Application of Separate Limitations to Dividends From Noncontrolled Section 902 Corporations; Correction, 77264-77266 [E6-22024]
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Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Rules and Regulations
2006–26–03 Alpha Aviation Design Limited
(Type Certificate No. A48EU formerly
held by APEX Aircraft and AVIONS
PIERRE ROBIN): Amendment 39–14861;
Docket No. FAA–2006–26492;
Directorate Identifier 2006–CE–77–AD.
the FAA amends 14 CFR part 39 as
follows:
PART 39—AIRWORTHINESS
DIRECTIVES
1. The authority citation for part 39
continues to read as follows:
I
Authority: 49 U.S.C. 106(g), 40113, 44701.
§ 39.13
Effective Date
(a) This AD becomes effective on January
30, 2007.
Affected ADs
(b) None.
[Amended]
2. The FAA amends § 39.13 by adding
the following new airworthiness
directive (AD):
I
Applicability
(c) This AD applies to Model R2160
airplanes, serial numbers 142, 143, 144, 147,
148, and 151 through 155, that are
certificated in any category.
Unsafe Condition
(d) This AD is the result of the possibility
of fuel leakage at the end of the adapter in
the fuel pressure indication system. We are
issuing this AD to detect and correct fuel
leaks in the fuel pressure indicating system.
This failure could allow fuel to leak near the
exhaust manifold and lead to a fire.
Compliance
(e) To address this problem, you must do
the following, unless already done:
Actions
Compliance
Procedures
(1) Inspect the fuel pressure system indication
adaptor (part number 52.46.11.000 or FAA
approved equivalent part number) for indication of fuel leakage.
(2) If any leak is found, repair the leak .............
Before further flight after January 30, 2007
(the effective date of this AD) and thereafter
at intervals not to exceed 50 hours time-inservice.
Before further flight after inspection required
by paragraph (e)(1) of this AD.
Perform a visual inspection. Figure 1 of Robin
Aviation Service Letter No 37 rev. 2 dated
April 4, 2000, shows a view of the fuel pressure indicator system.
Perform a repair program approved specifically for this AD by the FAA.
Alternative Methods of Compliance
(AMOCs)
(f) The Manager, Standards Staff, FAA,
ATTN: Karl Schletzbaum, Aerospace
Engineer, FAA, Small Airplane Directorate,
901 Locust, Room 301, Kansas City, Missouri
64106; telephone: (816) 329–4146; fax: (816)
329–4090, has the authority to approve
AMOCs for this AD, if requested using the
procedures found in 14 CFR 39.19.
ACTION:
Correcting amendments.
I Par. 2. Section 1.902–1 is amended by
adding a heading to paragraph (a)(4)(i)
introductory text and revising the
heading for paragraph (c)(8) to read as
follows:
Related Information
(g) This AD is related to the Civil Aviation
Authority of New Zealand AD DCA/R2000/
33, dated June 29, 2006, which references
Direction Generale de l’Aviation Civile
(DGAC) AD F–2001–391(a), dated October 3,
2001.
Material Incorporated by Reference
(h) None.
Issued in Kansas City, Missouri, on
December 15, 2006.
Kim Smith,
Manager, Small Airplane Directorate, Aircraft
Certification Service.
[FR Doc. E6–21923 Filed 12–22–06; 8:45 am]
BILLING CODE 4910–13–P
Internal Revenue Service
Need for Correction
As published, TD 9260 contains errors
that may prove to be misleading and are
in need of clarification.
Correction of Publication
26 CFR Part 1
Accordingly, 26 CFR part 1 is
corrected by making the following
correcting amendments:
I
[TD 9260]
RIN 1545–BF46
jlentini on PROD1PC65 with RULES
Background
The final and temporary regulations
(TD 9260) that are the subject of these
corrections are under sections 902, 904,
and 964 of the Internal Revenue Code.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
DEPARTMENT OF THE TREASURY
Application of Separate Limitations to
Dividends From Noncontrolled Section
902 Corporations; Correction
Internal Revenue Service (IRS),
Treasury.
