§ 1.904-0 - Outline of regulation provisions for section 904.

§ 1.904-0 Outline of regulation provisions for section 904.

This section lists the headings for §§ 1.904-1 through 1.904-7.

§ 1.904-1 Limitation on credit for foreign taxes.

(a) Per-country limitation.

(1) General.

(2) Illustration of principles.

(b) Overall limitation.

(1) General.

(2) Illustration of principles.

(c) Special computation of taxable income.

(d) Election of overall limitation.

(1) In general.

(i) Manner of making election.

(ii) Revocation for first taxable year beginning after December 31, 1969.

(2) Method of making the initial election.

(3) Method of revoking an election and making a new election.

(e) Joint return.

(1) General.

(2) Electing the overall limitation.

§ 1.904-2 Carryback and carryover of unused foreign tax.

(a) Credit for foreign tax carryback or carryover.

(b) Years to which carried.

(1) General.

(2) Definitions.

(3) Taxable years beginning before January 1, 1958.

(c) Tax deemed paid or accrued.

(1) Unused foreign tax for per-country limitation year.

(2) Unused foreign tax for overall limitation year.

(3) Unused foreign tax with respect to foreign mineral income.

(d) Determination of excess limitation for certain years.

(e) Periods of less than 12 months.

(f) Statement with tax return.

(g) Illustration of carrybacks and carryovers.

(h) Transition rules for carryovers and carrybacks of pre-2003 and post-2002 unused foreign tax paid or accrued with respect to dividends from noncontrolled section 902 corporations.

(1) Carryover of unused foreign tax.

(2) Carryback of unused foreign tax.

(i) Transition rules for carryovers and carrybacks of pre-2007 and post-2006 unused foreign tax.

(1) Carryover of unused foreign tax.

(i) General rule.

(ii) Safe harbor.

(2) Carryback of unused foreign tax.

(i) General rule.

(ii) Safe harbor.

(3) Effective/applicability date.

§ 1.904-3 Carryback and carryover of unused foreign tax by husband and wife.

(a) In general.

(b) Joint unused foreign tax and joint excess limitation.

(c) Continuous use of joint return.

(d) From separate to joint return.

(e) Amounts carried from or through a joint return year to or through a separate return year.

(f) Allocation of unused foreign tax and excess limitation.

(1) Limitation.

(i) Per-country limitation.

(ii) Overall limitation.

(2) Unused foreign tax.

(i) Per-country limitation.

(ii) Overall limitation.

(3) Excess limitation.

(i) Per-country limitation taxpayer.

(ii) Overall limitation.

(4) Excess limitation to be applied.

(5) Reduction of excess limitation.

(6) Spouses using different limitations.

(g) Illustrations.

§ 1.904-4 Separate application of section 904 with respect to certain categories of income.

(a) In general.

(b) Passive category income.

(1) In general.

(2) Passive income.

(i) In general.

(ii) Exceptions.

(iii) Active rents or royalties.

(A) In general.

(B) Active conduct of trade or business.

(iv) Examples.

(3) Specified passive category income.

(c) High-taxed income.

(1) In general.

(2) Grouping of items of income in order to determine whether passive income is high-taxed income.

(i) Effective dates.

(A) In general.

(B) Application to prior periods.

(ii) Grouping rules.

(A) Initial allocation and apportionment of deductions and taxes.

(B) Reallocation of loss groups.

(3) Amounts received or accrued by United States persons.

(4) Dividends and inclusions from controlled foreign corporations, dividends from noncontrolled section 902 corporations, and income of foreign QBUs.

(5) Special rules.

(i) Certain rents and royalties.

(ii) Treatment of partnership income.

(iii) Currency gain or loss.

(iv) Coordination with section 954(b)(4).

(6) Application of this paragraph to additional taxes paid or deemed paid in the year of receipt of previously taxed income.

(i) Determination made in year of inclusion.

(ii) Exception.

(iii) Allocation of foreign taxes imposed on distributions of previously taxed income.

(iv) Increase in taxes paid by successors.

(A) General rule.

(B) Exception for U.S. shareholders not entitled to look-through.

(7) Application of this paragraph to certain reductions of tax on distributions of income.

(i) In general.

(ii) Allocation of reductions of foreign tax.

(iii) Interaction with section 954(b)(4).

(8) Examples.

(d) [Reserved]

(e) Financial services income.

(1) In general.

(2) Active financing income.

(i) Income included.

(3) Financial services entities.

(i) In general.

(ii) Special rule for affiliated groups.

(iii) Treatment of partnerships and other pass-through entities.

(A) Rule.

(B) Examples.

(iv) Examples.

(4) Definition of incidental income.

