Treatment of Services Under Section 482; Allocation of Income and Deductions From Intangible Property; Apportionment of Stewardship Expense; Correction, 46345-46346 [E9-21226]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 74, Number 173 (Wednesday, September 9, 2009)]
[Rules and Regulations]
[Pages 46345-46346]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21226]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9456]
RIN 1545-BI78, 1545-BI79, 1545-BI80


Treatment of Services Under Section 482; Allocation of Income and 
Deductions From Intangible Property; Apportionment of Stewardship 
Expense; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

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SUMMARY: This document contains corrections to final regulations (TD 
9456) that were published in the Federal Register on Tuesday, August 4, 
2009 (74 FR 38830) providing guidance regarding the treatment of 
controlled services transactions under section 482 and the allocation 
of income from intangible property, in particular with respect to 
contributions by a controlled party to the value of intangible property 
owned by another controlled party. These final regulations modify 
regulations under section 861 concerning stewardship expenses to be 
consistent with the changes made to the guidance under section 482.

DATES: This correction is effective on September 9, 2009, and is 
applicable on August 4, 2009.

FOR FURTHER INFORMATION CONTACT: Carol B. Tan or Gregory A. Spring, 
(202) 435-5265 for matters relating to section 482, or Richard L. 
Chewning, (202) 622-3850 for matters relating to stewardship expenses 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    The final regulations that are the subject of this document are 
under sections 482, 861, 6038, and 6662 of the Internal Revenue Code.

Need for Correction

    As published, the final regulations (TD 9456) contain errors that 
may prove to be misleading and are in need of clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

0
Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAXES

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

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


0
Par. 2. Section 1.482-1 is amended by revising the last sentence of 
paragraph (d)(3)(v) to read as follows:


Sec.  1.482-1  Allocation of income and deductions among taxpayers.

* * * * *
    (d) * * *
    (3) * * *
    (v) * * * For guidance concerning the specific comparability 
considerations applicable to transfers of tangible and intangible 
property and performance of services, see Sec. Sec.  1.482-3 through 
1.482-6 and Sec.  1.482-9; see also Sec. Sec.  1.482-3(f), 1.482-
4(f)(4), and 1.482-9(m), dealing with the coordination of intangible 
and tangible property and performance of services rules.

0
Par. 3. Section 1.482-6 is amended by revising the third sentence of 
paragraph (c)(3)(i)(B)(1) to read as follows:


Sec.  1.482-6  Profit split method.

* * * * *
    (c) * * *
    (3) * * *
    (i) * * *
    (B) * * *
    (1) * * * Thus, in cases where such nonroutine contributions are 
present, there normally will be an unallocated residual profit after 
the allocation of income described in paragraph (c)(3)(i)(A) of this 
section. * * *

0
Par. 4. Section 1.482-8 is amended by revising the second sentence of 
paragraph (b) Example 10. (iv) to read as follows:


Sec.  1.482-8  Examples of the best method rule.

* * * * *
    (b) * * *

    Example 10. * * *
    (iv) * * * A functional analysis indicates that USSub's 
activities to promote Product Y in year 4 are similar to activities 
performed by Agency A during years 1 through 3 under the contract 
with USSub. * * *
* * * * *


0
Par. 5. Section 1.482-9 is amended as follows:
0
1. The last sentence of paragraph (b)(8) Example 22. (i) is revised.
0
2. Paragraphs (b)(8) Example 23. (ii) second occurrence, (b)(8) Example 
23. (iii), and (b)(8) Example 23. (iv) are redesignated as paragraphs 
(b)(8) Example 23. (iii), (b)(8) Example 23. (iv), and (b)(8) Example 
23. (v).
0
3. The table of paragraph (e)(4) Example 4. (ii) is revised.

[[Page 46346]]

0
4. The last sentence of paragraph (g)(2) Example 2. (iii) is revised.
0
5. The table of paragraph (k)(3) Example 2. (iii) is revised.
    The revisions read as follows:


Sec.  1.482-9  Methods to determine taxable income in connection with a 
controlled services transaction.

* * * * *
    (b) * * *
    (8) * * *

    Example 22. (i) * * * Company P's total services cost for 
services A, B, C, and D charged within the group is 100.
* * * * *
    (e) * * *
    (4) * * *

    Example 4. * * *
    (ii) * * *

------------------------------------------------------------------------
                 Category                               Rate
------------------------------------------------------------------------
Project managers..........................  $100 per hour.
Technical staff...........................  $75 per hour.
------------------------------------------------------------------------

* * * * *
    (g) * * *
    (2) * * *

    Example 2. * * *
    (iii) * * * In an effort to submit a winning bid to secure the 
contract, Company B points to its Level 2 license and its record of 
successful completion of projects, and also demonstrates to Country 
2 government that it has access to substantial technical expertise 
pertaining to processing of Level 1 waste.
* * * * *
    (k) * * *
    (3) * * *

    Example 2. * * *
    (iii) * * *

------------------------------------------------------------------------
             Company                    A            B          Total
------------------------------------------------------------------------
Allocation.......................      400/500      100/500  ...........
Amount...........................           80           20          100
------------------------------------------------------------------------

* * * * *

0
Par. 6. Section 1.861-8 is amended by revising the fourth sentence of 
paragraph (g). Example 17. (ii)(A) to read as follows:

Sec.  1.861-8  Computation of taxable income from sources within the 
United States and from other sources and activities.

* * * * *
    (g) * * *

    Example 17. * * *
    (ii) * * *
    (A) * * * For purposes of applying the foreign tax credit 
limitation, the statutory grouping is general category gross income 
from sources without the United States and the residual grouping is 
gross income from sources with in the United States. * * *
* * * * *

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
[FR Doc. E9-21226 Filed 9-8-09; 8:45 am]
BILLING CODE 4830-01-P