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26 CFR 1.901-2; Income, war profits, or excess profits tax paid or accrued.
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
Determining the Amount of Taxes Paid for Purposes of the Foreign Tax Credit
AGENCY: Internal Revenue (IRS),
ACTION: Final and temporary regulations.
SUMMARY: This document contains final and temporary regulations providing guidance relating to the determination of the amount of taxes paid for purposes of the foreign tax credit. These regulations address certain highly structured arrangements that produce inappropriate foreign tax credit results. The regulations affect individuals and corporations that claim direct and indirect foreign tax credits. The text of these temporary regulations also serves as the text of the proposed regulations (REG-1 265 19-11) published in this issue of the Bulletin.
DATES: Effective Date: These regulations are effective on July 18, 2011.
Applicability Date: For dates of applicability, see §1.901-2T(h)(3).
FOR FURTHER INFORMATION CONTACT: Jeffrey P. Cowan, at (202) 622-3850.
SUPPLEMENTARY INFORMATION:
Background
On March 30, 2007, the Federal Register published proposed regulations (REG-156779-06, 2007-2 CB. 1015 [72 FR 15081]) under section 901 of the Internal Revenue Code relating to the amount of taxes paid for purposes of the foreign tax credit. The IRS and the Treasury Department received written comments on the 2007 proposed regulations and a public hearing was held on July 30, 2007. On July 16, 2008, a notice of proposed rulemaking by cross-reference to temporary regulations and temporary regulations (T.D. 9416, 2008-35 I.R.B. 1142) (the "2008 temporary regulations") were published in the Federal Register at 73 FR 40792 and 73 FR 40727, respectively. Final regulations were published in the Federal Register in July 2011, and adopted the proposed regulations with the changes discussed in the preamble to the final regulations.
Explanation of Provision
Section 1.901-2(e)(5)(iv) of the final regulations provides that an amount paid to a foreign country is not a compulsory payment, and thus is not...