Elimination of Country-by-Country Reporting to Shareholders of Foreign Taxes Paid by Regulated Investment Companies, 48551-48555 [E7-16737]
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Federal Register / Vol. 72, No. 164 / Friday, August 24, 2007 / Rules and Regulations
(3) Will not have a significant
economic impact, positive or negative,
on a substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
We prepared a summary of the costs
to comply with this AD and placed it in
the AD Docket. You may get a copy of
this summary at the address listed
under ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation
safety, Safety.
Adoption of the Amendment
Accordingly, under the authority
delegated to me by the Administrator,
the Federal Aviation Administration
amends 14 CFR part 39 as follows:
I
Definition
(h) For the purpose of this AD, an HPT
module exposure is defined as removing the
1st stage HPT rotor or the 2nd stage HPT
rotor from the HPT case.
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
[Amended]
2. The FAA amends § 39.13 by adding
the following new airworthiness
directive:
I
2007–17–21 Pratt & Whitney: Amendment
39–15180. Docket No. FAA–2006–23742;
Directorate Identifier 2005–NE–53–AD.
Effective Date
(a) This airworthiness directive (AD)
becomes effective September 28, 2007.
Affected ADs
(b) None.
Applicability
(c) This AD applies to Pratt & Whitney
(PW) JT9D–7R4G2, –7R4E1, –7R4E4, and
–7R4H1 series turbofan engines. These
engines are installed on, but not limited to,
Boeing 747–200, –300, 767–200, and Airbus
A300–600 and A310–300 series airplanes.
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Unsafe Condition
(d) This AD results from a report of an
uncontained failure of the 2nd stage high
pressure turbine (HPT) air seal assembly,
caused by the air seal assembly brace
disengaging from the air seal, due to
insufficient cooling air flow. We are issuing
this AD to prevent uncontained failure of the
2nd stage HPT air seal assembly, leading to
engine in-flight shutdown and damage to the
airplane.
Compliance
(e) You are responsible for having the
actions required by this AD performed at the
next HPT module exposure after the effective
date of this AD, unless the actions have
already been done.
(f) At the next HPT module exposure,
remove reduced cooling flow 2nd stage HPT
vane assemblies part numbers (P/Ns):
797282, 796972, 800082, 800072, 803182,
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803282, and 822582, installed in 2nd stage
HPT vane cluster assemblies: P/Ns 797592,
797372, 799872, 799782, and 822572.
(g) For 2nd stage HPT air seals that have
operated in an engine with reduced cooling
flow HPT vane assemblies, at the next HPT
module exposure do the following:
(1) Perform a onetime visual inspection of
the 2nd stage HPT air seal assembly, P/N
815097, using instructions in JT9D–7R4
engine manual, Section 72–51–22,
Inspection/Check-01, paragraphs 1.D.(1),
1.D.(4), and 1.D.(6).
(2) Perform a fluorescent penetrant
inspection (FPI) of the 2nd stage HPT air seal
assembly for cracks, using instructions in
JT9D–7R4 engine manual, Section 71–51–00,
Inspection/Check-03.
Alternative Methods of Compliance
(i) The Manager, Engine Certification
Office, has the authority to approve
alternative methods of compliance for this
AD if requested using the procedures found
in 14 CFR 39.19.
Related Information
(j) Pratt & Whitney Alert Service Bulletin
JT9D–7R4–A72–596, dated September 15,
2005, contains information for modifying the
reduced cooling flow 2nd stage HPT vane
assemblies.
Issued in Burlington, Massachusetts, on
August 17, 2007.
Peter A. White,
Acting Manager, Engine and Propeller
Directorate, Aircraft Certification Service.
[FR Doc. E7–16665 Filed 8–23–07; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
[TD 9357]
RIN 1545–BE09
Elimination of Country-by-Country
Reporting to Shareholders of Foreign
Taxes Paid by Regulated Investment
Companies
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:
SUMMARY: This document contains final
regulations that generally eliminate
country-by-country reporting by a
regulated investment company (RIC) to
its shareholders of foreign source
income that the RIC takes into account
and foreign taxes that it pays. This
change is necessary to conform the
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48551
regulations to changes in the tax law
relating to the foreign tax credit. These
final regulations will affect certain RICs
that pay foreign taxes and the
shareholders of those RICs.
DATES: Effective Date: These regulations
are effective August 24, 2007.
Applicability Date: These regulations
are applicable for RIC taxable years
ending on or after December 31, 2007.
For reporting purposes, however, a
taxpayer may rely on the current
regulations for a taxable year ending on
or after December 31, 2007, and
beginning before August 24, 2007.
FOR FURTHER INFORMATION CONTACT:
Richard C. LaFalce, (202) 622–3930 (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–
2035. Comments on the accuracy of the
estimated burden and suggestions for
reducing the burden should be sent to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer,
SE:W:CAR:MP:T:T:SP, Washington, DC
20224.
The collection of information in these
final regulations is in § 1.853–4(c) and
(d). A RIC is required to notify the IRS
of amounts of income received from
sources within foreign countries and
possessions of the United States and
taxes paid to each such foreign country
or possession in order that the IRS may
monitor shareholder compliance with
the foreign tax credit provisions. The
collection of information is required if
a RIC elects to pass through the benefits
of the foreign tax credit to its
shareholders.
Estimated total annual recordkeeping
burden: 80 hours.
Estimated average annual burden per
recordkeeper: 2 hours.
Estimated number of recordkeepers:
40.
Estimated frequency of recordkeeping:
Annually.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control
number.
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
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are confidential, as required by 26
U.S.C. 6103.
Background
This document contains amendments
to 26 CFR part 1 under section 853 of
the Internal Revenue Code (Code). On
September 18, 2006, a notice of
proposed rulemaking (REG–105248–04)
was published in the Federal Register
(71 FR 54598). Comments were
specifically requested with respect to
the effective date of the final
regulations. In response, a trade
association sent a letter requesting that
RICs be allowed to rely on the proposed
regulations for 2006. This request was
not granted. No public hearing was
requested or held.
The proposed regulations are adopted
by this Treasury decision with minor
modifications. The applicability date for
these regulations as adopted, balances
the industry’s desire promptly to
eliminate unneeded RIC reporting with
the IRS’s need for time in which to
update its forms and instructions,
thereby reducing potential taxpayer
confusion that may arise from the new
reporting requirements.