(i) In general.

(A) Rule.

(B) Examples.

(ii) Income that is not incidental income.

(5) Exceptions.

(f)-(g) [Reserved]

(h) Export financing interest.

(1) Definitions.

(i) Export financing.

(ii) Fair market value.

(iii) Related person.

(2) Treatment of export financing interest.

(3) Exception.

(4) Examples.

(5) Income eligible for section 864(d)(7) exception (same country exception) from related person factoring treatment.

(i) Income other than interest.

(ii) Interest income.

(iii) Examples.

(i) Interaction of section 907(c) and income described in this section.

(j) Special rule for certain currency gains and losses.

(k) Special rule for alternative minimum tax foreign tax credit.

(l) Priority rule.

(m) Income treated as allocable to an additional separate category.

§ 1.904-5 Look-through rules as applied to controlled foreign corporations and other entities.

(a) Definitions.

(b) In general.

(c) Rules for specific types of inclusions and payments.

(1) Subpart F inclusions.

(i) Rule.

(ii) Examples.

(2) Interest.

(i) In general.

(ii) Allocating and apportioning expenses including interest paid to a related person.

(iii) Allocating and apportioning expenses of a noncontrolled section 902 corporation.

(iv) Definitions.

(A) Value of assets and reduction in value of assets and gross income.

(B) Related person debt allocated to passive assets.

(v) Examples.

(3) Rents and royalties.

(4) Dividends.

(i) Look-through rule for controlled foreign corporations.

(ii) Special rule for dividends attributable to certain loans.

(iii) Look-through rule for noncontrolled section 902 corporations.

(iv) Examples.

(d) Effect of exclusions from Subpart F income.

(1) De minimis amount of Subpart F income.

(2) Exception for certain income subject to high foreign tax.

(3) Examples.

(e) Treatment of Subpart F income in excess of 70 percent of gross income.

(1) Rule.

(2) Example.

(f) Modifications of look-through rules for certain income.

(1) High withholding tax interest.

(i) Rule.

(ii) Example.

(2) Distributions from a FSC.

(3) Example.

(g) Application of the look-through rules to certain domestic corporations.

(h) Application of the look-through rules to partnerships and other pass-through entities.

(1) General rule.

(2) Exception for certain partnership interests.

(i) Rule.

(ii) Exceptions.

(3) Income from the sale of a partnership interest.

(i) In general.

(ii) Exception for sale by 25-percent owner.

(4) Value of a partnership interest.

(i) Application of look-through rules to related entities.

(1) In general.

(2) Exception for distributive shares of partnership income.

(3) Special rule for dividends between controlled foreign corporations.

(4) Payor and recipient of dividend are members of the same qualified group.

(5) Examples.

(j) Look-through rules applied to passive foreign investment company inclusions.

(k) Ordering rules.

(1) In general.

(2) Specific rules.

(l) Examples.

(m) Application of section 904(h).

(1) In general.

(2) Treatment of interest payments.

(i) Interest payments from controlled foreign corporations.

(ii) Interest payments from noncontrolled section 902 corporations.

(3) Examples.

(4) Treatment of dividend payments.

(i) Rule.

(ii) Determination of earnings and profits from United States sources.

(iii) Example.

(5) Treatment of inclusions under sections 951(a)(1)(A) and 1293.

(i) Rule.

(ii) Example.

(6) Treatment of section 78 amount.

(7) Coordination with treaties.

(i) Rule.

(ii) Example.

(n) Order of application of sections 904(d) and (h).

(o) Effective date.

(1) Rules for controlled foreign corporations and other look-through entities.

(2) Rules for noncontrolled section 902 corporations.

(3) Rules for income from the sale of a partnership interest.

§ 1.904-6 Allocation and apportionment of taxes.

(a) Allocation and apportionment of taxes to a separate category or categories of income.

(1) Allocation of taxes to a separate category or categories of income.

(i) Taxes related to a separate category of income.

(ii) Apportionment of taxes related to more than one separate category.

(iii) Apportionment of taxes for purposes of applying the high tax income test.

(iv) Special rule for base and timing differences.

(2) Reserved.

(b) Application of paragraph (a) to sections 902 and 960.

(1) Determination of foreign taxes deemed paid.

(2) Distributions received from foreign corporations that are excluded from gross income under section 959(b).

(3) Application of section 78.

(4) Increase in limitation.

(c) Examples.

§ 1.904-7 Transition rules.

(a) Characterization of distributions and section 951(a)(1)(A) (ii) and (iii) and (B) inclusions of earnings of a controlled foreign corporation accumulated in taxable years beginning before January 1, 1987, during taxable years of both the payor controlled foreign corporation and the recipient which begin after December 31, 1986.

