Information Returns Required with Respect to Certain Foreign Corporations and Certain Foreign-Owned Domestic Corporations, 38475-38477 [E7-13587]
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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:
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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
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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:
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38476
Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Rules and Regulations
mstockstill on PROD1PC66 with RULES
§ 1.6038–2 Information returns required of
United States persons with respect to
annual accounting periods of certain
foreign corporations beginning after
December 31, 1962.
(a) * * *
(1) Form 2952, ‘‘Information Return
with Respect to Controlled Foreign
Corporations,’’ if such taxable year ends
before December 31, 1982;
(2) Form 5471, ‘‘Information Return of
U.S. Persons with Respect to Certain
Foreign Corporations,’’ if such taxable
year ends on or after December 31, 1983;
or
*
*
*
*
*
(f) * * *
(11) Transactions with certain related
parties. (i) A summary showing the total
amount of each of the following types of
transactions of the corporation, which
took place during the annual accounting
period, with the person required to file
this return, any other corporation or
partnership controlled by that person, or
any United States person owning at the
time of the transaction 10 percent or
more in value of any class of stock
outstanding of the foreign corporation,
or of any corporation controlling that
foreign corporation—
(A) Sales and purchases of stock in
trade;
(B) Sales and purchases of tangible
property other than stock in trade;
(C) Sales and purchases of patents,
inventions, models, or designs (whether
or not patented), copyrights, trademarks,
secret formulas or processes, or any
other similar property rights;
(D) Compensation paid and
compensation received for the rendition
of technical, managerial, engineering,
construction, scientific, or like services;
(E) Commissions paid and
commissions received;
(F) Rents and royalties paid and rents
and royalties received;
(G) Amounts loaned and amounts
borrowed (except open accounts
resulting from sales and purchases
reported under other items listed in this
paragraph (f)(11) that arise and are
collected in full in the ordinary course
of business);
(H) Dividends paid and dividends
received;
(I) Interest paid and interest received;
and
(J) Premiums paid and premiums
received for insurance or reinsurance.
(ii) Special rule for banks. For
purposes of this paragraph (f)(11), if the
United States person is a bank, as
defined in section 581, or is controlled
within the meaning of section 368(c) by
a bank, the term transactions shall not,
as to a corporation with respect to
which a return is filed, include banking
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transactions entered into on behalf of
customers; in any event, however,
deposits in accounts between a foreign
corporation, controlled (within the
meaning of paragraph (b) of this section)
by a United States person, and a person
described in this paragraph (f)(11) and
withdrawals from such accounts shall
be summarized by reporting end-ofmonth balances.
(12) Accrued payments and receipts.
For purposes of the required summary
under paragraph (f)(11) of this section,
a corporation that uses an accrual
method of accounting shall use accrued
payments and accrued receipts for
purposes of computing the total amount
of each of the types of transactions
listed.
*
*
*
*
*
(k) Failure to furnish information—(1)
Dollar amount penalty—(i) In general. If
any person required to file Form 5471
under section 6038 and this section fails
to furnish any information described in
paragraphs (f) and (g) of this section
within the time prescribed by paragraph
(i) of this section, such person shall pay
a penalty of $10,000 for each annual
accounting period of each foreign
corporation with respect to which such
failure occurs.
(ii) Increase in penalty for continued
failure after notification. If a failure
described in paragraph (k)(1)(i) of this
section continues for more than 90 days
after the date on which the Director of
Field Operations, Area Director, or
Director of Compliance Campus
Operations mails notice of such failure
to the person required to file Form 5471,
such person shall pay a penalty of
$10,000, in addition to the penalty
imposed by section 6038(b)(1) and
paragraph (k)(1)(i) of this section, for
each 30-day period (or a fraction of)
during which such failure continues
after such 90-day period has expired.
The additional penalty imposed by
section 6038(b)(2) and this paragraph
(k)(1)(ii) shall be limited to a maximum
of $50,000 for each failure.
