Residence Rules Involving U.S. Possessions, 51975-51977 [2015-21258]

Download as PDF Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Proposed Rules (4) Updating regulations to clarify the extent of the shoreward sanctuary boundary line. (5) Ensuring that salvers operating within MBNMS meet minimum industry standards for safety, liability, capacity, and environmentally sensitive salvage techniques during both emergency and non-emergency operations. (6) Clarifying the definition of ‘‘cruise ship’’ to include not only ships with berths for hire as is currently defined, but also ships with condominiums under private ownership. (7) Clarifying the intent and applicability of the existing prohibition on deserting a vessel in MBNMS. Education, Outreach and Citizen Science Enhancing the public’s awareness and appreciation of sanctuary resources is a cornerstone of MBNMS’s mission. Recent initiatives, such as visitor centers, video media production, and partnering with recreation and tourism industry offer opportunities for NOAA and other entities to expand educational and outreach contributions and reach larger audiences. NOAA is seeking the public’s view on developing and enhancing programs designed to enhance public awareness, including opportunities to participate in environmental research and monitoring. rmajette on DSK2VPTVN1PROD with PROPOSALS Condition Report To inform the MBNMS management plan review, NOAA is updating the Monterey Bay National Marine Sanctuary Condition Report, which was first published in 2009. The 2009 report provided a summary of resources in MBNMS, pressures on those resources, current conditions and recent trends within the Sanctuary, and management responses to mitigate negative impacts. The 2015 Condition Report will update current conditions and recent changes for water quality, habitat, living resources and maritime archaeological resources in the sanctuary. It will also include an assessment of the Davidson Seamount Management Zone which NOAA added to MBNMS in 2009. A summary of the 2015 Condition Report will be available to the general public during the public scoping period and on the Internet at: http:// sanctuaries.noaa.gov/science/condition/ welcome.html. The final report will be made available in late December 2015 on the same Web site. Public Comments NOAA is interested in hearing the public’s view on: VerDate Sep<11>2014 14:07 Aug 26, 2015 Jkt 235001 • The potential impacts of the proposed actions discussed above and ways to mitigate these impacts. • The topics discussed above for the next five to ten years and whether these are the right topics, the priority topics, or if there are additional topics NOAA should consider. • The effectiveness of the existing management plan in meeting both the mandates of the NMSA and MBNMS goals and objectives. • The public’s view on the effectiveness of the MBNMS programs, including programs focused on: Resource protection; research and monitoring; education; volunteer; and outreach. • NOAA’s implementation of MBNMS regulations and permits. • Adequacy of existing boundaries to protect sanctuary resources. • Assessment of the existing operational and administrative framework (staffing, offices, vessels, etc.). Federal Consultations This document also advises the public that NOAA will coordinate its consultation responsibilities under section 7 of the Endangered Species Act (ESA), Essential Fish Habitat (EFH) under the Magnuson Stevens Fishery Conservation and Management Act (MSA), section 106 of the National Historic Preservation Act (NHPA, 16 U.S.C. 470), and Federal Consistency review under the Coastal Zone Management Act (CZMA), along with its ongoing NEPA process including the use of NEPA documents and public and stakeholder meetings to also meet the requirements of other federal laws. In fulfilling its responsibility under the NHPA and NEPA, NOAA intends to identify consulting parties; identify historic properties and assess the effects of the undertaking on such properties; initiate formal consultation with the State Historic Preservation Officer, the Advisory Council of Historic Preservation, and other consulting parties; involve the public in accordance with NOAA’s NEPA procedures, and develop in consultation with identified consulting parties alternatives and proposed measures that might avoid, minimize or mitigate any adverse effects on historic properties and describe them in any environmental assessment or draft environmental impact statement. Authority: 16 U.S.C. 1431 et seq. PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 51975 Dated: August 20, 2015. John Armor, Acting Director, Office of National Marine Sanctuaries. [FR Doc. 2015–21132 Filed 8–26–15; 8:45 am] BILLING CODE 3510–NK–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG–109813–11] RIN 1545–BK18 Residence Rules Involving U.S. Possessions Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking. AGENCY: This document contains proposed amendments to the regulations for determining whether an individual is a bona fide resident of a U.S. territory. These proposed amendments affect individuals establishing bona fide residency in a U.S. territory by allowing additional days of constructive presence in a U.S. territory. DATES: Written or electronic comments and requests for a public hearing must be received by November 25, 2015. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–109813–11), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–109813– 11), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–109813– 11). FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Stephen Huggs, (202) 317–6941; concerning submission of comments and/or requests for a hearing, Oluwafunmilayo (Funmi) Taylor, (202) 317–6901 (not toll-free numbers). SUPPLEMENTARY INFORMATION: SUMMARY: Background This document contains proposed amendments to the Income Tax Regulations (26 CFR part 1) under section 937 of the Internal Revenue Code (Code). Section 937 was added to the Code by the American Jobs Creation Act of 2004 (Public Law 108–357, 118 E:\FR\FM\27AUP1.SGM 27AUP1 rmajette on DSK2VPTVN1PROD with PROPOSALS 51976 Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Proposed Rules Stat. 1418 (2004)). Section 937(a) provides rules for determining if an individual is a bona fide resident of a U.S. possession (generally referred to in this preamble as a ‘‘U.S. territory’’). On April 11, 2005, the Federal Register published temporary regulations (TD 9194, 70 FR 18920) and proposed regulations (REG–159243–03, 70 FR 18949) under section 937, providing rules to implement section 937 and conforming existing regulations to other legislative changes with respect to the U.S. territories. On January 31, 2006, the Federal Register published final regulations (TD 9248, 71 FR 4996) under section 937(a) concerning whether an individual is a bona fide resident of a U.S. territory. Section 1.937–1 was amended on November 14, 2006, and on April 9, 2008, to provide additional guidance concerning bona fide residency in the U.S. territories. See TD 9297 (71 FR 66232) and TD 9391 (73 FR 19350). Section 937(a) provides that an individual is a bona fide resident of a U.S. territory if the individual meets a presence test, a tax home test, and a closer connection test. In order to satisfy the presence test, an individual must be present in the U.S. territory for at least 183 days during the taxable year (183day rule), unless otherwise provided in regulations. Section 1.937–1 provides several alternatives to the 183-day rule. An individual who does not satisfy the 183day rule nevertheless meets the presence test if the individual satisfies one of four alternative tests: (1) The individual is present in the relevant U.S. territory for at least 549 days during the three-year period consisting of the current taxable year and the two immediately preceding taxable years, provided the individual is present in the U.S. territory for at least 60 days during each taxable year of the period; (2) the individual is present no more than 90 days in the United States during the taxable year; (3) the individual has no more than $3,000 of earned income from U.S. sources and is present for more days in the U.S. territory than in the United States during the taxable year; or (4) the individual has no significant connection to the United States during the taxable year. The term ‘‘significant connection’’ is generally defined as a permanent home, voter registration, spouse, or minor child in the United States. See § 1.937–1(c)(5). Section 1.937–1 also provides that certain days count as days of presence in the relevant U.S. territory for purposes of the presence test, even if the individual is not physically present in the U.S. territory (constructive presence). VerDate Sep<11>2014 14:07 Aug 26, 2015 Jkt 235001 Explanation of Provisions Special Analyses Following the original issuance of § 1.937–1, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) received comments requesting that the presence test be revisited to make it more flexible. These comments included a proposal to allow days of constructive presence for business or personal travel outside of the relevant U.S. territory. The Treasury Department and the IRS have concluded that it would be appropriate to allow additional days of constructive presence subject to certain limitations. Accordingly, these proposed regulations provide an additional rule for calculating days of presence in the relevant U.S. territory for purposes of the presence test in § 1.937–1(c)(1). Under the proposed amendment, an individual would be considered to be present in the relevant U.S. territory for up to 30 days during which the individual is outside of both the United States and the relevant U.S. territory. The proposed amendment would not apply, however, if the number of days that the individual is considered to be present in the United