E6-22169. Income and Currency Gain or Loss With Respect to a Section 987 QBU; Correction

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Correction to notice of proposed rulemaking.

SUMMARY:

This document contains corrections to a notice of proposed rulemaking that was published in the Federal Register on Thursday, September 7, 2006 (71 FR 52876), regarding the determination of the items of income or loss of a taxpayer with respect to a section 987 qualified business unit as well as the timing, amount, character and source of any section 987 gain or loss.

FOR FURTHER INFORMATION CONTACT:

Sheila Ramaswamy, [phone] (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The notice of proposed rulemaking (REG-208270-86) that is the subject of these corrections is under section 987 of the Internal Revenue Code.

Need for Correction

As published, the notice of proposed rulemaking (REG-208270-86) contains errors that may prove to be misleading and is in need of clarification.

Correction of Publication

Accordingly, the notice of proposed rulemaking (REG-208270-86), that was the subject of FR Doc. 06-7250, is corrected as follows:

1. On page 52879, second column, in the preamble under the paragraph heading “E. Concerns Regarding the 1991 Proposed Regulations: Notice 2000-20,” the sixteenth line following the formula, the language “DE. The DE conducts mineral” is corrected to read “DE. The DE conducts mineral extraction in Country X”.

2. On page 52886, first column, in the preamble under the paragraph heading “C. Section 1.987-3 Determination of the Items of Section 987 Taxable Income or Loss of an Owner of a Section 987 QBU,” the eighth line, the language “under other provisions are not taken” is corrected to read “under other provisions of the Code or regulations are not taken”.

3. On page 52886, second column, under the paragraph heading “C. Section 1.987-3 Determination of the Items of Section 987 Taxable Income or Loss of an Owner of a Section 987 QBU,” first full paragraph, ninth line from the bottom of the paragraph, the language “rates for amount realized and adjusted” is corrected to read “rates for the amount realized and adjusted”.

4. On page 52886, second column, under the paragraph heading “C. Section 1.987-3 Determination of the Items of Section 987 Taxable Income or Loss of an Owner of a Section 987 QBU,” second full paragraph, fifth line, the language “Generally the amount realized and” is corrected to read “Generally, the amount realized and adjusted”.

§ 1.987-1

[Corrected]

5. On page 52895, second column, § 1.987-1(b)(7), paragraph (ii)(B) of Example 1, fifth line from the bottom of the paragraph, the language “neither the activities of DE1 or DE2 are” is corrected to read “the activities of DE1 are not”.

§ 1.987-2

[Corrected]

6. On page 52899, first column, § 1.987-2(c)(9), lines 2 and 3, the language “illustrate the principles of this paragraph (c). For purposes of these” is corrected to read “illustrate the principles of paragraph (b) of this section and this paragraph (c). For purposes of these”.

7. On page 52899, second column, § 1.987-2(c)(9), paragraph (ii)(B) of Example 1, last line, the language “section 988 to X as a result of the loan.” is corrected to read “section 988 to X as a result of the disregarded loan.”

8. On page 52899, third column, § 1.987-2(c)(9), paragraph (ii)(A) of Example 3, line 3, the language “Federal tax purposes and therefore is a” is corrected to read “Federal income tax purposes and therefore is a”.

9. On page 52900, first column, § 1.987-2(c)(9), paragraph (ii)(C) of Example 4, line 3, the language “regarded for U.S. Federal tax purposes. As a” is corrected to read “regarded for U.S. Federal income tax purposes. As a”.

10. On page 52900, second column, § 1.987-2(c)(9), paragraph (ii)(A) of Example 7, line 1, the language “(ii) Analysis. (A) For Federal tax purposes” is corrected to read “(ii) Analysis. (A) For Federal income tax purposes”.

11. On page 52901, third column, § 1.987-2(d)(2), line 3, the language “described in section 988(c)(1)(i) and (ii)” is corrected to read “described in section 988(c)(1)(B)(i) and (ii)”.

§ 1.987-3

[Corrected]

12. On page 52902, third column, § 1.987-3(e)(2), line 5, the language “described in section 988(c)(1)(A)(i) and” is corrected to read “described in section 988(c)(1)(B)(i) and”.

13. On page 52904, first column, § 1.987-3(f) Example 3., the fourth line from the bottom of the paragraph, the language “section and § 1.987-1(c)(3) €8,000 × $1=” is corrected to read “section and § 1.987-1(c)(3) (€8_[n1],000 × $1=”.

§ 1.987-6

[Corrected]

14. On page 52911, first column, § 1.987-6(c) Example, lines 5 through 10 from the bottom of the column, the language “of this section, Sf7,500 (Sf750,000/Sf1,000,000 × Sf10,000) of the section 987 gain will be treated as foreign source general limitation income which is not subpart F income and Sf2,500 (Sf250,000/Sf1,000,000 × Sf10,000) will” is corrected to read “of this section, Sf7,500 ((Sf750,000/Sf1,000,000) × Sf10,000) of the section 987 gain will be treated as foreign source general limitation income which is not subpart F income and Sf2,500 ((Sf250,000/Sf1,000,000) × Sf10,000) will”.

Cynthia E. Grigsby,

Senior Federal Register Liaison Officer, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration).