Limitation on Deduction for Dividends Received From Certain Foreign Corporations and Amounts Eligible for Section 954 Look-Through Exception; Correcting Amendment

Published date13 November 2020
Citation85 FR 72564
Record Number2020-23632
SectionRules and Regulations
CourtInternal Revenue Service
Federal Register, Volume 85 Issue 220 (Friday, November 13, 2020)
[Federal Register Volume 85, Number 220 (Friday, November 13, 2020)]
                [Rules and Regulations]
                [Page 72564]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-23632]
                [[Page 72564]]
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                DEPARTMENT OF THE TREASURY
                Internal Revenue Service
                26 CFR Part 1
                [TD 9909]
                RIN 1545-BP35
                Limitation on Deduction for Dividends Received From Certain
                Foreign Corporations and Amounts Eligible for Section 954 Look-Through
                Exception; Correcting Amendment
                AGENCY: Internal Revenue Service (IRS), Treasury.
                ACTION: Correcting amendments.
                -----------------------------------------------------------------------
                SUMMARY: This document contains corrections to the final regulations
                (Treasury Decision 9909) that were published in the Federal Register on
                Thursday, August 27, 2020. Treasury Decision 9909 contained final
                regulations under sections 245A and 954 of the Internal Revenue Code
                (the ``Code'') that limit the deduction for certain dividends received
                by United States persons from foreign corporations under section 245A
                and the exception to subpart F income under section 954(c)(6) for
                certain dividends received by controlled foreign corporations.
                DATES: These corrections are effective on November 13, 2020.
                FOR FURTHER INFORMATION CONTACT: Arielle M. Borsos or Logan M.
                Kincheloe at (202) 317-6937 (not a toll-free number).
                SUPPLEMENTARY INFORMATION:
                Background
                 The final regulations (TD 9909) that are the subject of this
                correction are issued under sections 245A, 954(c)(6), and 6038 of the
                Internal Revenue Code.
                Need for Correction
                 As published on August 27, 2020 (85 FR 53068), the final
                regulations (TD 9909; FR Doc. 2020-18543) 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 1.245A-5 is amended by:
                0
                a. Adding a sentence after the first sentence of paragraph
                (e)(3)(i)(A); and
                0
                b. Revising paragraphs (i)(8) and (9) and the first sentence of
                paragraph (j)(10)(ii).
                 The addition and revisions read as follows:
                Sec. 1.245A-5 Limitation of section 245A deduction and section
                954(c)(6) exception.
                * * * * *
                 (e) * * *
                 (3) * * *
                 (i) * * *
                 (A) * * * Because the determination as to whether there would be an
                extraordinary reduction amount or tiered extraordinary reduction amount
                greater than zero is made without regard to this paragraph (e)(3)(i),
                this determination is made without taking into account any elections
                that may be available, or other events that may occur, solely by reason
                of an election described in this paragraph (e)(3)(i), such as the
                application of section 954(b)(4) to a short taxable year created as a
                result of the election. * * *
                * * * * *
                 (i) * * *
                 (8) Extraordinary disposition E&P. The term extraordinary
                disposition E&P has the meaning set forth in paragraph (c)(3)(i)(C) of
                this section.
                 (9) Extraordinary disposition ownership percentage. The term
                extraordinary disposition ownership percentage has the meaning set
                forth in paragraph (c)(3)(i)(B) of this section.
                * * * * *
                 (j) * * *
                 (10) * * *
                 (ii) * * * Because the loan from CFC1 to CFC2 and the subsequent
                distribution of cash were carried out with a principal purpose of
                avoiding the purposes of this section, appropriate adjustments are
                required to be made under the anti-abuse rule in paragraph (h) of this
                section. * * *
                Crystal Pemberton,
                Senior Federal Register Liaison, Publications and Regulations Branch,
                Legal Processing Division, Associate Chief Counsel (Procedure and
                Administration).
                [FR Doc. 2020-23632 Filed 11-12-20; 8:45 am]
                BILLING CODE 4830-01-P
                

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