.482–9T is amended
as follows:
I 1. Paragraph (b)(6), Example 22. (vi),
introductory text is revised.
I 2. Paragraph (g)(2), Example 2. (iv),
fifth sentence is revised.
I 3. Paragraph (i)(2) is revised.
I 4. Paragraph (i)(5), Example 1. (iii),
first sentence is revised.
I 5. Paragraph (i)(5), Example 3. (ii),
first sentence is revised.
VerDate Aug<31>2005
17:32 Dec 21, 2006
Jkt 211001
*
*
*
*
*
Example 3. (i) * * *
(ii) The years under examination are years
6 through 9. * * *
*
*
*
*
(l) * * *
(5) * * *
*
*
(m) * * *
(5) * * *
*
*
*
*
Example 1. (i) * * *
(ii) * * * The comparable profits method
may provide the most reliable measure of an
arm’s length result if uncontrolled parties are
identified that perform similar, combined
functions of maintaining and providing spare
parts for similar equipment. * * *
*
*
*
*
*
Par. 7. Section 1.861–8T is amended
as follows:
I 1. Paragraph (b)(3) is revised.
I 2. Paragraph (g), paragraph (i)
following Example 30. (i)(C) is
I
PO 00000
Frm 00007
Fmt 4700
Sfmt 4700
76903
redesignated as paragraph (ii) and the
paragraph designation for Example 30.
(i)(C) is removed.
I 3. Paragraph (h)(1), first three
sentences are revised.
I 4. Paragraph (h)(3) is revised.
The revisions read as follows:
§ 1.861–8T Computation of taxable income
from sources within the United States and
from other sources and activities
(temporary).
*
*
*
*
*
(b) * * *
(3) Supportive functions. Deductions
which are supportive in nature (such as
overhead, general and administrative,
and supervisory expenses) may relate to
other deductions which can more
readily be allocated to gross income. In
such instance, such supportive
deductions may be allocated and
apportioned along with the deductions
to which they relate. On the other hand,
it would be equally acceptable to
attribute supportive deductions on some
reasonable basis directly to activities or
property which generate, have generated
or could reasonably be expected to
generate gross income. This would
ordinarily be accomplished by
allocating the supportive expenses to all
gross income or to another broad class
of gross income and apportioning the
expenses in accordance with paragraph
(c)(1) of this section. For this purpose,
reasonable departmental overhead rates
may be utilized. For examples of the
application of the principles of this
paragraph (b)(3) to expenses other than
expenses attributable to stewardship
activities, see Examples 19 through 21
of paragraph (g) of this section. See
paragraph (e)(4)(ii) of this section for the
allocation and apportionment of
deductions attributable to stewardship
expenses. However, supportive
deductions that are described in
§ 1.861–14T(e)(3) shall be allocated and
apportioned in accordance with the
rules of § 1.861–14T and shall not be
allocated and apportioned by reference
only to the gross income of a single
member of an affiliated group of
corporations as defined in § 1.861–
14T(d).
*
*
*
*
*
(h) * * * (1) * * * In general, the
rules of this section, as well as the rules
of §§ 1.861–9T, 1.861–10T, 1.861–11T,
1.861–12T, and 1.861–14T apply for
taxable years beginning after December
31, 1986, except for paragraphs (a)(5)(ii),
(b)(3), (e)(4), (f)(4)(i), and paragraph (g)
Example 17, Example 18, and Example
30 of this section, which are generally
applicable for taxable years beginning
after December 31, 2006. Also, see
§§ 1.861–8(e)(12)(iv) and 1.861–14(e)(6)
E:\FR\FM\22DER1.SGM
22DER1
76904
Federal Register / Vol. 71, No. 246 / Friday, December 22, 2006 / Rules and Regulations
for rules concerning the allocation and
apportionment of deductions for
charitable contributions. In the case of
corporate taxpayers, transition rules set
forth in § 1.861–13T provide for the
gradual phase-in of certain provisions of
this and the foregoing sections. * * *
(3) Expiration date. The applicability
of the paragraphs (a)(5)(ii), (b)(3), (e)(4),
(f)(4)(i), and paragraph (g) Example 17,
Example 18, and Example 30 of this
section, expires on or before July 31,
2009.
I Par. 8. Section 1.6662–6T is amended
by revising paragraph (d)(2)(ii)(B), first
sentence to read as follows:
§ 1.6662–6T Transactions between parties
described in section 482 and net section
482 transfer price adjustments (temporary).
*
*
*
*
*
(d)(2)(ii)(B) A taxpayer’s selection of
the services cost method for certain
services, described in § 1.482–9T(b), and
its application of that method to a
controlled services transaction will be
considered reasonable for purposes of
the specified method requirement only
if the taxpayer reasonably allocated and
apportioned costs in accordance with
§ 1.482–9T(k), reasonably concluded
that the controlled services transaction
meets the conditions of § 1.482–
9T(b)(3), and reasonably concluded that
the controlled services transaction is not
described in § 1.482–9T(b)(2). * * *
*
*
*
*
*
Cynthia Grigsby,
Senior Federal Register Liaison Officer, Legal
Processing Division, Associate Chief Counsel
(Procedure and Administration).
[FR Doc. E6–21908 Filed 12–21–06; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 5
[TD 9304]
RIN 1545–BF26
Guidance Necessary To Facilitate
Business Electronic Filing Under
Section 1561
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
jlentini on PROD1PC65 with RULES
AGENCY:
SUMMARY: This document contains
temporary regulations that affect
component members of controlled
groups of corporations and consolidated
groups filing life-nonlife Federal income
tax returns. They provide guidance
VerDate Aug<31>2005
17:32 Dec 21, 2006
Jkt 211001
regarding the apportionment of tax
benefit items and the amount and type
of information these members are
required to submit with their returns.
The text of the temporary regulations
also serves as the text of the proposed
regulations set forth in the notice of
proposed rulemaking on this subject in
the Proposed Rules section in this issue
of the Federal Register.
DATES: Effective Date: These regulations
are effective on December 22, 2006.
Applicability Date: For dates of
applicability, see §§ 1.1502–43T(e)(1),
1.1502–47T(t)(1), 1.1561–1T(d)(1),
1.1561–2T(f)(1), 1.1561–3T(d)(1) and
1.1563–1T(e)(1). The applicability of
these regulations will expire on
December 21, 2009.
FOR FURTHER INFORMATION CONTACT: Grid
Glyer, (202) 622–7930 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Background
Section 1561(a) provides that the
component members of a controlled
group of corporations (as those terms
are defined in section 1563) are limited
to using the amounts of certain tax
benefit items described therein in the
same manner as if they were one
corporation. Although section 1561(a)
provides that these amounts shall
generally be divided equally among
those members, it also provides that if
those members consent to adopt an
apportionment plan, then, except as
provided below, they will be permitted
to allocate these amounts among
themselves unequally. Section 1.1561–
3(b) provides the procedural format by
which those members may adopt an
apportionment plan.
On May 26, 2006, the IRS and
Treasury Department released
temporary regulations (TD 9264), which,
among other things, eliminated
regulatory impediments to the
electronic filing (e-filing) of many
statements that corporate taxpayers
were previously required to include on
or with their Federal income tax returns.
As noted in section 2.C. of the preamble
to those regulations, § 1.1561–3(b)
presents an impediment to the e-filing
of that information which each member
of a controlled group is required to
provide with its Federal income tax
return when it makes the consent
provided therein. These temporary
regulations remove that impediment
and also clarify the amount and type of
information that each member of such
group is required to submit with its
return, whether or not the group
chooses to apportion unequally the
specified tax benefit items among its
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
members. Thus, these regulations
require each member of such group to
provide the requisite information,
whether or not it consents to adopt an
apportionment plan, on a form (i.e.,
Schedule O or any successor to that
form) to be filed with each member’s
Federal income tax return for each
taxable year for which it is a component
member of a controlled group.
Explanation of Provisions
1. Revision of the Regulations Under
Section 1561
The IRS and Treasury Department are
publishing temporary regulations under
section 1561 for several reasons. First,
the current regulations are outdated in
that they refer to tax benefit items that
are no longer listed in section 1561(a).
Except as provided below, to minimize
this issue in the future, the temporary
regulations refer generically to the tax
benefit items listed in section 1561(a)
rather than refer specifically to those
items by listing and describing each
one.
Second, the current regulations do not
provide guidance to taxpayers regarding
how to allocate the amounts of the
section 1561(a) tax benefit items among
the component members of a controlled
group of corporations which have an
apportionment plan in effect. As a
result, the IRS often can not determine
whether taxpayers have correctly
allocated these items. Thus, the
temporary regulations refer to a new
form (i.e., Schedule O or any successor
to that form) on which such members
will provide information about these
items.
Except as provided below, each
component member of a controlled
group must file this form every year
with its Federal income tax return
whether or not: (1) An apportionment
plan is in effect, or (2) any change is
made to the group’s apportionment of
its section 1561(a) tax benefit items from
the previous year. However, whenever
one or more of the component members
of a controlled group of corporations are
also members of a consolidated group,
the parent of such consolidated group
shall file one form on behalf of all of its
members. That form shall contain all the
information required for each such
member.
Finally, § 1.1561–3(b) presents an
impediment to e-filing where such
members have consented to the
adoption of an apportionment plan.
That section requires each member of a
controlled group to attach to its return,
for each year following the adoption of
the plan, a copy of its signed consent to
such plan. As explained in TD 9264,
E:\FR\FM\22DER1.SGM
22DER1
]]>Agencies
[Federal Register Volume 71, Number 246 (Friday, December 22, 2006)]
[Rules and Regulations]
[Pages 76902-76904]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-21908]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9278]
RIN 1545-BB31, 1545-AY38, 1545-BC52
Treatment of Services Under Section 482; Allocation of Income and
Deductions From Intangibles; Stewardship Expense; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendments.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to final and temporary
regulations (TD 9278) that was published in the Federal Register on
Friday, August 4, 2006 (71 FR 44466) regarding the treatment of
controlled services transactions under section 482 and the allocation
of income from intangibles, in particular with respect to contributions
by a controlled party to the value of an intangible owned by another
controlled party. This document also contains corrections to final and
temporary regulations that modify the regulations under section 861
concerning stewardship expenses to be consistent with the changes made
to the regulations under section 482.
DATES: Effective Date: The amendments are effective on January 1, 2007.
FOR FURTHER INFORMATION CONTACT: Thomas A. Vidano, (202) 435-5265, or
Carol B. Tan (202) 435-5159, for matters relating to section 482, and
David F. Bergkuist, (202) 622-3850, for matters relating to stewardship
expenses (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations that are the subject of these
corrections are under sections 482 and 861 of the Internal Revenue
Code.
Need for Correction
As published, the final and temporary regulations (TD 9278)
contains errors that may prove to be misleading and are in need of
clarification.
[[Page 76903]]
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Correction of Publication
0
Accordingly, 26 CFR part 1 is corrected by making the following
correcting amendments:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *.
0
Par. 2. Section 1.482-0T is amended by removing the entries for
paragraphs (i)(1) through (i)(10), (j)(1), (j)(2) and (j)(3) from Sec.
1.482-1T.
0
Par. 3. Section 1.482-1 is amended by revising paragraph (i)
introductory text to read as follows:
Sec. 1.482-1 Allocation of income and deductions among taxpayers.
* * * * *
(i) [Reserved]. For further guidance, see Sec. 1.482-1T(i)
introductory text.
* * * * *
0
Par. 4. Section 1.482-1T is amended as follows:
0
1. Paragraphs (i)(1) through (i)(10) are added and reserved.
0
2. Paragraphs (j)(1) through (j)(5) are amended by adding ``Sec. ''
before the language ``1.482-1(j)(1)''.
The addition reads as follows:
Sec. 1. 482-1T Allocation of income and deductions among taxpayers
(temporary).
* * * * *
(i)(1) through (i)(10) [Reserved]. For further guidance, see Sec.
1.482-1(i)(1) through (i)(10).
* * * * *
0
Par. 5. Section 1.482-8T is amended by revising paragraph (b) Example
12. (iv), second sentence to read as follows:
Sec. 1.482-8T Example of the best method rule (temporary).
* * * * *
(b) * * *
Example 12. (i) * * *
(iv) * * * USP contributed the long-term endorsement contracts
with professional athletes. * * *
* * * * *
0
Par. 6. Section 1.482-9T is amended as follows:
0
1. Paragraph (b)(6), Example 22. (vi), introductory text is revised.
0
2. Paragraph (g)(2), Example 2. (iv), fifth sentence is revised.
0
3. Paragraph (i)(2) is revised.
0
4. Paragraph (i)(5), Example 1. (iii), first sentence is revised.
0
5. Paragraph (i)(5), Example 3. (ii), first sentence is revised.
0
6. Paragraph (l)(5), Example 20. (i), second sentence is revised.
0
7. Paragraph (m)(5), Example 1. (ii), fourth sentence is revised.
The revisions read as follows:
Sec. 1.482-9T Methods to determine taxable income in connection with
a controlled services transaction (temporary).
* * * * *
(b) * * *
(6) * * *
Example 22. (i) * * *
(vi) In contrast, if aggregated services AB were allocated by
reference to the total U.S. dollar value of sales to uncontrolled
parties (trade sales) by each company, the following results would
obtain:
* * * * *
(g) * * *
(2) * * *
Example 2. * * *
(iv) * * * In the bid on the Country 2 contract for Level 1
waste remediation, Company B proposes to use a multidisciplinary
team of specialists from Company A and Company B. * * *
* * * * *
(i) * * *
(2) * * * For purposes of this paragraph (i), an arrangement will
be treated as a contingent-payment arrangement if it meets all of the
requirements in paragraph (i)(2)(i) of this section and is consistent
with the economic substance and conduct requirement in paragraph
(i)(2)(ii) of this section.