Section 853 provides a foreign tax
credit or deduction to shareholders of a
RIC that makes an election under, and
that meets the requirements set forth in,
that section. A RIC more than 50 percent
of the value of whose total assets at the
close of a taxable year consists of stock
or securities in foreign corporations may
make an election under section 853 (a
‘‘foreign tax passthrough election’’). If
the RIC makes this election for that
taxable year, it forgoes a deduction or
credit for certain taxes paid to foreign
countries and possessions of the United
States (collectively, ‘‘foreign taxes’’) (but
the amount of the foreign taxes is
allowed as an addition to the RIC’s
deduction for dividends paid for the
year). Instead, the RIC passes through to
its shareholders a credit or deduction
for the foreign taxes it has paid during
its taxable year. If the RIC makes this
election, each shareholder includes the
shareholder’s proportionate share of
these foreign taxes in gross income and
treats this proportionate share as paid
by the shareholder. Each shareholder of
an electing RIC further treats as gross
income from sources within foreign
countries and possessions of the United
States the sum of the shareholder’s
proportionate share of these taxes and
the portion of any dividend paid by the
RIC that represents income derived from
sources within foreign countries and
possessions of the United States. Each
shareholder may then deduct, or claim
a credit for the payment of, a
proportionate share of these taxes.
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A RIC electing this treatment must
provide information to its shareholders
and to the IRS. First, under section
853(c) of the Code, the RIC must
designate, in a written notice mailed to
shareholders not later than 60 days after
the close of its taxable year, each
shareholder’s proportionate share of
foreign taxes paid by the RIC and each
shareholder’s proportionate share of the
RIC’s gross income derived from sources
within any foreign country or
possession of the United States. Section
1.853–3(a) of the current Income Tax
Regulations requires that this notice
designate the shareholder’s portion of
foreign taxes paid to each such foreign
country or possession of the United
States and the portion of the dividend
that represents income derived from
sources within each foreign country or
possession of the United States.
Second, under current § 1.853–4(a),
the RIC must file with Form 1099–DIV,
‘‘Dividends and Distributions,’’ and
Form 1096, ‘‘Annual Summary and
Transmittal of U.S. Information
Returns,’’ a statement as part of its
income tax return (Form 1120–RIC or its
successor) that sets forth the total
amount of income received from sources
within foreign countries and
possessions of the United States; the
total amount of foreign taxes paid; the
date, form, and contents of the notice to
its shareholders; and the proportionate
share of this income received and these
taxes paid during the taxable year
attributable to one share of its stock. The
RIC must also file as part of its return
for the taxable year a Form 1118,
‘‘Foreign Tax Credit—Corporations,’’
that has been modified so that it is a
statement in support of the RIC’s foreign
tax passthrough election.
The requirement of current § 1.853–
3(a) that an electing RIC provide
country-by-country information to its
shareholders on foreign-source income
received and foreign taxes paid was
adopted at a time when many
shareholders generally needed the
information to apply a per-country
limitation on the foreign tax credit.
Because of changes to the foreign tax
credit provisions of the Code,
shareholders generally no longer need
country-by-country information on the
amounts of foreign-source income and
foreign taxes paid.
The Treasury Department and the IRS
have received comments suggesting that
the section 853 regulations should be
amended to eliminate per-country
reporting to shareholders and that Form
1116, ‘‘Foreign Tax Credit—Individual,
Estate or Trust,’’ should be modified to
indicate that distributions from RICs are
exempt from per-country shareholder
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reporting. According to these comments,
eliminating the reporting of this
information not only would reduce the
time and expense required of RICs to
compile and disseminate this tax
information but also would reduce the
confusion that their shareholders
experience upon receipt of the extensive
tables used to report this per-country
information.
Even though the section 904 foreign
tax credit limitation has been applied on
a separate-category-of-income basis,
instead of on a per-country basis, since
1976, the Treasury Department and the
IRS have continued to require the
reporting of per-country information by
RICs. This per-country information
remains relevant to the IRS’s monitoring
compliance with the section 901 rules
that disallow credits for refundable and
noncompulsory payments and for taxes
paid to certain countries. See § 1.901–
2(e)(2) and (5), providing that credit is
not allowed for amounts that are in
excess of final liability under foreign
law for tax, and section 901(j), denying
credit for tax paid to countries described
in section 901(j)(2)(A) and subjecting
income from sources in those countries
to separate foreign tax credit limitations.
Although per-country information
with respect to foreign income and
foreign taxes is needed for the IRS to
monitor compliance, the Treasury
Department and the IRS believe that
taxpayer burden can be reduced by
continuing to require this information to
be supplied with the RIC’s tax return
but generally not requiring it to be
reported to the RIC’s shareholders as
well. Accordingly, the final regulations
revise § 1.853–3 and § 1.853–4 to require
that a RIC provide aggregate per-country
information on a statement filed with its
tax return and require that only
summary foreign income and foreign tax
amounts be reported to its shareholders.
The instructions to Forms 1116 and
1118 will be modified to permit
summary reporting at the shareholder
level similar to the summary reporting
currently permitted with respect to
‘‘section 863(b) income’’ on Forms 1116
and 1118.
Explanation of Provisions
The final regulations update § 1.853–
1 to reflect statutory amendments
providing that the foreign tax
passthrough election is not applicable to
taxes for which the RIC would not be
allowed a credit by reason of section
901(j) (denying credit for taxes paid to
certain countries, including those with
which the United States does not have
diplomatic relations), section 901(k) and
(l) (denying credit for withholding taxes
paid on certain income where certain
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holding period requirements are not
met), or any similar provision.
The final regulations change in two
ways the regulations that set forth
requirements for a RIC seeking to make
and to notify shareholders of a foreign
tax passthrough election:
First, references in § 1.853–3(a) and
(b) to required statements to
shareholders of dollar amounts of taxes
paid to specific countries, and to dollar
amounts of income considered as
received from specific countries, are
changed to require that a RIC (or a
shareholder of record of the RIC who is
a nominee acting as a custodian of a
unit investment trust) state only the
total amount of the RIC’s shareholder’s
(or the record shareholder nominee’s
principal’s) proportionate share of
creditable foreign taxes paid, income
from sources within countries described
in section 901(j), if any, and income
derived from sources within other
foreign countries or possessions of the
United States.
