Guidance under Subpart F Relating to Partnerships, 38474-38475 [E7-13496]
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38474
Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Rules and Regulations
1. The general authority citation for
part 12 and the specific authority
citation for § 12.104g continue to read as
follows:
I
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202
(General Note 3(i), Harmonized Tariff
Schedule of the United States (HTSUS)),
1624;
*
*
*
*
*
Sections 12.104 through 12.104i also
issued under 19 U.S.C. 2612;
*
*
§ 12.104g
*
*
*
[Amended]
2. In § 12.104g(a), the table of the list
of agreements imposing import
restrictions on described articles of
cultural property of State Parties is
amended in the entry for Cyprus by
removing the reference to ‘‘T.D. 02–37,
as amended by CBP Dec. 06–22’’ and
adding in its place ‘‘CBP Dec. 07–52’’ in
the column headed ‘‘Decision No.’’.
I
Deborah J. Spero,
Acting Commissioner, Bureau of Customs and
Border Protection.
Approved: July 9, 2007.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 07–3425 Filed 7–12–07; 8:45 am]
BILLING CODE 9111–14–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9326]
RIN 1545–BE34
Guidance under Subpart F Relating to
Partnerships
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
the temporary regulations.
mstockstill on PROD1PC66 with RULES
AGENCY:
SUMMARY: This document contains final
regulations providing guidance under
subpart F relating to partnerships. The
final regulations add rules for
determining whether a controlled
foreign corporation’s (CFC’s)
distributive share of partnership income
is excluded from foreign personal
holding company income under the
exception contained in section 954(i).
These regulations will affect CFCs that
are qualified insurance companies, as
defined in section 953(e)(3), that have
an interest in a partnership and U.S.
shareholders of such CFCs.
VerDate Aug<31>2005
16:47 Jul 12, 2007
Jkt 211001
Effective Date: These regulations
are effective July 13, 2007.
Applicability Date: For date of
applicability, see § 1.954–2(a)(5)(v).
FOR FURTHER INFORMATION CONTACT: Kate
Y. Hwa, (202) 622–3840 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Department participated in their
development.
Background
On January 17, 2006, the IRS and the
Treasury Department published in the
Federal Register a notice of proposed
rulemaking (REG–106418–05, 2006–7
IRB 461, 71 FR 2496) by cross-reference
to temporary regulations (TD 9240,
2006–7 IRB 454, 71 FR 2462)
(collectively, the January 2006
regulations), which provide that a CFC’s
distributive share of partnership income
will qualify for the exception contained
in section 954(i) of the Internal Revenue
Code (Code) if the CFC is a qualifying
insurance company and the income of
the partnership would have been
qualified insurance income under
section 954(i) if received by the CFC
directly. Thus, whether the CFC
partner’s distributive share of
partnership income is qualified
insurance income is determined at the
CFC partner level.
The IRS and the Treasury Department
received no comments responding to the
January 2006 regulations and no public
hearing was requested or held.
Accordingly, the proposed regulations
are adopted without change by this
Treasury decision and the
corresponding temporary regulations are
removed.
I
DATES:
PART 12—SPECIAL CLASSES OF
MERCHANDISE
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
has also been determined that section
553(b) of the Administrative Procedures
Act (5 U.S.C. chapter 5) does not apply
to these regulations and, because the
regulation does not impose a collection
of information on small entities, the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to
section 7805(f) of the Code, the notice
of proposed rulemaking that preceded
these regulations was submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business.
Drafting Information
The principal author of these
regulations is Kate Y. Hwa of the Office
of the Associate Chief Counsel
(International). However, other
personnel from the IRS and Treasury
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for 26 CFR part 1 continues to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.954–2 is amended by
revising paragraphs (a)(5)(ii)(C) and
(a)(5)(iii) Example 2, to read as follows:
§ 1.954–2 Foreign personal holding
company income.
(a) * * *
(5) * * *
(ii) * * *
(C) A controlled foreign corporation’s
distributive share of partnership income
will not be excluded from foreign
personal holding company income
under the exception contained in
section 954(i) unless the controlled
foreign corporation is a qualifying
insurance company, as defined in
section 953(e)(3), and the income of the
partnership would have been qualified
insurance income, as defined in section
954(i)(2), if received by the controlled
foreign corporation directly. See
§ 1.952–1(g)(1).
