This document contains corrections to final regulations (T.D. 9456, 2009-33 I.R.B. 188) that were published in the Federal Register on Tuesday, August 4, 2009 (74 FR 38830) providing guidance regarding the treatment of controlled services transactions under section 482 and the allocation of income from intangible property, in particular with respect to contributions by a controlled party to the value of intangible property owned by another controlled party. These final regulations modify regulations under section 861 concerning stewardship expenses to be consistent with the changes made to the guidance under section 482.
Carol B. Tan or Gregory A. Spring, (202) 435-5265 for matters relating to section 482, or Richard L. Chewning, (202) 622-3850 for matters relating to stewardship expenses (not toll-free numbers).
The final regulations that are the subject of this document are under sections 482, 861, 6038, and 6662 of the Internal Revenue Code.
As published, the final regulations (T.D. 9456) contains errors that may prove to be misleading and are in need of clarification.
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Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:
Paragraph 1. The authority citation for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.482-1 is amended by revising the last sentence of paragraph (d)(3)(v) to read as follows:
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(d) * * *
(3) * * *
(v) * * * For guidance concerning the specific comparability considerations applicable to transfers of tangible and intangible property and performance of services, see §§1.482-3 through 1.482-6 and §1.482-9; see also §§1.482-3(f), 1.482-4(f)(4), and 1.482-9(m), dealing with the coordination of intangible and tangible property and performance of services rules.
Par. 3. Section 1.482-6 is amended by revising the third sentence of paragraph (c)(3)(i)(B)(1) to read as follows:
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(c) * * *
(3) * * *
(i) * * *
(B) * * *
(1) * * * Thus, in cases where such nonroutine contributions are present, there normally will be an unallocated residual profit after the allocation of income described in paragraph (c)(3)(i)(A) of this section. * * *
Par. 4. Section 1.482-8 is amended by revising the second sentence of paragraph (b) Example 10. (iv) to read as follows:
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(b) * * *
Example 10. * * *
(iv) * * * A functional analysis indicates that USSub’s activities to promote Product Y in year 4 are similar to activities performed by Agency A during years 1 through 3 under the contract with USSub. * * *
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Par. 5. Section 1.482-9 is amended as follows:
1. The last sentence of paragraph (b)(8) Example 22.(i) is revised.
2. Paragraphs (b)(8) Example 23.(ii) second occurrence, (b)(8) Example 23. (iii), and (b)(8) Example 23.(iv) are redesignated as paragraphs (b)(8) Example 23.(iii), (b)(8) Example 23.(iv), and (b)(8) Example 23.(v).
3. The table of paragraph (e)(4) Example 4.(ii) is revised.
4. The last sentence of paragraph (g)(2) Example 2. (iii) is revised.
5. The table of paragraph (k)(3) Example 2.(iii) is revised.
The revisions read as follows:
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(b) * * *
(8) * * *
Example 22. (i) * * * Company P’s total services cost for services A, B, C, and D charged within the group is 100.
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(e) * * *
(4) * * *
Example 4. * * *
(ii) * * *
| Category | Rate |
|---|---|
| Project managers | $100 per hour. |
| Technical staff | $75 per hour. |
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(g) * * *
(2) * * *
Example 2. * * *
(iii) * * * In an effort to submit a winning bid to secure the contract, Company B points to its Level 2 license and its record of successful completion of projects, and also demonstrates to Country 2 government that it has access to substantial technical expertise pertaining to processing of Level 1 waste.
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(k) * * *
(3) * * *
Example 2. * * *
(iii) * * *
| Company | A | B | Total |
|---|---|---|---|
| Allocation | 400/500 | 100/500 | |
| Amount | 80 | 20 | 100 |
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Par. 6. Section 1.861-8 is amended by revising the fourth sentence of paragraph (g) Example 17. (ii)(A) to read as follows:
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(g) * * *
Example 17. * * *
(ii) * * *
(A) * * * For purposes of applying the foreign tax credit limitation, the statutory grouping is general category gross income from sources without the United States and the residual grouping is gross income from sources with in the United States. * * *
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LaNita Van Dyke,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.