Federal Register: September 9, 2009 (Volume 74, Number 173)
DOCID: fr09se09-17 FR Doc E9-21226
DEPARTMENT OF THE TREASURY
Internal Revenue Service
CFR Citation: 26 CFR Part 1
RIN ID: RIN 1545-BI78, 1545-BI79, 1545-BI80
TD ID: [TD 9456]
NOTICE: RULES
DOCID: fr09se09-17
DOCUMENT ACTION: Correcting amendments.
SUBJECT CATEGORY:
Treatment of Services Under Section 482; Allocation of Income and Deductions From Intangible Property; Apportionment of Stewardship Expense; Correction
DATES: This correction is effective on September 9, 2009, and is applicable on August 4, 2009.
DOCUMENT SUMMARY:
This document contains corrections to final regulations (TD 9456) 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.
SUMMARY:
Treatment of Services Under Section 482; Allocation of Income and Deductions From Intangible Property, etc.; Correction
SUPPLEMENTAL INFORMATION
Background
The final regulations that are the subject of this document are under sections 482, 861, 6038, and 6662 of the Internal Revenue Code. Need for Correction
As published, the final regulations (TD 9456) contain errors that may prove to be misleading and are in need of clarification. 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 1INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *.
Par. 2. Section 1.4821 is amended by revising the last sentence of paragraph (d)(3)(v) to read as follows:
Sec. 1.4821 Allocation of income and deductions among taxpayers. * * * * *
(d) * * *
(3) * * *
(v) * * * For guidance concerning the specific comparability
considerations applicable to transfers of tangible and intangible
property and performance of services, see Sec. Sec. 1.4823 through
1.4826 and Sec. 1.4829; see also Sec. Sec. 1.4823(f), 1.482
4(f)(4), and 1.4829(m), dealing with the coordination of intangible and tangible property and performance of services rules.
Par. 3. Section 1.4826 is amended by revising the third sentence of paragraph (c)(3)(i)(B)(1) to read as follows:
Sec. 1.4826 Profit split method.
* * * * *
(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 1.4828 is amended by revising the second sentence of paragraph (b) Example 10. (iv) to read as follows:
Sec. 1.4828 Examples of the best method rule.
* * * * *
(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. * * *
* * * * *
Par. 5. Section 1.4829 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. [[Page 46346]]
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:
Sec. 1.4829 Methods to determine taxable income in connection with a controlled services transaction.
* * * * *
(b) * * *
(8) * * *
Example 22. (i) * * * Company P's total services cost for services A, B, C, and D charged within the group is 100.
* * * * *
(e) * * *
(4) * * *
Example 4. * * *
(ii) * * *
Category Rate Project managers.......................... $100 per hour.
Technical staff........................... $75 per hour.
* * * * *
(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.
* * * * *
(k) * * *
(3) * * *
Example 2. * * *
(iii) * * *
Company A B Total
Allocation....................... 400/500 100/500 ...........
Amount........................... 80 20 100 * * * * *
Par. 6. Section 1.8618 is amended by revising the fourth sentence of paragraph (g). Example 17. (ii)(A) to read as follows:
Sec. 1.8618 Computation of taxable income from sources within the United States and from other sources and activities.
* * * * *
(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. * * *
* * * * *
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration).
[FR Doc. E921226 Filed 9809; 8:45 am]
BILLING CODE 483001P
FOR FURTHER INFORMATION CONTACT
Carol B. Tan or Gregory A. Spring, (202) 4355265 for matters relating to section 482, or Richard L. Chewning, (202) 6223850 for matters relating to stewardship expenses (not tollfree numbers).