AGENCY:
VerDate Aug<31>2005
SUMMARY: This document contains
corrections to final and temporary
regulations that were published in the
Federal Register on Tuesday, April 25,
2006 (71 FR 24516) concerning the
application of separate foreign tax credit
limitations to dividends received from
noncontrolled section 902 corporations
under section 904(d)(4).
DATES: These corrections are effective
April 25, 2006.
FOR FURTHER INFORMATION CONTACT:
Ginny Chung (202) 622–3850 (not a tollfree call).
SUPPLEMENTARY INFORMATION:
16:12 Dec 22, 2006
Jkt 211001
PART 1—INCOME TAXES
Paragraph 1. The authority for part 1
is amended and continues to read in
part:
I
Authority: 26 U.S.C. 7805 * * *
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Sfmt 4700
§ 1.902–1 Credit for domestic corporate
shareholder of a foreign corporation for
foreign income taxes paid by the foreign
corporation.
(a) * * *
(4) Third- or lower-tier corporation—
(i) Third-tier corporation. * * *
*
*
*
*
*
(c) * * *
(8) Effect of certain liquidations,
reorganizations, or similar transactions
on certain foreign taxes paid or accrued
in taxable years beginning on or before
August 5, 1997.
* * *
*
*
*
*
*
I Par. 3. Section 1.902–1T is amended
by revising the first sentence of
paragraph (a)(7) to read as follows:
§ 1.902–1T Credit for domestic corporate
shareholder of a foreign corporation for
foreign income taxes paid by the foreign
corporation (temporary).
(a) * * *
(7) * * * The term foreign income
taxes means income, war profits, and
excess profits taxes as defined in
§ 1.902–1(a), and taxes included in the
term income, war profits, and excess
profits taxes by reason of section 903,
that are imposed by a foreign country or
a possession of the United States,
including any such taxes deemed paid
by a foreign corporation under this
section. * * *
*
*
*
*
*
E:\FR\FM\26DER1.SGM
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Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Rules and Regulations
I Par. 4. Section 1.902–2 is amended by
revising the first sentence of paragraph
(a)(1) to read as follows:
§ 1.902–2 Treatment of deficits in post1986 undistributed earnings and pre-1987
accumulated profits of a first- or lower-tier
corporation for purposes of computing an
amount of foreign taxes deemed paid under
§ 1.902–1.
(a) * * * (1) * * * For purposes of
computing foreign income taxes deemed
paid under § 1.902–1(b) with respect to
dividends paid by a first- or lower-tier
corporation, when there is a deficit in
the post-1986 undistributed earnings of
that corporation and the corporation
makes a distribution to shareholders
that is a dividend or would be a
dividend if there were current or
accumulated earnings and profits, then
the post-1986 deficit shall be carried
back to the most recent pre-effective
date taxable year of the first- or lowertier corporation with positive
accumulated profits computed under
section 902. * * *
*
*
*
*
*
I Par. 5. Section 1.904–0 is amended by
adding the entries for paragraphs (o)(1)
and (o)(2) under § 1.904–5 to read as
follows:
on the basis of the tax imposed on that
income as provided in § 1.904–
4T(c)(3)(i) through (iv).
(iii) Determination of the source of
income. For purposes of this paragraph
(c)(4), income will be determined to be
from sources within or without the
QBU’s country of operation under the
laws of the foreign country of the payor
of the income.
*
*
*
*
*
Par. 7. Section 1.904–5 is amended by
revising paragraphs (a) introductory text
and (a)(1) and adding Examples 4 and
5 to paragraph (i)(5) to read as follows:
§ 1.904–5 Look-through rules as applied to
controlled foreign corporations and other
entities.
(a) and (a)(1) [Reserved]. For further
guidance, see § 1.904–5T(a) introductory
text and (a)(1).
*
*
*
*
*
(i) * * *
(5) * * *
Examples 4 and 5 [Reserved]. For
further guidance, see § 1.904–5T(i)(5)
Examples 4 and 5.
*
*
*
*
*
Par. 8. Section 1.904(f)–12T is
amended by revising the heading for
paragraph (g)(1) to read as follows:
§ 1.904–0 Outline of regulations provisions
for section 904.
§ 1.904(f)–12T
(temporary).
