[Federal Register Volume 85, Number 239 (Friday, December 11, 2020)]
[Rules and Regulations]
[Pages 79853-79854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25371]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9902]
RIN 1545-BP15


Guidance Under Sections 951A and 954 Regarding Income Subject to 
a High Rate of Foreign Tax; Correcting Amendment

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

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SUMMARY: This document contains corrections to Treasury Decision 9902, 
which was published in the Federal Register on Thursday, July 23, 2020. 
Treasury Decision 9902 contained final regulations under the global 
intangible low-taxed income and subpart F income provisions of the 
Internal Revenue Code regarding the treatment of income that is subject 
to a high rate of foreign tax.

DATES: This correction is effective on December 11, 2020.

FOR FURTHER INFORMATION CONTACT: Jorge M. Oben or Larry R. Pounders at 
(202) 317-6934 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations (TD 9902) that are the subject of this 
correction are issued under section 951A of the Code.

Need for Correction

    As published on July 23, 2020 (85 FR 44620) the final regulations 
(TD 9902) 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 1.951A-2 is amended by:
0
a. Revising the third sentence of paragraph (c)(3)(ii)(B).
0
b. Revising paragraphs (c)(7)(iii)(B)(2) and (c)(7)(viii)(A)(2)(ii).
0
c. Revising the first sentence of paragraph (c)(7)(viii)(A)(4) 
introductory text.

[[Page 79854]]

0
d. Revising paragraph (c)(7)(viii)(A)(4)(i).
0
e. Redesignating paragraph (c)(8)(iii)(C)(2)(vii) as paragraph 
(c)(8)(iii)(C)(2)(vii).
0
f. Removing ``DE1Y'' in paragraph (c)(8)(iii)(D)(6)(i) and adding in 
its place ``FDE1Y''.
0
g. Removing ``CFC1X'' in paragraph (c)(8)(iii)(D)(6)(iii) and adding in 
its place ``CFC2X''.
    The revisions read as follows:


Sec.  1.951A-2  Tested income and tested loss.

* * * * *
    (c) * * *
    (3) * * *
    (ii) * * *
    (B) * * * Therefore, for example, interest expense that is 
apportioned under the modified gross income method to a tentative gross 
tested income item of a lower-tier corporation under paragraph 
(c)(7)(iii)(A) of this section may be allocated and apportioned to the 
tested income of the upper-tier corporation or to the residual 
grouping, depending on whether the lower-tier corporation's tentative 
gross tested income item is an item of gross tested income or is 
excluded from gross tested income under the high-tax exclusion. * * *
* * * * *
    (7) * * *
    (iii) * * *
    (B) * * *
    (2) In the case of payments to a tested unit that is treated as a 
foreign branch under paragraph (c)(7)(iii)(B)(1) of this section, 
applying the principles of Sec.  1.904-6(a)(2)(ii) and (iii) as if the 
tested unit receiving the payment were a foreign branch owner (and as 
if the tested unit making the payment were a foreign branch); and
* * * * *
    (viii) * * *
    (A) * * *
    (2) * * *
    (ii) Each United States shareholder that owns within the meaning of 
section 958(a) (including both domestic partnerships that are United 
States shareholders that own stock within the meaning of section 958(a) 
without regard to Sec.  1.951A-1(e)(1) and partners of a domestic 
partnership that are United States shareholders that are treated as 
owning stock withing the meaning of section 958(a) by reason of Sec.  
1.951A-1(e)(1)) stock of the controlled foreign corporation as of the 
end of the CFC's taxable year to which the election relates must file 
amended Federal income tax returns (or timely original federal income 
tax returns if a return has not yet been filed) reflecting the effect 
of such election (or revocation) for the U.S. shareholder inclusion 
year with or within which the CFC inclusion year ends as well as for 
any other taxable year in which the U.S. tax liability of the United 
States shareholder would be increased by reason of the election (or 
revocation) (or in the case of a partnership if any item reported by 
the partnership or any partnership-related item would change as a 
result of the election (or revocation)) within a single period no 
greater than six months within the 24-month period described in 
paragraph (c)(7)(viii)(A)(2)(i) of this section; and
* * * * *
    (4) A United States shareholder that is a partner in a partnership 
that is also a United States shareholder in the controlled foreign 
corporation must generally file an amended return, as required under 
paragraph (c)(7)(viii)(A)(2)(ii) of this section, and must generally 
pay any additional tax owed as required under paragraph 
(c)(7)(viii)(A)(2)(iii) of this section. * * *
    (i) The partnership timely files an administrative adjustment 
request described in paragraph (c)(7)(viii)(A)(2)(i) or (ii) of this 
section, as applicable; and,
* * * * *

Crystal Pemberton,
Senior Federal Register Liaison, Publications and Regulations Branch, 
Legal Processing Division, Associate Chief Counsel, (Procedure and 
Administration).
[FR Doc. 2020-25371 Filed 12-10-20; 8:45 am]
BILLING CODE 4830-01-P