[Federal Register Volume 78, Number 171 (Wednesday, September 4, 2013)]
[Rules and Regulations]
[Page 54391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21401]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9634]
RIN 1545-BK41


Determining the Amount of Taxes Paid for Purposes of the Foreign 
Tax Credit

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains final regulations providing guidance 
relating to the determination of the amount of taxes paid for purposes 
of the foreign tax credit. These regulations address certain highly 
structured arrangements that produce inappropriate foreign tax credit 
results. The regulations affect individuals and corporations that claim 
direct and indirect foreign tax credits.

DATES: Effective date: These regulations are effective on September 4, 
2013.
    Applicability date: For dates of applicability, see Sec.  1.901-
2(h)(3).

FOR FURTHER INFORMATION CONTACT: Jeffrey P. Cowan, at (202) 622-3850.

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to 26 CFR part 1. On July 18, 
2011, a notice of proposed rulemaking (REG-126519-11) under section 901 
of the Internal Revenue Code (Code) relating to the determination of 
the amount of taxes paid for purposes of the foreign tax credit was 
published in the Federal Register (76 FR 42076). In the same issue of 
the Federal Register, final and temporary regulations were also issued. 
The text of those temporary regulations served as the text of the 
proposed regulations. No comments were received in response to the 
notice of proposed rulemaking. No public hearing was requested or held. 
This Treasury Decision adopts the proposed regulations with no 
substantive change, and the corresponding temporary regulations are 
removed.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It is hereby 
certified that these regulations will not have a significant economic 
impact on a substantial number of small entities. This certification is 
based on the fact that these regulations will primarily affect 
affiliated groups of corporations that have foreign operations, which 
tend to be larger businesses. Moreover the number of taxpayers affected 
and the average burden are minimal. Therefore, a Regulatory Flexibility 
Analysis is not required. Pursuant to section 7805(f) of the Code, the 
notice of proposed rulemaking preceding this regulation was submitted 
to the Chief Counsel for Advocacy of the Small Business Administration 
for comment on its impact on small business.

Drafting Information

    The principal author of these regulations is Jeffrey P. Cowan, 
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.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

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 1.901-2 is amended by:
0
1. Adding a sentence at the end of paragraph (e)(5)(iv)(B)(1)(ii).
0
2. Removing paragraph (e)(5)(iv)(B)(1)(iii).
0
3. Revising the first sentence of paragraph (h)(2).
0
4. Revising paragraph (h)(3).
    The revisions and addition read as follows:


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

* * * * *
    (e) * * *
    (5) * * *
    (iv) * * *
    (B) * * *
    (1) * * *
    (ii) * * * A foreign payment attributable to income of the entity 
also includes a withholding tax (within the meaning of section 
901(k)(1)(B)) imposed on a dividend or other distribution (including 
distributions made by a pass-through entity or an entity that is 
disregarded as an entity separate from its owner for U.S. tax purposes) 
with respect to the equity of the entity.
* * * * *
    (h) * * *
    (2) Except as provided in paragraph (h)(3) of this section, 
paragraph (e)(5)(iv) of this section applies to foreign payments that, 
if such payments were an amount of tax paid, would be considered paid 
or accrued under Sec.  1.901-2(f) on or after July 13, 2011. * * *
    (3) The last sentence of paragraph (e)(5)(iv)(B)(1)(ii) of this 
section applies to foreign payments that, if such payments were an 
amount of tax paid, would be considered paid or accrued under Sec.  
1.901-2(f) on or after September 4, 2013. See 26 CFR 1.901-
2T(e)(5)(iv)(B)(1)(iii) (revised as of April 1, 2013) for rules 
applicable to foreign payments that, if such payments were an amount of 
tax paid, would be considered paid or accrued under Sec.  1.901-2(f) 
before September 4, 2013.
* * * * *


Sec.  1.901-2T  [Removed]

0
Par. 3. Section 1.901-2T is removed.

Beth Tucker,
Deputy Commissioner for Operations Support.
    Approved: August 6, 2013.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-21401 Filed 9-3-13; 8:45 am]
BILLING CODE 4830-01-P