*
*
*
*
*
*
§ 1.904–5 Look-through rules as applied to
controlled foreign corporations and other
entities.
*
*
*
*
*
(o) * * *
(1) Rules for controlled foreign
corporations and other look-through
entities.
(2) Rules for noncontrolled section
902 corporations.
*
*
*
*
*
I Par. 6. Section 1.904–4 is amended by
revising paragraph (c)(4) introductory
text and adding paragraphs (c)(4)(i)
through (c)(4)(iii) to read as follows:
§ 1.904–4 Separate application of section
904 with respect to certain categories of
income.
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*
*
*
*
*
(c) * * *
(3) and (4) [Reserved]. For further
guidance, see § 1.904–4T(c)(3) and (4)
introductory text.
(4)(i) Income from sources within the
QBU’s country of operation. Passive
income from sources within the QBU’s
country of operation shall be treated as
one item of income.
(ii) Income from sources without the
QBU’s country of operation. Passive
income from sources without the QBU’s
country of operation shall be grouped
VerDate Aug<31>2005
16:12 Dec 22, 2006
Jkt 211001
Transition rules
*
*
*
*
(g) * * * (1) Recapture of separate
limitation loss or overall foreign loss in
a separate category for dividends from
a noncontrolled section 902
corporation. * * *
*
*
*
*
*
I Par. 9. Section 1.964–1 is amended
by:
I 1. Redesignating paragraphs (a)
introductory text, (a)(1), (a)(2) and (a)(3)
as paragraphs (a)(1) introductory text,
(a)(1)(i), (a)(1)(ii) and (a)(1)(iii),
respectively.
I 2. Designating the undesignated text
following newly-designated paragraph
(a)(1)(iii) as paragraph (a)(2).
I 3. Removing the comma following the
word ‘‘shall’’ from newly-designated
paragraph (a)(1) introductory text.
I 4. Removing the last sentence in
newly-designated paragraph (a)(1)(i).
I 5. Revising newly-designated
paragraph (a)(2), and the text of
paragraphs (b)(1) introductory text and
(c)(1) introductory text.
The revisions read as follows:
§ 1.964–1 Determination of the earnings
and profits of a foreign corporation.
(a) * * *
(2) Required adjustments. The
computation described in paragraph
(a)(1) of this section shall be made in the
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Sfmt 4700
77265
foreign corporation’s functional
currency (determined under section 985
and the regulations under that section)
and may be made by following the
procedures described in paragraphs
(a)(1)(i) through (a)(1)(iii) of this section
in an order other than the one listed, as
long as the result so obtained would be
the same. In determining earnings and
profits, or the deficit in earnings and
profits, of a foreign corporation under
section 964, the amount of an illegal
bribe, kickback, or other payment
(within the meaning of section 162(c), as
amended by section 288 of the Tax
Equity and Fiscal Responsibility Act of
1982 in the case of payments made after
September 3, 1982, and the regulations
issued pursuant to section 964) paid
after November 3, 1976, by or on behalf
of the corporation during the taxable
year of the corporation directly or
indirectly to an official, employee, or
agent in fact of a government shall not
be taken into account to decrease such
earnings and profits or to increase such
deficit. No adjustment shall be required
under paragraph (a)(1)(ii) or (iii) of this
section unless it is material. Whether an
adjustment is material depends on the
facts and circumstances of the particular
case, including the amount of the
adjustment, its size relative to the
general level of the corporation’s total
assets and annual profit or loss, the
consistency with which the practice has
been applied, and whether the item to
which the adjustment relates is of a
recurring or merely a nonrecurring
nature. For the treatment of earnings
and profits whose distribution is
prevented by restrictions and
limitations imposed by a foreign
government, see section 964(b) and the
regulations issued pursuant to section
964. For rules for determining the
earnings and profits (or deficit in
earnings and profits) of a foreign
corporation for taxable years beginning
before January 1, 1987, for purposes of
sections 951 through 964, see 26 CFR
1.964–1(a) (revised as of April 1, 2006).