Second, the final regulations extend
various deadlines in § 1.853–3(b) to
reflect statutory changes since the
regulations were issued. Thus the
number of days following the close of its
taxable year by which a RIC must notify
its shareholders in writing of the making
of a foreign tax passthrough election is
increased to 60. References to the
number of days following the close of
the taxable year by which a nominee
acting as a custodian of a unit
investment trust must notify holders of
interests in the unit investment trust is
increased to 70. Similarly, references to
the number of days following the close
of a RIC’s taxable year by which a
statement that holders of interests in
unit investment trusts have been
directly notified by the RIC (or a
statement that the RIC has failed or is
unable to notify these holders of
interests) must be filed with the IRS and
transmitted to a nominee is increased to
60.
Section 1.853–4 is modified to create
more flexibility in the references to
specific forms. The current regulations
require a RIC to file statements with
Form 1099 and Form 1096 and to file,
as a part of its return for the taxable
year, a Form 1118, modified so that it
becomes a statement in support of the
election made by a RIC to pass through
taxes paid to a foreign country or a
possession of the United States. The
first of these requirements, the
requirement to file statements with
Forms 1099 and 1096, is eliminated.
The final regulations retain the general
requirement that a RIC must file as part
of its return a statement that elects the
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application of section 853 for the
taxable year.
Section 1.853–4(a) also requires that a
RIC agree to provide certain information
on foreign-source income received and
foreign taxes paid. The information
required to be provided is set forth in
§ 1.853–4(c). Section 1.853–4(d)
continues to provide that this required
information is to be provided on or with
a modified Form 1118 but adds that it
may instead be provided in such other
form or manner as may be prescribed by
the Commissioner. This change
facilitates future changes in
administrative practice if, for example,
forms are renumbered or become
obsolete.
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 because these
regulations do not impose a collection
of information on small entities.
Pursuant to section 605(b) of the
Regulatory Flexibility Act, 5 U.S.C.
605(b), it has also been determined that
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply to these
regulations because these regulations do
not have a significant economic impact
on a substantial number of small
entities. According to the Small
Business Administration definition of a
‘‘small business,’’ 13 CFR 121.201, a RIC
is classified as a Portfolio Management
company, NAICS code 523920, and is
considered a small entity if it
accumulates less than 6.5 million
dollars in annual receipts. It has been
determined that RICs affected by these
regulations generally will have greater
than 6.5 million dollars in annual
receipts and therefore will not generally
be classified as small business entities.
Because the summary reporting of the
foreign tax credit information provided
by these regulations is universally less
burdensome than the reporting of
country-by-country information
previously required, it is also clear that
these regulations do not have a
significant economic impact on affected
RICs. Pursuant to section 7805(f) of the
Internal Revenue Code, the proposed
regulations preceding these regulations
were submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on their
impact on small business.
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48553
Drafting Information
The principal author of this regulation
is Richard C. LaFalce of the Office of
Associate Chief Counsel (Financial
Institutions and Products).
List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
I
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding entries
in numerical order to read in part as
follows:
I
Authority: 26 U.S.C. 7805 * * *
Section 1.853–1 also issued under 26
U.S.C. 901(j).
Section 1.853–2 also issued under 26
U.S.C. 901(j).
Section 1.853–3 also issued under 26
U.S.C. 901(j).
Section 1.853–4 also issued under 26
U.S.C. 901(j) and 26 U.S.C. 6011. * * *
I Par. 2. Section 1.853–1 is amended by
adding a sentence at the end of
paragraph (a) and adding paragraph (c)
to read as follows:
§ 1.853–1 Foreign tax credit allowed to
shareholders.
(a) In general. * * * In addition, the
election is not applicable to any tax
with respect to which the regulated
investment company is not allowed a
credit by reason of any provision of the
Internal Revenue Code other than
section 853(b)(1), including, but not
limited to, section 901(j), section 901(k),
or section 901(l).
*
*
*
*
*
(c) Effective/applicability date. The
final sentence of paragraph (a) of this
section is applicable for RIC taxable
years ending on or after December 31,
2007.
I Par. 3. Section 1.853–2 is amended by
revising paragraph (d) and adding
paragraph (e) to read as follows:
§ 1.853–2
Effect of election.
*
*
*
*
*
(d) Example. This section is
illustrated by the following example:
Example. (i) Facts. X Corporation, a
regulated investment company with 250,000
shares of common stock outstanding, has
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total assets, at the close of the taxable year,
of $10 million ($4 million invested in
domestic corporations, $3.5 million in
Foreign Country A corporations, and $2.5
million in Foreign Country B corporations).
X Corporation received dividend income of
$800,000 from the following sources:
$300,000 from domestic corporations,
$250,000 from Country A corporations, and
$250,000 from Country B corporations. All
dividends from Country A corporations and
from Country B corporations were properly
characterized as income from sources
without the United States. The dividends
from Country A corporations were subject to
a 10 percent withholding tax ($25,000) and
the dividends from Country B corporations
were subject to a 20 percent withholding tax
($50,000). X Corporation’s only expenses for
the taxable year were $80,000 of operation
and management expenses related to both its
U.S. and foreign investments. In this case,
Corporation X properly apportioned the
$80,000 expense based on the relative
amounts of its U.S. and foreign source gross
income. Thus, $50,000 in expense was
apportioned to foreign source income
($80,000 × $500,000/$800,000, total expense
times the fraction of foreign dividend income
over total dividend income) and $30,000 in
expense was apportioned to U.S. source
income ($80,000 × $300,000/$800,000, total
expense times the fraction of U.S. source
dividend income over total dividend
income). During the taxable year, X
Corporation distributed to its shareholders
the entire $645,000 income that was available
for distribution ($800,000, less $80,000 in
expenses, less $75,000 in foreign taxes
withheld).
(ii) Section 853 election. X Corporation
meets the requirements of section 851 to be
considered a RIC for the taxable year and the
requirements of section 852(a) for part 1 of
subchapter M to apply for the taxable year.