States during the taxable year equals or exceeds the number of days that the individual is considered to be present in the relevant U.S. territory during the taxable year, determined without taking into account any days for which the individual would be treated as present in the U.S. territory under this proposed amendment. Furthermore, the 30-day constructive presence rule would not apply for purposes of calculating the minimum 60 days of presence in the relevant U.S. territory that is required for the 549-day test under § 1.937– 1(c)(1)(ii). Therefore, an individual invoking § 1.937–1(c)(1)(ii) must otherwise be considered to have been present at least 60 days in the relevant U.S. territory in each of the three years in order to benefit from the 30-day constructive presence rule. Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact 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, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Proposed Effective/Applicability Date These amendments to the regulations are proposed to apply to taxable years beginning after the date these regulations are published as final regulations in the Federal Register. Reliance on Proposed Regulations Until these regulations are published as final regulations in the Federal Register, taxpayers may rely on these proposed regulations with respect to taxable years beginning on or after the date these proposed regulations are published in the Federal Register. PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 Comments and Requests for Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the ADDRESSES heading. The Treasury Department and the IRS request comments on all aspects of the proposed rules. All comments will be available at www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register. Drafting Information The principal author of these proposed regulations is Cleve Lisecki, formerly of the Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is proposed to be amended as follows: PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ Authority: 26 U.S.C. 7805 * * * Section 1.937–1 also issued under 26 U.S.C. 937(a). * * * E:\FR\FM\27AUP1.SGM 27AUP1 Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Proposed Rules Par. 2. Section 1.937–1 is amended as follows: ■ 1. Revising paragraph (c)(3)(i)(B) and paragraph (c)(3)(i)(C)(2). ■ 2. Adding paragraph (c)(3)(i)(D). ■ 3. Revising Example 1 of paragraph (g). ■ 4. Redesignating Examples 2 through 10 of paragraph (g) as Examples 5 through 13 respectively. ■ 5. Adding new Examples 2, 3, and 4 to paragraph (g). ■ 6. Revising newly re-designated Example 5 of paragraph (g). ■ 7. Adding a new sentence to the end of paragraph (i). The revisions and additions read as follows: ■ § 1.937–1 Bona fide residency in a possession. rmajette on DSK2VPTVN1PROD with PROPOSALS * * * * * (c) * * * (3) * * * (i) * * * (B) Any day that an individual is outside of the relevant possession to receive, or to accompany on a full-time basis a parent, spouse, or child (as defined in section 152(f)(1)) who is receiving, qualifying medical treatment as defined in paragraph (c)(4) of this section; (C) * * * (1) * * * (2) Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which the individual’s place of abode is located; and (D) Any day not described in paragraph (c)(3)(i)(B) or (C) of this section that an individual is outside of the United States and the relevant possession, except that an individual will not be considered present in the relevant possession under this paragraph (c)(3)(i)(D) for more than 30 days during the taxable year, and this paragraph (c)(3)(i)(D) does not apply for purposes of calculating the required minimum 60 days of presence in the relevant possession under paragraph (c)(1)(ii) of this section. Furthermore, this paragraph (c)(3)(i)(D) applies only if the number of days that the individual is considered to be present in the relevant possession during the taxable year, determined without regard to this paragraph (c)(3)(i)(D), exceeds the number of days that the individual is considered to be present in the United States during the taxable year. * * * * * (g) * * * Example 1. Presence test. H, a U.S. citizen, is engaged in a profession that requires frequent travel. In each of the years 2016 and 2017, H spends 195 days in Possession N and VerDate Sep<11>2014 14:07 Aug 26, 2015 Jkt 235001 the balance of the year in the United States. In 2018, H spends 160 days in Possession N and the balance of the year in the United States. Thus, H spends a total of 550 days in Possession N for the three-year period consisting of years 2016, 2017, and 2018. Under paragraph (c)(1)(ii) of this section, H satisfies the presence test of paragraph (c) of this section with respect to Possession N for taxable year 2018 because H is present in Possession N for more than the required 549 days during the three-year period of 2016 through 2018 and is present in Possession N for at