(b) * * * (1) * * * The accounting
principles to be applied in making the
adjustments required by paragraph
(a)(1)(ii) of this section shall be those
accounting principles generally
accepted in the United States for
purposes of reflecting in the financial
statements of a domestic corporation the
operations of its foreign affiliates,
including the following:
*
*
*
*
*
(c) * * * (1) * * * The tax
accounting standards to be applied in
making the adjustments required by
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Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Rules and Regulations
paragraph (a)(1)(iii) of this section shall
be the following:
*
*
*
*
*
I Par. 10. Section 1.964–1T is amended
by revising the first sentence of
paragraph (c)(2) and the last sentence of
paragraph (c)(5)(i) to read as follows:
§ 1.964–1T Determination of the earnings
and profits of a foreign corporation
(temporary).
*
*
*
*
*
(c) * * *
(2) * * * For the first taxable year of
a foreign corporation beginning after
April 25, 2006, in which such foreign
corporation first qualifies as a controlled
foreign corporation (as defined in
section 957 or 953) or a noncontrolled
section 902 corporation (as defined in
section 904(d)(2)(E)), any method of
accounting or taxable year allowable
under this section may be adopted, and
any election allowable under this
section may be made, by such foreign
corporation or on its behalf
notwithstanding that, in previous years,
its books or financial statements were
prepared on a different basis, and
notwithstanding that such election is
required by the Internal Revenue Code
or regulations to be made in a prior
taxable year. * * *
*
*
*
*
*
(5) * * * (i) * * * In the event that
the United States shareholders of the
controlled foreign corporation do not, in
the aggregate, own (within the meaning
of section 958(a)) more than 50 percent
of the total combined voting power of
all classes of the stock of such foreign
corporation entitled to vote, the
controlling United States shareholders
of the controlled foreign corporation
shall be all those United States
shareholders who own (within the
meaning of section 958(a)) stock of such
corporation.
*
*
*
*
*
Cynthia Grigsby,
Senior Federal Register Liaison Officer,
Publications and Regulations Branch, Legal
Processing Division, Associate Chief Counsel
(Procedure and Administration).
[FR Doc. E6–22024 Filed 12–22–06; 8:45 am]
BILLING CODE 4830–01–P
ENVIRONMENTAL PROTECTION
AGENCY
jlentini on PROD1PC65 with RULES
40 CFR Part 80
Regulation of Fuels and Fuel Additives
CFR Correction
In Title 40 of the Code of Federal
Regulations, parts 72 to 80, revised as of
VerDate Aug<31>2005
16:12 Dec 22, 2006
Jkt 211001
July 1, 2006, on page 695, § 80.75 is
corrected by reinstating paragraphs
(a)(2)(ix) and (a)(2)(x) to read as follows:
§ 80.75
Reporting requirements.
*
*
*
*
*
(a) * * *
(2) * * *
(ix) In the case of butane blended with
reformulated gasoline or RBOB under
§ 80.82:
(A) Identification of the butane batch
as complying with the provisions of
§ 80.82;
(B) Identification of the butane batch
as commercial or non-commercial grade
butane;
(C) The batch number of the butane;
(D) The date of production of the
gasoline produced using the butane
batch;
(E) The volume of the butane batch;
(F) The properties of the butane batch
specified by the butane supplier, or the
properties specified in § 80.82(c) or (d),
as appropriate;
(G) The volume of the gasoline batch
subsequent to the butane blending; and
(x) In the case of any imported GTAB,
identification of the gasoline as GTAB.
*
*
*
*
*
[FR Doc. 06–55532 Filed 12–22–06; 8:45 am]
BILLING CODE 1505–01–D
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 112
[EPA–HQ–OPA–2005–0001; FRL–8258–3]
RIN 2050–AG23
Oil Pollution Prevention; Spill
Prevention, Control, and
Countermeasure Plan Requirements—
Amendments
Environmental Protection
Agency.
ACTION: Final rule.