*
*
*
*
*
(5) * * *
Example 3. A, a U.S. person, owns 100
percent of the stock of FC. On April 15, 2008,
A timely filed its 2007 income tax return but
did not file Form 5471 with respect to FC’s
2007 annual accounting period. On June 1,
2008, the Director of Field Operations mailed
a notice to A of A’s failure to file Form 5471
for 2007 with respect to FC. On August 1,
2008, A submits a written statement asserting
facts for reasonable cause for failure to file
the 2007 Form 5471 for FC. Based on A’s
statement and discussions with A, the
Director of Field Operations agrees that A
had reasonable cause for failure to file FC’s
2007 Form 5471 and determined that it is
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Fmt 4700
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reasonable for A to file FC’s 2007 Form 5471
by September 15, 2008. The time prescribed
for furnishing information under paragraph
(i) of this section is September 15, 2008, and
the 90-day period described under
paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this
section begins on that same date. Thus, if A
files a completed Form 5471 by September
15, 2008, A is not subject to the penalties
under paragraphs (k)(1) and (k)(2) of this
section. If A does not file a completed Form
5471 by December 14, 2008, in addition to
the penalties under paragraphs (k)(1) and
(k)(2) of this section, A will also be subject
to the penalties for continued failure under
paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this
section.
Example 4. The facts are the same as in
Example 3 except A submits the written
statement to the Director before a notice of
failure to furnish information is mailed to A.
The notice is mailed to A on September 7,
2008. Under these facts, the time prescribed
for furnishing information under paragraph
(i) of this section is September 15, 2008, and
the 90-day period after mailing of notice of
failure under paragraphs (k)(1)(ii) and
(k)(2)(iv)(A) of this section begins on that
same date.
*
*
*
*
*
(m) Effective/applicability dates.
Except as otherwise provided, this
section applies with respect to
information for annual accounting
periods beginning on or after June 21,
2006. Paragraphs (k)(1) and (k)(5)
Examples 3 and 4 of this section apply
June 21, 2006.
§ 1.6038–2T
[Amended]
I Par. 3. In § 1.6038–2T, paragraphs (e)
through (m) are revised to read as
follows:
§ 1.6038–2T Information returns required
of United States persons with respect to
annual accounting periods of certain
foreign corporations (temporary).
*
*
*
*
*
(e) through (l) [Reserved]. For further
guidance, see § 1.6038–2(e) through (l).
(m) Effective/applicability date.
Paragraph (d) of this section shall apply
for taxable years ending after October
22, 2004.
I Par. 4. Section 1.6038A–2 is amended
by revising paragraphs (b)(8) and (h) to
read as follows:
§ 1.6038A–2
*
Requirement of return.
*
*
*
*
(b) * * *
(8) Accrued payments and receipts.
For purposes of this section, a reporting
corporation that uses an accrual method
of accounting shall use accrued
payments and accrued receipts for
purposes of computing the total amount
of each of the types of transactions
listed in this section.
*
*
*
*
*
E:\FR\FM\13JYR1.SGM
13JYR1
Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Rules and Regulations
(h) Effective/applicability date. Except
as otherwise provided, for applicability
dates for this section for certain
reporting corporations, see § 1.6038A–
1(n). Paragraph (b)(8) of this section
applies with respect to information for
annual accounting periods beginning on
or after June 21, 2006.
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Approved: July 2, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E7–13587 Filed 7–12–07; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9321]
RIN 1545–BE79
Application of Section 409A to
Nonqualified Deferred Compensation
Plans; Correction
Internal Revenue Service (IRS),
Treasury.
SUMMARY: This document contains
corrections to final regulations that were
published in the Federal Register on
Tuesday, April 17, 2007 (73 FR 19234),
relating to section 409A.
DATES: This correction is effective April
17, 2007.
FOR FURTHER INFORMATION CONTACT:
Stephen Tackney, (202) 622–9639 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
AGENCY:
Background
The final regulations that are subject
to these corrections are under section
409A of the Internal Revenue Code.
Need for Correction
As published, final regulations (TD
9321) contain errors that may prove
misleading and are in need of
correction.
mstockstill on PROD1PC66 with RULES
Correction of Publication
Accordingly, the publication of the
final regulations (TD 9321), which were
the subject of FR Doc. 07–1820, is
corrected as follows:
1. On page 19235, column 3, in the
preamble the paragraph heading III. the
language ‘‘Definition of Nonqualified
Deferred Compensation Plan’’, is
corrected to read ‘‘Definition of Deferral
of Compensation’’.