least 60 days during each of those taxable years. Assuming that in 2018 H does not have a tax home outside of Possession N and does not have a closer connection to the United States or a foreign country under paragraphs (d) and (e) of this section respectively, then regardless of whether H was a bona fide resident of Possession N in 2016 and 2017, H is a bona fide resident of Possession N for taxable year 2018. Example 2. Presence test. Same facts as Example 1, except that in 2018, H spends 130 days in Possession N, 110 days in foreign countries, and 125 days in the United States. Because H satisfies the requirements of paragraph (c)(3)(i)(D) of this section, 30 of the days spent in foreign countries during 2018 are treated as days of presence in Possession N. Thus, H will be treated as being present for 160 days in Possession N for 2018. Under paragraph (c)(1)(ii) of this section, H meets the presence test of paragraph (c) of this section with respect to Possession N for taxable year 2018 because H is present in Possession N for 550 days (more than the required 549 days) during the three-year period of 2016 through 2018 and is present in Possession N for at least 60 days in each of those taxable years. As in Example 1, assuming that in 2018 H does not have a tax home outside of Possession N and does not have a closer connection to the United States or a foreign country under paragraphs (d) and (e) of this section respectively, then regardless of whether H was a bona fide resident of Possession N in 2016 and 2017, H is a bona fide resident of Possession N in 2018. Example 3. Presence test. Same facts as Example 1, except that in 2018, H spends 130 days in Possession N, 100 days in foreign countries, and 135 days in the United States. Under these facts, H does not satisfy paragraph (c)(1)(ii) of this section for taxable year 2018 because H is present in Possession N for only 520 days (less than the required 549 days) during the three-year period of 2016 through 2018. The rule of paragraph (c)(3)(i)(D) of this section (treating up to 30 days spent in foreign countries as days of presence in Possession N) is not available because H fails to satisfy the condition that H be present more days in Possession N than in the United States during 2018, determined without regard to the application of paragraph (c)(3)(i)(D) of this section. Example 4. Presence test. Same facts as Example 1, except that in 2016, H spends 360 days in Possession N and six days in the United States; in 2017, H spends 45 days in Possession N, 290 days in foreign countries, and 30 days in the United States; and in 2018, H spends 180 days in Possession N and PO 00000 Frm 00015 Fmt 4702 Sfmt 9990 51977 185 days in the United States. Under these facts, H does not satisfy paragraph (c)(1)(ii) of this section for taxable year 2018. During the three-year period from 2016 through 2018, H is present in Possession N for 615 days, including 30 of the days spent in foreign countries in 2017, which are treated under paragraph (c)(3)(i)(D) of this section as days of presence in Possession N. Although H is present in Possession N for more than the required 549 days during the three-year period, H is only present for 45 days in Possession N during one of the taxable years (2017) of the period, less than the 60 days of minimum presence required under paragraph (c)(1)(ii) of this section. The rule of paragraph (c)(3)(i)(D) of this section does not apply for purposes of determining whether H is present in Possession N for the 60-day minimum required under paragraph (c)(1)(ii) of this section. Example 5. Presence test. W, a U.S. citizen, owns a condominium in Possession P where she spends part of the taxable year. W also owns a house in State N near her grown children and grandchildren. W is retired and her income consists solely of pension payments, dividends, interest, and Social Security benefits. For 2016, W spends 145 days in Possession P, 101 days in Europe and Asia on vacation, and 120 days in State N. For taxable year 2016, W is not present in Possession P for at least 183 days, is present in the United States for more than 90 days, and has a significant connection to the United States by reason of her permanent home. However, under paragraph (c)(1)(iv) of this section, W still satisfies the presence test of paragraph (c) of this section with respect to Possession P for taxable year 2016 because she has no earned income in the United States and is present for more days in Possession P than in the United States. * * * * * (i) * * * Notwithstanding the foregoing, paragraph (c)(3)(i)(D) and Examples 1, 2, 3, 4, and 5 of paragraph (g) of this section apply for taxable years beginning after the date these regulations are published as final regulations in the Federal Register. John Dalrymple, Deputy Commissioner for Services and Enforcement. [FR Doc. 2015–21258 Filed 8–26–15; 8:45 am] BILLING CODE 4830–01–P E:\FR\FM\27AUP1.SGM 27AUP1

