[Federal Register Volume 74, Number 53 (Friday, March 20, 2009)]
[Rules and Regulations]
[Pages 11843-11847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5894]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9438]
RIN 1545-BI50


Guidance Regarding Foreign Base Company Sales Income; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to final and temporary regulations.

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SUMMARY: This document contains corrections to final and temporary 
regulations that were published in the Federal Register on Monday, 
December 29, 2008 (73 FR 79334) relating to foreign base company sales 
income.

DATES: The corrections are effective July 1, 2009.

FOR FURTHER INFORMATION CONTACT: Ethan Atticks, (202) 622-3840 (not a 
toll-free number).

[[Page 11844]]


SUPPLEMENTARY INFORMATION:

Background

    The final and temporary regulations that are subject to these 
corrections are under section 954 of the Internal Revenue Code.

Need for Correction

    As published the final and temporary regulations (TD 9438) contain 
errors that may prove to be misleading and are in need of correction.

Correction of Publication

    Accordingly, the publication of the final and temporary regulations 
(TD 9438) that were the subject of FR Doc. E8-30727 is corrected as 
follows:
    1. On page 79340, column 2, in the preamble under paragraph caption 
Determination of Hypothetical Effective Tax Rate, the first paragraph, 
line 8 of the paragraph, the language ``effective tax rate of tax.'' is 
corrected to read ``effective tax rate.''.
    2. On page 79340, column 3, in the preamble under paragraph caption 
Determination of Hypothetical Effective Tax Rate, lines 2, 3, and 4, 
the language ``In contrast, if a sales affiliate in the country of 
manufacturing can theoretically receive certain tax relief by'' is 
corrected to read ``In contrast, if a manufacturing branch could 
receive tax relief with respect to sales income derived from sources 
within the country in which the manufacturing branch is located by''.
    3. On page 79341, column 3, in the preamble, the first paragraph, 
the language ``Under the temporary regulations, if a demonstrably 
greater amount of manufacturing activity with respect to the personal 
property occurs in jurisdictions without tax rate disparity relative to 
the sales or purchase branch, the location of the sales or purchase 
branch will be deemed to be the location of manufacture of the personal 
property. In that case, the purchase or sales activities with respect 
to the property purchased or sold by or through the sales or purchase 
branch of the CFC will not, for purposes of determining FBCSI in 
connection with the sale of that property, be deemed to have 
substantially the same tax effect as if a branch were a wholly owned 
subsidiary corporation of the CFC. Otherwise, the location of 
manufacture of the personal property will be deemed to be the location 
of a manufacturing branch (or remainder) that has tax rate disparity 
relative to the sales or purchase branch. In that case, the purchase or 
sales activities with respect to the property purchased or sold by or 
through the sales or purchase branch of the CFC will be deemed to have 
substantially the same tax effect as if a branch were a wholly owned 
subsidiary corporation of the CFC, and that branch will be treated as a 
separate corporation for purposes of applying the regulations.'' is 
corrected to read ``Under the temporary regulations, if a demonstrably 
greater amount of manufacturing activity with respect to the income 
derived by a sales or purchase branch with respect to the personal 
property occurs in jurisdictions without tax rate disparity relative to 
that sales or purchase branch, the location of that sales or purchase 
branch will be deemed to be the location of manufacture of the personal 
property with respect to the income derived by that sales or purchase 
branch from the purchase or sale of the property. In that case, the use 
of the purchase or sales branch for purchase or sales activities with 
respect to the property purchased or sold by or through that sales or 
purchase branch of the CFC will not, for purposes of determining FBCSI 
in connection with the income derived by that sales or purchase branch 
from the purchase or sale of that property, be deemed to have 
substantially the same tax effect as if a branch were a wholly owned 
subsidiary corporation of the CFC. Otherwise, the location of 
manufacture of the personal property with respect to the income derived 
by that sales or purchase branch from the purchase or sale of that 
property will be deemed to be the location of a manufacturing branch 
(or remainder) that has tax rate disparity relative to that sales or 
purchase branch. In that case, the use of the purchase or sales branch 
for purchase or sales activities with respect to the property purchased 
or sold by or through that sales or purchase branch of the CFC will, 
for purposes of determining FBCSI in connection with the income derived 
by that sales or purchase branch from the purchase or sale of that 
property, be deemed to have substantially the same tax effect as if a 
branch were a wholly owned subsidiary corporation of the CFC, and that 
branch will be treated as a separate corporation for purposes of 
applying the regulations.''.
    4. On page 79342, column 1, in the preamble under the paragraph 
caption Clarifying Application of the Rule for Determining the 
Remainder of the CFC When Activities are Performed in Multiple 
Locations, the first paragraph, line 18 of the paragraph, the language 
``the CFC when activities are preformed'' is corrected to read ``the 
CFC when activities are performed''.


Sec.  1.954-3  [Corrected]

0
5. On page 79344, column 1, under amendatory instruction paragraph 2, 
item 3, line 5, the language ``Example (3).'' is corrected to read 
``Examples (3), (6), and (7).''.
0
6. On page 79345, column 3, paragraph (a)(4)(iv)(d), Example 1 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
7. On page 79346, column 1, paragraph (a)(4)(iv)(d), Example 2 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
8. On page 79346, column 1, paragraph (a)(4)(iv)(d), Example 3 (i), 
line 11, the language ``FS for use outside of FS's country of'' is 
corrected to read ``FS to a related person for use outside of FS's 
country of''.
0
9. On page 79346, column 1, paragraph (a)(4)(iv)(d), Example 3 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
10. On page 79346, column 2, paragraph (a)(4)(iv)(d), Example 4 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
11. On page 79346, column 3, paragraph (a)(4)(iv)(d), Example 5 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
12. On page 79346, column 3, paragraph (a)(4)(iv)(d), Example 6 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
13. On page 79347, column 1, paragraph (a)(4)(iv)(d), Example 7 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
14. On page 79347, column 2, paragraph (a)(4)(iv)(d), Example 8 (ii), 
line 1, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
15. On page 79347, column 2, paragraph (a)(4)(iv)(d), Example 8 (ii), 
line 9, the language ``X, it is irrelevant to the substantial'' is 
corrected to read ``X, it is not important to the substantial''.
0
16. On page 79347, column 2, paragraph (a)(4)(iv)(d), Example 9 (ii),

[[Page 11845]]

line 3, the language ``to sale were undertaken by FS1 or FS2'' is 
corrected to read ``to sale had been undertaken by FS1 or FS2''.
0
17. On page 79347, column 3, paragraph (a)(4)(iv)(d), Example 10 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
18. On page 79348, column 1, paragraph (a)(4)(iv)(d), Example 11 (ii), 
line 3, the language ``to sale were undertaken by FS through the'' is 
corrected to read ``to sale had been undertaken by FS through the''.
0
19. On page 79348, column 1, paragraph (b)(2)(i)(d), the language 
``[Reserved]. For further guidance, see Sec.  1.954-3(b)(2)(i)(d).'' is 
corrected to read ``[Reserved].''.
0
20. On page 79348, column 2, following the language ``Example (3). 
[Reserved]. For further guidance, see Sec.  1.954-3(b)(4) Example 
(3).'', the language ``Example (6). [Reserved].'' is added on the next 
line.
0
21. On page 79348, column 2, following the new language ``Example (6). 
[Reserved].'', the language ``Example (7). [Reserved].'' is added on 
the next line.
0
22. On page 79348, column 2, paragraph (d), the last two lines, the 
language ``subsequent taxable years of the taxpayer.'' is corrected to 
read ``subsequent taxable years.''.


Sec.  1.954-3T  [Corrected]

0
23. On page 79349, column 2, in paragraph (b)(1)(ii)(c)(2), Example 
(i), line 18, the language ``effective rate imposed in Country M on 
the'' is corrected to read ``effective rate of tax imposed in Country M 
on the''.
0
24. On page 79349, column 3, paragraph (b)(1)(ii)(c)(3)(i), a new 
sentence is added after the first sentence to read ``This paragraph 
(b)(1)(ii)(c)(3) is applied separately with respect to the income 
derived by each purchasing or selling branch (or similar establishment) 
or purchasing or selling remainder of the controlled foreign 
corporation as provided under paragraphs (b)(1)(i) and (b)(1)(ii) of 
this section and Sec. Sec.  1.954-3(b)(1)(i) and (b)(1)(ii).''.
0
25. On page 79350, column 2, line 2, in paragraph 
(b)(1)(ii)(c)(3)(iii), the language ``construction with respect to 
that'' is corrected to read ``construction with respect to the income 
derived by a purchasing or selling branch (or similar establishment) or 
the purchasing or selling remainder of the controlled foreign 
corporation in connection with the purchase or sale of that''.
0
26. On page 79350, column 2, line 15, in paragraph 
(b)(1)(ii)(c)(3)(iii), the language ``any, and that would, after 
applying'' is corrected to read ``any, that would, after applying''.
0
27. On page 79350, column 2, the second full sentence, in paragraph 
(b)(1)(ii)(c)(3)(iii), the language ``The tested sales location is the 
location where the branch (or similar establishment) or the remainder 
of the controlled foreign corporation purchases or sells the personal 
property.'' is corrected to read ``The tested sales location is the 
location of the purchasing or selling branch (or similar establishment) 
or the remainder of the controlled foreign corporation by or through 
which the purchasing or selling activities are carried on with respect 
to the personal property.''.
0
28. On page 79350, column 2, the last line, in paragraph 
(b)(1)(ii)(c)(3)(iii), the language ``(b)(1)(ii)(c)(3)(v) Examples 4, 
5, and 6 of'' is corrected to read ``(b)(1)(ii)(c)(3)(v) Examples 3, 4, 
5, and 6 of''.
0
29. On page 79350, column 3, lines 13, 14, and 15, in paragraph 
(b)(1)(ii)(c)(3)(iii), the language ``apply with respect to the sales 
income related to that property and the use of the purchasing or 
selling branch (or'' is corrected to read ``apply with respect to the 
income derived by the tested sales location in connection with the 
purchase or sale of that property and the use of that purchasing or 
selling branch (or''.
0
30. On page 79351, column 1, line 4, in paragraph (b)(1)(ii)(c)(3)(v), 
Example 1 (i), the language ``branches. Employees of FS located in'' is 
corrected to read ``branches. The activities of the remainder of FS in 
Country M do not independently satisfy Sec.  1.954-3(a)(4)(i). 
Employees of FS located in''.
0
31. On page 79351, column 2, paragraph (b)(1)(ii)(c)(3)(v), Example 3 
(ii), lines 14, 15, 16, and 17, the language ``(b)(1)(ii)(c)(3)(iii) of 
this section The tested sales location is Country M because the 
remainder of FS performs the selling activities with respect to Product 
X. The'' is corrected to read ``(b)(1)(ii)(c)(3)(iii) of this section. 
The tested sales location is Country M because the selling activities 
with respect to Product X are carried on by the remainder of FS. The''.
0
32. On page 79351, column 3, paragraph (b)(1)(ii)(c)(3)(v), Example 4, 
the paragraph heading, the language ``Manufacturing activities 
performed by multiple branches, no branch independently satisfies Sec.  
1.954-3(a)(4)(i), selling activities performed by remainder of the 
controlled foreign corporation, remainder contribution includes branch 
manufacturing activities.'' is corrected to read ``Manufacturing 
activities performed by multiple branches, no branch independently 
satisfies Sec.  1.954-3(a)(4)(i), selling activities carried on by 
remainder of the controlled foreign corporation, remainder contribution 
includes branch manufacturing activities.''.
0
33. On page 79351, column 3, paragraph (b)(1)(ii)(c)(3)(v), Example 4 
(ii), the fourth sentence, the language ``The tested sales location is 
Country M because the remainder of FS performs the selling activities 
with respect to Product X.'' is corrected to read ``The tested sales 
location is Country M because the selling activities with respect to 
Product X are carried on by the remainder of FS.''.
0
34. On page 79351, column 3, paragraph (b)(1)(ii)(c)(3)(v), Example 4 
(ii), the last sentence, the language ``Therefore, the rules of 
paragraph (b)(1)(ii)(a) of this section will not apply and neither 
Branch A nor Branch B will be treated as a separate corporation for 
purposes of paragraph (b)(2)(ii) of this section and Sec.  1.954-
3(b)(2)(ii).'' is corrected to read ``Therefore, the rules of paragraph 
(b)(1)(ii)(a) of this section will not apply with respect to the income 
derived by the remainder of FS in connection with the sale of Product 
X, and neither Branch A nor Branch B will be treated as a separate 
corporation for purposes of paragraph (b)(2)(ii) of this section and 
Sec.  1.954-3(b)(2)(ii).''.
0
35. On page 79351, column 3, paragraph (b)(1)(ii)(c)(3)(v), Example 5, 
the paragraph heading, the language ``Manufacturing activities 
performed by multiple branches, no branch independently satisfies Sec.  
1.954-3(a)(4)(i), selling activities performed by remainder of the 
controlled foreign corporation and a sales branch.'' is corrected to 
read ``Manufacturing activities performed by multiple branches, no 
branch independently satisfies Sec.  1.954-3(a)(4)(i), selling 
activities carried on by remainder of the controlled foreign 
corporation and a sales branch.''.
0
36. On page 79352, column 1, paragraph (b)(1)(ii)(c)(3)(v), Example 5 
(i), the first sentence, the language ``The facts are the same as 
Example 3, except that selling activities are also performed by Branch 
D in Country D, and Country D imposes a 16% effective rate of tax on 
sales income.'' is corrected to read ``The facts are the same as 
Example 3, except that sales of Product X are also carried on through 
Branch D in Country D, and Country D imposes a 16% effective rate of 
tax on sales income.''.
0
37. On page 79352, column 1, paragraph (b)(1)(ii)(c)(3)(v), Example 5 
(ii), the fifth sentence, the language

[[Page 11846]]

``The results with respect to the remainder of FS in this Example 6 are 
the same as in Example 3.'' is corrected to read ``The results with 
respect to income derived by the remainder of FS in connection with the 
sale of Product X in this Example 5 are the same as in Example 3.''.
0
38. On page 79352, column 1, in paragraph (b)(1)(ii)(c)(3)(v), Example 
5 (ii), the sixth sentence, the language ``However, paragraph 
(b)(1)(ii)(c)(3)(iii) of this section must also be applied with respect 
to Branch D because Branch D performs selling activities with respect 
to Product X.'' is corrected to read ``However, paragraph 
(b)(1)(ii)(c)(3)(iii) of this section must also be applied with respect 
to Branch D because the sale of Product X is also carried on through 
Branch D.''.
0
39. On page 79352, column 1, paragraph (b)(1)(ii)(c)(3)(v), Example 5 
(ii), line 29, the language ``rate of tax imposed on the Branch D's 
sales'' is corrected to read ``rate of tax imposed on Branch D's 
sales''.
0
40. On page 79352, column 1, paragraph (b)(1)(ii)(c)(3)(v), Example 5 
(ii), the last sentence, the language ``Therefore, the rules of 
paragraph (b)(1)(ii)(a) of this section will not apply to Branch D and 
neither Branch A nor Branch D will be treated as a separate corporation 
for purposes of paragraph (b)(2)(ii) of this section and Sec.  1.954-
3(b)(2)(ii).'' is corrected to read ``Therefore, the rules of paragraph 
(b)(1)(ii)(a) of this section will not apply with respect to the income 
derived by Branch D in connection with the sale of Product X and the 
use of Branch D to sell Product X will not result in a branch being 
treated as a separate corporation for purposes of paragraph (b)(2)(ii) 
of this section and Sec.  1.954-3(b)(2)(ii).''.
0
41. On page 79352, column 2, paragraph (b)(1)(ii)(c)(3)(v), Example 6 
(ii), the fourth sentence, the language ``The tested sales location is 
Country M because the remainder of FS performs the selling activities 
with respect to Product X.'' is corrected to read ``The tested sales 
location is Country M because the selling activities with respect to 
Product X are carried on by the remainder of FS.''.
0
42. On page 79352, column 3, paragraph (b)(2)(i)(b) is corrected to 
read as follows:
    ``(b) Activities treated as performed on behalf of the remainder of 
corporation. (1) With respect to purchasing or selling activities 
performed by or through the branch or similar establishment, such 
purchasing or selling activities will, with respect to personal 
property manufactured, produced, constructed, grown, or extracted by 
the remainder of the controlled foreign corporation, be treated as 
performed on behalf of the remainder of the controlled foreign 
corporation.
    (2) With respect to purchasing or selling activities performed by 
or through the branch or similar establishment, such purchasing or 
selling activities will, with respect to personal property (other than 
property described in paragraph (b)(2)(i)(b)(1) of this section) 
purchased or sold, or purchased and sold, by the remainder of the 
controlled foreign corporation (or any branch treated as the remainder 
of the controlled foreign corporation), be treated as performed on 
behalf of the remainder of the controlled foreign corporation.''.
0
43. On page 79352, column 3, paragraph (b)(2)(i)(c), the language ``(c) 
[Reserved]. For further guidance, see Sec.  1.954-3(b)(2)(i)(c).'' is 
corrected to read ``(c) through (e) [Reserved]. For further guidance, 
see Sec.  1.954-3(b)(2)(i)(c) and (e).''.
0
44. On page 79352, column 3, paragraph (b)(2)(i)(d) is removed.
0
45. On page 79353, column 1, paragraph (b)(2)(i)(e) is removed.
0
46. On page 79353, columns 1 and 2, paragraph (b)(2)(ii)(b) is 
corrected to read as follows:
    ``(b) Activities treated as performed on behalf of the remainder of 
corporation. (1) With respect to purchasing or selling activities 
performed by or through the branch or similar establishment, such 
purchasing or selling activities will, with respect to personal 
property manufactured, produced, constructed, grown, or extracted by 
the remainder of the controlled foreign corporation, be treated as 
performed on behalf of the remainder of the controlled foreign 
corporation.
    (2) With respect to purchasing or selling activities performed by 
or through the branch or similar establishment, such purchasing or 
selling activities will, with respect to personal property (other than 
property described in paragraph (b)(2)(ii)(b)(1) of this section) 
purchased or sold, or purchased and sold, by the remainder of the 
controlled foreign corporation (or any branch treated as the remainder 
of the controlled foreign corporation), be treated as performed on 
behalf of the remainder of the controlled foreign corporation.''.
0
47. On page 79353, column 3, paragraph (b)(4), Examples (4) through 
(7), the language ``[Reserved]. For further guidance, see Sec.  1.954-
3(b)(4) Examples (4) through (7).'' is corrected to read ``[Reserved]. 
For further guidance, see Sec.  1.954-3(b)(4) Examples (4) and (5).''.
0
48. On page 79353, column 3, paragraph (b)(4), Example 8 (i), line 13, 
the language ``located in Country M perform only sales'' is corrected 
to read ``located in Country M carry on only sales''.
0
49. On page 79354, column 1, paragraph (b)(4), Example 9, the paragraph 
heading, the language ``Manufacturing activities performed by multiple 
branches, no branch independently satisfies Sec.  1.954-3(a)(4)(i), 
selling activities performed by remainder of the controlled foreign 
corporation, branch manufacturing activities included in remainder 
contribution.'' is corrected to read ``Manufacturing activities 
performed by multiple branches, no branch independently satisfies Sec.  
1.954-3(a)(4)(i), selling activities carried on by remainder of the 
controlled foreign corporation, some branch manufacturing activities 
included in remainder contribution.''.
0
50. On page 79354, column 1, paragraph (b)(4), Example 9 (i), the first 
sentence, the language ``FS, a controlled foreign corporation organized 
in Country M, has two branches, Branch A and Branch B, located in 
Country A and Country B respectively.'' is corrected to read ``FS, a 
controlled foreign corporation organized in Country M, has three 
branches, Branch A, Branch B, and Branch C, located in Country A, 
Country B, and Country C respectively.''.
0
51. On page 79354, column 1, paragraph (b)(4), Example 9 (i), line 33, 
the language ``Country B, provides quality control and'' is corrected 
to read ``Country B, provides quality control. Branch C, through the 
activities of employees of FS located in Country C, provides''.
0
52. On page 79354, column 1, paragraph (b)(4), Example 9 (i), the 
eleventh sentence, the language ``Country A imposes an effective rate 
of tax on sales income of 12%, and Country B imposes an effective rate 
of tax on sales income of 24%.'' is corrected to read ``Country A 
imposes an effective rate of tax on sales income of 12%, Country B 
imposes an effective rate of tax on sales income of 24%, and Country C 
imposes an effective rate of tax on sales income of 25%.''.
0
53. On page 79354, column 1, paragraph (b)(4), Example 9 (i), the 
twelfth sentence, the language ``None of the remainder of FS, Branch A, 
or Branch B independently satisfies Sec.  1.954-3(a)(4)(i).'' is 
corrected to read ``None of the remainder of FS, Branch A, Branch B, or 
Branch C independently satisfies Sec.  1.954-3(a)(4)(i).''.