AGENCY:
SUMMARY: The Environmental Protection
Agency (EPA or the Agency) is
amending the Spill Prevention, Control,
and Countermeasure (SPCC) Plan
requirements by: first, providing the
option for owners and operators of
facilities that store 10,000 gallons of oil
or less and meet other qualifying criteria
to self-certify their SPCC Plans in lieu
of review and certification by a
Professional Engineer; second,
providing an alternative to the general
secondary containment requirement
without requiring a determination of
impracticability for facilities that have
particular types of oil-filled equipment;
third, defining and exempting particular
PO 00000
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Fmt 4700
Sfmt 4700
vehicle fuel tanks and other on-board
bulk oil storage containers used for
motive power; and fourth, exempting
mobile refuelers from the sized
secondary containment requirements for
bulk storage containers. The Agency
also is removing and reserving the SPCC
requirements for animal fats and
vegetable oils that are specific to
onshore oil production facilities,
onshore oil drilling and workover
facilities, and offshore oil drilling,
production, or workover facilities.
Finally, the Agency is extending the
SPCC compliance dates for farms. These
changes significantly reduce the burden
imposed on the regulated community
for complying with the SPCC
requirements, while maintaining
protection of human health and the
environment. In a separate document in
this Federal Register, the Agency is
proposing to extend the compliance
dates for all facilities.
DATES: This final rule is effective
February 26, 2007.
ADDRESSES: The public docket for this
final rule, Docket ID No. EPA–HQ–
OPA–2005–0001, contains the
information related to this rulemaking,
including the response to comment
document. All documents in the docket
are listed in the https://
www.regulations.gov index. Although
listed in the index, some information
may not be publicly available, e.g.,
Confidential Business Information or
other information the disclosure of
which is restricted by statute. Certain
other material, such as copyrighted
material, will be publicly available only
in hard copy. Publicly available docket
materials are available either
electronically in https://
www.regulations.gov or in hard copy at
the EPA Docket, EPA/DC, EPA West,
Room B102, 1301 Constitution Ave.,
NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday,
excluding legal holidays. The telephone
number of the Public Reading Room is
202–566–1744, and the telephone
number to make an appointment to view
the docket is 202–566–0276. The EPA
Docket Center suffered damage due to
flooding during the last week of June
2006. The Docket Center is continuing
to operate. However, during the
cleanup, there will be temporary
changes to Docket Center telephone
numbers, addresses, and hours of
operation for people who wish to visit
the Public Reading Room to view
documents. Consult EPA’s Federal
Register notice at 71 FR 38147 (July 5,
2006) or the EPA Web site at https://
www.epa.gov/epahome/dockets.htm for
E:\FR\FM\26DER1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 247 (Tuesday, December 26, 2006)]
[Rules and Regulations]
[Pages 77264-77266]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-22024]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9260]
RIN 1545-BF46
Application of Separate Limitations to Dividends From
Noncontrolled Section 902 Corporations; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendments.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to final and temporary
regulations that were published in the Federal Register on Tuesday,
April 25, 2006 (71 FR 24516) concerning the application of separate
foreign tax credit limitations to dividends received from noncontrolled
section 902 corporations under section 904(d)(4).
DATES: These corrections are effective April 25, 2006.
FOR FURTHER INFORMATION CONTACT: Ginny Chung (202) 622-3850 (not a
toll-free call).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations (TD 9260) that are the subject
of these corrections are under sections 902, 904, and 964 of the
Internal Revenue Code.
Need for Correction
As published, TD 9260 contains errors that may prove to be
misleading and are in need of clarification.
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 for part 1 is amended and continues to read
in part:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.902-1 is amended by adding a heading to paragraph
(a)(4)(i) introductory text and revising the heading for paragraph
(c)(8) to read as follows:
Sec. 1.902-1 Credit for domestic corporate shareholder of a foreign
corporation for foreign income taxes paid by the foreign corporation.
(a) * * *
(4) Third- or lower-tier corporation--(i) Third-tier corporation. *
* *
* * * * *
(c) * * *
(8) Effect of certain liquidations, reorganizations, or similar
transactions on certain foreign taxes paid or accrued in taxable years
beginning on or before August 5, 1997.
* * *
* * * * *
0
Par. 3. Section 1.902-1T is amended by revising the first sentence of
paragraph (a)(7) to read as follows:
Sec. 1.902-1T Credit for domestic corporate shareholder of a foreign
corporation for foreign income taxes paid by the foreign corporation
(temporary).