(iii) * * *
Example 2. D Corp, a Country F
corporation, is a controlled foreign
corporation within the meaning of section
957(a). D Corp is a qualifying insurance
company, within the meaning of section
953(e)(3), that is engaged in the business of
issuing life insurance contracts. D Corp has
reserves of $100x, all of which are allocable
to exempt contracts, and $10x of surplus,
which is equal to 10 percent of the reserves
allocable to exempt contracts. D Corp
contributed the $100x of reserves and $10x
of surplus to DJ Partnership in exchange for
a 40-percent partnership interest. DJ
Partnership is an entity organized under the
laws of Country G and is treated as a
partnership under the laws of Country G and
Country F. DJ Partnership earns $30x of
investment income during the taxable year
that is received from persons who are not
related persons with respect to D Corp,
within the meaning of section 954(d)(3). D
Corp’s distributive share of this investment
income is $12x. This income is treated as
earned by D Corp in Country F under the tax
laws of Country F and meets the definition
of exempt insurance income in section
953(e)(1). This $12x of investment income
would be qualified insurance income, under
E:\FR\FM\13JYR1.SGM
13JYR1
Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Rules and Regulations
section 954(i)(2), if D Corp had received the
income directly, because the $110x invested
by D Corp in DJ Partnership is equal to D
Corp’s reserves allocable to exempt contracts
under section 954(i)(2)(A) and allowable
surplus under section 954(i)(2)(B)(ii). Thus, D
Corp’s distributive share of DJ Partnership’s
income will be excluded from foreign
personal holding company income under
section 954(i).
*
*
*
§ 1.954–2T
I
*
*
[Removed]
Par. 3. Section 1.954–2T is removed.
Dated: July 2, 2007.
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E7–13496 Filed 7–12–07; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9338]
RIN 1545–BG11
Information Returns Required with
Respect to Certain Foreign
Corporations and Certain ForeignOwned Domestic Corporations
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
This document contains final
regulations that provide guidance under
sections 6038 and 6038A of the Internal
Revenue Code (Code). The final
regulations clarify the information
required to be furnished regarding
certain related party transactions of
certain foreign corporations and certain
foreign-owned domestic corporations.
The final regulations also increase the
amount of certain penalties, and make
certain other changes, to reflect the
statutory changes made by the Taxpayer
Relief Act of 1997.
DATES: Effective Date: These regulations
are effective July 13, 2007.
Applicability Date: For dates of
applicability, see §§ 1.6038–2(m) and
1.6038A–2(h).
FOR FURTHER INFORMATION CONTACT: Kate
Y. Hwa (202) 622–3840 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
mstockstill on PROD1PC66 with RULES
SUMMARY:
VerDate Aug<31>2005
17:23 Jul 12, 2007
Jkt 211001
Paperwork Reduction Act
The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545–
2020. Responses to this collection of
information are mandatory.
The collection of information is in
§ 1.6038–2(f)(11). This information is
required by the IRS pursuant to section
6038 of the Code. The likely
recordkeepers are business or other forprofit institutions. The estimated
burden is as follows:
Estimated total annual reporting and/
or recordkeeping burden: 1250 hours.
Estimated average annual burden per
respondent: 15 minutes.
Estimated number of respondents:
5,000.
Estimated annual frequency of
responses: once.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number
assigned by the Office of Management
and Budget.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
Background
This document contains final
amendments to the Income Tax
Regulations (26 CFR part 1) under
sections 6038 and 6038A of the Code.
On June 21, 2006, final and temporary
regulations (TD 9268, 2006–30 IRB 94)
under sections 6038 and 6038A were
published in the Federal Register (71
FR 35524). On the same day, a notice of
proposed rulemaking (REG–109512–05,
2006–30 IRB 100) was published by
cross-reference to the temporary
regulations in the Federal Register (71
FR 35592). The preamble of TD 9268
includes background information and
an explanation of provisions regarding
these regulations.
The IRS received no comments in
response to the notice of proposed
rulemaking. No requests to speak at a
public hearing were received and no
hearing was held. Accordingly, the
proposed regulations are adopted
without change by this Treasury
decision and the corresponding
temporary regulations are removed or
removed and reserved.
PO 00000
Frm 00013
Fmt 4700
Sfmt 4700
38475
The Treasury Department, however, is
considering additional information
reporting pursuant to section 6038A of
the Code regarding section 163(j) to
further the administration of the earning
stripping rules.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
has also been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations. It is hereby
certified that the collection of
information in these regulations will not
have a significant economic impact on
a substantial number of small entities.
This certification is based upon the fact
that these regulations only affect entities
with significant foreign operations and
any burden on small entities is minimal.
Therefore, a Regulatory Flexibility
Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is
not required. Pursuant to section 7805(f)
of the Code, the notice of proposed
rulemaking preceding these final
regulations was submitted to the Chief
Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business.
Drafting Information
The principal author of these
regulations is Kate Y. Hwa, Office of the
Associate Chief Counsel (International).
However, other personnel from the IRS
and Treasury Department participated
in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
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 * * *
I Par. 2. Section 1.6038–2 is amended
as follows:
I 1. Paragraphs (a)(1) and (a)(2) are
revised.
I 2. Paragraphs (f)(11), (f)(12), (k)(1) and
(m) are revised.
