In the Rules and Regulations section in this issue of the Bulletin, the IRS is issuing temporary regulations that provide guidance relating to the allocation by a partnership of foreign income taxes. Those temporary regulations are necessary to improve the operation of an existing safe harbor rule that is used for determining whether allocations of creditable foreign tax expenditures are deemed to be in accordance with the partners’ interests in the partnership. The text of those temporary regulations published in this issue of the Bulletin also serves as the text of these proposed regulations.
Send submissions to CC:PA:LPD:PR (REG–100861–15), room 5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–100861–15), Courier’s desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 20224, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–100861–15).
Concerning the regulations, Suzanne M. Walsh, (202) 317-4908; concerning submissions of comments, Oluwafunmilayo Taylor, (202) 317-5179 (not toll-free numbers).
Temporary regulations in the Rules and Regulations section of this issue of the Bulletin contain amendments to the Income Tax Regulations (26 CFR part 1) which provide guidance relating to the allocation by a partnership of foreign income taxes. The text of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations and these proposed regulations. The regulations affect partnerships and their partners.
Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f), these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under “ADDRESSES.” The Treasury Department and the IRS request comments on all aspects of the proposed rules. All comments will be available at www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person that timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register.
The principal author of these regulations is Suzanne M. Walsh of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.
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Accordingly, 26 CFR part 1 is proposed to be amended as follows:
Paragraph 1. The authority citation for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.704–1 is amended as follows:
1. In paragraph (b)(0):
i. Add an entry for § 1.704–1 (b)(1)(ii)(b)(1).
ii. Revise the entries for (b)(4)(viii)(c)(1) through (4) and (b)(4)(viii)(d)(1).
2. Revise paragraphs (b)(1)(ii)(b)(1), (b)(1)(ii)(b)(3)(B), (b)(4)(viii)(a)(1), (b)(4)(viii)(c)(1), (b)(4)(viii)(c)(2)(ii) and (iii), (b)(4)(viii)(c)(3) and (4), (b)(4)(viii)(d)(1), and Example 25 of paragraph (b)(5).
3. Add Examples 36 and 37 to paragraph (b)(5).
The revisions read as follows:
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(b) * * *
(0) [The text of the proposed amendments to § 1.704–1(b)(0) is the same as the text of § 1.704–1T(b)(0) published elsewhere in this issue of the Bulletin.]
(1) * * *
(ii) * * *
(b) Rules relating to foreign tax expenditures. (1) [The text of the proposed amendments to § 1.704–1(b)(1)(ii)(b)(1) is the same as the text of § 1.704–1T(b)(1)(ii)(b)(1) published elsewhere in this issue of the Bulletin.]
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(3) * * *
(B) [The text of the proposed amendments to § 1.704–1(b)(1)(ii)(b)(3)(B) is the same as the text of § 1.704–1T(b)(1)(ii)(b)(3)(B) published elsewhere in this issue of the Bulletin.]
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(4) * * *
(viii) * * *
(a) * * *
(1) [The text of the proposed amendments to § 1.704–1(b)(4)(viii)(a)(1) is the same as the text of § 1.704–1T(b)(4)(viii)(a)(1) published elsewhere in this issue of the Bulletin.]
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(c) Income to which CFTEs relate. (1) [The text of the proposed amendments to § 1.704–1(b)(4)(viii)(c)(1) is the same as the text of § 1.704–1T(b)(4)(viii)(c)(1) published elsewhere in this issue of the Bulletin.]
(2) * * *
(ii) [The text of the proposed amendments to § 1.704–1(b)(4)(viii)(c)(2)(ii) is the same as the text of § 1.704–1T(b)(4)(viii)(c)(2)(ii) published elsewhere in this issue of the Bulletin.]
(iii) [The text of the proposed amendments to § 1.704–1(b)(4)(viii)(c)(2)(iii) is the same as the text of § 1.704–1T(b)(4)(viii)(c)(2)(iii) published elsewhere in this issue of the Bulletin.]
(3) [The text of the proposed amendments to § 1.704–1(b)(4)(viii)(c)(3) is the same as the text of § 1.704–1T(b)(4)(viii)(c)(3) published elsewhere in this issue of the Bulletin.]
(4) [The text of the proposed amendments to § 1.704–1(b)(4)(viii)(c)(4) is the same as the text of § 1.704–1T(b)(4)(viii)(c)(4) published elsewhere in this issue of the Bulletin.]
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(d) Allocation and apportionment of CFTEs to CFTE categories. (1) [The text of the proposed amendments to § 1.704–1(b)(4)(viii)(d)(1) is the same as the text of § 1.704–1T(b)(4)(viii)(d)(1) published elsewhere in this issue of the Bulletin.]
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(5) * * *
Example 25. [The text of the proposed amendments to § 1.704–1(b)(5) Example 25 is the same as the text of § 1.704–1T(b)(5) Example 25 published elsewhere in this issue of the Bulletin.]
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Example 36. [The text of the proposed amendments to § 1.704–1(b)(5) Example 36 is the same as the text of § 1.704–1T(b)(5) Example 36 published elsewhere in this issue of the Bulletin.]
Example 37. [The text of the proposed amendments to § 1.704–1(b)(5) Example 37 is the same as the text of § 1.704–1T(b)(5) Example 37 published elsewhere in this issue of the Bulletin.]
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John Dalrymple, Deputy Commissioner for Services and Enforcement.The Internal Revenue Bulletin is produced and published by the Internal Revenue Service and contains IRS pronouncements affecting tax analysis under the Code and the Regulations, including but not limited to Revenue Procedures, Revenue Rulings, Notices and Announcements. Access the IRS site at https://www.irs.gov/help/irsgov-accessibility for information concerning accessibility of IRS materials. While every effort has been made to ensure that the IRB database files available through the TouchTax application are accurate, those using TouchTax for legal research should verify their results against the printed versions of the IRBs available from the IRS.