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16:47 Jul 12, 2007
Jkt 211001
2. On page 19243, column 1, in the
preamble, paragraph E., the last
sentence in the first paragraph, the
language ‘‘The final regulations adopt
this suggestion, so long as the risk of
forfeiture to which the stock is subject
constitutes a substantial risk of
forfeiture for purposes of section 409A.’’
is corrected to read ‘‘The final
regulations adopt this suggestion.’’.
3. On page 19243, column 2,
paragraph G., line 2 from the bottom of
the paragraph, the language ‘‘Q&A–7
and section II.E. of the preamble’’ is
corrected to read ‘‘Q&A–7 and sections
II.E. and VI.E. of the preamble.’’.
4. On page 19247, column 2, in the
preamble, lines 3 and 4 from the bottom
of the last paragraph, the language
‘‘limited period of time not to exceed
one year following the initial existence
of’’ is corrected to read ‘‘limited period
of time not to exceed two years
following the initial existence of’’.
5. On page 19258, column 2, in the
preamble the tenth line from the bottom
of the column, the language ‘‘average
level of bona fide service’’ is corrected
to read ‘‘average level of bona fide
services’’.
6. On page 19264, column 1, in the
preamble, paragraph D. line 9 from the
bottom of the first paragraph, the
language ‘‘with section 409A if the
service’’ is corrected to read ‘‘with
section 409A only if the service’’.
7. On page 19264, column 2, in the
preamble, paragraph D., the last
sentence of the top paragraph, the
language ‘‘For a discussion of the ability
to provide for different times and forms
of payment due to different types of
separations from service, including
separations from service due to certain
disabilities, see section VII.C.4 of this
preamble.’’ is removed.
8. On page 19265, column 1, in the
preamble under paragraph G., the third
sentence of the paragraph, the language
‘‘The final regulations clarify that for
these purposes, the availability of
payments due to the unforeseeable
emergency under any other
nonqualified deferred compensation
plan as defined for purposes of section
409A, including plans that would be
nonqualified deferred compensation
plans for purposes of section 409A
except due to the effective date of the
statute, or under any qualified plan
(including any assets available by
obtaining a loan under a qualified plan),
need not be considered in determining
whether an emergency is or may be
relieved through other means.’’ is
corrected to read ‘‘The final regulations
clarify that for these purposes, the
availability of payments under any
qualified plan (including any amount
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38477
available by obtaining a loan under a
qualified plan), or under any other
nonqualified deferred compensation
plan due to the unforeseeable
emergency, including plans that would
be nonqualified deferred compensation
plans for purposes of section 409A
except due to the effective date of the
statute, need not be considered in
determining whether an emergency is or
may be relieved through other means.’’.
9. On page 19265, column 1, in the
preamble under paragraph G., lines 1
through 5 from the bottom of the first
paragraph, the language ‘‘qualified plan,
from a grandfathered nonqualified
deferred compensation plan, or from
another nonqualified deferred
compensation plan that is subject to
section 409A.’’ is corrected to read
‘‘qualified plan, or from another
nonqualified deferred compensation
plan (including a grandfathered plan)
due to the unforeseeable emergency.’’.
10. On page 19267, column 2, in the
preamble under paragraph B., lines 4
and 5 from the bottom of the column,
the language ‘‘Where the change in
control event consists of an asset
purchase, the’’ is corrected to read
‘‘Solely for purposes of this rule, the’’.
11. On page 19270, column 2, in the
preamble under paragraph A., lines 2, 3,
and 4 from the top of the paragraph, the
language ‘‘contributions, each up to the
section 402(g) dollar limit on elective
deferrals, are separate, additive limits
and are not’’ is corrected to read
‘‘contributions is subject to two
separate, additive limits and not’’.
12. On page 19272, column 1, in the
preamble, the paragraph heading of
paragraph XII., the language ‘‘Effective
Date of Final Regulations’’ is corrected
to read ‘‘Applicability Date of Final
Regulations’’.
13. On page 19272, column 2, in the
preamble under paragraph B., line 2, the
language ‘‘effective January 1, 2008. For
periods’’ is corrected to read ‘‘applicable
January 1, 2008. For periods’’.