X Corporation notifies each shareholder by
mail, within the time prescribed by section
853(c), that by reason of the election the
shareholders are to treat as foreign taxes paid
$0.30 per share of stock ($75,000 of foreign
taxes paid, divided by the 250,000 shares of
stock outstanding). The shareholders must
report as income $2.88 per share ($2.58 of
dividends actually received plus the $0.30
representing foreign taxes paid). Of the $2.88
per share, $1.80 per share ($450,000 of
foreign source taxable income divided by
250,000 shares) is to be considered as
received from foreign sources. The $1.80
consists of $0.30, the foreign taxes treated as
paid by the shareholder and $1.50, the
portion of the dividends received by the
shareholder from the RIC that represents
income of the RIC treated as derived from
foreign sources ($500,000 of foreign source
income, less $50,000 of expense apportioned
to foreign source income, less $75,000 of
foreign tax withheld, which is $375,000,
divided by 250,000 shares).
(e) Effective/applicability date.
Paragraph (d) of this section is
applicable for RIC taxable years ending
on or after December 31, 2007.
Notwithstanding the preceding
sentence, for a taxable year that ends on
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or after December 31, 2007, and begins
before August 24, 2007, a taxpayer may
rely on this section as it was in effect
on August 23, 2007.
I Par. 4. Section 1. 853–3 is amended
by:
I 1. Revising paragraph (a).
I 2. Removing the number ‘‘55th’’ and
adding the number ‘‘70th’’ in its place
in the first sentence of paragraph (b).
I 3. Revising the second sentence of
paragraph (b).
I 4. Removing the number ‘‘45’’ and
adding the number ‘‘60’’ in its place in
each place in which it appears in the
fifth sentence of paragraph (b).
I 5. Adding paragraph (c).
The revisions and addition read as
follows:
§ 1.853–3
Notice to shareholders.
(a) General rule. If a regulated
investment company makes an election
under section 853(a), in the manner
provided in § 1.853–4, the regulated
investment company is required under
section 853(c) to furnish its
shareholders with a written notice
mailed not later than 60 days after the
close of its taxable year. The notice must
designate the shareholder’s portion of
creditable foreign taxes paid to foreign
countries or possessions of the United
States and the portion of the dividend
that represents income derived from
sources within each country that is
attributable to a period during which
section 901(j) applies to such country, if
any, and the portion of the dividend
that represents income derived from
other foreign countries and possessions
of the United States. For purposes of
section 853(b)(2) and § 1.853–2(b), the
amount that a shareholder may treat as
the shareholder’s proportionate share of
foreign taxes paid and the amount to be
included as gross income derived from
any foreign country that is attributable
to a period during which section 901(j)
applies to such country or gross income
from sources within other foreign
countries or possessions of the United
States shall not exceed the amount so
designated by the regulated investment
company in such written notice. If,
however, the amount designated by the
regulated investment company in the
notice exceeds the shareholder’s proper
proportionate share of foreign taxes or
gross income from sources within
foreign countries or possessions of the
United States, the shareholder is limited
to the amount correctly ascertained.
(b) * * * The notice shall designate
the holder’s proportionate share of the
amounts of creditable foreign taxes paid
to foreign countries or possessions of
the United States and the holder’s
proportionate share of the dividend that
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represents income derived from sources
within each country that is attributable
to a period during which section 901(j)
applies to such country, if any, and the
holder’s proportionate share of the
dividend that represents income derived
from other foreign countries or
possessions of the United States shown
on the notice received by the nominee
pursuant to paragraph (a) of this section.
* * *
(c) Effective/applicability date. This
section is applicable for RIC taxable
years ending on or after December 31,
2007. Notwithstanding the preceding
sentence, for a taxable year that ends on
or after December 31, 2007, and begins
before August 24, 2007, a taxpayer may
rely on this section as it was in effect
on August 23, 2007.
I Par. 5. Section 1.853–4 is revised to
read as follows:
§ 1.853–4
Manner of making election.
(a) General rule. To make an election
under section 853 for a taxable year, a
regulated investment company must file
a statement of election as part of its
Federal income tax return for the
taxable year. The statement of election
must state that the regulated investment
company elects the application of
section 853 for the taxable year and
agrees to provide the information
required by paragraph (c) of this section.
(b) Irrevocability of the election. The
election shall be made with respect to
all foreign taxes described in paragraph
(c)(2) of this section, and must be made
not later than the time prescribed for
filing the return (including extensions).
This election, if made, shall be
irrevocable with respect to the dividend
(or portion thereof), and the foreign
taxes paid with respect thereto, to
which the election applies.
(c) Required information. A regulated
investment company making an election
under section 853 must provide the
following information:
(1) The total amount of taxable
income received in the taxable year
from sources within foreign countries
and possessions of the United States
and the amount of taxable income
received in the taxable year from
sources within each such foreign
country or possession.
(2) The total amount of income, war
profits, or excess profits taxes (described
in section 901(b)(1)) to which the
election applies that were paid in the
taxable year to such foreign countries or
possessions and the amount of such
taxes paid to each such foreign country
or possession.
(3) The amount of income, war
profits, or excess profits taxes paid
during the taxable year to which the
E:\FR\FM\24AUR1.SGM
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Federal Register / Vol. 72, No. 164 / Friday, August 24, 2007 / Rules and Regulations
election does not apply by reason of any
provision of the Internal Revenue Code
other than section 853(b), including, but
not limited to, section 901(j), section
901(k), or section 901(l).
(4) The date, form, and contents of the
notice to its shareholders.
(5) The proportionate share of
creditable foreign taxes paid to each
such foreign country or possession
during the taxable year and foreign
income received from sources within
each such foreign country or possession
during the taxable year attributable to
one share of stock of the regulated
investment company.
(d) Time and manner of providing
information. The information specified
in paragraph (c) of this section must be
provided at the time and in the manner
prescribed by the Commissioner and,
unless otherwise prescribed, must be
provided on or with a modified Form
1118 ‘‘Foreign Tax Credit—
Corporations’’ filed as part of the RIC’s
timely filed Federal income tax return
for the taxable year.
(e) Effective/applicability date. This
section is applicable for RIC taxable
years ending on or after December 31,
2007. Notwithstanding the preceding
sentence, for a taxable year that ends on
or after December 31, 2007, and begins
before August 24, 2007, a taxpayer may
rely on this section as it was in effect
on August 23, 2007.
PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
I Par. 6. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 7. In § 602.101, paragraph (b) is
amended by revising the entries for
1.853–3 and 1.853–4 to read as follows:
I
§ 602.101
*
OMB Control numbers.
