Classification of Certain Foreign Entities, 15064-15065 [E8-5686]

Download as PDF 15064 Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Rules and Regulations Friday, December 21, 2007 (72 FR 72582) regarding the reduction of the number of separate foreign tax credit limitation categories under section 904(d) of the Internal Revenue Code. These regulations affect taxpayers claiming foreign tax credits and provide guidance needed to comply with the statutory changes made by the American Jobs Creation Act of 2004 (AJCA). DATES: The correction is effective March 21, 2008. FOR FURTHER INFORMATION CONTACT: Jeffrey L. Parry, (202) 622–3850 (not a toll-free number). SUPPLEMENTARY INFORMATION: language ‘‘rules of § 1.904–12T(g)(1) and (2)’’ is corrected to read ‘‘rules of § 1.904(f)–12T(g)(1) and (2)’’. Background [TD 9388] The final and temporary regulations (TD 9368) that are the subject of the correction are under section 904 of the Internal Revenue Code. RIN 1545–BH24 Need for Correction AGENCY: As published, final and temporary regulations (TD 9368) contain errors that may prove to be misleading and are in need of clarification. jlentini on PROD1PC65 with RULES Correction of Publication Accordingly, the publication of the final and temporary regulations (TD 9368), which were the subject of FR Doc. E7–24782, is corrected as follows: 1. On page 72585, column 1, in the preamble, under the paragraph heading ‘‘V. Post–1986 Undistributed Earnings and Post–1986 Foreign Income Taxes of a Foreign Corporation as of the End of the Corporation’s Last Pre–2007 Taxable Year’’, second line of the first paragraph of the column, the language ‘‘described in section 959(c)(1)(A),’’ is corrected to read ‘‘described in section 959(c)(1) and (2),’’. 2. On page 72586, column 3, in the preamble, under the paragraph heading ‘‘VI. Separate Limitation Losses and Overall Foreign Losses’’, first line of the second paragraph of the column, the language ‘‘Section 1.904–12T(h)(4) provides that’’ is corrected to read ‘‘Section 1.904(f)–12T(h)(4) provides that’’. 3. On page 72586, column 3, in the preamble, under the paragraph heading ‘‘VI. Separate Limitation Losses and Overall Foreign Losses’’, first line of the third paragraph of the column, the language ‘‘Section 1.904–12T(h)(5) provides that’’ is corrected to read ‘‘Section 1.904(f)–12T(h)(5) provides that’’. 4. On page 72586, column 3, in the preamble, under the paragraph heading ‘‘VI. Separate Limitation Losses and Overall Foreign Losses’’, sixth line of the third paragraph of the column, the VerDate Aug<31>2005 20:55 Mar 20, 2008 Jkt 214001 LaNita Van Dyke, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. E8–5683 Filed 3–20–08; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301 Classification of Certain Foreign Entities Internal Revenue Service (IRS), Treasury. ACTION: Final and temporary regulations. SUMMARY: This document contains temporary and final regulations relating to certain business entities included on the list of foreign business entities that are always classified as corporations for Federal tax purposes. The regulations are needed to make the Federal tax classification of Bulgarian public limited liability companies consistent with the Federal tax classification of public limited liability companies organized in other countries of the European Economic Area. The regulations will affect persons owning an interest in a Bulgarian aktsionerno druzhestvo on or after January 1, 2007. The text of the temporary regulations serves as the text of the proposed regulations (REG–143468–07) set forth in the notice of proposed rulemaking on this subject in this issue of the Federal Register. DATES: Effective Date: These regulations are effective on March 21, 2008. Applicability Date: For the dates of applicability of these regulations, see § 301.7701–2T(e)(7). FOR FURTHER INFORMATION CONTACT: S. James Hawes, (202) 622–3860 (not a tollfree number). SUPPLEMENTARY INFORMATION: Background The IRS and the Treasury Department issued final regulations concerning the Federal tax classification of entities under section 7701 of the Internal Revenue Code on December 18, 1996. See TD 8697 (1997–1 CB 215; 61 FR 66584) and §§ 301.7701–1 through PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 301.7701–3. Under those regulations, a business entity that is not specifically classified as a corporation can elect its classification for Federal tax purposes under certain circumstances. Section 301.7701–2(b)(8) provides a list of certain foreign business entities that are nevertheless always classified as corporations for Federal tax purposes. This list is known as the per se corporation list. The foreign business entities on this list are referred to as per se corporations. Recent changes in European law require the IRS and the Treasury Department to amend the per se list. See § 601.601(d)(2)(ii)(b). On October 8, 2001, the Council of the European Union adopted Council Regulation 2157/2001 (2001 Official Journal of the European Communities, L 294/1) (the EU Regulation) to provide for a new business entity called the European public limited liability company, which is also known as a Societas Europaea or SE. The EU Regulation entered into force October 8, 2004. The EU Regulation provides general rules that govern the formation and operation of an SE. With respect to many issues, however, the EU Regulation defers to the laws of the country in which the SE has its registered office. An SE must have a registered office in one of the Member States of the European Economic Area, which includes Norway, Iceland, Liechtenstein, and every country in the European Union. For further background, see TD 9197 (2005–1 CB 985; 70 FR 19697) and Notice 2004–68 (2004–43 IRB 706). See § 601.601(d)(2)(ii)(b). The IRS and the Treasury Department stated in Notice 2004–68 that the SE is properly classified as a per se corporation for Federal tax purposes. Consequently, the IRS and the Treasury Department issued regulations modifying § 301.7701–2(b)(8) to include the SE on the per se corporation list. Those regulations included certain public limited liability companies organized in Member States that did not already appear on the per se list. See TD 9197 and TD 9235 (2006–1 CB 338; 70 FR 74658). With the entry of Bulgaria into the European Union on January 1, 2007, an SE can now have its registered office in Bulgaria. Explanation of Provisions Bulgaria’s SE is called an aktsionerno druzhestvo. The IRS and the Treasury Department stated in Notice 2007–10 (2007–4 IRB 354) that § 301.7701–2(b)(8) would be modified to include the aktsionerno druzhestvo on the per se corporation list. The temporary regulations in this document make that E:\FR\FM\21MRR1.SGM 21MRR1 Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Rules and Regulations List of Subjects in 26 CFR Part 301 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 been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. Chapter 5) does not apply to this regulation. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble to the notice of proposed rulemaking published in this issue of the Federal Register. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact. jlentini on PROD1PC65 with RULES modification. In accordance with Notice 2007–10, these regulations will be effective for any Bulgarian aktsionerno druzhestvo formed on or after January 1, 2007. Notice 2007–10 also stated that the regulations would be effective for any Bulgarian aktsionerno druzhestvo formed before January 1, 2007, upon a 50 percent or greater change of ownership in such entity subsequent to that date. See section 7805(b)(1)(C) and § 601.601(d)(2)(ii)(b). The temporary regulations therefore provide that a Bulgarian aktsionerno druzhestvo formed before January 1, 2007, will become a per se corporation on the date that, in the aggregate, a 50 percent or more interest in the entity is owned by a person or persons who were not owners of the entity as of January 1, 2007. In the case of a partnership, an interest means a capital or profits interest. In the case of a corporation, an interest means an equity interest in the entity measured by vote or value. The standard provided by these temporary regulations for determining the application of the regulations to a Bulgarian aktsionerno druzhestvo formed before January 1, 2007, clarifies the standard described in Notice 2007– 10 and the standard to be applied with respect to entities listed in § 301.7701– 2(b)(8), including those entities listed in TD 8697, TD 9197, and TD 9235. Comments are requested with respect to this clarification. § 301.7701–2T Business entities; definitions (temporary). Drafting Information The principal author of these regulations is S. James Hawes of the Office of Associate Chief Counsel (International); however, other personnel from the IRS and the Treasury Department participated in their development. VerDate Aug<31>2005 20:55 Mar 20, 2008 Jkt 214001 Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 301 is amended as follows: I PART 301—PROCEDURE AND ADMINISTRATION Paragraph 1. The authority citation for part 301 continues to read in part as follows: 15065 (8) Expiration date. The applicability of this section expires on or before March 18, 2011. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. Approved: March 12, 2008. Eric Solomon, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E8–5686 Filed 3–20–08; 8:45 am] BILLING CODE 4830–01–P I Authority: 26 U.S.C. 7805 * * * I Par. 2. Section 301.7701–2(b)(8)(vi) and (e)(7) are added and the paragraph heading for paragraph (e) is revised to read as follows: § 301.7701–2 definitions. Business entities; * * * * * (b) * * * (8) * * * (vi) [Reserved]. For further guidance, see § 301.7701–2T(b)(8)(vi). * * * * * (e) Effective/applicability date.* * * (7) [Reserved]. For further guidance, see § 301.7701–2T(e)(7). I Par. 3. Section 301.7701–2T is added to read as follows: (a) through (b)(8)(v) [Reserved]. For further guidance, see § 301.7701–2(a) through (b)(8)(v). (b)(8)(vi) Certain European entities. The following business entity formed in the following jurisdiction: Bulgaria, Aktsionerno Druzhestvo. (c) through (e)(6) [Reserved]. For further guidance, see § 301.7701–2(c) through (e)(6). (7) The reference to the Bulgarian entity in paragraph (b)(8)(vi) of this section applies to such entities formed on or after January 1, 2007, and to any such entity formed before such date from the date that, in the aggregate, a 50 percent or more interest in such entity is owned by any person or persons who were not owners of the entity as of January 1, 2007. For purposes of the preceding sentence, the term interest means— (i) In the case of a partnership, a capital or profits interest; and (ii) In the case of a corporation, an equity interest measured by vote or value. PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 PENSION BENEFIT GUARANTY CORPORATION 29 CFR Parts 4006 and 4007 RIN 1212–AB11 Premium Rates; Payment of Premiums; Variable-Rate Premium; Pension Protection Act of 2006 Pension Benefit Guaranty Corporation. ACTION: Final rule. AGENCY: SUMMARY: This is a final rule to amend PBGC’s regulations on Premium Rates and Payment of Premiums. The amendments implement provisions of the Pension Protection Act of 2006 (Pub. L. 109–280) that change the variable-rate premium for plan years beginning on or after January 1, 2008, and make other changes to the regulations. (Other provisions of the Pension Protection Act of 2006 that deal with PBGC premiums are the subject of separate rulemaking proceedings.) Effective April 21, 2008. (For information about applicability of the amendments made by this rule, see Applicability in the SUPPLEMENTARY INFORMATION.) DATES: John H. Hanley, Director, Legislative and Regulatory Department; or Catherine B. Klion, Manager, or Deborah C. Murphy, Attorney, Regulatory and Policy Division, Legislative and Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005–4026; 202–326– 4024. (TTY/TDD users may call the Federal relay service toll-free at 1–800– 877–8339 and ask to be connected to 202–326–4024.) SUPPLEMENTARY INFORMATION: FOR FURTHER INFORMATION CONTACT: Background Pension Benefit Guaranty Corporation (PBGC) administers the pension plan termination insurance program under Title IV of the Employee Retirement Income Security Act of 1974 (ERISA). E:\FR\FM\21MRR1.SGM 21MRR1