14. On page 19272, column 2, in the
preamble, paragraph B., line 7 from the
top of the first paragraph, the language
‘‘relief for periods before the effective’’
is corrected to read ‘‘relief for periods
before the applicability’’.
15. On page 19272, column 2, in the
preamble, paragraph B., line 3 from the
top of the second paragraph, the
language ‘‘becoming effective January 1,
2008, on’’ is corrected to read
‘‘becoming applicable January 1, 2008,
on’’.
16. On page 19272, column 2, in the
preamble, paragraph C., line 5 from the
top of the paragraph, the language
‘‘rights issued before the effective date
E:\FR\FM\13JYR1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 134 (Friday, July 13, 2007)]
[Rules and Regulations]
[Pages 38475-38477]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13587]
-----------------------------------------------------------------------
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 Foreign-Owned Domestic Corporations
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of temporary regulations.
-----------------------------------------------------------------------
SUMMARY: 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 Sec. Sec.
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:
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 Sec. 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 for-profit
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.
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
0
Accordingly, 26 CFR part 1 is amended as follows:
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 1.6038-2 is amended as follows:
0
1. Paragraphs (a)(1) and (a)(2) are revised.
0
2. Paragraphs (f)(11), (f)(12), (k)(1) and (m) are revised.
0
3. Paragraph (k)(5) is amended by adding Examples 3 and 4.
The revisions and additions read as follows:
[[Page 38476]]
Sec. 1.6038-2 Information returns required of United States persons
with respect to annual accounting periods of certain foreign
corporations beginning after December 31, 1962.
(a) * * *
(1) Form 2952, ``Information Return with Respect to Controlled
Foreign Corporations,'' if such taxable year ends before December 31,
1982;
(2) Form 5471, ``Information Return of U.S. Persons with Respect to
Certain Foreign Corporations,'' if such taxable year ends on or after
December 31, 1983; or
* * * * *
(f) * * *
(11) Transactions with certain related parties. (i) A summary
showing the total amount of each of the following types of transactions
of the corporation, which took place during the annual accounting
period, with the person required to file this return, any other
corporation or partnership controlled by that person, or any United
States person owning at the time of the transaction 10 percent or more
in value of any class of stock outstanding of the foreign corporation,
or of any corporation controlling that foreign corporation--
(A) Sales and purchases of stock in trade;
(B) Sales and purchases of tangible property other than stock in
trade;
(C) Sales and purchases of patents, inventions, models, or designs
(whether or not patented), copyrights, trademarks, secret formulas or
processes, or any other similar property rights;
(D) Compensation paid and compensation received for the rendition
of technical, managerial, engineering, construction, scientific, or
like services;
(E) Commissions paid and commissions received;
(F) Rents and royalties paid and rents and royalties received;
(G) Amounts loaned and amounts borrowed (except open accounts
resulting from sales and purchases reported under other items listed in
this paragraph (f)(11) that arise and are collected in full in the
ordinary course of business);
(H) Dividends paid and dividends received;
(I) Interest paid and interest received; and
(J) Premiums paid and premiums received for insurance or
reinsurance.
(ii) Special rule for banks. For purposes of this paragraph
(f)(11), if the United States person is a bank, as defined in section
581, or is controlled within the meaning of section 368(c) by a bank,
the term transactions shall not, as to a corporation with respect to
which a return is filed, include banking transactions entered into on
behalf of customers; in any event, however, deposits in accounts
between a foreign corporation, controlled (within the meaning of
paragraph (b) of this section) by a United States person, and a person
described in this paragraph (f)(11) and withdrawals from such accounts
shall be summarized by reporting end-of-month balances.
(12) Accrued payments and receipts. For purposes of the required
summary under paragraph (f)(11) of this section, a corporation that
uses an accrual method of accounting shall use accrued payments and
accrued receipts for purposes of computing the total amount of each of
the types of transactions listed.
* * * * *
(k) Failure to furnish information--(1) Dollar amount penalty--(i)
In general. If any person required to file Form 5471 under section 6038
and this section fails to furnish any information described in
paragraphs (f) and (g) of this section within the time prescribed by
paragraph (i) of this section, such person shall pay a penalty of
$10,000 for each annual accounting period of each foreign corporation
with respect to which such failure occurs.
