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June 2006 Plain Language Regulations

Information Returns Required with Respect to Certain Foreign Corporations and Certain Foreign-Owned Domestic Corporations
The Internal Revenue Service is issuing guidance under sections 6038 and 6038A of the Internal Revenue Code. The final regulations under section 1.6038-2 are revised to remove and replace obsolete references to a form and IRS offices. The temporary regulations clarify the information required to be furnished regarding certain related party transactions of certain foreign corporations and certain foreign-owned domestic corporations.  The temporary regulations also increase the amount of certain penalties, and make certain other changes, to reflect the statutory changes made by the Taxpayer Relief Act of 1997.  TD 9268.  Published June 21, 2006.
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Information Returns Required with Respect to Certain Foreign Corporations and Certain Foreign-Owned Domestic Corporations
The Internal Revenue Service is issuing guidance under sections 6038 and 6038A of the Internal Revenue Code. The final regulations under section 1.6038-2 are revised to remove and replace obsolete references to a form and IRS offices.  The temporary regulations clarify the information required to be furnished regarding certain related party transactions of certain foreign corporations and certain foreign-owned domestic corporations.  The temporary regulations also increase the amount of certain penalties, and make certain other changes, to reflect the statutory changes made by the Taxpayer Relief Act of 1997.  REG-109512-05.  Published June 21, 2006.
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Application of the Federal Insurance Contributions Act to Payments Made for Certain Services
These final regulations relate to payments made for service not in the course of the employer's trade or business, for domestic service in a private home of the employer, for agricultural labor, and for service performed as a home worker.  These final regulations provide guidance concerning the dollar threshold amounts and time periods used to determine whether payments for such services are wages subject to Federal Insurance Contributions Act taxes.  TD 9266.  Published June 19, 2006.
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Tax on Interest of Nonresident Alien Individuals and Foreign Corporations Received from Certain Portfolio Debt Investments
These regulations clarify how the portfolio interest rules apply with respect to interest paid to a partnership (or simple or grantor trust) that has foreign partners (or beneficiaries or owners).  Under these regulations, the 10-percent shareholder test applies to the foreign partner or foreign corporation that is the beneficial owner of the income (or beneficiary or owner in the case of a simple or grantor trust). 
REG-118775-06.  Published June 13, 2006.
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Rules Regarding Inversion Transactions
These temporary regulations elaborate on the requirements of the inversion transaction, and note that section 7874 may apply if there is a transfer of the stock or partnership interest of a domestic corporation or partnership rather than a transfer of the assets of the domestic corporation or partnership.  These temporary regulations also provide guidance as to what constitutes substantial business activity in a given foreign country, for purposes of determining whether the expanded affiliated group has substantial business activities in the country in which the putative surrogate foreign corporation is created or organized.  In addition, these temporary regulations note that a publicly traded partnership may corporation or publicly traded partnership must meet in order to be considered a result of being considered a surrogate foreign corporation. 
TD 9265.  Published June 6, 2006.
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Rules Regarding Inversion Transactions
These proposed regulations elaborate on the requirements of the inversion transaction, and note that section 7874 may apply if there is a transfer of the stock or partnership interest of a domestic corporation or partnership.  These proposed regulations also provide guidance as to what constitutes substantial business activity in a given foreign country, for purposes of determining whether the expanded affiliated group has substantial business activities in the country in which the putative surrogate foreign corporation is created or organized.  In addition, these proposed regulations note that a publicly traded partnership may be a surrogate foreign corporation, and elaborate on the requirements that a corporation or publicly traded partnership must meet in order to be considered a surrogate foreign corporation.  These regulations also discuss the result of being considered a surrogate foreign corporation. 
REG-112994-06  Published June 6, 2006.
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Section 1248 Attribution Principles
This document contains proposed regulations that provide guidance for determining the earnings and profits attributable to stock of current or former controlled foreign corporations that have been involved in certain kinds of transactions in which gain (or loss) was not recognized for tax purposes.  The proposed regulations also clarify that when a foreign partnership sells stock of a current or former controlled foreign corporation the partners are treated as selling their share of such stock for purposes applying section 1248.  The proposed regulations affect persons who, directly or indirectly, acquire and sell shares of stock in current or former controlled foreign corporations.  REG-135866-02.  Published  June 2, 2006.
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Deduction for Income Attributable to Domestic Production
Taxpayers may claim a deduction for income attributable to domestic production activities. The final regulations provide guidance on the eligibility for the deduction and how taxpayers calculate the deduction.  The final regulations incorporate changes made to the proposed regulations as a result of testimony at the public hearing held on January 11, 2006, and written comments.  TD 9263.  Published June 1, 2006.
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Deduction for Income Attributable to Domestic Production Relating to Computer Software
Taxpayers may claim a deduction for income attributable to domestic production activities. The temporary and proposed regulations provide guidance for certain transactions involving computer software. 
REG-111578-06.  Published June 1, 2006.
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Deduction for Income Attributable to Domestic Production Relating to Computer Software
Taxpayers may claim a deduction for income attributable to domestic production activities.  The temporary and proposed regulations provide guidance for certain transactions involving computer software.  TD 9262.  Published June 1, 2006.
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Page Last Reviewed or Updated: 22-Jan-2014