[Federal Register Volume 73, Number 94 (Wednesday, May 14, 2008)]
[Rules and Regulations]
[Pages 27728-27729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-10695]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[TD 9391]
RIN 1545-BF85


Source Rules Involving U.S. Possessions and Other Conforming 
Changes; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

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SUMMARY: This document contains corrections to final regulations (TD 
9391) that were published in the Federal Register on Wednesday, April 
9, 2008 (73 FR 19350) providing rules under section 937(b) of the 
Internal Revenue Code for determining whether income is derived from 
sources within a U.S. possession or territory specified in section 
937(a)(1) (generally referred to in this preamble as a ``territory'') 
and whether income is effectively connected with the conduct of a trade 
or business within a territory.

DATES: This correction is effective May 14, 2008, and is applicable on 
April 9, 2008.

FOR FURTHER INFORMATION CONTACT: J. David Varley, (202) 622-7790 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations and removal of temporary regulations that are 
the subjects of this document are under sections 1, 170A, 861, 871, 
876, 881, 884, 901, 931, 932, 933, 934, 935, 937, 957, 1402, 6012, 
6038, 6046, 6688, and 7701 of the Internal Revenue Code.

Need for Correction

    As published, final regulations (TD 9391) contain errors that may 
prove to be misleading and are in need of clarification.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Correction of Publication

0
Accordingly, 26 CFR parts 1 and 301 are corrected by making the 
following correcting 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 1.881-5 is amended as follows:
    In paragraph (f)(2), the language ``Section 935'' possession is 
defined in Sec.  1.935-1(a)(3)(i).'' is removed and the language 
``Section 935 possession'' is defined in Sec.  1.935-1(a)(3)(i).'' is 
added in its place.


Sec.  1.884-0  [Amended]

0
Par. 3. Section 1.884-0 is amended as follows:
    In paragraph (b)(1), the last sentence, the language ``The 
preceding sentence applies for taxable years ending after April 11, 
2005.'' is removed and the language ``The preceding sentence applies 
for taxable years ending after April 9, 2008.'' is added in its place.


Sec.  1.932-1  [Amended]

0
Par. 4. Section 1.932-1 is amended as follows:
    In paragraph (c)(3), the first sentence, the language ``In the case 
of an individual who is required to file an income tax return with the 
United States as a consequence of failing to satisfy the requirements 
of paragraphs (c)(2)(i)(A) and (B) of this section, there will be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to the amount of the tax liability 
referred to in section 934(a) to the extent paid to the Virgin 
Islands.'' is removed and the language ``In the case of an individual 
who is required to file an income tax return with the United States as 
a consequence of failing to satisfy the requirements of paragraphs 
(c)(2)(i)(A) or (B) of this section, there will be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the amount of the tax liability referred to in section 934(a) 
to the extent paid to the Virgin Islands.'' is added in its place.


Sec.  1.937-2  [Amended]

0
Par. 5. Section 1.937-2 is amended as follows:
    In paragraph (k) Example 2. (i), the fourth sentence, the language 
``On June 1, 2010, R's interest in Partnership P is not a marketable 
security within the meaning of section 731(c)(2).'' is removed and the 
language ``On June 1, 2010, R's interest in Partnership P is not a 
marketable security within the meaning of paragraph (f)(1)(vii)(A) of 
this section.'' is added in its place.


Sec.  1.937-3  [Amended]

0
Par. 6. Section 1.937-3 is amended as follows:
    In paragraph (e) Example 5. (ii), the last sentence, the language 
``Accordingly, the U.S. income rule of section 937(b)(2), Sec.  1.937-
2(c)(1), and paragraph (c)(1) of this section does not operate to 
prevent Corporation B's services income from being Territory X source 
or Possession X effectively connected income within the meaning of 
section 937(b)(1).'' is removed and the language ``Accordingly, the 
U.S. income rule of section 937(b)(2), Sec.  1.937-2(c)(1), and 
paragraph (c)(1) of this section does not operate to prevent 
Corporation B's services income from being Possession X source or 
Possession X effectively connected income within the meaning of section 
937(b)(1).'' is added in its place.

PART 301--PROCEDURE AND ADMINISTRATION

0
Par. 7. The authority citation for part 301 continues to read, in part, 
as follows:

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

0
Par. 8. Section 301.6688-1 is amended as follows:
    In paragraph (c), in the first sentence of the paragraph, the 
language ``(1) In general. The penalty set forth in paragraph (a) of 
this section will not apply if it is established to the satisfaction of 
the appropriate tax authority (as defined in paragraph (c)(2) of this 
section) that the failure to file the information return or furnish the

[[Page 27729]]

information within the prescribed time was due to reasonable cause and 
not to willful neglect.'' is removed and the language ``The penalty set 
forth in paragraph (a) of this section will not apply if it is 
established to the satisfaction of the Commissioner that the failure to 
file the information return or furnish the information within the 
prescribed time was due to reasonable cause and not to willful 
neglect.'' is added in its place.

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. E8-10695 Filed 5-13-08; 8:45 am]
BILLING CODE 4830-01-P