Allocation of Controlled Group Research Credit, 13183-13185 [2018-06241]
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13183
Rules and Regulations
Federal Register
Vol. 83, No. 60
Wednesday, March 28, 2018
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Administrative Procedure Act (5 U.S.C.
553). FDA has determined that notice
and public comment are unnecessary
because the amendments to the
regulations provide only technical
changes to correct an office name and
address, and are nonsubstantive. To the
extent that 5 U.S.C. 553(d) applies, FDA
has determined that, for the same
reasons, good cause exists for making
this rule effective upon publication in
the Federal Register.
Food and Drug Administration
List of Subjects in 21 CFR Part 1140
21 CFR Part 1140
Advertising, Labeling, Smoking,
Tobacco.
[Docket No. FDA–2018–N–0011]
Cigarettes, Smokeless Tobacco, and
Covered Tobacco Products; Change of
Office Name and Address; Technical
Amendment
AGENCY:
Food and Drug Administration,
HHS.
PART 1140—CIGARETTES,
SMOKELESS TOBACCO, AND
COVERED TOBACCO PRODUCTS
Final rule; technical
amendment.
ACTION:
The Food and Drug
Administration (FDA or Agency) is
amending its Cigarettes, Smokeless
Tobacco, and Covered Tobacco Products
regulations to reflect a change of office
name and mailing address for the Center
for Tobacco Products’ (CTP’s) Office of
Compliance and Enforcement. This
action is editorial in nature and is
intended to improve the accuracy of the
Agency’s regulations.
DATES: This rule is effective March 28,
2018.
FOR FURTHER INFORMATION CONTACT: May
Nelson, Center for Tobacco Products,
Food and Drug Administration,
Document Control Center, 10903 New
Hampshire Ave., Bldg. 71, Rm. G335,
Silver Spring, MD 20993, 1–877–CTP–
1373, ctpregulations@fda.hhs.gov.
SUPPLEMENTARY INFORMATION: FDA is
amending our regulations in part 1140
(21 CFR part 1140) to reflect the change
of an office name and the mailing
address in the regulation. The office
name was the Office of Compliance and
the new office name is Office of
Compliance and Enforcement. The
mailing address for notices submitted
under § 1140.30(a)(2) is updated to
CTP’s Document Control Center, 10903
New Hampshire Ave., Bldg. 71, Rm.
G335, Silver Spring, MD 20993.
Publication of this document
constitutes final action under the
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SUMMARY:
VerDate Sep<11>2014
16:22 Mar 27, 2018
Therefore, under the Federal Food,
Drug, and Cosmetic Act and under
authority delegated to the Commissioner
of Food and Drugs, 21 CFR part 1140 is
amended as follows:
Jkt 244001
1. The authority citation for part 1140
continues to read as follows:
■
Authority: 21 U.S.C. 301 et seq., Sec. 102,
Pub. L. 111–31, 123 Stat. 1776.
2. Amend § 1140.30 by revising the
last sentence of paragraph (a)(2) to read
as follows:
■
§ 1140.30 Scope of permissible forms of
labeling and advertising.
(a) * * *
(2) * * * The manufacturer,
distributor, or retailer shall send this
notice to the Office of Compliance and
Enforcement, Center for Tobacco
Products, Food and Drug
Administration, Document Control
Center, 10903 New Hampshire Ave.,
Bldg. 71, Rm. G335, Silver Spring, MD
20993.
*
*
*
*
*
Dated: March 21, 2018.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2018–06164 Filed 3–27–18; 8:45 am]
BILLING CODE 4164–01–P
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9832]
RIN 1545–BL76
Allocation of Controlled Group
Research Credit
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
This document contains final
regulations relating to the allocation of
the credit for increasing research
activities (research credit) to
corporations and trades or businesses
under common control (controlled
groups). This document also contains
final regulations relating to the
allocation of the railroad track
maintenance credit and the election for
a reduced research credit.
DATES: Effective date: These regulations
are effective on April 2, 2018.
Applicability date: For dates of
applicability, see §§ 1.41–6(j), 1.45G–
1(g), and 1.280C–4(c).
FOR FURTHER INFORMATION CONTACT:
James Holmes, at (202) 317–4137; (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
SUMMARY:
Background
This document amends 26 CFR part 1
to provide rules relating to sections 41,
45G, and 280C of the Internal Revenue
Code (Code). On April 3, 2015, the
Department of the Treasury (Treasury
Department) and the IRS published final
and temporary regulations (TD 9717)
(temporary regulations) in the Federal
Register (80 FR 18096) and a notice of
proposed rulemaking by cross-reference
to the temporary regulations (REG–
133489–13) in the Federal Register (80
FR 18171) (proposed regulations). On
April 27, 2015, the Treasury Department
and the IRS published corrections to TD
9717 in the Federal Register (80 FR
23237 and 80 FR 23238). The temporary
regulations expire on April 2, 2018.
The preamble to the temporary
regulations fully describes the updates
to the regulations under sections 41,
45G, and 280C. See 80 FR 18097, April
3, 2015. The temporary regulations
updated the section 41 rules in a
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13184
Federal Register / Vol. 83, No. 60 / Wednesday, March 28, 2018 / Rules and Regulations
manner that is consistent with the
amendments made to section
41(f)(1)(A)(ii) and section 41(f)(1)(B)(ii)
contained in Section 301(c) of the
American Taxpayer Relief Act of 2012,
Public Law 112–240, H.R. 8 (ATRA).
The temporary regulations also updated
the regulations under § 1.45G–1(f) and
an example under § 1.280C–4(b)(2)
because they are based on the rules of
section 41(f) in effect before the ATRA
amendments.
One written comment responding to
the proposed regulations was received.
No requests for a public hearing were
made and no public hearing was held.
After consideration of the comment, the
proposed regulations are adopted
without change by this Treasury
decision.
Summary of Comment and Explanation
of Provisions
No comments were received related to
the proposed regulations under section
41 or section 280C. One commenter
requested the regulations under
§ 1.45G–1(f)(8) be amended to explicitly
provide that qualified railroad track
maintenance expenditures (QRTMEs)
associated with a track assignment
reside with the assignee (and not with
the track owner) when there has been an
intra-group track assignment. Revising
those rules is beyond the scope of these
regulations. Therefore, the Treasury
Department and IRS decline to adopt
the comment.
daltland on DSKBBV9HB2PROD with RULES
Effect on Other Documents
The temporary regulations are
obsolete for taxable years beginning on
or after April 2, 2018.
Special Analyses
Certain IRS regulations, including
these, 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. Because the final 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, the notice
of proposed rulemaking that preceded
the final regulations was submitted to
the Chief Counsel for Advocacy of the
Small Business Administration for
comment on their impact on small
business. No comments were received
on the proposed regulations.
These final regulations provide
necessary guidance for corporations that
file a consolidated return regarding the
allocation of the group credit to
members of certain controlled groups of
VerDate Sep<11>2014
16:22 Mar 27, 2018
Jkt 244001
corporations and trades or businesses
under common control. It is necessary
to provide this administrative relief for
these controlled groups as of April 2,
2018, the expiration date of the
temporary regulations, to remove
impediments to claiming the research
and railroad track maintenance credits
and making the election for a reduced
research credit. Accordingly, good cause
is found for dispensing with a delayed
effective date pursuant to 5 U.S.C.
553(d).
Drafting Information
The principal author of these
regulations is James Holmes, Office of
the Associate Chief Counsel
(Passthroughs and Special Industries).
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.
Amendments to the Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by revising the
sectional authority entires for §§ 1.41–6
and 1.280C–4 and adding a sectional
authority for § 1.45G–1 in numerical
order to read in part as follows:
■
Authority: 26 U.S.C. 7805 * * *
*
*
*
*
*
Section 1.41–6 also issued under 26 U.S.C.
41(f)(1) and 1502.
*
*
*
*
*
Section 1.45G–1 also issued under 26 U.S.C.
45G(e)(2).
*
*
*
*
*
Section 1.280C–4 also issued under 26 U.S.C.
280C(c)(4).
*
*
*
*
*
Par. 2. Section 1.41–6 is amended by
revising paragraphs (c), (d)(1) and (3),
(e), and (j)(4) and (5) to read as follows:
■
§ 1.41–6
Aggregation of expenditures.
*
*
*
*
*
(c) Allocation of the group credit. The
group credit is allocated to each member
of the controlled group on a
proportionate basis to its share of the
aggregate of the qualified research
expenses, basic research payments, and
amounts paid or incurred to energy
research consortiums taken into account
for the taxable year by such controlled
group for purposes of the credit. For
purposes of paragraphs (c), (d), and (e)
of this section, qualified research
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expenses, basic research payments, and
amounts paid or incurred to energy
research consortiums are collectively
referred to as QREs.
(d) Special rules for consolidated
groups—(1) In general. For purposes of
applying paragraph (c) of this section,
members of a consolidated group who
are members of a controlled group are
treated as a single member of the
controlled group.
*
*
*
*
*
(3) Special rule for allocation of group
credit among consolidated group
members. The portion of the group
credit that is allocated to a consolidated
group is allocated to each member of the
consolidated group on a proportionate
basis to its share of the aggregate of the
QREs taken into account for the taxable
year by such consolidated group for
purposes of the credit.
(e) Examples. The following examples
illustrate the provisions of paragraphs
(c) and (d) of this section.
Example 1. Controlled group. A, B, and C
are a controlled group. A had $100x, B
$300x, and C $500x of qualified research
expenses for the year, totaling $900x for the
group. A, in the course of its trade or
business, also made a payment of $100x to
an energy research consortium for energy
research. The group’s QREs total 1000x and
the group calculated its total research credit
to be $60x for the year. Based on each
member’s proportionate share of the
controlled group’s aggregate QREs, A is
allocated $12x, B $18x, and C $30x of the
credit.
Example 2. Consolidated group is a
member of controlled group. The controlled
group’s members are D, E, F, G, and H. F, G,
and H file a consolidated return and are
treated as a single member (FGH) of the
controlled group. D had $240x, E $360x, and
FGH $600x of qualified research expenses for
the year ($1,200x aggregate). The group
calculated its research credit to be $100x for
the year. Based on the proportion of each
member’s share of QREs to the controlled
group’s aggregate QREs for the taxable year
D is allocated $20x, E $30x, and FGH $50x
of the credit. The $50x of credit allocated to
FGH is then allocated to the consolidated
group members based on the proportion of
each consolidated group member’s share of
QREs to the consolidated group’s aggregate
QREs. F had $120x, G $240x, and H $240x
of QREs for the year. Therefore, F is allocated
$10x, G is allocated $20x, and H is allocated
$20x.
*
*
*
*
*
(j) * * *
(4) Taxable years beginning after
December 31, 2011. Paragraphs (c),
(d)(1) and (3), (e), and (j)(4) and (5) of
this section apply to taxable years
beginning on or after April 2, 2018. For
taxable years ending before April 2,
2018, see § 1.41–6T as contained in 26
CFR part 1, as revised April 1, 2017.
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Federal Register / Vol. 83, No. 60 / Wednesday, March 28, 2018 / Rules and Regulations
(5) Taxable years beginning before
January 1, 2012. See § 1.41–6 as
contained in 26 CFR part 1, revised
April 1, 2014.
§ 1.41–6T
[Removed]
Par. 3. Section 1.41–6T is removed.
■ Par. 4. Section 1.45G–1 is amended by
revising paragraphs (f)(4) and (5) and
(g)(4) and (5) to read as follows:
■
§ 1.45G–1
credit.
Railroad track maintenance
*
*
*
*
*
(f) * * *
(4) Allocation of the group credit. The
group credit is allocated to each member
of the controlled group on a
proportionate basis to its share of the
aggregate of the QRTMEs taken into
account for the taxable year by such
controlled group for purposes of the
credit.
(5) Special rules for consolidated
groups—(i) In general. For purposes of
applying paragraph (f)(4) of this section,
members of a consolidated group who
are members of a controlled group are
treated as a single member of the
controlled group.
(ii) Special rule for allocation of group
credit among consolidated group
members. The portion of the group
credit that is allocated to a consolidated
group is allocated to each member of the
consolidated group on a proportionate
basis to its share of the aggregate of the
QRTMEs taken into account for the
taxable year by such consolidated group
for purposes of the credit.
*
*
*
*
*
(g) * * *
(4) Taxable years beginning after
December 31, 2011. Paragraphs (f)(4)
and (5) and (g)(4) and (5) of this section
apply to taxable years beginning on or
after April 2, 2018. For taxable years
ending before April 2, 2018, see
§ 1.45G–1T as contained in 26 CFR part
1, as revised April 1, 2017.
(5) Taxable years beginning before
January 1, 2012. See § 1.45–1 as
contained in 26 CFR part 1, revised
April 1, 2014.
§ 1.45G–1T
controlled group of corporations (within the
meaning of section 41(f)(5)). A, B, and C each
attach a statement to the 2012 Form 6765,
‘‘Credit for Increasing Research Activities,’’
showing A and C were the only members of
the controlled group to have qualified
research expenses when calculating the
group credit. A and C report their allocated
portions of the group credit on the 2012 Form
6765 and B reports no research credit on
Form 6765. Pursuant to paragraph (a) of this
section, A and B, but not C, each make an
election for the reduced credit under section
280C(c)(3)(B) on the 2012 Form 6765. In
December 2013, B determines it had qualified
research expenses in 2012 resulting in an
increased group credit. On an amended 2012
Form 6765, A, B, and C each report their
allocated portions of the group credit. B
reports its credit as a regular credit under
section 41(a) and reduces the credit under
section 280C(c)(3)(B). C may not reduce its
credit under section 280C(c)(3)(B) because C
did not make an election for the reduced
credit with its original return.
(c) * * *
(2) Taxable years beginning after
December 31, 2011. Paragraphs (b)(2)
and (c)(2) and (3) of this section apply
to taxable years beginning on or after
April 2, 2018. For taxable years ending
before April 2, 2018, see § 1.280C–4T as
contained in 26 CFR part 1, as revised
April 1, 2017.
(3) For taxable years ending before
January 1, 2012. See § 1.280C–4 as
contained in 26 CFR part 1, revised
April 1, 2014.
§ 1.280C–4T
■
[Removed]
Par. 7. Section 1.280C–4T is removed.
Par. 5. Section 1.45G–1T is removed.
Par. 6. Section 1.280C–4 is amended
by revising paragraphs (b)(2) and (c)(2)
and (3) to read as follows:
■
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*
Credit for increasing research
*
*
(b) * * *
*
*
[FR Doc. 2018–06241 Filed 3–27–18; 8:45 am]
II. Background Information and
Regulatory History
The Coast Guard is issuing this
temporary rule without prior notice and
opportunity to comment pursuant to
authority under section 4(a) of the
Administrative Procedure Act (APA) (5
U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and opportunity to
comment when the agency for good
cause finds that those procedures are
‘‘impracticable, unnecessary, or contrary
to the public interest.’’ Under 5 U.S.C.
553(b)(B), the Coast Guard finds that
good cause exists for not publishing a
notice of proposed rulemaking (NPRM)
with respect to this rule because it is
impracticable and contrary to the public
interest. Increasing high water in this
area requires immediate action to
BILLING CODE 4830–01–P
DEPARTMENT OF HOMELAND
SECURITY
33 CFR Part 165
VerDate Sep<11>2014
[Docket Number USCG–2018–0229]
RIN 1625–AA00
Safety Zone; Lower Mississippi River,
Port Gibson, MS
Coast Guard, DHS.
Temporary final rule.
AGENCY:
(2) Example. The following example
illustrates an application of paragraph (b) of
this section: A, B, and C, all of which are
calendar year taxpayers, are members of a
16:22 Mar 27, 2018
Jkt 244001
I. Table of Abbreviations
CFR Code of Federal Regulations
COTP Captain of the Port Sector Lower
Mississippi River
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
§ Section
U.S.C. United States Code
■
§ 1.280C–4
activities.
safety zone for all navigable waters of
the Lower Mississippi River, extending
the entire width of the river, from mile
marker (MM) 405 to MM 408. This
emergency safety zone is necessary to
protect persons, property, and
infrastructure from potential damage
and safety hazards associated with
vessels transiting this area during high
water. This rule prohibits persons and
vessels from entering the safety zone
area unless specifically authorized by
the Captain of the Port Sector Lower
Mississippi River (COTP) or a
designated representative.
DATES: This rule is effective without
actual notice from March 28, 2018
through 7 p.m. on March 31, 2018. For
the purposes of enforcement, actual
notice will be used from 10 a.m. on
March 13, 2018 through March 28, 2018.
ADDRESSES: To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type USCG–2018–
0229 in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on ‘‘Open Docket
Folder’’ on the line associated with this
rule.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
email Petty Officer Todd Manow, Sector
Lower Mississippi River Prevention
Department, U.S. Coast Guard;
telephone 901–521–4813, email
Todd.M.Manow@uscg.mil.
SUPPLEMENTARY INFORMATION:
Kirsten Wielobob,
Deputy Commissioner for Services and
Enforcement.
Approved: March 7, 2018.
David J. Kautter,
Assistant Secretary of the Treasury (Tax
Policy).
Coast Guard
[Removed]
13185
ACTION:
The Coast Guard is
establishing an emergency temporary
SUMMARY:
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]]>Agencies
[Federal Register Volume 83, Number 60 (Wednesday, March 28, 2018)]
[Rules and Regulations]
[Pages 13183-13185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06241]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9832]
RIN 1545-BL76
Allocation of Controlled Group Research Credit
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to the
allocation of the credit for increasing research activities (research
credit) to corporations and trades or businesses under common control
(controlled groups). This document also contains final regulations
relating to the allocation of the railroad track maintenance credit and
the election for a reduced research credit.
DATES: Effective date: These regulations are effective on April 2,
2018.
Applicability date: For dates of applicability, see Sec. Sec.
1.41-6(j), 1.45G-1(g), and 1.280C-4(c).
FOR FURTHER INFORMATION CONTACT: James Holmes, at (202) 317-4137; (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document amends 26 CFR part 1 to provide rules relating to
sections 41, 45G, and 280C of the Internal Revenue Code (Code). On
April 3, 2015, the Department of the Treasury (Treasury Department) and
the IRS published final and temporary regulations (TD 9717) (temporary
regulations) in the Federal Register (80 FR 18096) and a notice of
proposed rulemaking by cross-reference to the temporary regulations
(REG-133489-13) in the Federal Register (80 FR 18171) (proposed
regulations). On April 27, 2015, the Treasury Department and the IRS
published corrections to TD 9717 in the Federal Register (80 FR 23237
and 80 FR 23238). The temporary regulations expire on April 2, 2018.
The preamble to the temporary regulations fully describes the
updates to the regulations under sections 41, 45G, and 280C. See 80 FR
18097, April 3, 2015. The temporary regulations updated the section 41
rules in a
[[Page 13184]]
manner that is consistent with the amendments made to section
41(f)(1)(A)(ii) and section 41(f)(1)(B)(ii) contained in Section 301(c)
of the American Taxpayer Relief Act of 2012, Public Law 112-240, H.R. 8
(ATRA). The temporary regulations also updated the regulations under
Sec. 1.45G-1(f) and an example under Sec. 1.280C-4(b)(2) because they
are based on the rules of section 41(f) in effect before the ATRA
amendments.
One written comment responding to the proposed regulations was
received. No requests for a public hearing were made and no public
hearing was held. After consideration of the comment, the proposed
regulations are adopted without change by this Treasury decision.
Summary of Comment and Explanation of Provisions
No comments were received related to the proposed regulations under
section 41 or section 280C. One commenter requested the regulations
under Sec. 1.45G-1(f)(8) be amended to explicitly provide that
qualified railroad track maintenance expenditures (QRTMEs) associated
with a track assignment reside with the assignee (and not with the
track owner) when there has been an intra-group track assignment.
Revising those rules is beyond the scope of these regulations.
Therefore, the Treasury Department and IRS decline to adopt the
comment.
Effect on Other Documents
The temporary regulations are obsolete for taxable years beginning
on or after April 2, 2018.
Special Analyses
Certain IRS regulations, including these, 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. Because the final 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, the notice of proposed rulemaking that preceded the final
regulations was submitted to the Chief Counsel for Advocacy of the
Small Business Administration for comment on their impact on small
business. No comments were received on the proposed regulations.
These final regulations provide necessary guidance for corporations
that file a consolidated return regarding the allocation of the group
credit to members of certain controlled groups of corporations and
trades or businesses under common control. It is necessary to provide
this administrative relief for these controlled groups as of April 2,
2018, the expiration date of the temporary regulations, to remove
impediments to claiming the research and railroad track maintenance
credits and making the election for a reduced research credit.
Accordingly, good cause is found for dispensing with a delayed
effective date pursuant to 5 U.S.C. 553(d).
Drafting Information
The principal author of these regulations is James Holmes, Office
of the Associate Chief Counsel (Passthroughs and Special Industries).
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.
Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by revising
the sectional authority entires for Sec. Sec. 1.41-6 and 1.280C-4 and
adding a sectional authority for Sec. 1.45G-1 in numerical order to
read in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.41-6 also issued under 26 U.S.C. 41(f)(1) and 1502.
* * * * *
Section 1.45G-1 also issued under 26 U.S.C. 45G(e)(2).
* * * * *
Section 1.280C-4 also issued under 26 U.S.C. 280C(c)(4).
* * * * *
0
Par. 2. Section 1.41-6 is amended by revising paragraphs (c), (d)(1)
and (3), (e), and (j)(4) and (5) to read as follows:
Sec. 1.41-6 Aggregation of expenditures.
* * * * *
(c) Allocation of the group credit. The group credit is allocated
to each member of the controlled group on a proportionate basis to its
share of the aggregate of the qualified research expenses, basic
research payments, and amounts paid or incurred to energy research
consortiums taken into account for the taxable year by such controlled
group for purposes of the credit. For purposes of paragraphs (c), (d),
and (e) of this section, qualified research expenses, basic research
payments, and amounts paid or incurred to energy research consortiums
are collectively referred to as QREs.
(d) Special rules for consolidated groups--(1) In general. For
purposes of applying paragraph (c) of this section, members of a
consolidated group who are members of a controlled group are treated as
a single member of the controlled group.
* * * * *
(3) Special rule for allocation of group credit among consolidated
group members. The portion of the group credit that is allocated to a
consolidated group is allocated to each member of the consolidated
group on a proportionate basis to its share of the aggregate of the
QREs taken into account for the taxable year by such consolidated group
for purposes of the credit.
(e) Examples. The following examples illustrate the provisions of
paragraphs (c) and (d) of this section.
Example 1. Controlled group. A, B, and C are a controlled group.
A had $100x, B $300x, and C $500x of qualified research expenses for
the year, totaling $900x for the group. A, in the course of its
trade or business, also made a payment of $100x to an energy
research consortium for energy research. The group's QREs total
1000x and the group calculated its total research credit to be $60x
for the year. Based on each member's proportionate share of the
controlled group's aggregate QREs, A is allocated $12x, B $18x, and
C $30x of the credit.
Example 2. Consolidated group is a member of controlled group.
The controlled group's members are D, E, F, G, and H. F, G, and H
file a consolidated return and are treated as a single member (FGH)
of the controlled group. D had $240x, E $360x, and FGH $600x of
qualified research expenses for the year ($1,200x aggregate). The
group calculated its research credit to be $100x for the year. Based
on the proportion of each member's share of QREs to the controlled
group's aggregate QREs for the taxable year D is allocated $20x, E
$30x, and FGH $50x of the credit. The $50x of credit allocated to
FGH is then allocated to the consolidated group members based on the
proportion of each consolidated group member's share of QREs to the
consolidated group's aggregate QREs. F had $120x, G $240x, and H
$240x of QREs for the year. Therefore, F is allocated $10x, G is
allocated $20x, and H is allocated $20x.
* * * * *
(j) * * *
(4) Taxable years beginning after December 31, 2011. Paragraphs
(c), (d)(1) and (3), (e), and (j)(4) and (5) of this section apply to
taxable years beginning on or after April 2, 2018. For taxable years
ending before April 2, 2018, see Sec. 1.41-6T as contained in 26 CFR
part 1, as revised April 1, 2017.
[[Page 13185]]
(5) Taxable years beginning before January 1, 2012. See Sec. 1.41-
6 as contained in 26 CFR part 1, revised April 1, 2014.
Sec. 1.41-6T [Removed]
0
Par. 3. Section 1.41-6T is removed.
0
Par. 4. Section 1.45G-1 is amended by revising paragraphs (f)(4) and
(5) and (g)(4) and (5) to read as follows:
Sec. 1.45G-1 Railroad track maintenance credit.
* * * * *
(f) * * *
(4) Allocation of the group credit. The group credit is allocated
to each member of the controlled group on a proportionate basis to its
share of the aggregate of the QRTMEs taken into account for the taxable
year by such controlled group for purposes of the credit.
(5) Special rules for consolidated groups--(i) In general. For
purposes of applying paragraph (f)(4) of this section, members of a
consolidated group who are members of a controlled group are treated as
a single member of the controlled group.
(ii) Special rule for allocation of group credit among consolidated
group members. The portion of the group credit that is allocated to a
consolidated group is allocated to each member of the consolidated
group on a proportionate basis to its share of the aggregate of the
QRTMEs taken into account for the taxable year by such consolidated
group for purposes of the credit.
* * * * *
(g) * * *
(4) Taxable years beginning after December 31, 2011. Paragraphs
(f)(4) and (5) and (g)(4) and (5) of this section apply to taxable
years beginning on or after April 2, 2018. For taxable years ending
before April 2, 2018, see Sec. 1.45G-1T as contained in 26 CFR part 1,
as revised April 1, 2017.
(5) Taxable years beginning before January 1, 2012. See Sec. 1.45-
1 as contained in 26 CFR part 1, revised April 1, 2014.
Sec. 1.45G-1T [Removed]
0
Par. 5. Section 1.45G-1T is removed.
0
Par. 6. Section 1.280C-4 is amended by revising paragraphs (b)(2) and
(c)(2) and (3) to read as follows:
Sec. 1.280C-4 Credit for increasing research activities.
* * * * *
(b) * * *
(2) Example. The following example illustrates an application of
paragraph (b) of this section: A, B, and C, all of which are
calendar year taxpayers, are members of a controlled group of
corporations (within the meaning of section 41(f)(5)). A, B, and C
each attach a statement to the 2012 Form 6765, ``Credit for
Increasing Research Activities,'' showing A and C were the only
members of the controlled group to have qualified research expenses
when calculating the group credit. A and C report their allocated
portions of the group credit on the 2012 Form 6765 and B reports no
research credit on Form 6765. Pursuant to paragraph (a) of this
section, A and B, but not C, each make an election for the reduced
credit under section 280C(c)(3)(B) on the 2012 Form 6765. In
December 2013, B determines it had qualified research expenses in
2012 resulting in an increased group credit. On an amended 2012 Form
6765, A, B, and C each report their allocated portions of the group
credit. B reports its credit as a regular credit under section 41(a)
and reduces the credit under section 280C(c)(3)(B). C may not reduce
its credit under section 280C(c)(3)(B) because C did not make an
election for the reduced credit with its original return.
(c) * * *
(2) Taxable years beginning after December 31, 2011. Paragraphs
(b)(2) and (c)(2) and (3) of this section apply to taxable years
beginning on or after April 2, 2018. For taxable years ending before
April 2, 2018, see Sec. 1.280C-4T as contained in 26 CFR part 1, as
revised April 1, 2017.
(3) For taxable years ending before January 1, 2012. See Sec.
1.280C-4 as contained in 26 CFR part 1, revised April 1, 2014.
Sec. 1.280C-4T [Removed]
0
Par. 7. Section 1.280C-4T is removed.
Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
Approved: March 7, 2018.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2018-06241 Filed 3-27-18; 8:45 am]
BILLING CODE 4830-01-P