* * * * *
(5) * * *
Example 1. (i) * * *
(iii) The years under examination are years 6 through 9. * * *
* * * * *
Example 3. (i) * * *
(ii) The years under examination are years 6 through 9. * * *
* * * * *
(l) * * *
(5) * * *
Example 20. (i) * * * Y, a Country B corporation, is a
distribution and marketing company that also performs clinical
trials for X in Country B. * * *
* * * * *
(m) * * *
(5) * * *
Example 1. (i) * * *
(ii) * * * The comparable profits method may provide the most
reliable measure of an arm's length result if uncontrolled parties
are identified that perform similar, combined functions of
maintaining and providing spare parts for similar equipment. * * *
* * * * *
0
Par. 7. Section 1.861-8T is amended as follows:
0
1. Paragraph (b)(3) is revised.
0
2. Paragraph (g), paragraph (i) following Example 30. (i)(C) is
redesignated as paragraph (ii) and the paragraph designation for
Example 30. (i)(C) is removed.
0
3. Paragraph (h)(1), first three sentences are revised.
0
4. Paragraph (h)(3) is revised.
The revisions read as follows:
Sec. 1.861-8T Computation of taxable income from sources within the
United States and from other sources and activities (temporary).
* * * * *
(b) * * *
(3) Supportive functions. Deductions which are supportive in nature
(such as overhead, general and administrative, and supervisory
expenses) may relate to other deductions which can more readily be
allocated to gross income. In such instance, such supportive deductions
may be allocated and apportioned along with the deductions to which
they relate. On the other hand, it would be equally acceptable to
attribute supportive deductions on some reasonable basis directly to
activities or property which generate, have generated or could
reasonably be expected to generate gross income. This would ordinarily
be accomplished by allocating the supportive expenses to all gross
income or to another broad class of gross income and apportioning the
expenses in accordance with paragraph (c)(1) of this section. For this
purpose, reasonable departmental overhead rates may be utilized. For
examples of the application of the principles of this paragraph (b)(3)
to expenses other than expenses attributable to stewardship activities,
see Examples 19 through 21 of paragraph (g) of this section. See
paragraph (e)(4)(ii) of this section for the allocation and
apportionment of deductions attributable to stewardship expenses.
However, supportive deductions that are described in Sec. 1.861-
14T(e)(3) shall be allocated and apportioned in accordance with the
rules of Sec. 1.861-14T and shall not be allocated and apportioned by
reference only to the gross income of a single member of an affiliated
group of corporations as defined in Sec. 1.861-14T(d).
* * * * *
(h) * * * (1) * * * In general, the rules of this section, as well
as the rules of Sec. Sec. 1.861-9T, 1.861-10T, 1.861-11T, 1.861-12T,
and 1.861-14T apply for taxable years beginning after December 31,
1986, except for paragraphs (a)(5)(ii), (b)(3), (e)(4), (f)(4)(i), and
paragraph (g) Example 17, Example 18, and Example 30 of this section,
which are generally applicable for taxable years beginning after
December 31, 2006. Also, see Sec. Sec. 1.861-8(e)(12)(iv) and 1.861-
14(e)(6)
[[Page 76904]]
for rules concerning the allocation and apportionment of deductions for
charitable contributions. In the case of corporate taxpayers,
transition rules set forth in Sec. 1.861-13T provide for the gradual
phase-in of certain provisions of this and the foregoing sections. * *
*
(3) Expiration date. The applicability of the paragraphs
(a)(5)(ii), (b)(3), (e)(4), (f)(4)(i), and paragraph (g) Example 17,
Example 18, and Example 30 of this section, expires on or before July
31, 2009.
0
Par. 8. Section 1.6662-6T is amended by revising paragraph
(d)(2)(ii)(B), first sentence to read as follows:
Sec. 1.6662-6T Transactions between parties described in section 482
and net section 482 transfer price adjustments (temporary).
* * * * *
(d)(2)(ii)(B) A taxpayer's selection of the services cost method
for certain services, described in Sec. 1.482-9T(b), and its
application of that method to a controlled services transaction will be
considered reasonable for purposes of the specified method requirement
only if the taxpayer reasonably allocated and apportioned costs in
accordance with Sec. 1.482-9T(k), reasonably concluded that the
controlled services transaction meets the conditions of Sec. 1.482-
9T(b)(3), and reasonably concluded that the controlled services
transaction is not described in Sec. 1.482-9T(b)(2). * * *
* * * * *
Cynthia Grigsby,
Senior Federal Register Liaison Officer, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. E6-21908 Filed 12-21-06; 8:45 am]
BILLING CODE 4830-01-P