I 3. Paragraph (k)(5) is amended by
adding Examples 3 and 4.
The revisions and additions read as
follows:
E:\FR\FM\13JYR1.SGM
13JYR1
]]>Agencies
[Federal Register Volume 72, Number 134 (Friday, July 13, 2007)]
[Rules and Regulations]
[Pages 38474-38475]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13496]
=======================================================================
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9326]
RIN 1545-BE34
Guidance under Subpart F Relating to Partnerships
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of the temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations providing guidance
under subpart F relating to partnerships. The final regulations add
rules for determining whether a controlled foreign corporation's
(CFC's) distributive share of partnership income is excluded from
foreign personal holding company income under the exception contained
in section 954(i). These regulations will affect CFCs that are
qualified insurance companies, as defined in section 953(e)(3), that
have an interest in a partnership and U.S. shareholders of such CFCs.
DATES: Effective Date: These regulations are effective July 13, 2007.
Applicability Date: For date of applicability, see Sec. 1.954-
2(a)(5)(v).
FOR FURTHER INFORMATION CONTACT: Kate Y. Hwa, (202) 622-3840 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On January 17, 2006, the IRS and the Treasury Department published
in the Federal Register a notice of proposed rulemaking (REG-106418-05,
2006-7 IRB 461, 71 FR 2496) by cross-reference to temporary regulations
(TD 9240, 2006-7 IRB 454, 71 FR 2462) (collectively, the January 2006
regulations), which provide that a CFC's distributive share of
partnership income will qualify for the exception contained in section
954(i) of the Internal Revenue Code (Code) if the CFC is a qualifying
insurance company and the income of the partnership would have been
qualified insurance income under section 954(i) if received by the CFC
directly. Thus, whether the CFC partner's distributive share of
partnership income is qualified insurance income is determined at the
CFC partner level.
The IRS and the Treasury Department received no comments responding
to the January 2006 regulations and no public hearing was requested or
held. Accordingly, the proposed regulations are adopted without change
by this Treasury decision and the corresponding temporary regulations
are removed.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedures Act (5
U.S.C. chapter 5) does not apply to these regulations and, because the
regulation does not impose a collection of information on small
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking that preceded these regulations was submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on its impact on small business.
Drafting Information
The principal author of these regulations is Kate Y. Hwa of the
Office of the Associate Chief Counsel (International). However, other
personnel from the IRS and Treasury Department participated in their
development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for 26 CFR part 1 continues to
read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.954-2 is amended by revising paragraphs
(a)(5)(ii)(C) and (a)(5)(iii) Example 2, to read as follows:
Sec. 1.954-2 Foreign personal holding company income.
(a) * * *
(5) * * *
(ii) * * *
(C) A controlled foreign corporation's distributive share of
partnership income will not be excluded from foreign personal holding
company income under the exception contained in section 954(i) unless
the controlled foreign corporation is a qualifying insurance company,
as defined in section 953(e)(3), and the income of the partnership
would have been qualified insurance income, as defined in section
954(i)(2), if received by the controlled foreign corporation directly.
See Sec. 1.952-1(g)(1).
(iii) * * *
Example 2. D Corp, a Country F corporation, is a controlled
foreign corporation within the meaning of section 957(a). D Corp is
a qualifying insurance company, within the meaning of section
953(e)(3), that is engaged in the business of issuing life insurance
contracts. D Corp has reserves of $100x, all of which are allocable
to exempt contracts, and $10x of surplus, which is equal to 10
percent of the reserves allocable to exempt contracts. D Corp
contributed the $100x of reserves and $10x of surplus to DJ
Partnership in exchange for a 40-percent partnership interest. DJ
Partnership is an entity organized under the laws of Country G and
is treated as a partnership under the laws of Country G and Country
F. DJ Partnership earns $30x of investment income during the taxable
year that is received from persons who are not related persons with
respect to D Corp, within the meaning of section 954(d)(3). D Corp's
distributive share of this investment income is $12x. This income is
treated as earned by D Corp in Country F under the tax laws of
Country F and meets the definition of exempt insurance income in
section 953(e)(1). This $12x of investment income would be qualified
insurance income, under
[[Page 38475]]
section 954(i)(2), if D Corp had received the income directly,
because the $110x invested by D Corp in DJ Partnership is equal to D
Corp's reserves allocable to exempt contracts under section
954(i)(2)(A) and allowable surplus under section 954(i)(2)(B)(ii).
Thus, D Corp's distributive share of DJ Partnership's income will be
excluded from foreign personal holding company income under section
954(i).
* * * * *
Sec. 1.954-2T [Removed]
0
Par. 3. Section 1.954-2T is removed.
Dated: July 2, 2007.
Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E7-13496 Filed 7-12-07; 8:45 am]
BILLING CODE 4830-01-P
