[Federal Register Volume 85, Number 189 (Tuesday, September 29, 2020)]
[Rules and Regulations]
[Pages 60909-60910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19333]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9901]
RIN 1545-BO55


Deduction for Foreign-Derived Intangible Income and Global 
Intangible Low-Taxed Income; Correcting Amendment

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

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[[Page 60910]]

SUMMARY: This document contains corrections to Treasury Decision 9901, 
which was published in the Federal Register on Wednesday, July 15, 
2020. The Treasury Decision provided guidance regarding the deduction 
for foreign derived intangible income (FDII) and global intangible low-
taxed income (GILTI).

DATES: These corrections are effective on September 29, 2020.
    Applicability Date: For date of applicability, see Sec.  1.250-
1(b).

FOR FURTHER INFORMATION CONTACT: Brad McCormack at (202) 317-6911 and 
Lorraine Rodriguez at (202) 317-6726; (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations (TD 9901) that are the subject of this 
correction are issued under section 250 of the Internal Revenue Code.

Need for Correction

    As published July 15, 2020 (85 FR 43042), the final regulations (TD 
9901) contain errors that need to be corrected.

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 1.250-0 is amended by revising the entry for Sec.  
1.250(b)-6 (d)(3)(ii) to read as follows:


Sec.  1.250-0   Table of contents.

* * * * *


Sec.  1.250(b)-6  Related party transactions.

* * * * *
    (d) * * *
    (3) * * *
    (ii) Rules for allocating the benefits provided by and price paid 
to the renderer of a related party service.
* * * * *

0
Par. 3. Section 1.250(b)-2 is amended by revising the second sentence 
of paragraph (d)(4)(ii)(C) to read as follows:


Sec.  1.250(b)-2   Qualified business asset investment (QBAI).

* * * * *
    (d) * * *
    (4) * * *
    (ii) * * *
    (C) * * * Therefore, under paragraph (d)(3) of this section, DC's 
dual use ratio with respect to the machine for the taxable year is 80 
percent, which is DC's depreciation with respect to the machine that is 
capitalized to inventory of Product A, the gross income or loss from 
the sale of which is taken into account in determining DC's DEI for the 
taxable year ($320x), divided by DC's depreciation with respect to the 
machine that is capitalized to inventory, the gross income or loss from 
the sale of which is taken into account in determining DC's income for 
Year 1 ($400x). * * *
* * * * *

0
Par. 4. Section 1.250(b)-4 is amended by revising the paragraph heading 
for paragraph(d)(2)(iv)(B)(13) to read as follows:


Sec.  1.250(b)-4   Foreign-derived deduction eligible income (FDDEI) 
sales.

* * * * *
    (d) * * *
    (2) * * *
    (iv) * * *
    (B) * * *
    (13) Example 13: License of intangible property used in research 
and development of other intangible property--* * *
* * * * *

0
Par. 5. Section 1.250(b)-5 is amended by revising the second sentence 
of paragraph (e)(2)(iii) to read as follows:


Sec.  1.250(b)-5   Foreign-derived deduction eligible income (FDDEI) 
services.

* * * * *
    (e) * * *
    (2) * * *
    (iii) * * * If it cannot be determined whether the location is 
within or outside the United States (such as where the location of 
access cannot be reliably determined using the location of the IP 
address of the device used to receive the service), and the gross 
receipts from all services with respect to the business recipient are 
in the aggregate less than $50,000 for the renderer's taxable year, the 
operations of the business recipient that benefit from the service 
provided by the renderer are deemed to be located at the recipient's 
billing address; otherwise, the operations of the business recipient 
that benefit are deemed to be located in the United States. * * *
* * * * *

0
Par. 6. Section 1.250(b)-6 is amended by:
0
1. Revising the second sentence of paragraph (d)(4)(ii)(B)(2)(i).
0
2. Revising the third sentence of paragraph (d)(4)(ii)(C)(2)(i).
    The revisions read as follows:


Sec.  1.250(b)-6   Related party transactions.

* * * * *
    (d) * * *
    (4) * * *
    (ii) * * *
    (B) * * *
    (2) * * *
    (i) * * * However, because 90 percent of R's operations that will 
benefit from FC's service are located outside the United States under 
paragraph (d)(3)(i) of this section, only 10 percent of the benefits of 
FC's service are conferred on persons located within the United States. 
* * *
* * * * *
    (C) * * *
    (2) * * *
    (i) * * * Accordingly, because 10 percent of R's operations that 
will benefit from FC's services are located within the United States, 
persons located within the United States are treated as paying $10x 
($100x x 0.10) for FC's services for purposes of applying the test in 
paragraph (d)(2)(ii) of this section.
* * * * *


Sec.  1.1502-12   [Corrected]

0
Par. 7. On page 43112, in the third column, amendatory instruction 18 
under Sec.  1.1502-12, is corrected to read as ``Redesignating newly 
designated paragraphs (c)(7)(ii)(Q)(a) through (c) as paragraphs 
(c)(7)(ii)(Q)(1) through (3)''.

Crystal Pemberton,
Senior Federal Register Liaison, Publications and Regulations Branch, 
Legal Processing Division, Associate Chief Counsel, (Procedure and 
Administration).
[FR Doc. 2020-19333 Filed 9-28-20; 8:45 am]
BILLING CODE 4830-01-P