Agencies

[Federal Register Volume 80, Number 166 (Thursday, August 27, 2015)]
[Proposed Rules]
[Pages 51975-51977]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21258]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-109813-11]
RIN 1545-BK18


Residence Rules Involving U.S. Possessions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: This document contains proposed amendments to the regulations 
for determining whether an individual is a bona fide resident of a U.S. 
territory. These proposed amendments affect individuals establishing 
bona fide residency in a U.S. territory by allowing additional days of 
constructive presence in a U.S. territory.

DATES: Written or electronic comments and requests for a public hearing 
must be received by November 25, 2015.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-109813-11), room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
109813-11), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically, via the Federal 
eRulemaking Portal at www.regulations.gov (IRS REG-109813-11).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Stephen Huggs, (202) 317-6941; concerning submission of comments and/or 
requests for a hearing, Oluwafunmilayo (Funmi) Taylor, (202) 317-6901 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    This document contains proposed amendments to the Income Tax 
Regulations (26 CFR part 1) under section 937 of the Internal Revenue 
Code (Code). Section 937 was added to the Code by the American Jobs 
Creation Act of 2004 (Public Law 108-357, 118

[[Page 51976]]

Stat. 1418 (2004)). Section 937(a) provides rules for determining if an 
individual is a bona fide resident of a U.S. possession (generally 
referred to in this preamble as a ``U.S. territory'').
    On April 11, 2005, the Federal Register published temporary 
regulations (TD 9194, 70 FR 18920) and proposed regulations (REG-
159243-03, 70 FR 18949) under section 937, providing rules to implement 
section 937 and conforming existing regulations to other legislative 
changes with respect to the U.S. territories. On January 31, 2006, the 
Federal Register published final regulations (TD 9248, 71 FR 4996) 
under section 937(a) concerning whether an individual is a bona fide 
resident of a U.S. territory. Section 1.937-1 was amended on November 
14, 2006, and on April 9, 2008, to provide additional guidance 
concerning bona fide residency in the U.S. territories. See TD 9297 (71 
FR 66232) and TD 9391 (73 FR 19350).
    Section 937(a) provides that an individual is a bona fide resident 
of a U.S. territory if the individual meets a presence test, a tax home 
test, and a closer connection test. In order to satisfy the presence 
test, an individual must be present in the U.S. territory for at least 
183 days during the taxable year (183-day rule), unless otherwise 
provided in regulations.
    Section 1.937-1 provides several alternatives to the 183-day rule. 
An individual who does not satisfy the 183-day rule nevertheless meets 
the presence test if the individual satisfies one of four alternative 
tests: (1) The individual is present in the relevant U.S. territory for 
at least 549 days during the three-year period consisting of the 
current taxable year and the two immediately preceding taxable years, 
provided the individual is present in the U.S. territory for at least 
60 days during each taxable year of the period; (2) the individual is 
present no more than 90 days in the United States during the taxable 
year; (3) the individual has no more than $3,000 of earned income from 
U.S. sources and is present for more days in the U.S. territory than in 
the United States during the taxable year; or (4) the individual has no 
significant connection to the United States during the taxable year. 
The term ``significant connection'' is generally defined as a permanent 
home, voter registration, spouse, or minor child in the United States. 
See Sec.  1.937-1(c)(5). Section 1.937-1 also provides that certain 
days count as days of presence in the relevant U.S. territory for 
purposes of the presence test, even if the individual is not physically 
present in the U.S. territory (constructive presence).

Explanation of Provisions

    Following the original issuance of Sec.  1.937-1, the Department of 
the Treasury (Treasury Department) and the Internal Revenue Service 
(IRS) received comments requesting that the presence test be revisited 
to make it more flexible. These comments included a proposal to allow 
days of constructive presence for business or personal travel outside 
of the relevant U.S. territory. The Treasury Department and the IRS 
have concluded that it would be appropriate to allow additional days of 
constructive presence subject to certain limitations. Accordingly, 
these proposed regulations provide an additional rule for calculating 
days of presence in the relevant U.S. territory for purposes of the 
presence test in Sec.  1.937-1(c)(1).
    Under the proposed amendment, an individual would be considered to 
be present in the relevant U.S. territory for up to 30 days during 
which the individual is outside of both the United States and the 
relevant U.S. territory. The proposed amendment would not apply, 
however, if the number of days that the individual is considered to be 
present in the United States during the taxable year equals or exceeds 
the number of days that the individual is considered to be present in 
the relevant U.S. territory during the taxable year, determined without 
taking into account any days for which the individual would be treated 
as present in the U.S. territory under this proposed amendment. 
Furthermore, the 30-day constructive presence rule would not apply for 
purposes of calculating the minimum 60 days of presence in the relevant 
U.S. territory that is required for the 549-day test under Sec.  1.937-
1(c)(1)(ii). Therefore, an individual invoking Sec.  1.937-1(c)(1)(ii) 
must otherwise be considered to have been present at least 60 days in 
the relevant U.S. territory in each of the three years in order to 
benefit from the 30-day constructive presence rule.

Proposed Effective/Applicability Date

    These amendments to the regulations are proposed to apply to 
taxable years beginning after the date these regulations are published 
as final regulations in the Federal Register.

Reliance on Proposed Regulations

    Until these regulations are published as final regulations in the 
Federal Register, taxpayers may rely on these proposed regulations with 
respect to taxable years beginning on or after the date these proposed 
regulations are published in the Federal Register.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact 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, and because the regulations do not impose a 
collection of information on small entities, the Regulatory Flexibility 
Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of 
the Code, this regulation has been submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small business.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the Addresses heading. 
The Treasury Department and the IRS request comments on all aspects of 
the proposed rules. All comments will be available at 
www.regulations.gov or upon request. A public hearing will be scheduled 
if requested in writing by any person that timely submits written 
comments. If a public hearing is scheduled, notice of the date, time, 
and place for the public hearing will be published in the Federal 
Register.

Drafting Information

    The principal author of these proposed regulations is Cleve 
Lisecki, formerly of the Office of Associate Chief Counsel 
(International). However, other personnel from the Treasury Department 
and the IRS participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

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 * * *
    Section 1.937-1 also issued under 26 U.S.C. 937(a). * * *


[[Page 51977]]


0
Par. 2. Section 1.937-1 is amended as follows:
0
1. Revising paragraph (c)(3)(i)(B) and paragraph (c)(3)(i)(C)(2).
0
2. Adding paragraph (c)(3)(i)(D).
0
3. Revising Example 1 of paragraph (g).
0
4. Redesignating Examples 2 through 10 of paragraph (g) as Examples 5 
through 13 respectively.
0
5. Adding new Examples 2, 3, and 4 to paragraph (g).
0
6. Revising newly re-designated Example 5 of paragraph (g).
0
7. Adding a new sentence to the end of paragraph (i).
    The revisions and additions read as follows:


Sec.  1.937-1  Bona fide residency in a possession.

* * * * *
    (c) * * *
    (3) * * *
    (i) * * *
    (B) Any day that an individual is outside of the relevant 
possession to receive, or to accompany on a full-time basis a parent, 
spouse, or child (as defined in section 152(f)(1)) who is receiving, 
qualifying medical treatment as defined in paragraph (c)(4) of this 
section;
    (C) * * *
    (1) * * *
    (2) Period for which a mandatory evacuation order is in effect for 
the geographic area in the relevant possession in which the 
individual's place of abode is located; and
    (D) Any day not described in paragraph (c)(3)(i)(B) or (C) of this 
section that an individual is outside of the United States and the 
relevant possession, except that an individual will not be considered 
present in the relevant possession under this paragraph (c)(3)(i)(D) 
for more than 30 days during the taxable year, and this paragraph 
(c)(3)(i)(D) does not apply for purposes of calculating the required 
minimum 60 days of presence in the relevant possession under paragraph 
(c)(1)(ii) of this section. Furthermore, this paragraph (c)(3)(i)(D) 
applies only if the number of days that the individual is considered to 
be present in the relevant possession during the taxable year, 
determined without regard to this paragraph (c)(3)(i)(D), exceeds the 
number of days that the individual is considered to be present in the 
United States during the taxable year.
* * * * *
    (g) * * *

    Example 1. Presence test. H, a U.S. citizen, is engaged in a 
profession that requires frequent travel. In each of the years 2016 
and 2017, H spends 195 days in Possession N and the balance of the 
year in the United States. In 2018, H spends 160 days in Possession 
N and the balance of the year in the United States. Thus, H spends a 
total of 550 days in Possession N for the three-year period 
consisting of years 2016, 2017, and 2018. Under paragraph (c)(1)(ii) 
of this section, H satisfies the presence test of paragraph (c) of 
this section with respect to Possession N for taxable year 2018 
because H is present in Possession N for more than the required 549 
days during the three-year period of 2016 through 2018 and is 
present in Possession N for at least 60 days during each of those 
taxable years. Assuming that in 2018 H does not have a tax home 
outside of Possession N and does not have a closer connection to the 
United States or a foreign country under paragraphs (d) and (e) of 
this section respectively, then regardless of whether H was a bona 
fide resident of Possession N in 2016 and 2017, H is a bona fide 
resident of Possession N for taxable year 2018.
    Example 2. Presence test. Same facts as Example 1, except that 
in 2018, H spends 130 days in Possession N, 110 days in foreign 
countries, and 125 days in the United States. Because H satisfies 
the requirements of paragraph (c)(3)(i)(D) of this section, 30 of 
the days spent in foreign countries during 2018 are treated as days 
of presence in Possession N. Thus, H will be treated as being 
present for 160 days in Possession N for 2018. Under paragraph 
(c)(1)(ii) of this section, H meets the presence test of paragraph 
(c) of this section with respect to Possession N for taxable year 
2018 because H is present in Possession N for 550 days (more than 
the required 549 days) during the three-year period of 2016 through 
2018 and is present in Possession N for at least 60 days in each of 
those taxable years. As in Example 1, assuming that in 2018 H does 
not have a tax home outside of Possession N and does not have a 
closer connection to the United States or a foreign country under 
paragraphs (d) and (e) of this section respectively, then regardless 
of whether H was a bona fide resident of Possession N in 2016 and 
2017, H is a bona fide resident of Possession N in 2018.
    Example 3. Presence test. Same facts as Example 1, except that 
in 2018, H spends 130 days in Possession N, 100 days in foreign 
countries, and 135 days in the United States. Under these facts, H 
does not satisfy paragraph (c)(1)(ii) of this section for taxable 
year 2018 because H is present in Possession N for only 520 days 
(less than the required 549 days) during the three-year period of 
2016 through 2018. The rule of paragraph (c)(3)(i)(D) of this 
section (treating up to 30 days spent in foreign countries as days 
of presence in Possession N) is not available because H fails to 
satisfy the condition that H be present more days in Possession N 
than in the United States during 2018, determined without regard to 
the application of paragraph (c)(3)(i)(D) of this section.
    Example 4. Presence test. Same facts as Example 1, except that 
in 2016, H spends 360 days in Possession N and six days in the 
United States; in 2017, H spends 45 days in Possession N, 290 days 
in foreign countries, and 30 days in the United States; and in 2018, 
H spends 180 days in Possession N and 185 days in the United States. 
Under these facts, H does not satisfy paragraph (c)(1)(ii) of this 
section for taxable year 2018. During the three-year period from 
2016 through 2018, H is present in Possession N for 615 days, 
including 30 of the days spent in foreign countries in 2017, which 
are treated under paragraph (c)(3)(i)(D) of this section as days of 
presence in Possession N. Although H is present in Possession N for 
more than the required 549 days during the three-year period, H is 
only present for 45 days in Possession N during one of the taxable 
years (2017) of the period, less than the 60 days of minimum 
presence required under paragraph (c)(1)(ii) of this section. The 
rule of paragraph (c)(3)(i)(D) of this section does not apply for 
purposes of determining whether H is present in Possession N for the 
60-day minimum required under paragraph (c)(1)(ii) of this section.
    Example 5. Presence test. W, a U.S. citizen, owns a condominium 
in Possession P where she spends part of the taxable year. W also 
owns a house in State N near her grown children and grandchildren. W 
is retired and her income consists solely of pension payments, 
dividends, interest, and Social Security benefits. For 2016, W 
spends 145 days in Possession P, 101 days in Europe and Asia on 
vacation, and 120 days in State N. For taxable year 2016, W is not 
present in Possession P for at least 183 days, is present in the 
United States for more than 90 days, and has a significant 
connection to the United States by reason of her permanent home. 
However, under paragraph (c)(1)(iv) of this section, W still 
satisfies the presence test of paragraph (c) of this section with 
respect to Possession P for taxable year 2016 because she has no 
earned income in the United States and is present for more days in 
Possession P than in the United States.
* * * * *
    (i) * * * Notwithstanding the foregoing, paragraph (c)(3)(i)(D) and 
Examples 1, 2, 3, 4, and 5 of paragraph (g) of this section apply for 
taxable years beginning after the date these regulations are published 
as final regulations in the Federal Register.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2015-21258 Filed 8-26-15; 8:45 am]
 BILLING CODE 4830-01-P