*
*
(b) * * *
*
*
rfrederick on PROD1PC67 with RULES
CFR part or section where
identified or described
*
*
*
1.853–3 .................................
1.853–4 .................................
*
VerDate Aug<31>2005
*
*
12:50 Aug 23, 2007
Current OMB
control No.
*
*
1545–2035
1545–2035
*
Jkt 211001
*
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Approved: August 9, 2007.
Karen G. Sowell,
Deputy Assistant Secretary of the Treasury
(Tax Policy).
[FR Doc. E7–16737 Filed 8–23–07; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[CGD05–07–083]
Drawbridge Operation Regulations;
Atlantic Intracoastal Waterway (AICW),
NC
Coast Guard, DHS.
Notice of temporary deviation
from regulations.
AGENCY:
ACTION:
SUMMARY: The Commander, Fifth Coast
Guard District, has approved a
temporary deviation from the
regulations governing the operation of
the Onslow Beach Swing Bridge, at
AICW mile 240.7, in Camp Lejeune, NC.
This deviation allows the drawbridge to
remain closed-to-navigation from 8 a.m.
on September 11, 2007 until and
including 8 a.m. on September 13, 2007,
and from 8 a.m. on September 25, 2007
until and including 8 a.m. on September
27, 2007, to facilitate mechanical
repairs.
This deviation is effective from
8 a.m. on September 11, 2007 to 8 a.m.
on September 27, 2007.
ADDRESSES: Materials referred to in this
document are available for inspection or
copying at Commander (dpb), Fifth
Coast Guard District, Federal Building,
1st Floor, 431 Crawford Street,
Portsmouth, VA 23704–5004 between 8
a.m. and 4 p.m., Monday through
Friday, except Federal holidays. The
telephone number is (757) 398–6222.
Commander (dpb), Fifth Coast Guard
District maintains the public docket for
this temporary deviation.
FOR FURTHER INFORMATION CONTACT: Bill
H. Brazier, Bridge Management
Specialist, Fifth Coast Guard District, at
(757) 398–6422.
SUPPLEMENTARY INFORMATION: The
Onslow Beach Swing Bridge has a
vertical clearance in the closed position
to vessels of 12 feet, above mean high
water.
The U.S. Navy (the bridge owner) has
requested a temporary deviation from
DATES:
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
48555
the current operating regulations set out
in 33 CFR 117.821(a)(2) to close the
drawbridge to navigation to facilitate
hydraulic repairs on the northeast and
southeast ends and the power
components of bridge.
To facilitate the mechanical repairs,
the Onslow Beach Swing Bridge will be
maintained in the closed-to-navigation
position from 8 a.m. on Tuesday,
September 11, 2007 until and including
8 a.m. on Thursday, September 13,
2007, and from 8 a.m. on Tuesday,
September 25, 2007 until and including
8 a.m. on Thursday, September 27,
2007.
The Coast Guard has informed the
known commercial users of the
waterway of the change to the
regulations concerning this so that these
vessels can arrange their transits to
minimize any impact caused by the
temporary deviation.
In accordance with 33 CFR 117.35(e),
the drawbridge must return to its regular
operating schedule immediately at the
end of the designated time period.
This deviation from the operating
regulations is authorized under 33 CFR
117.35.
Dated: August 16, 2007.
Waverly W. Gregory, Jr.,
Chief, Bridge Administration Branch, Fifth
Coast Guard District.
[FR Doc. E7–16727 Filed 8–23–07; 8:45 am]
BILLING CODE 4910–15–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[COTP Honolulu 07–005]
RIN 1625–AA87
Security Zone; Waters Surrounding
U.S. Forces Vessel SBX–1, HI
Coast Guard, DHS.
Temporary final rule.
AGENCY:
ACTION:
SUMMARY: The Coast Guard is
establishing a temporary 500-yard
moving security zone around the U.S.
Forces vessel SBX–1 during transit
within the Honolulu Captain of the Port
Zone. The security zone is necessary to
protect the SBX–1 from hazards
associated with vessels and persons
approaching too close during transit.
Entry of persons or vessels into this
temporary security zone is prohibited
unless authorized by the Captain of the
Port (COTP).
E:\FR\FM\24AUR1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 164 (Friday, August 24, 2007)]
[Rules and Regulations]
[Pages 48551-48555]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-16737]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
[TD 9357]
RIN 1545-BE09
Elimination of Country-by-Country Reporting to Shareholders of
Foreign Taxes Paid by Regulated Investment Companies
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations that generally
eliminate country-by-country reporting by a regulated investment
company (RIC) to its shareholders of foreign source income that the RIC
takes into account and foreign taxes that it pays. This change is
necessary to conform the regulations to changes in the tax law relating
to the foreign tax credit. These final regulations will affect certain
RICs that pay foreign taxes and the shareholders of those RICs.
DATES: Effective Date: These regulations are effective August 24, 2007.
Applicability Date: These regulations are applicable for RIC
taxable years ending on or after December 31, 2007. For reporting
purposes, however, a taxpayer may rely on the current regulations for a
taxable year ending on or after December 31, 2007, and beginning before
August 24, 2007.
FOR FURTHER INFORMATION CONTACT: Richard C. LaFalce, (202) 622-3930
(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 1545-2035. Comments on the accuracy of
the estimated burden and suggestions for reducing the burden should be
sent to the Internal Revenue Service, Attn: IRS Reports Clearance
Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224.
The collection of information in these final regulations is in
Sec. 1.853-4(c) and (d). A RIC is required to notify the IRS of
amounts of income received from sources within foreign countries and
possessions of the United States and taxes paid to each such foreign
country or possession in order that the IRS may monitor shareholder
compliance with the foreign tax credit provisions. The collection of
information is required if a RIC elects to pass through the benefits of
the foreign tax credit to its shareholders.
Estimated total annual recordkeeping burden: 80 hours.
Estimated average annual burden per recordkeeper: 2 hours.
Estimated number of recordkeepers: 40.
Estimated frequency of recordkeeping: Annually.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number.
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
[[Page 48552]]
are confidential, as required by 26 U.S.C. 6103.
