Internal Revenue Bulletin:  2012-15 

April 9, 2012 

REG-132736-11

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations Foreign Tax Credit Splitting Events


AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY:

In this issue of the Bulletin, the IRS is issuing temporary regulations (T.D. 9577) that provide guidance relating to a new provision of the Internal Revenue Code (Code) that addresses situations in which foreign income taxes have been separated from the related income. Those regulations are necessary to provide guidance on applying the new statutory provision, which was enacted as part of legislation commonly referred to as the Education Jobs and Medicaid Assistance Act (EJMAA) on August 10, 2010. The text of those temporary regulations published in this issue of the Bulletin also serves as the text of these proposed regulations.

DATES:

Comments and requests for a public hearing must be received by May 14, 2012.

ADDRESSES:

Send submissions to CC:PA:LPD:PR (REG-132736-11), room 5205, Internal Revenue Service, PO 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-132736-11), Courier’s desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20044, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS REG-132736-11).

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Suzanne M. Walsh, (202) 622-3850; concerning submissions of comments, Oluwafunmilayo Taylor, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

Temporary regulations in this issue of the Bulletin contain amendments to the Income Tax Regulations (26 CFR Part 1) which provide rules relating to a new provision of the Code that was enacted as part of EJMAA (Public Law 111-226, 124 Stat. 2389 (2010)) which addresses situations in which foreign income taxes have been separated from the related income. The text of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations and these proposed regulations. The regulations affect taxpayers claiming foreign tax credits.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory 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), these regulations have 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 “Addresses.” 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 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.

Proposed 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 continues to read in part as follows:

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

Par. 2. Section 1.704-1 is amended as follows:

1. Paragraph (b)(1)(ii)(b)(3) is added.

2. Paragraph (b)(4)(viii)(d)(3) and paragraph (b)(5) Example 24 are revised.

The addition and revisions read as follows:

§1.704-1 Partner’s distributive share.

* * * * *

(b) * * *

(1) * * *

(ii) * * *

(b) * * *

(3) [The text of the proposed amendments to §1.704-1(b)(1)(ii)(b)(3) is the same as the text of §1.704-1T(b)(1)(ii)(b)(3) published elsewhere in this issue of the Bulletin.]

* * * * *

(4) * * *

(viii) * * *

(d) * * *

(3) [The text of the proposed amendments to §1.704-1(b)(4)(viii)(d)(3) is the same as the text of §1.704-1T(b)(4)(viii)(d)(3) published elsewhere in this issue of the Bulletin.]

* * * * *

(5) * * *

Example 24. [The text of the proposed amendments to §1.704-1(b)(5) Example 24 is the same as the text of §§1.704-1T(b)(5) Example 24 published elsewhere in this issue of the Bulletin.]

* * * * *

Par. 3. Section 1.909-0 is added to read as follows:

§1.909-0 Outline of regulation provisions for section 909.

[The text of proposed §1.909-0 is the same as the text of §1.909-0T published elsewhere in this issue of the Bulletin.]

Par. 4. Sections 1.909-1 through 1.909-6 are added to read as follows:

§1.909-1 Definitions and special rules.

[The text of proposed §1.909-1 is the same as the text of §1.909-1T(a) through (e) published elsewhere in this issue of the Bulletin.]

§1.909-2 Splitter arrangements.

[The text of proposed §1.909-2 is the same as the text of §1.909-2T(a) through (c) published elsewhere in this issue of the Bulletin.]

§1.909-3 Rules regarding related income and split taxes.

[The text of proposed §1.909-3 is the same as the text of §1.909-3T(a) through (c) published elsewhere in this issue of the Bulletin.]

§1.909-4 Coordination rules.

[The text of proposed §1.909-4 is the same as the text of §1.909-4T(a) through (b) published elsewhere in this issue of the Bulletin.]

§1.909-5 2011 and 2012 Splitter arrangements.

[The text of proposed §1.909-5 is the same as the text of §1.909-5T(a) through (c) published elsewhere in this issue of the Bulletin.]

§1.909-6 Pre-2011 foreign tax credit splitting events.

[The text of proposed §1.909-6 is the same as the text of §1.909-6T(a) through (h) published elsewhere in this issue of the Bulletin.]

Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.

Note

(Filed by the Office of the Federal Register on February 9, 2012, 4:15 p.m., and published in the issue of the Federal Register for February 14, 2012, 77 F.R. 8184)

Drafting Information

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

* * * * *


More Internal Revenue Bulletins