(a) * * *
(7) * * * The term foreign income taxes means income, war profits,
and excess profits taxes as defined in Sec. 1.902-1(a), and taxes
included in the term income, war profits, and excess profits taxes by
reason of section 903, that are imposed by a foreign country or a
possession of the United States, including any such taxes deemed paid
by a foreign corporation under this section. * * *
* * * * *
[[Page 77265]]
0
Par. 4. Section 1.902-2 is amended by revising the first sentence of
paragraph (a)(1) to read as follows:
Sec. 1.902-2 Treatment of deficits in post-1986 undistributed
earnings and pre-1987 accumulated profits of a first- or lower-tier
corporation for purposes of computing an amount of foreign taxes deemed
paid under Sec. 1.902-1.
(a) * * * (1) * * * For purposes of computing foreign income taxes
deemed paid under Sec. 1.902-1(b) with respect to dividends paid by a
first- or lower-tier corporation, when there is a deficit in the post-
1986 undistributed earnings of that corporation and the corporation
makes a distribution to shareholders that is a dividend or would be a
dividend if there were current or accumulated earnings and profits,
then the post-1986 deficit shall be carried back to the most recent
pre-effective date taxable year of the first- or lower-tier corporation
with positive accumulated profits computed under section 902. * * *
* * * * *
0
Par. 5. Section 1.904-0 is amended by adding the entries for paragraphs
(o)(1) and (o)(2) under Sec. 1.904-5 to read as follows:
Sec. 1.904-0 Outline of regulations provisions for section 904.
* * * * *
Sec. 1.904-5 Look-through rules as applied to controlled foreign
corporations and other entities.
* * * * *
(o) * * *
(1) Rules for controlled foreign corporations and other look-
through entities.
(2) Rules for noncontrolled section 902 corporations.
* * * * *
0
Par. 6. Section 1.904-4 is amended by revising paragraph (c)(4)
introductory text and adding paragraphs (c)(4)(i) through (c)(4)(iii)
to read as follows:
Sec. 1.904-4 Separate application of section 904 with respect to
certain categories of income.
* * * * *
(c) * * *
(3) and (4) [Reserved]. For further guidance, see Sec. 1.904-
4T(c)(3) and (4) introductory text.
(4)(i) Income from sources within the QBU's country of operation.
Passive income from sources within the QBU's country of operation shall
be treated as one item of income.
(ii) Income from sources without the QBU's country of operation.
Passive income from sources without the QBU's country of operation
shall be grouped on the basis of the tax imposed on that income as
provided in Sec. 1.904-4T(c)(3)(i) through (iv).
(iii) Determination of the source of income. For purposes of this
paragraph (c)(4), income will be determined to be from sources within
or without the QBU's country of operation under the laws of the foreign
country of the payor of the income.
* * * * *
Par. 7. Section 1.904-5 is amended by revising paragraphs (a)
introductory text and (a)(1) and adding Examples 4 and 5 to paragraph
(i)(5) to read as follows:
Sec. 1.904-5 Look-through rules as applied to controlled foreign
corporations and other entities.
(a) and (a)(1) [Reserved]. For further guidance, see Sec. 1.904-
5T(a) introductory text and (a)(1).
* * * * *
(i) * * *
(5) * * *
Examples 4 and 5 [Reserved]. For further guidance, see Sec. 1.904-
5T(i)(5) Examples 4 and 5.
* * * * *
Par. 8. Section 1.904(f)-12T is amended by revising the heading for
paragraph (g)(1) to read as follows:
Sec. 1.904(f)-12T Transition rules (temporary).
* * * * *
(g) * * * (1) Recapture of separate limitation loss or overall
foreign loss in a separate category for dividends from a noncontrolled
section 902 corporation. * * *
* * * * *
0
Par. 9. Section 1.964-1 is amended by:
0
1. Redesignating paragraphs (a) introductory text, (a)(1), (a)(2) and
(a)(3) as paragraphs (a)(1) introductory text, (a)(1)(i), (a)(1)(ii)
and (a)(1)(iii), respectively.
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2. Designating the undesignated text following newly-designated
paragraph (a)(1)(iii) as paragraph (a)(2).
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3. Removing the comma following the word ``shall'' from newly-
designated paragraph (a)(1) introductory text.
