[Federal Register Volume 72, Number 243 (Wednesday, December 19, 2007)]
[Rules and Regulations]
[Page 71787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-24674]



[[Page 71787]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9362]
RIN 1545-BG23


Foreign Tax Credit: Notification of Foreign Tax Redeterminations; 
Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

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SUMMARY: This document contains corrections to temporary regulations 
(TD 9362) that were published in the Federal Register on Wednesday, 
November 7, 2007 (72 FR 62771) relating to a United States taxpayer's 
obligation under section 905(c) of the Internal Revenue Code to notify 
the IRS of a foreign tax redetermination, which is a change in the 
taxpayer's foreign tax liability that may affect the taxpayer's foreign 
tax credit and also relating to the civil penalty under section 6689 
for failure to notify the IRS of a foreign tax redetermination as 
required under section 905(c).

DATES: The correction is effective December 19, 2007.

FOR FURTHER INFORMATION CONTACT: Teresa Burridge Hughes, (202) 622-3850 
(not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    The temporary regulations (TD 9362) that are the subject of the 
correction are under section 905(c) of the Internal Revenue Code.

Need for Correction

    As published, temporary regulations (TD 9362) contain errors that 
may prove to be misleading and are in need of clarification.

List of Subject in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

0
Accordingly, 26 CFR part 1 is corrected by making the following 
amendments:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read, in 
part, as follows:

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

0
Par. 2. Section 1.905-3T is amended by revising the eighth sentence of 
paragraph (d)(3)(iii) Example. (i), the first sentence of paragraph 
(d)(3)(iii) Example. (ii), and the third and last sentences of 
paragraph (d)(3)(iii) Example. (iii) as follows:


Sec.  1.905-3T  Adjustments to United States tax liability and to the 
pools of post-1986 undistributed earnings and post-1986 foreign income 
taxes as a result of a foreign tax redetermination (temporary).

* * * * *
    (d) * * *
    (3) * * *
    (iii) * * *
    Example. * * *
    (i) * * * In 2009, CFC paid its actual foreign tax liability for 
2008 of 80u. * * *
    (ii) Result in 2009. If the 20u overaccrual of tax for 2008 were 
taken into account in 2008, CFC's general category post-1986 
undistributed earnings would be 1,020u, CFC's general category post-
1986 foreign income taxes would be $280, and P would be deemed to 
pay $27.45 of tax with respect to the 2008 distribution of 100u 
(100u/1020u x $280 = $27.45). * * *
    (iii) * * * As determined in 2011, CFC's post-1986 undistributed 
earnings for 2009 are 1350u (1,100u as revised for 2008, less 100u 
distributed in 2008, plus 350u earned in 2009), and its post-1986 
foreign income taxes for 2009 are $281.82 ($200 as revised for 2008, 
less $18.18 deemed paid in 2008, plus $100 accrued for 2009). As 
redetermined in 2011, P's deemed paid credit with respect to the 
100u distribution from CFC in 2009 is $20.88 (100u/1350u x $281.82).
* * * * *

0
Par. 3. Section 1.905-4T is amended by revising the last sentence of 
paragraph (b)(4) and the second sentence of paragraph (f)(2)(ii) as 
follows:


Sec.  1.905-4T  Notification of foreign tax redetermination 
(temporary).

* * * * *
    (b) * * *
    (4) * * * Because the date for notifying the IRS of the foreign tax 
redetermination under paragraph (b)(1)(ii) of this section precedes the 
date of the opening conference concerning the examination of the return 
for X's 2008 taxable year, paragraph (b)(3) of this section does not 
apply, and X must notify the IRS of the foreign tax redetermination by 
filing a amended return, Form 1118, and the statement required in 
paragraph (c) of this section for the 2008 taxable year by September 
15, 2010.
* * * * *
    (f) * * *
    (2) * * *
    (ii) * * * Such notification must be filed no later than the due 
date (with extensions) of the original return for the taxpayer's first 
taxable year following the taxable year in which these regulations are 
first applicable. * * *

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
[FR Doc. E7-24674 Filed 12-18-07; 8:45 am]
BILLING CODE 4830-01-P