Amendments to the Section 7216 Regulations-Disclosure or Use of Information by Preparers of Returns; Correction, 40738-40739 [E8-16288]
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Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Rules and Regulations
6, except that instead of loaning $50 million
to D, C contributes the $50 million to E in
exchange for 10 percent of the stock of E. E
is a country Y corporation that is not engaged
in the active conduct of a trade or business.
Also in year 1, D pays no dividends to C, E
pays $3.2 million in dividends to C, and C
makes a payment of $960,000 to country X
with respect to C’s net income.
(ii) Result. C’s dividend income
attributable to its stock in E is passive
investment income, and C’s stock in E is held
to produce such income. C’s stock in D is not
held to produce passive investment income
because C owns at least 10 percent of D and
D derives more than 50 percent of its income
from the active conduct of its widget
business. See paragraph (e)(5)(iv)(C)(5)(ii) of
this section. As a result, less than
substantially all of C’s assets are held to
produce passive investment income.
Accordingly, C is not an SPV because it does
not meet the requirements of paragraph
(e)(5)(iv)(B)(1) of this section, and the
$960,000 payment to country X is not
attributable to a structured passive
investment arrangement.
Example 8. Asset holding transaction. (i)
Facts. (A) A domestic corporation (USP)
contributes $6 billion of country Z debt
obligations to a country Z entity (DE) in
exchange for all of the class A and class B
stock of DE. A corporation unrelated to USP
and organized in country Z (FC) contributes
$1.5 billion to DE in exchange for all of the
class C stock of DE. DE uses the $1.5 billion
contributed by FC to redeem USP’s class B
stock. The class C stock is entitled to ‘‘all’’
income from DE. However, FC is obligated
immediately to contribute back to DE all
distributions on the class C stock. USP and
FC enter into—
(1) A contract under which USP agrees to
buy after five years the class C stock for $1.5
billion; and
(2) An agreement under which USP agrees
to pay FC periodic payments on $1.5 billion.
(B) For U.S. tax purposes, these steps
create a loan of $1.5 billion from FC to USP,
and USP is the owner of the class C stock and
the class A stock. DE is a disregarded entity
for U.S. tax purposes and a corporation for
country Z tax purposes. In year 1, DE earns
$400 million of interest income on the
country Z debt obligations. DE makes a
payment to country Z of $100 million with
respect to such income and distributes the
remaining $300 million to FC. FC contributes
the $300 million back to DE. None of FC’s
stock is owned, directly or indirectly, by USP
or shareholders of USP that are domestic
corporations, U.S. citizens, or resident alien
individuals. Country Z does not impose tax
on interest income derived by U.S. residents.
(C) Country Z treats FC as the owner of the
class C stock. Pursuant to country Z tax law,
FC is required to report the $400 million of
income with respect to the $300 million
distribution from DE, but is allowed to claim
credits for DE’s $100 million payment to
country Z. For country Z tax purposes, FC is
entitled to current deductions equal to the
$300 million contributed back to DE.
(ii) Result. The payment to country Z is not
a compulsory payment, and thus is not an
amount of tax paid because the payment is
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15:04 Jul 15, 2008
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attributable to a structured passive
investment arrangement. First, DE is an SPV
because all of DE’s income is passive
investment income described in paragraph
(e)(5)(iv)(C)(5) of this section; all of DE’s
assets are held to produce such income; the
payment to country Z is attributable to such
income; and if the payment were an amount
of tax paid it would be paid or accrued in
a U.S. taxable year in which DE meets the
requirements of paragraph (e)(5)(iv)(B)(1)(i)
of this section. Second, if the payment were
an amount of tax paid, USP would be eligible
to claim a credit for such amount under
section 901(a). Third, USP would not pay any
country Z tax if it directly owned DE’s assets.
Fourth, FC is entitled to claim a credit under
country Z tax law for the payment and
recognizes a deduction for the $300 million
contributed to DE under country Z law. The
credit claimed by FC corresponds to more
than 10 percent of USP’s share (for U.S. tax
purposes) of the foreign payment and the
deductions claimed by FC correspond to
more than 10 percent of the base with respect
to which USP’s share of the foreign payment
was imposed. Fifth, FC is a counterparty
because FC is considered to own equity of DE
under country Z law and none of FC’s stock
is owned, directly or indirectly, by USP or
shareholders of USP that are domestic
corporations, U.S. citizens, or resident alien
individuals. Sixth, the United States and
country X treat certain aspects of the
transaction differently and the amount of
credits claimed by USP if the country Z
payment were an amount of tax paid is
materially greater than it would be if FC,
rather than USP, owned the class C stock for
U.S. tax purposes. Because the payment to
country Z is not an amount of tax paid, USP
is not considered to pay tax under section
901. USP has $400 million of interest
income.