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4. Removing the last sentence in newly-designated paragraph (a)(1)(i).
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5. Revising newly-designated paragraph (a)(2), and the text of
paragraphs (b)(1) introductory text and (c)(1) introductory text.
The revisions read as follows:
Sec. 1.964-1 Determination of the earnings and profits of a foreign
corporation.
(a) * * *
(2) Required adjustments. The computation described in paragraph
(a)(1) of this section shall be made in the foreign corporation's
functional currency (determined under section 985 and the regulations
under that section) and may be made by following the procedures
described in paragraphs (a)(1)(i) through (a)(1)(iii) of this section
in an order other than the one listed, as long as the result so
obtained would be the same. In determining earnings and profits, or the
deficit in earnings and profits, of a foreign corporation under section
964, the amount of an illegal bribe, kickback, or other payment (within
the meaning of section 162(c), as amended by section 288 of the Tax
Equity and Fiscal Responsibility Act of 1982 in the case of payments
made after September 3, 1982, and the regulations issued pursuant to
section 964) paid after November 3, 1976, by or on behalf of the
corporation during the taxable year of the corporation directly or
indirectly to an official, employee, or agent in fact of a government
shall not be taken into account to decrease such earnings and profits
or to increase such deficit. No adjustment shall be required under
paragraph (a)(1)(ii) or (iii) of this section unless it is material.
Whether an adjustment is material depends on the facts and
circumstances of the particular case, including the amount of the
adjustment, its size relative to the general level of the corporation's
total assets and annual profit or loss, the consistency with which the
practice has been applied, and whether the item to which the adjustment
relates is of a recurring or merely a nonrecurring nature. For the
treatment of earnings and profits whose distribution is prevented by
restrictions and limitations imposed by a foreign government, see
section 964(b) and the regulations issued pursuant to section 964. For
rules for determining the earnings and profits (or deficit in earnings
and profits) of a foreign corporation for taxable years beginning
before January 1, 1987, for purposes of sections 951 through 964, see
26 CFR 1.964-1(a) (revised as of April 1, 2006).
(b) * * * (1) * * * The accounting principles to be applied in
making the adjustments required by paragraph (a)(1)(ii) of this section
shall be those accounting principles generally accepted in the United
States for purposes of reflecting in the financial statements of a
domestic corporation the operations of its foreign affiliates,
including the following:
* * * * *
(c) * * * (1) * * * The tax accounting standards to be applied in
making the adjustments required by
[[Page 77266]]
paragraph (a)(1)(iii) of this section shall be the following:
* * * * *
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Par. 10. Section 1.964-1T is amended by revising the first sentence of
paragraph (c)(2) and the last sentence of paragraph (c)(5)(i) to read
as follows:
Sec. 1.964-1T Determination of the earnings and profits of a foreign
corporation (temporary).
* * * * *
(c) * * *
(2) * * * For the first taxable year of a foreign corporation
beginning after April 25, 2006, in which such foreign corporation first
qualifies as a controlled foreign corporation (as defined in section
957 or 953) or a noncontrolled section 902 corporation (as defined in
section 904(d)(2)(E)), any method of accounting or taxable year
allowable under this section may be adopted, and any election allowable
under this section may be made, by such foreign corporation or on its
behalf notwithstanding that, in previous years, its books or financial
statements were prepared on a different basis, and notwithstanding that
such election is required by the Internal Revenue Code or regulations
to be made in a prior taxable year. * * *
* * * * *
(5) * * * (i) * * * In the event that the United States
shareholders of the controlled foreign corporation do not, in the
aggregate, own (within the meaning of section 958(a)) more than 50
percent of the total combined voting power of all classes of the stock
of such foreign corporation entitled to vote, the controlling United
States shareholders of the controlled foreign corporation shall be all
those United States shareholders who own (within the meaning of section
958(a)) stock of such corporation.
* * * * *
Cynthia Grigsby,
Senior Federal Register Liaison Officer, Publications and Regulations
Branch, Legal Processing Division, Associate Chief Counsel (Procedure
and Administration).
[FR Doc. E6-22024 Filed 12-22-06; 8:45 am]
BILLING CODE 4830-01-P