(1) Distributions and section 951(a)(1)(A) (ii) and (iii) and (B) inclusions.

(2) Limitation on establishing the character of earnings and profits.

(b) Application of look-through rules to distributions (including deemed distributions) and payments by an entity to a recipient when one's taxable year begins before January 1, 1987 and the other's taxable year begins after December 31, 1986.

(1) In general.

(2) Payor of interest, rents, or royalties is subject to the Act and recipient is not subject to the Act.

(3) Recipient of interest, rents, or royalties is subject to the Act and payor is not subject to the Act.

(4) Recipient of dividends and subpart F inclusions is subject to the Act and payor is not subject to the Act.

(5) Examples.

(c) Installment sales.

(d) Special effective date for high withholding tax interest earned by persons with respect to qualified loans described in section 1201(e)(2) of the Act.

(e) Treatment of certain recapture income.

(f) Treatment of non-look-through pools of a noncontrolled section 902 corporation or a controlled foreign corporation in post-2002 taxable years.

(1) Definition of non-look-through pools.

(2) Treatment of non-look-through pools of a noncontrolled section 902 corporation.

(3) Treatment of non-look-through pools of a controlled foreign corporation.

(4) Substantiation of look-through character of undistributed earnings and taxes in a non-look-through pool.

(i) Reconstruction of earnings and taxes pools.

(ii) Safe harbor method.

(iii) Inadequate substantiation.

(iv) Examples.

(5) Treatment of a deficit accumulated in a non-look-through pool.

(6) Treatment of pre-1987 accumulated profits.

(7) Treatment of post-1986 undistributed earnings or a deficit of a controlled foreign corporation attributable to dividends from a noncontrolled section 902 corporation paid in taxable years beginning before January 1, 2003.

(i) Look-through treatment of post-1986 undistributed earnings at controlled foreign corporation level.

(ii) Look-through treatment of deficit in post-1986 undistributed earnings at controlled foreign corporation level.

(iii) Substantiation required for look-through treatment.

(8) Treatment of distributions received by an upper-tier corporation from a lower-tier noncontrolled section 902 corporation, including when the corporations do not have the same taxable years.

(i) Rule.

(ii) Example.

(9) Election to apply pre-AJCA rules to 2003 and 2004 taxable years.

(i) Definition.

(ii) Time, manner, and form of election.

(iii) Treatment of non-look-through pools in taxable years beginning after December 31, 2004.

(iv) Carryover of unused foreign tax.

(v) Carryback of unused foreign tax.

(vi) Recapture of overall foreign loss or separate limitation loss in the single category for dividends from all noncontrolled section 902 corporations.

(vii) Recapture of separate limitation losses in other separate categories.

(viii) Treatment of undistributed earnings in an upper-tier corporation-level single category for dividends from lower-tier noncontrolled section 902 corporations.

(ix) Treatment of a deficit in the single category for dividends from lower-tier noncontrolled section 902 corporations.

(10) Effective/applicability date.

(g) Treatment of earnings and foreign taxes of a controlled foreign corporation or a noncontrolled section 902 corporation accumulated in taxable years beginning before January 1, 2007.

(1) Definitions.

(i) Pre-2007 pools.

(ii) Pre-2007 separate categories.

(iii) Post-2006 separate categories.

(2) Treatment of pre-2007 pools of a controlled foreign corporation or a noncontrolled section 902 corporation.

(3) Substantiation of post-2006 character of earnings and taxes in a pre-2007 pool.

(i) Reconstruction of earnings and taxes pools.

(ii) Safe harbor method.

(A) In general.

(B) General safe harbor method.

(C) Interest apportionment safe harbor.

(iii) Consistency rule.

(4) Treatment of pre-1987 accumulated profits.

(5) Treatment of earnings and foreign taxes in pre-2007 pools of a lower-tier controlled foreign corporation or noncontrolled section 902 corporation.

(6) Effective/applicability date.

[T.D. 8412, 57 FR 20642, May 14, 1992, as amended by T.D. 8627, 60 FR 56119, Nov. 7, 1995; T.D. 8805, 64 FR 1515, Jan. 11, 1999; T.D. 8916, 66 FR 274, Jan. 3, 2001; T.D. 9141, 69 FR 43306, July 20, 2004; T.D. 9260, 71 FR 24528, Apr. 25, 2006; 71 FR 77265, Dec. 26, 2006; T.D. 9368, 72 FR 72587, 72596, Dec. 21, 2007; T.D. 9452, 74 FR 27876, June 11, 2009; T.D. 9521, 76 FR 19269, Apr. 7, 2011]