Income Taxes; Foreign Management and Foreign Economic Processes Requirements of a Foreign Sales Corporation, 14478-14479 [E9-7205]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 74, Number 60 (Tuesday, March 31, 2009)]
[Rules and Regulations]
[Pages 14478-14479]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-7205]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1


Income Taxes; Foreign Management and Foreign Economic Processes 
Requirements of a Foreign Sales Corporation



[[Page 14479]]

CFR Correction

    In Title 26 of the Code of Federal Regulations, Part 1 (Sec. Sec.  
1.908 to 1.1000), revised as of April 1, 2008, in Sec.  1.924(c)-1, 
make the following corrections:
    1. On pages 62 and 63, remove paragraphs (d) introductory text, 
(d)(1) through (7), and (2) following (d)(7);
    2. Reinstate paragraphs (d)(1) and (2) to read as set forth below; 
and
    3. On page 64, in the last sentence of paragraph (d)(6), insert the 
word ``in'' before the words ``Sec.  1.415(c)-2(b) and (c)''.



Sec.  1.924(c)-1  Requirement that a FSC be managed outside the United 
States.


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    (d) Disbursement of dividends, legal and accounting fees, and 
salaries of officers and directors out of the principal bank account of 
the FSC--(1) In general. All dividends, legal fees, accounting fees, 
salaries of officers of the FSC, and salaries or fees paid to members 
of the board of directors of the FSC that are disbursed during the 
taxable year must be disbursed out of bank account(s) of the FSC 
maintained outside the United States. Such an account is treated as the 
principal bank account of the FSC for purposes of section 924(c). 
Dividends, however, may be netted against amounts owed to the FSC 
(e.g., commissions) by a related supplier through book entries. If the 
FSC regularly disburses its legal or accounting fees, salaries of 
officers, and salaries or fees of directors out of its principal bank 
account, the occasional, inadvertent payment by mistake of fact or law 
of such amounts out of another bank account will not be considered a 
disbursement by the FSC if, upon determination that such payment was 
made from another account, reimbursement to such other account is made 
from the principal bank account of the FSC within a reasonable period 
from the date of the determination. Disbursement out of the principal 
bank account of the FSC may be made by transferring funds from the 
principal bank account to a U.S. account of the FSC provided that (i) 
the payment of the dividends, salaries or fees to the recipients is 
made within 12 months of the transfer, (ii) the purpose of the 
expenditures is designated and, (iii) the payment of the dividends, 
salaries or fees is actually made out of the same U.S. account that 
received the disbursement from the principal bank account.
    (2) Reimbursement. Legal or accounting fees, salaries of officers, 
and salaries or fees of directors that are paid by a related person 
wholly or partially on behalf of a FSC must be reimbursed by the FSC. 
The amounts paid by the related person are not considered disbursed by 
the FSC until the related person is reimbursed by the FSC. The related 
person must be reimbursed no later than the last date prescribed for 
filing the FSC's tax return (including extensions) for the taxable year 
to which the reimbursement relates. Any reimbursement for amounts paid 
on behalf of the FSC must be disbursed out of the FSC's principal bank 
account (and not netted against any obligation owed by the related 
person to the FSC), as set forth in paragraph (c) of this section. To 
determine the amounts paid on behalf of the FSC, the FSC may rely upon 
a written statement or invoice furnished to it by the related person 
which shows the following:
    (i) The actual fees charged for performing the legal or accounting 
services for the FSC or, if such fees cannot be ascertained by the 
related person, a good faith estimate thereof, and the actual salaries 
or fees paid for services as officers and directors of the FSC, and
    (ii) The person who performed or provided the services.

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[FR Doc. E9-7205 Filed 3-30-09; 8:45 am]
BILLING CODE 1505-01-D