[[Page 11847]]

0
54. On page 79354, column 1, paragraph (b)(4), Example 9 (i), the 
fourteenth sentence, the language ``Under the facts and circumstances 
of the business, the activities of the remainder of FS and Branch A, if 
considered together, would not provide a demonstrably greater 
contribution to the manufacture of Product X than the activities of 
Branch B.'' is corrected to read ``Under the facts and circumstances of 
the business, the activities of the remainder of FS and Branch A, if 
considered together, would not provide a demonstrably greater 
contribution to the manufacture of Product X than the activities of 
Branch B and Branch C, if considered together.''.
0
55. On page 79354, columns 1 and 2, paragraph (b)(4), Example 9 (ii), 
the second sentence, the language ``The remainder of FS, Branch A, and 
Branch B each provide a contribution through the activities of 
employees to the manufacture of Product X.'' is corrected to read ``The 
remainder of FS, Branch A, Branch B, and Branch C each provide a 
contribution through the activities of employees to the manufacture of 
Product X.''.
0
56. On page 79354, column 2, paragraph (b)(4), Example 9 (ii), the 
fourth sentence, the language ``The tested sales location is Country M 
because the remainder of FS performs the selling activities with 
respect to Product X.'' is corrected to read ``The tested sales 
location is Country M because the selling activities with respect to 
Product X are carried on by the remainder of FS.''.
0
57. On page 79354, column 2, paragraph (b)(4), Example 9 (ii), the 
fifth sentence, the language ``The location of Branch B is the tested 
manufacturing location because the effective rate of tax imposed on 
FS's sales income by Country M (10%) is less than 90% of, and at least 
5 percentage points less than, the effective rate of tax that would 
apply to such income in Country B (24%): and Branch B is the only 
manufacturing branch that would, after applying Sec.  1.954-
3(b)(1)(ii)(b), be treated as a separate corporation.'' is corrected to 
read ``The location of Branch B is the tested manufacturing location 
because the effective rate of tax imposed on FS's sales income by 
Country M (10%) is less than 90% of, and at least 5 percentage points 
less than the effective rate of tax that would apply to such income in 
Country B (24%), and Country B has the lowest effective rate of tax 
among the manufacturing branches that would, after applying Sec.  
1.954-3(b)(1)(ii)(b), be treated as a separate corporation.''.
0
58. On page 79354, column 2, paragraph (b)(4), Example 9 (ii), line 
nineteen from the top of the column, the language ``Country A will be 
included in the'' is corrected to read ``Country A by Branch A, will be 
included in the''.
0
59. On page 79354, column 2, paragraph (b)(4), Example 9 (ii), a new 
sentence is added between the sixth and seventh sentences to read ``The 
manufacturing activities performed in Country C by Branch C will be 
included in the contribution of Branch B for purposes of determining 
the location of manufacture of Product X because the effective rate of 
tax imposed on the sales income by Country M (10%) is less than 90% of, 
and at least 5 percentage points less than, the effective rate of tax 
that would apply to such income in Country C (25%).''.
0
60. On page 79354, column 2, paragraph (b)(4), Example 9 (ii), the 
seventh sentence, the language ``Under the facts and circumstances of 
the business, the manufacturing activities of the remainder of FS and 
Branch A, considered together, would not provide a demonstrably greater 
contribution to the manufacture of Product X than the activities of 
Branch B.'' is corrected to read ``Under the facts and circumstances of 
the business, the manufacturing activities of the remainder of FS and 
Branch A, considered together, would not provide a demonstrably greater 
contribution to the manufacture of Product X than the activities of 
Branch B and Branch C, considered together.''

Guy R. Traynor,
Federal Register Liaison, Publications & Regulations Br., Associate 
Chief Counsel, Procedure & Administration.
[FR Doc. E9-5894 Filed 3-19-09; 8:45 am]
BILLING CODE 4830-01-P