E9-26274. Determination of Interest Expense Deduction of Foreign Corporations; Correction

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Correcting amendments.

SUMMARY:

This document contains corrections to final regulations (TD 9465) that were published in the Federal Register on Monday, September 28, 2009 (74 FR 49315) concerning the determination of the interest expense deduction of foreign corporations engaged in a trade or business within the United States. These final regulations conform the interest expense rules to recent U.S. Income Tax Treaty agreements and adopt other changes to improve compliance.

DATES:

This correction is effective on November 5, 2009], and is applicable on September 28, 2009.

FOR FURTHER INFORMATION CONTACT:

Anthony J. Marra, [phone] (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations (TD 9465) that are the subject of this document are under sections 882 and 884 of the Internal Revenue Code.

Need for Correction

As published, the final regulations (TD 9465) 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 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. Section 1.882-5 is amended by revising the first sentence of paragraph (f)(1) to read as follows:

§ 1.882-5

Determination of interest deduction.

* * * * *

(f) Effective/applicability date. (1) This section is applicable for taxable years ending on or after August 15, 2009. * * *

* * * * *

Par. 3. Section 1.884-1 is amended by revising the fifth sentence of paragraph (e)(5) Example 2. (i) to read as follows:

§ 1.884-1

Branch profits tax.

* * * * *

(e) * * *

(5) * * *

Example 2.

(i) * * * As a result of the election, assuming A's U.S. assets and U.S. liabilities would otherwise have remained constant, A's U.S. net equity as of the close of 2007 will increase by the amount of the decrease in liabilities ($60) from $200 to $260 and its ECEP will be reduced to zero. * * *

* * * * *

LaNita Van Dyke,

Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).