(ii) Increase in penalty for continued failure after notification.
If a failure described in paragraph (k)(1)(i) of this section continues
for more than 90 days after the date on which the Director of Field
Operations, Area Director, or Director of Compliance Campus Operations
mails notice of such failure to the person required to file Form 5471,
such person shall pay a penalty of $10,000, in addition to the penalty
imposed by section 6038(b)(1) and paragraph (k)(1)(i) of this section,
for each 30-day period (or a fraction of) during which such failure
continues after such 90-day period has expired. The additional penalty
imposed by section 6038(b)(2) and this paragraph (k)(1)(ii) shall be
limited to a maximum of $50,000 for each failure.
* * * * *
(5) * * *
Example 3. A, a U.S. person, owns 100 percent of the stock of
FC. On April 15, 2008, A timely filed its 2007 income tax return but
did not file Form 5471 with respect to FC's 2007 annual accounting
period. On June 1, 2008, the Director of Field Operations mailed a
notice to A of A's failure to file Form 5471 for 2007 with respect
to FC. On August 1, 2008, A submits a written statement asserting
facts for reasonable cause for failure to file the 2007 Form 5471
for FC. Based on A's statement and discussions with A, the Director
of Field Operations agrees that A had reasonable cause for failure
to file FC's 2007 Form 5471 and determined that it is reasonable for
A to file FC's 2007 Form 5471 by September 15, 2008. The time
prescribed for furnishing information under paragraph (i) of this
section is September 15, 2008, and the 90-day period described under
paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this section begins on
that same date. Thus, if A files a completed Form 5471 by September
15, 2008, A is not subject to the penalties under paragraphs (k)(1)
and (k)(2) of this section. If A does not file a completed Form 5471
by December 14, 2008, in addition to the penalties under paragraphs
(k)(1) and (k)(2) of this section, A will also be subject to the
penalties for continued failure under paragraphs (k)(1)(ii) and
(k)(2)(iv)(A) of this section.
Example 4. The facts are the same as in Example 3 except A
submits the written statement to the Director before a notice of
failure to furnish information is mailed to A. The notice is mailed
to A on September 7, 2008. Under these facts, the time prescribed
for furnishing information under paragraph (i) of this section is
September 15, 2008, and the 90-day period after mailing of notice of
failure under paragraphs (k)(1)(ii) and (k)(2)(iv)(A) of this
section begins on that same date.
* * * * *
(m) Effective/applicability dates. Except as otherwise provided,
this section applies with respect to information for annual accounting
periods beginning on or after June 21, 2006. Paragraphs (k)(1) and
(k)(5) Examples 3 and 4 of this section apply June 21, 2006.
Sec. 1.6038-2T [Amended]
0
Par. 3. In Sec. 1.6038-2T, paragraphs (e) through (m) are revised to
read as follows:
Sec. 1.6038-2T Information returns required of United States persons
with respect to annual accounting periods of certain foreign
corporations (temporary).
* * * * *
(e) through (l) [Reserved]. For further guidance, see Sec. 1.6038-
2(e) through (l).
(m) Effective/applicability date. Paragraph (d) of this section
shall apply for taxable years ending after October 22, 2004.
0
Par. 4. Section 1.6038A-2 is amended by revising paragraphs (b)(8) and
(h) to read as follows:
Sec. 1.6038A-2 Requirement of return.
* * * * *
(b) * * *
(8) Accrued payments and receipts. For purposes of this section, a
reporting corporation that uses an accrual method of accounting shall
use accrued payments and accrued receipts for purposes of computing the
total amount of each of the types of transactions listed in this
section.
* * * * *
[[Page 38477]]
(h) Effective/applicability date. Except as otherwise provided, for
applicability dates for this section for certain reporting
corporations, see Sec. 1.6038A-1(n). Paragraph (b)(8) of this section
applies with respect to information for annual accounting periods
beginning on or after June 21, 2006.
Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
Approved: July 2, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E7-13587 Filed 7-12-07; 8:45 am]
BILLING CODE 4830-01-P
