Guidance on Passive Foreign Investment Companies; Correction
| Published date | 10 March 2021 |
| Citation | 86 FR 13647 |
| Record Number | 2021-04789 |
| Section | Rules and Regulations |
| Court | Internal Revenue Service |
Federal Register, Volume 86 Issue 45 (Wednesday, March 10, 2021)
[Federal Register Volume 86, Number 45 (Wednesday, March 10, 2021)]
[Rules and Regulations]
[Pages 13647-13648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04789]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9936]
RIN 1545-BO59
Guidance on Passive Foreign Investment Companies; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendments.
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SUMMARY: This document contains corrections to the final regulations
Treasury Decision 9936, that were published in the Federal Register on
Friday, January 15, 2021. The final regulations regarding the
determination of whether a foreign corporation is treated as a passive
foreign investment company (``PFIC'') for purposes of the Internal
Revenue Code (``Code''), and the application and scope of certain rules
that determine whether a United States person that indirectly holds
stock in a PFIC is treated as a shareholder of the PFIC.
DATES: These corrections are effective on March 10, 2021 and applicable
on or after January 15, 2021.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations Sec. Sec.
1.1291-0 and 1.1291-1, 1.1297-0 through 1.1297-2, 1.1298-0, 1.1298-2,
and 1.1298-4, Christina G. Daniels at (202) 317-6934; concerning the
regulations Sec. Sec. 1.1297-4 and 1.1297-6, Josephine Firehock at
(202) 317-4932 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The final regulations (TD 9936) that are the subject of this
correction are issued under sections 1297 and 1298 of the Internal
Revenue Code.
Need for Correction
As published on January 15, 2021 (86 FR 4516), the final
regulations (TD 9936) 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:
[[Page 13648]]
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.1297-0 is amended by revising the entry for Sec.
1.1297-2(g)(12) to read as follows:
Sec. 1.1297-0 Table of contents.
* * * * *
Sec. 1.1297-2 Special rules regarding look-through subsidiaries and
look-through partnerships.
* * * * *
(g) * * *
(12) TFC obligation.
* * * * *
0
Par. 3. Section 1.1297-1 is amended by:
0
a. Removing ``Sec. 1.1297-2(b)(2)(i))'' in the first sentence of
paragraph (d)(1)(v)(C)(1) and adding in its place ``Sec. 1.1297-
2(b)(2)(i)''.
0
b. Revising paragraph (f)(8).
The revision reads as follows:
Sec. 1.1297-1 Definition of passive foreign investment company.
* * * * *
(f) * * *
(8) Related person. For purposes of applying the rules of this
section and Sec. 1.1297-2 with respect to section 1297(b)(2)(C), the
term means a related person within the meaning of section 954(d)(3).
* * * * *
0
Par. 4. Section 1.1297-2 is amended by:
0
a. Removing ``of this section))'' in the first sentence of paragraph
(b)(3)(i) and adding in its place ``of this section)''.
0
b. Revising the first sentence of paragraph (c)(4)(iii)(B).
0
c. Removing ``PFIC .'' at the end of paragraph (e)(3)(i)(B)(1) and
adding in its place ``PFIC.''
0
d. Revising the first sentence of paragraph (g)(4)(iv)(A)(2)(iii).
The revisions read as follows:
Sec. 1.1297-2 Special rules regarding look-through subsidiaries and
look-through partnerships.
* * * * *
(c) * * *
(4) * * *
(iii) * * *
(B) * * * The results are the same as in paragraph (c)(4)(ii)(B) of
this section (the results in Example 2), except that TFC's assets also
do not include the stock of LTS2.
* * *
* * * * *
(g) * * *
(4) * * *
(iv) * * *
(A) * * *
(2) * * *
(iii) * * * For purposes of paragraph (b)(3) of this section, FPS
qualifies as a look-through partnership because TFC satisfies the
active partner tests of both paragraphs (g)(4)(ii)(A) and (B) of this
section. * * *
* * * * *
0
Par. 5. Section 1.1297-4 is amended by:
0
a. Revising paragraph (d)(6).
0
b. Removing ``written by a'' in paragraph (f)(5) and adding in its
place ``written by, a''.
The revision reads as follows:
Sec. 1.1297-4 Qualifying insurance corporation.
* * * * *
(d) * * *
(6) Stock ownership. For purposes of this section, ownership of
stock in a foreign corporation means either direct ownership of such
stock or indirect ownership determined using the rules specified in
Sec. 1.1291-1(b)(8) (but without regard to the 50 percent ownership
requirement of Sec. 1.1291-1(b)(8)(ii)(A)).
* * * * *
0
Par. 6. Section 1.1298-2 is amended by revising the second sentence of
paragraph (c)(3), the second sentence of paragraph (f)(1)(i)(B), and
the first sentence of paragraph (f)(2)(ii) to read as follows:
Sec. 1.1298-2 Rules for certain corporations changing businesses.
* * * * *
(c) * * *
(3) * * * However, if activities performed by the officers and
employees of a look-through subsidiary of a corporation or of a look-
through partnership (including a look-through subsidiary or a look-
through partnership with respect to which paragraph (d) of this section
applies) would be taken into account by the corporation pursuant to
Sec. 1.1297-2(e) if it applied, such activities are taken into account
for purposes of the determination of the existence of an active trade
or business and the determination of whether assets are used in an
active trade or business.
* * * * *
(f) * * *
(1) * * *
(i) * * *
(B) * * * The residual gain computed under Sec. 1.1297-2(f)(2) on
the sale of the FS stock is $10x. * * *
* * * * *
(2) * * *
(ii) * * * The results are the same as in paragraph (f)(1)(ii) of
this section (the results in Example 1), except that under paragraph
(c)(1) of this section, the passive income considered attributable to
proceeds from a disposition of one or more active trades or businesses
is $4x (from investment of disposition proceeds). * * *
* * * * *
Sec. 1.1298-4 [Amended]
0
Par. 7. Section 1.1298-4(f) is amended by removing ``Janyuary'' and
adding in its place ``January''.
Crystal Pemberton,
Senior Federal Register Liaison, Legal Processing Division, Associate
Chief Counsel (Procedure and Administration).
[FR Doc. 2021-04789 Filed 3-9-21; 8:45 am]
BILLING CODE 4830-01-P