Example 9. Loss surrender. (i) Facts. The
facts are the same as in Example 8, except
that the deductions attributable to the
arrangement contribute to a loss recognized
by FC for country Z tax purposes, and
pursuant to a group relief regime in country
Z FC elects to surrender the loss to its
country Z subsidiary.
(ii) Result. The results are the same as in
Example 8. The surrender of the loss to a
related party is a foreign tax benefit that
corresponds to the base with respect to
which USP’s share of the foreign payment
was imposed.
Example 10. Joint venture; no foreign tax
benefit. (i) Facts. FC, a country X corporation,
and USC, a domestic corporation, each
contribute $1 billion to a newly-formed
country X entity (C) in exchange for stock of
C. FC and USC are entitled to equal 50%
shares of C’s income, gain, expense and loss.
C is treated as a corporation for country X
purposes and a partnership for U.S. tax
purposes. In year 1, C earns $200 million of
passive investment income, makes a payment
to country X of $60 million with respect to
that income, and distributes $70 million to
each of FC and USC. Country X does not
impose tax on dividends received by one
country X corporation from a second country
X corporation.
(ii) Result. FC’s tax-exempt receipt of $70
million, or its 50% share of C’s profits, is not
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a foreign tax benefit within the meaning of
paragraph (e)(5)(iv)(B)(4) of this section,
because it does not correspond to any part of
the foreign base with respect to which USC’s
share of the foreign payment was imposed.
Accordingly, the $60 million payment to
country X is not attributable to a structured
passive investment arrangement.
(f) through (h)(1) [Reserved]. For
further guidance, see § 1.901–2(f)
through (h)(1).
(h)(2) This section applies to foreign
payments that, if such payments were
an amount of tax paid, would be
considered paid or accrued under
§ 1.901–2(f) by a U.S. or foreign person
in taxable years ending on or after July
16, 2008. In the case of foreign
payments by a foreign corporation that
has a domestic corporate shareholder,
this section also applies to such
payments that, if such payments were
an amount of tax paid, would be
considered paid or accrued in the
foreign corporation’s U.S. taxable years
ending with or within taxable years of
its domestic corporate shareholder
ending on or after July 16, 2008. In the
case of foreign payments by a
partnership, trust or estate with respect
to which any person would be eligible
to claim a credit under section 901(b) if
the payment were an amount of tax
paid, this section also applies to such
payments that would be considered
paid or accrued in U.S. taxable years of
the partnership, trust or estate ending
with or within taxable years of such
eligible persons ending on or after July
16, 2008.
(3) Expiration date. The applicability
of this section expires on July 15, 2011.
Linda E. Stiff,
Deputy Commissioner for Services and
Enforcement.
Approved: June 30, 2008.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E8–16329 Filed 7–15–08; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9409]
RIN 1545–BI01
Amendments to the Section 7216
Regulations—Disclosure or Use of
Information by Preparers of Returns;
Correction
Internal Revenue Service (IRS),
Treasury.
AGENCY:
E:\FR\FM\16JYR1.SGM
16JYR1
Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Rules and Regulations
ACTION:
Correcting amendment.
DEPARTMENT OF THE TREASURY
SUMMARY: This document contains a
correction to final and temporary
regulations (TD 9409) that was
published in the Federal Register on
Wednesday, July 2, 2008 (73 FR 37804)
providing rules relating to the
disclosure and use of tax return
information by tax return preparers.
These regulations provide updated
guidance regarding the disclosure of a
taxpayer’s social security number to a
tax return preparer located outside of
the United States.
DATES: Effective Date: July 16, 2008.
FOR FURTHER INFORMATION CONTACT:
Lawrence E. Mack, (202) 622–4940 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations
that are the subjects of this document
are under section 7216 of the Internal
Revenue Code.
Need for Correction
As published, final and temporary
regulations (TD 9409) contain an error
that may prove to be misleading and is
in need of clarification.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Correction of Publication
Accordingly, 26 CFR part 301 is
corrected by making the following
correcting amendment:
I
Authority: 26 U.S.C. 7805 * * *
§ 301.7216–3T Disclosure or use permitted
only with the taxpayer’s consent
(temporary).
*
*
*
*
(d) * * * The applicability of this
section expires on July 1, 2011.
dwashington3 on PRODPC61 with RULES
*
BILLING CODE 4830–01–P
Change to Office to Which Notices of
Nonjudicial Sale and Requests for
Return of Wrongfully Levied Property
Must Be Sent; Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations; correction.
AGENCY:
This document contains a
correction to final regulations (TD 9410)
that were published in the Federal
Register on Tuesday, July 8, 2008 (73 FR
38915) relating to the discharge of liens
under section 7425 and return of
wrongfully levied upon property under
section 6343 of the Internal Revenue
Code of 1986. These regulations revise
regulations currently published under
sections 7425 and 6343. These
regulations clarify that such notices and
claims should be sent to the IRS official
and office specified in the relevant IRS
publications. The regulations will affect
parties seeking to provide the IRS with
notice of a nonjudicial foreclosure sale
and parties making administrative
requests for return of wrongfully levied
property.