Agencies

[Federal Register Volume 73, Number 56 (Friday, March 21, 2008)]
[Rules and Regulations]
[Pages 15064-15065]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-5686]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9388]
RIN 1545-BH24


Classification of Certain Foreign Entities

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains temporary and final regulations 
relating to certain business entities included on the list of foreign 
business entities that are always classified as corporations for 
Federal tax purposes. The regulations are needed to make the Federal 
tax classification of Bulgarian public limited liability companies 
consistent with the Federal tax classification of public limited 
liability companies organized in other countries of the European 
Economic Area. The regulations will affect persons owning an interest 
in a Bulgarian aktsionerno druzhestvo on or after January 1, 2007. The 
text of the temporary regulations serves as the text of the proposed 
regulations (REG-143468-07) set forth in the notice of proposed 
rulemaking on this subject in this issue of the Federal Register.

DATES: Effective Date: These regulations are effective on March 21, 
2008.
    Applicability Date: For the dates of applicability of these 
regulations, see Sec.  301.7701-2T(e)(7).

FOR FURTHER INFORMATION CONTACT: S. James Hawes, (202) 622-3860 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    The IRS and the Treasury Department issued final regulations 
concerning the Federal tax classification of entities under section 
7701 of the Internal Revenue Code on December 18, 1996. See TD 8697 
(1997-1 CB 215; 61 FR 66584) and Sec. Sec.  301.7701-1 through 
301.7701-3. Under those regulations, a business entity that is not 
specifically classified as a corporation can elect its classification 
for Federal tax purposes under certain circumstances. Section 301.7701-
2(b)(8) provides a list of certain foreign business entities that are 
nevertheless always classified as corporations for Federal tax 
purposes. This list is known as the per se corporation list. The 
foreign business entities on this list are referred to as per se 
corporations. Recent changes in European law require the IRS and the 
Treasury Department to amend the per se list. See Sec.  
601.601(d)(2)(ii)(b).
    On October 8, 2001, the Council of the European Union adopted 
Council Regulation 2157/2001 (2001 Official Journal of the European 
Communities, L 294/1) (the EU Regulation) to provide for a new business 
entity called the European public limited liability company, which is 
also known as a Societas Europaea or SE. The EU Regulation entered into 
force October 8, 2004. The EU Regulation provides general rules that 
govern the formation and operation of an SE. With respect to many 
issues, however, the EU Regulation defers to the laws of the country in 
which the SE has its registered office. An SE must have a registered 
office in one of the Member States of the European Economic Area, which 
includes Norway, Iceland, Liechtenstein, and every country in the 
European Union. For further background, see TD 9197 (2005-1 CB 985; 70 
FR 19697) and Notice 2004-68 (2004-43 IRB 706). See Sec.  
601.601(d)(2)(ii)(b).
    The IRS and the Treasury Department stated in Notice 2004-68 that 
the SE is properly classified as a per se corporation for Federal tax 
purposes. Consequently, the IRS and the Treasury Department issued 
regulations modifying Sec.  301.7701-2(b)(8) to include the SE on the 
per se corporation list. Those regulations included certain public 
limited liability companies organized in Member States that did not 
already appear on the per se list. See TD 9197 and TD 9235 (2006-1 CB 
338; 70 FR 74658). With the entry of Bulgaria into the European Union 
on January 1, 2007, an SE can now have its registered office in 
Bulgaria.

