[Federal Register Volume 72, Number 245 (Friday, December 21, 2007)]
[Proposed Rules]
[Pages 72645-72646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-24783]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-114126-07]
RIN 1545-BG54


Reduction of Foreign Tax Credit Limitation Categories Under 
Section 904(d)

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations and notice of public hearing.

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SUMMARY: In the Rules and Regulations section in this issue of the 
Federal Register, the IRS is issuing temporary regulations that provide 
guidance relating to the reduction of the number of separate foreign 
tax credit limitation categories under section 904(d) of the Internal 
Revenue Code. Changes to the applicable law were made by the American 
Jobs Creation Act of 2004 (AJCA) reducing the number of section 904(d) 
separate categories from eight to two, effective for taxable years 
beginning after December 31, 2006. The temporary regulations provide 
guidance needed to comply with these changes and affect individuals and 
corporations claiming foreign tax credits. The text of those temporary 
regulations published in this issue of the Federal Register also serves 
as the text of these proposed regulations. This document also provides 
a notice of public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by March 20, 
2008. Outlines of topics to be discussed at the public hearing 
scheduled for April 22, 2008, at 10 a.m. must be received by April 1, 
2008.

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-114126-07), room 5203, 
Internal Revenue Service, P.O. 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-
114126-07), 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-114126-07). 
The public hearing will be held in the IRS Auditorium, Internal Revenue 
Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Jeffrey L. 
Parry, (202) 622-3850; concerning submissions of comments, the hearing, 
and/or to be placed on the building access list to attend the hearing, 
Kelly Banks, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register contain amendments to the Income Tax 
Regulations (26 CFR Part 1) which provide rules relating to the 
reduction of the number of separate foreign tax credit limitation 
categories under section 904(d). 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 individuals and 
corporations 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 Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any electronic or written comments (a 
signed original and eight (8) copies) that are submitted timely to the 
IRS. The Treasury Department and the IRS specifically request comments 
on the clarity of the proposed regulations and how they may be made 
easier to understand, as well as comments on additional guidance that 
may be needed to implement changes made by the AJCA. All comments will 
be available for public inspection and copying.
    A public hearing has been scheduled for April 26, 2008, in the 
auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., 
Washington, DC. Due to building security procedures, visitors must 
enter at the Constitution Avenue entrance. In addition, all visitors 
must present photo identification to enter the building. Because of 
access restrictions, visitors will not be admitted beyond the immediate 
entrance more than 30 minutes before the hearing starts. For 
information about having your name placed on the building access list 
to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section 
of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit electronic or 
written comments by March 20, 2008 and an outline of the topics to be 
discussed and the time to be devoted to each topic (signed original and 
eight (8) copies) by April 1, 2008. A period of 10 minutes

[[Page 72646]]

will be allotted to each person for making comments.
    An agenda showing the scheduling of the speakers will be prepared 
after the deadline for receiving outlines has passed. Copies of the 
agenda will be available free of charge at the hearing.

Drafting Information

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

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be 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 1.904-2(i) is added to read as follows:


Sec.  1.904-2  Carryback and carryover of unused foreign tax.

* * * * *
    (i) [The text of proposed Sec.  1.904-2(i) is the same as the text 
of Sec.  1.904-2T(i)(1) through (3) published elsewhere in this issue 
of the Federal Register.]
    Par. 3. In Sec.  1.904-4, paragraphs (a), (b), (h)(3), and (l) are 
revised and paragraph (n) is added to read as follows:


Sec.  1.904-4  Separate application of section 904 with respect to 
certain categories of income.

    (a) [The text of the proposed amendment to Sec.  1.904-4(a) is the 
same as the text of Sec.  1.904-4T(a) published elsewhere in this issue 
of the Federal Register.]
    (b) [The text of the proposed amendment to Sec.  1.904-4(b) is the 
same as the text of Sec.  1.904-4T(b) published elsewhere in this issue 
of the Federal Register.]
* * * * *
    (h) * * *
    (3) [The text of the proposed amendment to Sec.  1.904-4(h)(3) is 
the same as the text of Sec.  1.904-4T(h)(3) published elsewhere in 
this issue of the Federal Register.]
* * * * *
    (l) [The text of the proposed amendment to Sec.  1.904-4(l) is the 
same as the text of Sec.  1.904-4T(l) published elsewhere in this issue 
of the Federal Register.]
* * * * *
    (n) [The text of proposed Sec.  1.904-4(n) is the same as the text 
of Sec.  1.904-4T(n) published elsewhere in this issue of the Federal 
Register.]
    Par. 4. In Sec.  1.904-5, paragraph (h)(3) is revised and paragraph 
(o)(3) is added to read as follows:


Sec.  1.904-5  Look-through rules as applied to controlled foreign 
corporations and other entities.

* * * * *
    (h) * * *
    (3) [The text of the proposed amendment to Sec.  1.904-5(h)(3) is 
the same as the text of Sec.  1.904-5T(h)(3) published elsewhere in 
this issue of the Federal Register.]
* * * * *
    (o) * * *
    (3) [The text of proposed Sec.  1.904-5(o)(3) is the same as the 
text of Sec.  1.904-5T(o)(3) published elsewhere in this issue of the 
Federal Register.]
    Par. 5. Section 1.904-7(g) is added to read as follows:


Sec.  1.904-7  Transition rules.

* * * * *
    (g) [The text of proposed Sec.  1.904-7(g) is the same as the text 
of Sec.  1.904-7T(g)(1) through (6) published elsewhere in this issue 
of the Federal Register.]
    Par. 6. Sec.  1.904(f)-12(h) is added to read as follows:


Sec.  1.904(f)-12  Transition rules.

* * * * *
    (h) [The text of proposed Sec.  1.904-12(h) is the same as the text 
of Sec.  1.904-12T(h)(1) through (h)(6) published elsewhere in this 
issue of the Federal Register.]

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
 [FR Doc. E7-24783 Filed 12-20-07; 8:45 am]
BILLING CODE 4830-01-P