Modifications to Subpart F Treatment of Aircraft and Vessel Leasing Income
Federal Register: July 3, 2008 (Volume 73, Number 129)
Proposed Rules
Page 38162-38163
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr03jy08-16
DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 1
REG-138355-07
RIN 1545-BG98
Modifications to Subpart F Treatment of Aircraft and Vessel
Leasing Income
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations and notice of proposed rulemaking.
SUMMARY: In the Rules and Regulations section of this issue of the
Federal Register, the IRS is issuing temporary regulations relating to the subpart F treatment of aircraft and vessel leasing income under sections 954 and 956 of the Internal Revenue Code (Code) and the transfer of tangible property incorporated in aircraft and vessels that are used predominantly outside the United States under section 367 of the Code. The regulations reflect statutory changes made by section 415 of the American Jobs Creation Act of 2004 (AJCA). In general, the regulations will affect United States shareholders of controlled foreign corporations that derive income from the leasing of aircraft or vessels in foreign commerce and that transfer property subject to these leases to a foreign corporation. The text of those temporary regulations also serves as the text of these proposed regulations.
DATES: Written or electronic comments and requests for a public hearing must be received by October 1, 2008.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-138355-07), Internal
Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-138355-07), Courier's Desk, Internal
Revenue Service, 1111 Constitution Avenue, NW., Washington, DC., or sent electronically, via the Federal eRulemaking Portal at http:// www.regulations.gov (IRS-REG-138355-07).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations under section 367, John H. Seibert, at (202) 622-3860; concerning the proposed regulations under section 954 or 956, Paul J. Carlino at (202) 622-3840; concerning submissions of comments or a public hearing,
Richard Hurst, at (202) 622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
Temporary regulations in this issue of the Federal Register provide guidance under section 367 of the Code, relating to the nonrecognition of gain on certain property transferred to a foreign corporation if the property is used by the foreign corporation in the active conduct of a trade or business outside of the United States. The regulations also provide guidance under section 954 relating to the determination of whether rents derived from leasing an aircraft or vessel in foreign commerce will be treated as derived in the active conduct of a trade or business under section 954(c)(2)(A), and section 956, relating to whether an aircraft or vessel used in the transportation of persons or property in foreign commerce is excluded from U.S. property. The text of the temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations and these proposed regulations.
Special Analyses
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. 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 proposed regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. Ch. 6) does not apply.
Page 38163
Pursuant to section 7805(f) of the Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Comments and Requests for a Public Hearing
Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight
(8) copies) or electronic comments that are submitted timely to the
IRS. The IRS and Treasury Department request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written 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.
Drafting Information
The principal authors of these regulations are John H. Seibert and
Paul J. Carlino, Office of Associate Chief Counsel (International).
However, other personnel from the IRS and Treasury Department participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805. * * *
Par. 2. In Sec. 1.367(a)-2 is added to read as follows:
Sec. 1.367(a)-2 Exception for transfers of property for use in the active conduct of a trade or business.
The text of the proposed Sec. 1.367(a)-2 is the same as the text for Sec. 1.367(a)-2T(a) through (e)(2) published elsewhere in this issue of the Federal Register.
Par. 3. In Sec. 1.367(a)-4 is added to read as follows:
Sec. 1.367(a)-4 Special rules applicable to specified transfers of property (temporary).
The text of the proposed Sec. 1.367(a)-4 is the same as the text for Sec. 1.367(a)-4T(a) through (i)(1) published elsewhere in this issue of the Federal Register.
Par. 4. In Sec. 1.367(a)-5 is added to read as follows:
Sec. 1.367(a)-5 Property subject to section 367(a)(1) regardless of use in trade or business.
The text of the proposed Sec. 1.367(a)-5 is the same as the text for Sec. 1.367(a)-5T(a) through (f)(3)(ii) published elsewhere in this issue of the Federal Register.
Par. 5. Section 1.954-2(c)(2)(ii), (c)(2)(v) and (c)(3) Example 6 and (i) are revised to read as follows:
Sec. 1.954-2 Foreign personal holding company income.
* * * * *
(c) * * *
(2) * * *
(ii) [The text of the proposed amendment to Sec. 1.954-2(c)(2)(ii) is the same as the text of Sec. 1.954-2T(c)(2)(ii) published elsewhere in this issue of the Federal Register.]
* * * * *
(v) [The text of the proposed amendment to Sec. 1.954-2(c)(2)(v) is the same as the text for Sec. 1.954-2T(c)(2)(v) published elsewhere in this issue of the Federal Register.]
(vi) [The text of the proposed amendment to Sec. 1.954-2(c)(2)(vi) is the same as the text for Sec. 1.954-2T(c)(2)(vi) published elsewhere in this issue of the Federal Register.]
(vii) [The text of the proposed amendment to Sec. 1.954- 2(c)(2)(vii) is the same as the text for Sec. 1.954-2T(c)(2)(vii) published elsewhere in this issue of the Federal Register.]
(3) * * *
Example 6. [The text of the proposed amendment to Sec. 1.954- 2(c)(3) Example 6 is the same as the text for Sec. 1.954-2T(c)(3)
Example 6 published elsewhere in this issue of the Federal Register.]
(i) [The text of the proposed amendment to Sec. 1.954-2(c)(3)(i) is the same as the text for Sec. 1.954-2T(c)(3)(i) published elsewhere in this issue of the Federal Register.]
Par. 6. Section 1.956-2(b)(1)(vi) and (e) are revised to read as follows:
Sec. 1.956-2 Definition of United States Property.
* * * * *
(b) * * *
(1) * * *
(vi) [The text of the proposed amendment to Sec. 1.956-2(b)(1)(vi) is the same as the text for Sec. 1.956-2T(b)(1)(vi) published elsewhere in this issue of the Federal Register.]
* * * * *
(e) [The text of the proposed amendment to Sec. 1.956-2(e) is the same as the text of Sec. 1.956-2T(e) published elsewhere in this issue of the Federal Register].
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
FR Doc. E8-14918 Filed 7-2-08; 8:45 am
BILLING CODE 4830-01-P