DATES: This correction is effective July
16, 2008, and is applicable on July 8,
2008.
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 105
SUMMARY:
The final regulations that are the
subjects of this document are under
sections 6343 and 7425 of the Internal
Revenue Code.
As published, final regulations (TD
9410) contain an error that may prove to
be misleading and is in need of
clarification.
Correction of Publication
Accordingly, the publication of the
final regulations (TD 9410), which were
the subject of FR Doc. E8–15460, is
corrected as follows:
I On page 38916, column 1, in the
preamble, under the caption DATES:,
lines 3 thru 4, the language
‘‘Applicability Date: See §§ 301.6343–2
and 301.6343–3.’’ is corrected to read
I
LaNita Van Dyke,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel (Procedure and Administration).
[FR Doc. E8–16288 Filed 7–15–08; 8:45 am]
Jkt 214001
RIN 1545–BF54
Need for Correction
I Par. 2. Section 301.7216–3T(d) is
amended by revising the second
sentence to read as follows:
15:04 Jul 15, 2008
[TD 9410]
Background
Paragraph 1. The authority citation
for part 301 continues to read, in part,
as follows:
VerDate Aug<31>2005
26 CFR Part 301
Robin M. Ferguson, (202) 622–3630 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
I
‘‘Applicability Date: See §§ 301.6343–2
and 301.7425–3.’’.
LaNita Van Dyke,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel (Procedure and Administration).
[FR Doc. E8–16289 Filed 7–15–08; 8:45 am]
FOR FURTHER INFORMATION CONTACT:
PART 301—PROCEDURE AND
ADMINISTRATION
BILLING CODE 4830–01–P
Internal Revenue Service
40739
PO 00000
Frm 00025
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[Docket Nos. TSA–2006–24191; USCG–
2006–24196]
Transportation Worker Identification
Credential (TWIC) Implementation in
the Maritime Sector; Hazardous
Materials Endorsement for a
Commercial Driver’s License
AGENCY:
United States Coast Guard;
DHS.
Notice of compliance date,
Captain of the Port Zones Cape Fear
River, Corpus Christi, North Carolina,
and Port Arthur.
ACTION:
SUMMARY: This Notice informs owners
and operators of facilities located within
Captain of the Port Zones Cape Fear
River, Corpus Christi, North Carolina,
and Port Arthur that they must
implement access control procedures
utilizing TWIC no later than November
28, 2008.
DATES: This Notice is effective July 16,
2008.
ADDRESSES: Comments and material
received from the public, as well as
documents mentioned in this notice as
being available in the docket, are part of
dockets TSA–2006–24191 and USCG–
2006–24196, and are available for
inspection or copying at the Docket
Management Facility, U.S. Department
of Transportation, West Building
Ground Floor, Room W12–140, 1200
New Jersey Avenue, SE., Washington,
DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal
holidays. You may also find this docket
on the Internet at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this Notice, call
LCDR Jonathan Maiorine, telephone 1–
877–687–2243. If you have questions on
viewing the docket, call Renee V.
Wright, Program Manager, Docket
Operations, telephone 202–493–0402.
SUPPLEMENTARY INFORMATION:
E:\FR\FM\16JYR1.SGM
16JYR1
]]>Agencies
[Federal Register Volume 73, Number 137 (Wednesday, July 16, 2008)]
[Rules and Regulations]
[Pages 40738-40739]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-16288]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9409]
RIN 1545-BI01
Amendments to the Section 7216 Regulations--Disclosure or Use of
Information by Preparers of Returns; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
[[Page 40739]]
ACTION: Correcting amendment.
-----------------------------------------------------------------------
SUMMARY: This document contains a correction to final and temporary
regulations (TD 9409) that was published in the Federal Register on
Wednesday, July 2, 2008 (73 FR 37804) providing rules relating to the
disclosure and use of tax return information by tax return preparers.
These regulations provide updated guidance regarding the disclosure of
a taxpayer's social security number to a tax return preparer located
outside of the United States.
DATES: Effective Date: July 16, 2008.
FOR FURTHER INFORMATION CONTACT: Lawrence E. Mack, (202) 622-4940 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations that are the subjects of this
document are under section 7216 of the Internal Revenue Code.
Need for Correction
As published, final and temporary regulations (TD 9409) contain an
error that may prove to be misleading and is in need of clarification.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Correction of Publication
0
Accordingly, 26 CFR part 301 is corrected by making the following
correcting amendment:
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 301.7216-3T(d) is amended by revising the second
sentence to read as follows:
Sec. 301.7216-3T Disclosure or use permitted only with the taxpayer's
consent (temporary).
* * * * *
(d) * * * The applicability of this section expires on July 1,
2011.
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. E8-16288 Filed 7-15-08; 8:45 am]
BILLING CODE 4830-01-P