Background
This document contains amendments to 26 CFR part 1 under section
853 of the Internal Revenue Code (Code). On September 18, 2006, a
notice of proposed rulemaking (REG-105248-04) was published in the
Federal Register (71 FR 54598). Comments were specifically requested
with respect to the effective date of the final regulations. In
response, a trade association sent a letter requesting that RICs be
allowed to rely on the proposed regulations for 2006. This request was
not granted. No public hearing was requested or held.
The proposed regulations are adopted by this Treasury decision with
minor modifications. The applicability date for these regulations as
adopted, balances the industry's desire promptly to eliminate unneeded
RIC reporting with the IRS's need for time in which to update its forms
and instructions, thereby reducing potential taxpayer confusion that
may arise from the new reporting requirements.
Section 853 provides a foreign tax credit or deduction to
shareholders of a RIC that makes an election under, and that meets the
requirements set forth in, that section. A RIC more than 50 percent of
the value of whose total assets at the close of a taxable year consists
of stock or securities in foreign corporations may make an election
under section 853 (a ``foreign tax passthrough election''). If the RIC
makes this election for that taxable year, it forgoes a deduction or
credit for certain taxes paid to foreign countries and possessions of
the United States (collectively, ``foreign taxes'') (but the amount of
the foreign taxes is allowed as an addition to the RIC's deduction for
dividends paid for the year). Instead, the RIC passes through to its
shareholders a credit or deduction for the foreign taxes it has paid
during its taxable year. If the RIC makes this election, each
shareholder includes the shareholder's proportionate share of these
foreign taxes in gross income and treats this proportionate share as
paid by the shareholder. Each shareholder of an electing RIC further
treats as gross income from sources within foreign countries and
possessions of the United States the sum of the shareholder's
proportionate share of these taxes and the portion of any dividend paid
by the RIC that represents income derived from sources within foreign
countries and possessions of the United States. Each shareholder may
then deduct, or claim a credit for the payment of, a proportionate
share of these taxes.
A RIC electing this treatment must provide information to its
shareholders and to the IRS. First, under section 853(c) of the Code,
the RIC must designate, in a written notice mailed to shareholders not
later than 60 days after the close of its taxable year, each
shareholder's proportionate share of foreign taxes paid by the RIC and
each shareholder's proportionate share of the RIC's gross income
derived from sources within any foreign country or possession of the
United States. Section 1.853-3(a) of the current Income Tax Regulations
requires that this notice designate the shareholder's portion of
foreign taxes paid to each such foreign country or possession of the
United States and the portion of the dividend that represents income
derived from sources within each foreign country or possession of the
United States.
Second, under current Sec. 1.853-4(a), the RIC must file with Form
1099-DIV, ``Dividends and Distributions,'' and Form 1096, ``Annual
Summary and Transmittal of U.S. Information Returns,'' a statement as
part of its income tax return (Form 1120-RIC or its successor) that
sets forth the total amount of income received from sources within
foreign countries and possessions of the United States; the total
amount of foreign taxes paid; the date, form, and contents of the
notice to its shareholders; and the proportionate share of this income
received and these taxes paid during the taxable year attributable to
one share of its stock. The RIC must also file as part of its return
for the taxable year a Form 1118, ``Foreign Tax Credit--Corporations,''
that has been modified so that it is a statement in support of the
RIC's foreign tax passthrough election.
The requirement of current Sec. 1.853-3(a) that an electing RIC
provide country-by-country information to its shareholders on foreign-
source income received and foreign taxes paid was adopted at a time
when many shareholders generally needed the information to apply a per-
country limitation on the foreign tax credit. Because of changes to the
foreign tax credit provisions of the Code, shareholders generally no
longer need country-by-country information on the amounts of foreign-
source income and foreign taxes paid.
The Treasury Department and the IRS have received comments
suggesting that the section 853 regulations should be amended to
eliminate per-country reporting to shareholders and that Form 1116,
``Foreign Tax Credit--Individual, Estate or Trust,'' should be modified
to indicate that distributions from RICs are exempt from per-country
shareholder reporting. According to these comments, eliminating the
reporting of this information not only would reduce the time and
expense required of RICs to compile and disseminate this tax
information but also would reduce the confusion that their shareholders
experience upon receipt of the extensive tables used to report this
per-country information.
Even though the section 904 foreign tax credit limitation has been
applied on a separate-category-of-income basis, instead of on a per-
country basis, since 1976, the Treasury Department and the IRS have
continued to require the reporting of per-country information by RICs.
This per-country information remains relevant to the IRS's monitoring
compliance with the section 901 rules that disallow credits for
refundable and noncompulsory payments and for taxes paid to certain
countries. See Sec. 1.901-2(e)(2) and (5), providing that credit is
not allowed for amounts that are in excess of final liability under
foreign law for tax, and section 901(j), denying credit for tax paid to
countries described in section 901(j)(2)(A) and subjecting income from
sources in those countries to separate foreign tax credit limitations.
Although per-country information with respect to foreign income and
foreign taxes is needed for the IRS to monitor compliance, the Treasury
Department and the IRS believe that taxpayer burden can be reduced by
continuing to require this information to be supplied with the RIC's
tax return but generally not requiring it to be reported to the RIC's
shareholders as well. Accordingly, the final regulations revise Sec.
1.853-3 and Sec. 1.853-4 to require that a RIC provide aggregate per-
country information on a statement filed with its tax return and
require that only summary foreign income and foreign tax amounts be
reported to its shareholders. The instructions to Forms 1116 and 1118
will be modified to permit summary reporting at the shareholder level
similar to the summary reporting currently permitted with respect to
``section 863(b) income'' on Forms 1116 and 1118.
Explanation of Provisions
The final regulations update Sec. 1.853-1 to reflect statutory
amendments providing that the foreign tax passthrough election is not
applicable to taxes for which the RIC would not be allowed a credit by
reason of section 901(j) (denying credit for taxes paid to certain
countries, including those with which the United States does not have
diplomatic relations), section 901(k) and (l) (denying credit for
withholding taxes paid on certain income where certain
[[Page 48553]]
holding period requirements are not met), or any similar provision.
