[Federal Register Volume 73, Number 137 (Wednesday, July 16, 2008)]
[Proposed Rules]
[Pages 40792-40793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-16331]



[[Page 40792]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-156779-06]
RIN 1545-BG27


Determining the Amount of Taxes Paid for Purposes of Section 901

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 determination of the amount of taxes paid for 
purposes of the foreign tax credit. The regulations affect taxpayers 
that claim direct and indirect foreign tax credits. The text of those 
temporary regulations also serves as the text of these proposed 
regulations. This document also provides notice of a public hearing on 
these proposed regulations.

DATES: Written or electronic comments must be received by October 14, 
2008. Outlines of topics to be discussed at the public hearing 
scheduled for December 11, 2008, at 10 a.m. must be received by 
November 20, 2008.

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-156779-06), room 5203, 
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-
156779-06), Courier's desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC 20224, or sent electronically via the 
Federal eRulemaking Portal at www.regulations.gov (IRS REG-156779-06). 
The public hearing will be held in the Auditorium, Internal Revenue 
Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Michael I. 
Gilman, (202) 622-3850; concerning submissions of comments, the 
hearing, and/or to be placed on the building access list to attend the 
hearing, Regina Johnson, (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 
determination of the amount of taxes paid for purposes of the foreign 
tax credit. 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 also has 
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) of the Internal Revenue Code, this 
regulation has been submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
businesses.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. In particular, the IRS and Treasury Department continue to study 
arrangements in which the foreign payments attributable to income of a 
special purpose vehicle (SPV) do not substantially exceed the foreign 
taxes that would have been paid by a controlled foreign corporation 
that owns the SPV in the absence of the arrangement. The IRS and 
Treasury Department seek additional comments on how to overcome the 
administrative challenges of determining the amount of foreign taxes 
that would have been paid but for such arrangement. The IRS and 
Treasury Department also request comments on whether the regulations 
should contain additional guidance on the extent to which activities 
are conducted by an entity's employees or on the treatment of employees 
of affiliates that are seconded to, or supervised by employees of, the 
tested entity. Finally, the IRS and Treasury Department request 
comments on the clarity of the proposed regulations and how they can be 
made easier to understand. All comments will be available for public 
inspection and copying.
    A public hearing has been scheduled for December 11, 2008, at 10 
a.m. 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 must submit electronic or written 
comments by October 14, 2008, and an outline of the topics to be 
discussed and time to be devoted to each topic (a signed original and 
eight (8) copies) by November 20, 2008. A period of 10 minutes 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 Michael I. Gilman, 
Office of Associate Chief Counsel (International). However, other 
personnel from the IRS and the Treasury Department 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 * * *


[[Page 40793]]


    Par. 2. Section 1.901-1 is amended by revising paragraphs (a) and 
(b) to read as follows:


Sec.  1.901-1  Allowance of credit for taxes.

    (a) and (b) [The text of proposed Sec.  1.901-2(a) and (b) is the 
same as the text of Sec.  1.901-1T(a) and (b) published elsewhere in 
this issue of the Federal Register.]
* * * * *
    Par 3. Section 1.901-2 is amended by revising paragraphs 
(e)(5)(iii), (e)(5)(iv), and (h)(2) to read as follows:


Sec.  1.901-2  Income, war profits, or excess profits tax paid or 
accrued.

* * * * *
    (e) * * *
    (5) * * *
    (iii) and (iv) [The text of proposed Sec.  1.901-2(e)(5)(iii) and 
(iv) is the same as the text of Sec.  1.901-2T(e)(5)(iii) and (iv) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (h) * * *
    (2) [The text of proposed Sec.  1.901-2(h)(2) is the same as the 
text of Sec.  1.901-2T(h)(2) published elsewhere in this issue of the 
Federal Register.]

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E8-16331 Filed 7-15-08; 8:45 am]
BILLING CODE 4830-01-P