Internal Revenue Bulletin:  2007-20 

May 14, 2007 

INCOME TAX


Table of Contents

T.D. 9323 T.D. 9323

Final regulations under section 871 of the Code relate to the exclusion from gross income of portfolio interest paid to a nonresident alien individual or foreign corporation. The regulations clarify how the portfolio interest rules apply with respect to interest paid to certain partnerships or trusts that have foreign partners, beneficiaries, or owners. The regulations also retroactively remove the rule in regulations section 1.1441-1(b)(7)(iii) that would impose interest under section 6601 when no underlying tax liability is due.

REG-144859-04 REG-144859-04

Proposed regulations under section 1367(b)(2) of the Code provide rules regarding the definition of open account debt and the adjustments in basis of any indebtedness of an S corporation to a shareholder for shareholder advances and repayments on advances of open account debt. The regulations affect shareholders of S corporations and are necessary to provide guidance needed to comply with the applicable tax law. A public hearing is scheduled for July 31, 2007.


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