Guidance on Passive Foreign Investment Companies; Correction, 13647-13648 [2021-04789]

Download as PDF Federal Register / Vol. 86, No. 45 / Wednesday, March 10, 2021 / Rules and Regulations was not reviewed by OMB. The Office of Information and Regulatory Affairs (OIRA) has designated this rule not as a major rule under the Congressional Review Act (5 U.S.C. 801 et seq.). Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act (PRA), an agency may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements contained in this final rule have been approved by the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501– 3520) and assigned OMB control number 2502–0253. 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HUD has determined that this final rule imposes no additional requirements, and does VerDate Sep<11>2014 16:13 Mar 09, 2021 Jkt 253001 not have a significant economic impact, on a substantial number of small entities. Of the 222 firms primarily engaged in manufacturing manufactured homes, under the NAICS definition (NAICS 32991), approximately 35 produce manufactured homes subject to HUD’s Manufactured Home Construction and Safety Standards. Of these firms, 31 are considered to be small businesses based on the U.S. Small Business Administration’s threshold of 1,250 employees or less. The final rule applies to all the manufacturers and thus would affect a substantial number of small entities. However, this final rule provides all manufacturers, including small manufacturers, more time to implement revisions to the Construction and Safety Standards contained in HUD’s January 12, 2021 final rule, but does not itself update or amend the Standards. As a result, this rule does not place any additional costs on any manufactured home manufacturers subject to the January 12, 2021, final rule. Accordingly, the undersigned certifies that this rule would not have a significant economic impact on a substantial number of small entities. Executive Order 13132, Federalism Executive Order 13132 (entitled ‘‘Federalism’’) prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has federalism implications and either imposes substantial direct compliance costs on state and local governments and is not required by statute, or preempts state law, unless the relevant requirements of section 6 of the Executive order are met. This rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive order. Authority: 15 U.S.C. 2697, 28 U.S.C. 2461 note, 42 U.S.C. 3535(d), 5403, 5404, 5424. Susan A. Betts, Deputy Assistant Secretary for Finance and Budget, Office of Housing—Federal Housing Administration. [FR Doc. 2021–05010 Filed 3–9–21; 8:45 am] BILLING CODE 4210–67–P PO 00000 13647 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9936] RIN 1545–BO59 Guidance on Passive Foreign Investment Companies; Correction Internal Revenue Service (IRS), Treasury. ACTION: Correcting amendments. AGENCY: This document contains corrections to the final regulations Treasury Decision 9936, that were published in the Federal Register on Friday, January 15, 2021. The final regulations regarding the determination of whether a foreign corporation is treated as a passive foreign investment company (‘‘PFIC’’) for purposes of the Internal Revenue Code (‘‘Code’’), and the application and scope of certain rules that determine whether a United States person that indirectly holds stock in a PFIC is treated as a shareholder of the PFIC. DATES: These corrections are effective on March 10, 2021 and applicable on or after January 15, 2021. FOR FURTHER INFORMATION CONTACT: Concerning the regulations §§ 1.1291–0 and 1.1291–1, 1.1297–0 through 1.1297– 2, 1.1298–0, 1.1298–2, and 1.1298–4, Christina G. Daniels at (202) 317–6934; concerning the regulations §§ 1.1297–4 and 1.1297–6, Josephine Firehock at (202) 317–4932 (not toll-free numbers). SUPPLEMENTARY INFORMATION: SUMMARY: Background The final regulations (TD 9936) that are the subject of this correction are issued under sections 1297 and 1298 of the Internal Revenue Code. Need for Correction As published on January 15, 2021 (86 FR 4516), the final regulations (TD 9936) contain errors that need to be corrected. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Correction of Publication Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments: PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ Frm 00019 Fmt 4700 Sfmt 4700 E:\FR\FM\10MRR1.SGM 10MRR1 13648 Federal Register / Vol. 86, No. 45 / Wednesday, March 10, 2021 / Rules and Regulations Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.1297–0 is amended by revising the entry for § 1.1297– 2(g)(12) to read as follows: ■ § 1.1297–0 Table of contents. * * * * * § 1.1297–2 Special rules regarding lookthrough subsidiaries and look-through partnerships. * * * * * (g) * * * (12) TFC obligation. * * * * * ■ Par. 3. Section 1.1297–1 is amended by: ■ a. Removing ‘‘§ 1.1297–2(b)(2)(i))’’ in the first sentence of paragraph (d)(1)(v)(C)(1) and adding in its place ‘‘§ 1.1297–2(b)(2)(i)’’. ■ b. Revising paragraph (f)(8). The revision reads as follows: § 1.1297–1 Definition of passive foreign investment company. * * * * * (f) * * * (8) Related person. For purposes of applying the rules of this section and § 1.1297–2 with respect to section 1297(b)(2)(C), the term means a related person within the meaning of section 954(d)(3). * * * * * ■ Par. 4. Section 1.1297–2 is amended by: ■ a. Removing ‘‘of this section))’’ in the first sentence of paragraph (b)(3)(i) and adding in its place ‘‘of this section)’’. ■ b. Revising the first sentence of paragraph (c)(4)(iii)(B). ■ c. Removing ‘‘PFIC .’’ at the end of paragraph (e)(3)(i)(B)(1) and adding in its place ‘‘PFIC.’’ ■ d. Revising the first sentence of paragraph (g)(4)(iv)(A)(2)(iii). The revisions read as follows: § 1.1297–2 Special rules regarding lookthrough subsidiaries and look-through partnerships. * * * * * (c) * * * (4) * * * (iii) * * * (B) * * * The results are the same as in paragraph (c)(4)(ii)(B) of this section (the results in Example 2), except that TFC’s assets also do not include the stock of LTS2. * * * * * * * * (g) * * * (4) * * * (iv) * * * (A) * * * (2) * * * (iii) * * * For purposes of paragraph (b)(3) of this section, FPS qualifies as a VerDate Sep<11>2014 16:13 Mar 09, 2021 Jkt 253001 look-through partnership because TFC satisfies the active partner tests of both paragraphs (g)(4)(ii)(A) and (B) of this section. * * * * * * * * ■ Par. 5. Section 1.1297–4 is amended by: ■ a. Revising paragraph (d)(6). ■ b. Removing ‘‘written by a’’ in paragraph (f)(5) and adding in its place ‘‘written by, a’’. The revision reads as follows: § 1.1297–4 Qualifying insurance corporation. * * * * * (d) * * * (6) Stock ownership. For purposes of this section, ownership of stock in a foreign corporation means either direct ownership of such stock or indirect ownership determined using the rules specified in § 1.1291–1(b)(8) (but without regard to the 50 percent ownership requirement of § 1.1291– 1(b)(8)(ii)(A)). * * * * * ■ Par. 6. Section 1.1298–2 is amended by revising the second sentence of paragraph (c)(3), the second sentence of paragraph (f)(1)(i)(B), and the first sentence of paragraph (f)(2)(ii) to read as follows: § 1.1298–2 Rules for certain corporations changing businesses. * * * * * (c) * * * (3) * * * However, if activities performed by the officers and employees of a look-through subsidiary of a corporation or of a look-through partnership (including a look-through subsidiary or a look-through partnership with respect to which paragraph (d) of this section applies) would be taken into account by the corporation pursuant to § 1.1297–2(e) if it applied, such activities are taken into account for purposes of the determination of the existence of an active trade or business and the determination of whether assets are used in an active trade or business. * * * * * (f) * * * (1) * * * (i) * * * (B) * * * The residual gain computed under § 1.1297–2(f)(2) on the sale of the FS stock is $10x. * * * * * * * * (2) * * * (ii) * * * The results are the same as in paragraph (f)(1)(ii) of this section (the results in Example 1), except that under paragraph (c)(1) of this section, the passive income considered attributable to proceeds from a disposition of one or PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 more active trades or businesses is $4x (from investment of disposition proceeds). * * * * * * * * § 1.1298–4 [Amended] Par. 7. Section 1.1298–4(f) is amended by removing ‘‘Janyuary’’ and adding in its place ‘‘January’’. ■ Crystal Pemberton, Senior Federal Register Liaison, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. 2021–04789 Filed 3–9–21; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9936] RIN 1545–BO59 Guidance on Passive Foreign Investment Companies; Correction Internal Revenue Service (IRS), Treasury. ACTION: Final regulations; correction. AGENCY: This document contains corrections to the final regulations (Treasury Decision 9936), that were published in the Federal Register on Friday, January 15, 2021. The final regulations regarding the determination of whether a foreign corporation is treated as a passive foreign investment company (‘‘PFIC’’) for purposes of the Internal Revenue Code (‘‘Code’’), and the application and scope of certain rules that determine whether a United States person that indirectly holds stock in a PFIC is treated as a shareholder of the PFIC. DATES: These corrections are effective on March 10, 2021 and applicable on or after January 15, 2021. FOR FURTHER INFORMATION CONTACT: Concerning the regulations §§ 1.1291–0 and 1.1291–1, 1.1297–0 through 1.1297– 2, 1.1298–0, 1.1298–2, and 1.1298–4, Christina G. Daniels at (202) 317–6934; concerning the regulations §§ 1.1297–4 and 1.1297–6, Josephine Firehock at (202) 317–4932 (not toll-free numbers). SUPPLEMENTARY INFORMATION: SUMMARY: Background The final regulations (TD 9936) that are the subject of this correction are issued under sections 1297 and 1298 of the Internal Revenue Code. E:\FR\FM\10MRR1.SGM 10MRR1

Agencies

[Federal Register Volume 86, Number 45 (Wednesday, March 10, 2021)]
[Rules and Regulations]
[Pages 13647-13648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04789]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9936]
RIN 1545-BO59


Guidance on Passive Foreign Investment Companies; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

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

SUMMARY: This document contains corrections to the final regulations 
Treasury Decision 9936, that were published in the Federal Register on 
Friday, January 15, 2021. The final regulations regarding the 
determination of whether a foreign corporation is treated as a passive 
foreign investment company (``PFIC'') for purposes of the Internal 
Revenue Code (``Code''), and the application and scope of certain rules 
that determine whether a United States person that indirectly holds 
stock in a PFIC is treated as a shareholder of the PFIC.

DATES: These corrections are effective on March 10, 2021 and applicable 
on or after January 15, 2021.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations Sec. Sec.  
1.1291-0 and 1.1291-1, 1.1297-0 through 1.1297-2, 1.1298-0, 1.1298-2, 
and 1.1298-4, Christina G. Daniels at (202) 317-6934; concerning the 
regulations Sec. Sec.  1.1297-4 and 1.1297-6, Josephine Firehock at 
(202) 317-4932 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations (TD 9936) that are the subject of this 
correction are issued under sections 1297 and 1298 of the Internal 
Revenue Code.

Need for Correction

    As published on January 15, 2021 (86 FR 4516), the final 
regulations (TD 9936) contain errors that need to be corrected.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

    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:


[[Page 13648]]


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


0
Par. 2. Section 1.1297-0 is amended by revising the entry for Sec.  
1.1297-2(g)(12) to read as follows:


Sec.  1.1297-0   Table of contents.

* * * * *


Sec.  1.1297-2  Special rules regarding look-through subsidiaries and 
look-through partnerships.

* * * * *
    (g) * * *
    (12) TFC obligation.
* * * * *

0
Par. 3. Section 1.1297-1 is amended by:
0
a. Removing ``Sec.  1.1297-2(b)(2)(i))'' in the first sentence of 
paragraph (d)(1)(v)(C)(1) and adding in its place ``Sec.  1.1297-
2(b)(2)(i)''.
0
b. Revising paragraph (f)(8).
    The revision reads as follows:


Sec.  1.1297-1   Definition of passive foreign investment company.

* * * * *
    (f) * * *
    (8) Related person. For purposes of applying the rules of this 
section and Sec.  1.1297-2 with respect to section 1297(b)(2)(C), the 
term means a related person within the meaning of section 954(d)(3).
* * * * *

0
Par. 4. Section 1.1297-2 is amended by:
0
a. Removing ``of this section))'' in the first sentence of paragraph 
(b)(3)(i) and adding in its place ``of this section)''.
0
b. Revising the first sentence of paragraph (c)(4)(iii)(B).
0
c. Removing ``PFIC .'' at the end of paragraph (e)(3)(i)(B)(1) and 
adding in its place ``PFIC.''
0
d. Revising the first sentence of paragraph (g)(4)(iv)(A)(2)(iii).
    The revisions read as follows:


Sec.  1.1297-2   Special rules regarding look-through subsidiaries and 
look-through partnerships.

* * * * *
    (c) * * *
    (4) * * *
    (iii) * * *
    (B) * * * The results are the same as in paragraph (c)(4)(ii)(B) of 
this section (the results in Example 2), except that TFC's assets also 
do not include the stock of LTS2.
    * * *
* * * * *
    (g) * * *
    (4) * * *
    (iv) * * *
    (A) * * *
    (2) * * *
    (iii) * * * For purposes of paragraph (b)(3) of this section, FPS 
qualifies as a look-through partnership because TFC satisfies the 
active partner tests of both paragraphs (g)(4)(ii)(A) and (B) of this 
section. * * *
* * * * *

0
Par. 5. Section 1.1297-4 is amended by:
0
a. Revising paragraph (d)(6).
0
b. Removing ``written by a'' in paragraph (f)(5) and adding in its 
place ``written by, a''.
    The revision reads as follows:


Sec.  1.1297-4   Qualifying insurance corporation.

* * * * *
    (d) * * *
    (6) Stock ownership. For purposes of this section, ownership of 
stock in a foreign corporation means either direct ownership of such 
stock or indirect ownership determined using the rules specified in 
Sec.  1.1291-1(b)(8) (but without regard to the 50 percent ownership 
requirement of Sec.  1.1291-1(b)(8)(ii)(A)).
* * * * *

0
Par. 6. Section 1.1298-2 is amended by revising the second sentence of 
paragraph (c)(3), the second sentence of paragraph (f)(1)(i)(B), and 
the first sentence of paragraph (f)(2)(ii) to read as follows:


Sec.  1.1298-2   Rules for certain corporations changing businesses.

* * * * *
    (c) * * *
    (3) * * * However, if activities performed by the officers and 
employees of a look-through subsidiary of a corporation or of a look-
through partnership (including a look-through subsidiary or a look-
through partnership with respect to which paragraph (d) of this section 
applies) would be taken into account by the corporation pursuant to 
Sec.  1.1297-2(e) if it applied, such activities are taken into account 
for purposes of the determination of the existence of an active trade 
or business and the determination of whether assets are used in an 
active trade or business.
* * * * *
    (f) * * *
    (1) * * *
    (i) * * *
    (B) * * * The residual gain computed under Sec.  1.1297-2(f)(2) on 
the sale of the FS stock is $10x. * * *
* * * * *
    (2) * * *
    (ii) * * * The results are the same as in paragraph (f)(1)(ii) of 
this section (the results in Example 1), except that under paragraph 
(c)(1) of this section, the passive income considered attributable to 
proceeds from a disposition of one or more active trades or businesses 
is $4x (from investment of disposition proceeds). * * *
* * * * *


Sec.  1.1298-4   [Amended]

0
Par. 7. Section 1.1298-4(f) is amended by removing ``Janyuary'' and 
adding in its place ``January''.

Crystal Pemberton,
Senior Federal Register Liaison, Legal Processing Division, Associate 
Chief Counsel (Procedure and Administration).
[FR Doc. 2021-04789 Filed 3-9-21; 8:45 am]
BILLING CODE 4830-01-P