The final regulations change in two ways the regulations that set
forth requirements for a RIC seeking to make and to notify shareholders
of a foreign tax passthrough election:
First, references in Sec. 1.853-3(a) and (b) to required
statements to shareholders of dollar amounts of taxes paid to specific
countries, and to dollar amounts of income considered as received from
specific countries, are changed to require that a RIC (or a shareholder
of record of the RIC who is a nominee acting as a custodian of a unit
investment trust) state only the total amount of the RIC's
shareholder's (or the record shareholder nominee's principal's)
proportionate share of creditable foreign taxes paid, income from
sources within countries described in section 901(j), if any, and
income derived from sources within other foreign countries or
possessions of the United States.
Second, the final regulations extend various deadlines in Sec.
1.853-3(b) to reflect statutory changes since the regulations were
issued. Thus the number of days following the close of its taxable year
by which a RIC must notify its shareholders in writing of the making of
a foreign tax passthrough election is increased to 60. References to
the number of days following the close of the taxable year by which a
nominee acting as a custodian of a unit investment trust must notify
holders of interests in the unit investment trust is increased to 70.
Similarly, references to the number of days following the close of a
RIC's taxable year by which a statement that holders of interests in
unit investment trusts have been directly notified by the RIC (or a
statement that the RIC has failed or is unable to notify these holders
of interests) must be filed with the IRS and transmitted to a nominee
is increased to 60.
Section 1.853-4 is modified to create more flexibility in the
references to specific forms. The current regulations require a RIC to
file statements with Form 1099 and Form 1096 and to file, as a part of
its return for the taxable year, a Form 1118, modified so that it
becomes a statement in support of the election made by a RIC to pass
through taxes paid to a foreign country or a possession of the United
States. The first of these requirements, the requirement to file
statements with Forms 1099 and 1096, is eliminated. The final
regulations retain the general requirement that a RIC must file as part
of its return a statement that elects the application of section 853
for the taxable year.
Section 1.853-4(a) also requires that a RIC agree to provide
certain information on foreign-source income received and foreign taxes
paid. The information required to be provided is set forth in Sec.
1.853-4(c). Section 1.853-4(d) continues to provide that this required
information is to be provided on or with a modified Form 1118 but adds
that it may instead be provided in such other form or manner as may be
prescribed by the Commissioner. This change facilitates future changes
in administrative practice if, for example, forms are renumbered or
become obsolete.
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 because these
regulations do not impose a collection of information on small
entities.
Pursuant to section 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b), it has also been determined that the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does not apply to these
regulations because these regulations do not have a significant
economic impact on a substantial number of small entities. According to
the Small Business Administration definition of a ``small business,''
13 CFR 121.201, a RIC is classified as a Portfolio Management company,
NAICS code 523920, and is considered a small entity if it accumulates
less than 6.5 million dollars in annual receipts. It has been
determined that RICs affected by these regulations generally will have
greater than 6.5 million dollars in annual receipts and therefore will
not generally be classified as small business entities.
Because the summary reporting of the foreign tax credit information
provided by these regulations is universally less burdensome than the
reporting of country-by-country information previously required, it is
also clear that these regulations do not have a significant economic
impact on affected RICs. Pursuant to section 7805(f) of the Internal
Revenue Code, the proposed regulations preceding these regulations were
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on their impact on small business.
Drafting Information
The principal author of this regulation is Richard C. LaFalce of
the Office of Associate Chief Counsel (Financial Institutions and
Products).
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR parts 1 and 602 are amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by adding
entries in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.853-1 also issued under 26 U.S.C. 901(j).
Section 1.853-2 also issued under 26 U.S.C. 901(j).
Section 1.853-3 also issued under 26 U.S.C. 901(j).
Section 1.853-4 also issued under 26 U.S.C. 901(j) and 26 U.S.C.
6011. * * *
0
Par. 2. Section 1.853-1 is amended by adding a sentence at the end of
paragraph (a) and adding paragraph (c) to read as follows:
Sec. 1.853-1 Foreign tax credit allowed to shareholders.
(a) In general. * * * In addition, the election is not applicable
to any tax with respect to which the regulated investment company is
not allowed a credit by reason of any provision of the Internal Revenue
Code other than section 853(b)(1), including, but not limited to,
section 901(j), section 901(k), or section 901(l).
* * * * *
(c) Effective/applicability date. The final sentence of paragraph
(a) of this section is applicable for RIC taxable years ending on or
after December 31, 2007.
0
Par. 3. Section 1.853-2 is amended by revising paragraph (d) and adding
paragraph (e) to read as follows:
Sec. 1.853-2 Effect of election.
* * * * *
(d) Example. This section is illustrated by the following example:
Example. (i) Facts. X Corporation, a regulated investment
company with 250,000 shares of common stock outstanding, has
[[Page 48554]]
total assets, at the close of the taxable year, of $10 million ($4
million invested in domestic corporations, $3.5 million in Foreign
Country A corporations, and $2.5 million in Foreign Country B
corporations). X Corporation received dividend income of $800,000
from the following sources: $300,000 from domestic corporations,
$250,000 from Country A corporations, and $250,000 from Country B
corporations. All dividends from Country A corporations and from
Country B corporations were properly characterized as income from
sources without the United States. The dividends from Country A
corporations were subject to a 10 percent withholding tax ($25,000)
and the dividends from Country B corporations were subject to a 20
percent withholding tax ($50,000). X Corporation's only expenses for
the taxable year were $80,000 of operation and management expenses
related to both its U.S. and foreign investments. In this case,
Corporation X properly apportioned the $80,000 expense based on the
relative amounts of its U.S. and foreign source gross income. Thus,
$50,000 in expense was apportioned to foreign source income ($80,000
x $500,000/$800,000, total expense times the fraction of foreign
dividend income over total dividend income) and $30,000 in expense
was apportioned to U.S. source income ($80,000 x $300,000/$800,000,
total expense times the fraction of U.S. source dividend income over
total dividend income). During the taxable year, X Corporation
distributed to its shareholders the entire $645,000 income that was
available for distribution ($800,000, less $80,000 in expenses, less
$75,000 in foreign taxes withheld).
