[Federal Register Volume 80, Number 234 (Monday, December 7, 2015)]
[Rules and Regulations]
[Page 75946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30777]



[[Page 75946]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9734]
RIN 1545-BJ56


Dividend Equivalents From Sources Within the United States; 
Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations; correcting amendment.

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SUMMARY: This document contains corrections to final and temporary 
regulations (TD 9734) that was published in the Federal Register on 
September 18, 2015 (80 FR 56866). These corrections include a change to 
the effective date that was applicable to transactions issued on or 
after January 1, 2016, and before January 1, 2017. This document 
provides guidance to nonresident alien individuals and foreign 
corporations that hold certain financial products providing for 
payments that are contingent upon or determined by reference to U.S. 
source dividend payments.

DATES: This correction is effective on December 7, 2015 and applicable 
on September 18, 2015.

FOR FURTHER INFORMATION CONTACT: Peter Merkel or Karen Walny at (202) 
317-6938 (not a toll free number).

SUPPLEMENTARY INFORMATION: 

Background

    The final and temporary regulations (TD 9734) that are the subject 
of this correction are under sections 871 and 894 of the Internal 
Revenue Code.

Need for Correction

    As published, the final and temporary regulations (TD 9734) contain 
errors that may prove to be misleading and are in need of 
clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

    Accordingly, 26 CFR part 1 is 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 1.871-15 is amended by revising paragraphs (i)(4) 
Example 1. (ii), (i)(4) Example 2. (ii), (r)(1), and (r)(3) and adding 
paragraph (r)(4) to read as follows:


Sec.  1.871-15  Treatment of dividend equivalents.

* * * * *
    (i) * * *
    (4) * * *
    Example 1.  * * *
    (ii) Subject to paragraph (i)(2)(iv) of this section, the 
estimated dividend amounts are the per-share dividend amounts 
because the estimates are reasonable and specified in accordance 
with paragraph (i)(2)(iii) of this section. The estimated per-share 
dividend amounts are dividend equivalents for purposes of this 
section.
    Example 2.  * * *
    (ii) Because the LIBOR leg of the swap contract is reduced to 
reflect estimated dividends and the estimated dividend amounts are 
not specified, Foreign Investor is treated as receiving the actual 
dividend amounts are in accordance with paragraph (i)(2) of this 
section. The actual per-share dividend amounts are dividend 
equivalents for purposes of this section.
* * * * *
    (r) * * * (1) In general. This section applies to payments made on 
or after September 18, 2015 except as provided in paragraphs (r)(2), 
(3), and (4) of this section.
* * * * *
    (3) Effective/applicability date for paragraphs (d)(2) and (e). 
Paragraphs (d)(2) and (e) of this section apply to any payment made on 
or after January 1, 2017, with respect to any transaction issued on or 
after January 1, 2017.
    (4) Effective/applicability date for paragraphs (c)(2)(iv), (h), 
and (q) of this section. [Reserved]. For further guidance, see Sec.  
1.871-15T(r)(4).

0
Par. 3. Section 1.871-15T is amended by removing the language 
``transaction'' and adding in its place ``complex contract'' in 
paragraph (h)(7) Example. (iv) and revising paragraph (h)(7) Example. 
(viii) to read as follows:


Sec.  1.871-15T  Treatment of dividend equivalents (temporary).

* * * * *
    (h) * * *
    (7) * * *
    Example.  * * *
    (viii) FI concludes that the Contract is not a section 871(m) 
transaction because the complex contract calculation of 7.68 exceeds 
the benchmark calculation of 4.473.
* * * * *

0
Par. 4. Section 1.1441-1 is amended by removing the second occurrence 
of paragraph (e)(3)(ii)(E) and adding paragraph (e)(3)(ii)(F) to read 
as follows:


Sec.  1.1441-1  Requirements for the deduction and withholding of tax 
on payments to foreign persons.

* * * * *
    (e) * * *
    (3) * * *
    (ii) * * *
    (F) [Reserved]. For further guidance, see Sec.  1.1441-
1T(e)(3)(ii)(F).
* * * * *

0
Par. 5. Section 1.1441-1T is amended by revising the last sentence of 
paragraph (f)(3) to read as follows:


Sec.  1.1441-1T  Requirements for the deduction and withholding of tax 
on payments to foreign persons (temporary).

* * * * *
    (f) * * *
    (3) * * * Paragraphs (e)(3)(ii)(E) and (e)(6) of this section apply 
beginning September 18, 2015.
* * * * *

0
Par. 6. Section 1.1461-1 is amended by adding a second sentence to 
paragraph (c)(2)(iii) to read as follows:


Sec.  1.1461-1  Payments and returns of tax withheld.

* * * * *
    (c) * * *
    (2) * * *
    (iii) * * * Paragraphs (c)(2)(i)(M) and (c)(2)(ii)(J) of this 
section apply beginning September 18, 2015.
* * * * *

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2015-30777 Filed 12-4-15; 8:45 am]
 BILLING CODE 4830-01-P