Explanation of Provisions

    Bulgaria's SE is called an aktsionerno druzhestvo. The IRS and the 
Treasury Department stated in Notice 2007-10 (2007-4 IRB 354) that 
Sec.  301.7701-2(b)(8) would be modified to include the aktsionerno 
druzhestvo on the per se corporation list. The temporary regulations in 
this document make that

[[Page 15065]]

modification. In accordance with Notice 2007-10, these regulations will 
be effective for any Bulgarian aktsionerno druzhestvo formed on or 
after January 1, 2007.
    Notice 2007-10 also stated that the regulations would be effective 
for any Bulgarian aktsionerno druzhestvo formed before January 1, 2007, 
upon a 50 percent or greater change of ownership in such entity 
subsequent to that date. See section 7805(b)(1)(C) and Sec.  
601.601(d)(2)(ii)(b). The temporary regulations therefore provide that 
a Bulgarian aktsionerno druzhestvo formed before January 1, 2007, will 
become a per se corporation on the date that, in the aggregate, a 50 
percent or more interest in the entity is owned by a person or persons 
who were not owners of the entity as of January 1, 2007. In the case of 
a partnership, an interest means a capital or profits interest. In the 
case of a corporation, an interest means an equity interest in the 
entity measured by vote or value.
    The standard provided by these temporary regulations for 
determining the application of the regulations to a Bulgarian 
aktsionerno druzhestvo formed before January 1, 2007, clarifies the 
standard described in Notice 2007-10 and the standard to be applied 
with respect to entities listed in Sec.  301.7701-2(b)(8), including 
those entities listed in TD 8697, TD 9197, and TD 9235. Comments are 
requested with respect to this clarification.

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 been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. Chapter 5) does not apply to this regulation. For the 
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), 
refer to the Special Analyses section of the preamble to the notice of 
proposed rulemaking published in this issue of the Federal Register. 
Pursuant to section 7805(f) of the Internal Revenue Code, these 
regulations have been submitted to the Chief Counsel for Advocacy of 
the Small Business Administration for comment on their impact.

Drafting Information

    The principal author of these regulations is S. James Hawes of the 
Office of Associate Chief Counsel (International); however, other 
personnel from the IRS and the Treasury Department participated in 
their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Amendments to the Regulations

0
Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 301.7701-2(b)(8)(vi) and (e)(7) are added and the 
paragraph heading for paragraph (e) is revised to read as follows:


Sec.  301.7701-2  Business entities; definitions.

* * * * *
    (b) * * *
    (8) * * *
    (vi) [Reserved]. For further guidance, see Sec.  301.7701-
2T(b)(8)(vi).
* * * * *
    (e) Effective/applicability date.* * *
    (7) [Reserved]. For further guidance, see Sec.  301.7701-2T(e)(7).
0
Par. 3. Section 301.7701-2T is added to read as follows:


Sec.  301.7701-2T  Business entities; definitions (temporary).

    (a) through (b)(8)(v) [Reserved]. For further guidance, see Sec.  
301.7701-2(a) through (b)(8)(v).
    (b)(8)(vi) Certain European entities. The following business entity 
formed in the following jurisdiction:
    Bulgaria, Aktsionerno Druzhestvo.
    (c) through (e)(6) [Reserved]. For further guidance, see Sec.  
301.7701-2(c) through (e)(6).
    (7) The reference to the Bulgarian entity in paragraph (b)(8)(vi) 
of this section applies to such entities formed on or after January 1, 
2007, and to any such entity formed before such date from the date 
that, in the aggregate, a 50 percent or more interest in such entity is 
owned by any person or persons who were not owners of the entity as of 
January 1, 2007. For purposes of the preceding sentence, the term 
interest means--
    (i) In the case of a partnership, a capital or profits interest; 
and
    (ii) In the case of a corporation, an equity interest measured by 
vote or value.
    (8) Expiration date. The applicability of this section expires on 
or before March 18, 2011.

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
    Approved: March 12, 2008.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E8-5686 Filed 3-20-08; 8:45 am]
BILLING CODE 4830-01-P

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