(ii) Section 853 election. X Corporation meets the requirements
of section 851 to be considered a RIC for the taxable year and the
requirements of section 852(a) for part 1 of subchapter M to apply
for the taxable year. X Corporation notifies each shareholder by
mail, within the time prescribed by section 853(c), that by reason
of the election the shareholders are to treat as foreign taxes paid
$0.30 per share of stock ($75,000 of foreign taxes paid, divided by
the 250,000 shares of stock outstanding). The shareholders must
report as income $2.88 per share ($2.58 of dividends actually
received plus the $0.30 representing foreign taxes paid). Of the
$2.88 per share, $1.80 per share ($450,000 of foreign source taxable
income divided by 250,000 shares) is to be considered as received
from foreign sources. The $1.80 consists of $0.30, the foreign taxes
treated as paid by the shareholder and $1.50, the portion of the
dividends received by the shareholder from the RIC that represents
income of the RIC treated as derived from foreign sources ($500,000
of foreign source income, less $50,000 of expense apportioned to
foreign source income, less $75,000 of foreign tax withheld, which
is $375,000, divided by 250,000 shares).
(e) Effective/applicability date. Paragraph (d) of this section is
applicable for RIC taxable years ending on or after December 31, 2007.
Notwithstanding the preceding sentence, for a taxable year that ends on
or after December 31, 2007, and begins before August 24, 2007, a
taxpayer may rely on this section as it was in effect on August 23,
2007.
0
Par. 4. Section 1. 853-3 is amended by:
0
1. Revising paragraph (a).
0
2. Removing the number ``55th'' and adding the number ``70th'' in its
place in the first sentence of paragraph (b).
0
3. Revising the second sentence of paragraph (b).
0
4. Removing the number ``45'' and adding the number ``60'' in its place
in each place in which it appears in the fifth sentence of paragraph
(b).
0
5. Adding paragraph (c).
The revisions and addition read as follows:
Sec. 1.853-3 Notice to shareholders.
(a) General rule. If a regulated investment company makes an
election under section 853(a), in the manner provided in Sec. 1.853-4,
the regulated investment company is required under section 853(c) to
furnish its shareholders with a written notice mailed not later than 60
days after the close of its taxable year. The notice must designate the
shareholder's portion of creditable foreign taxes paid to foreign
countries or possessions of the United States and the portion of the
dividend that represents income derived from sources within each
country that is attributable to a period during which section 901(j)
applies to such country, if any, and the portion of the dividend that
represents income derived from other foreign countries and possessions
of the United States. For purposes of section 853(b)(2) and Sec.
1.853-2(b), the amount that a shareholder may treat as the
shareholder's proportionate share of foreign taxes paid and the amount
to be included as gross income derived from any foreign country that is
attributable to a period during which section 901(j) applies to such
country or gross income from sources within other foreign countries or
possessions of the United States shall not exceed the amount so
designated by the regulated investment company in such written notice.
If, however, the amount designated by the regulated investment company
in the notice exceeds the shareholder's proper proportionate share of
foreign taxes or gross income from sources within foreign countries or
possessions of the United States, the shareholder is limited to the
amount correctly ascertained.
(b) * * * The notice shall designate the holder's proportionate
share of the amounts of creditable foreign taxes paid to foreign
countries or possessions of the United States and the holder's
proportionate share of the dividend that represents income derived from
sources within each country that is attributable to a period during
which section 901(j) applies to such country, if any, and the holder's
proportionate share of the dividend that represents income derived from
other foreign countries or possessions of the United States shown on
the notice received by the nominee pursuant to paragraph (a) of this
section. * * *
(c) Effective/applicability date. This section is applicable for
RIC taxable years ending on or after December 31, 2007. Notwithstanding
the preceding sentence, for a taxable year that ends on or after
December 31, 2007, and begins before August 24, 2007, a taxpayer may
rely on this section as it was in effect on August 23, 2007.
0
Par. 5. Section 1.853-4 is revised to read as follows:
Sec. 1.853-4 Manner of making election.
(a) General rule. To make an election under section 853 for a
taxable year, a regulated investment company must file a statement of
election as part of its Federal income tax return for the taxable year.
The statement of election must state that the regulated investment
company elects the application of section 853 for the taxable year and
agrees to provide the information required by paragraph (c) of this
section.
(b) Irrevocability of the election. The election shall be made with
respect to all foreign taxes described in paragraph (c)(2) of this
section, and must be made not later than the time prescribed for filing
the return (including extensions). This election, if made, shall be
irrevocable with respect to the dividend (or portion thereof), and the
foreign taxes paid with respect thereto, to which the election applies.
(c) Required information. A regulated investment company making an
election under section 853 must provide the following information:
(1) The total amount of taxable income received in the taxable year
from sources within foreign countries and possessions of the United
States and the amount of taxable income received in the taxable year
from sources within each such foreign country or possession.
(2) The total amount of income, war profits, or excess profits
taxes (described in section 901(b)(1)) to which the election applies
that were paid in the taxable year to such foreign countries or
possessions and the amount of such taxes paid to each such foreign
country or possession.
(3) The amount of income, war profits, or excess profits taxes paid
during the taxable year to which the
[[Page 48555]]
election does not apply by reason of any provision of the Internal
Revenue Code other than section 853(b), including, but not limited to,
section 901(j), section 901(k), or section 901(l).
(4) The date, form, and contents of the notice to its shareholders.
(5) The proportionate share of creditable foreign taxes paid to
each such foreign country or possession during the taxable year and
foreign income received from sources within each such foreign country
or possession during the taxable year attributable to one share of
stock of the regulated investment company.
(d) Time and manner of providing information. The information
specified in paragraph (c) of this section must be provided at the time
and in the manner prescribed by the Commissioner and, unless otherwise
prescribed, must be provided on or with a modified Form 1118 ``Foreign
Tax Credit--Corporations'' filed as part of the RIC's timely filed
Federal income tax return for the taxable year.
(e) Effective/applicability date. This section is applicable for
RIC taxable years ending on or after December 31, 2007. Notwithstanding
the preceding sentence, for a taxable year that ends on or after
December 31, 2007, and begins before August 24, 2007, a taxpayer may
rely on this section as it was in effect on August 23, 2007.
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
0
Par. 6. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
0
Par. 7. In Sec. 602.101, paragraph (b) is amended by revising the
entries for 1.853-3 and 1.853-4 to read as follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where identified or described control No.
------------------------------------------------------------------------
* * * * *
1.853-3................................................. 1545-2035
1.853-4................................................. 1545-2035
* * * * *
------------------------------------------------------------------------
Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
Approved: August 9, 2007.
Karen G. Sowell,
Deputy Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E7-16737 Filed 8-23-07; 8:45 am]
BILLING CODE 4830-01-P
