This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

19267 

Vol. 76, No. 67 

Thursday, April 7, 2011 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 61 

[Docket No. FAA–2006–26661; Amdt. No. 

61–127] 

RIN 2120–AI86 

Pilot, Flight Instructor, and Pilot 

School Certification; Technical 

Amendment 

AGENCY: Federal Aviation 

Administration, DOT. 

ACTION: Final rule; technical 

amendment. 

SUMMARY: The FAA is correcting a final 

rule published on August 21, 2009 (74 

FR 42500). In that rule, the FAA 

amended its regulations to revise the 

training, qualification, certification, and 

operating requirements for pilots, flight 

instructors, ground instructors, and 

pilot schools. This document reinstates 

two paragraphs that were inadvertently 

removed in one section, and amends an 

out-of-date cross reference in another 

section. 

DATES: Effective April 7, 2011. 

FOR FURTHER INFORMATION CONTACT: For 

technical questions concerning this 

action, contact Jeffrey Smith, Airmen 

Certification and Training Branch, AFS– 

810, General Aviation and Commercial 

Division, Flight Standards Service, 

Federal Aviation Administration, 800 

Independence Avenue, SW., 

Washington, DC 20591; telephone (202) 

493–4789; e-mail to 

jeffrey.smith@faa.gov. For legal 

interpretative questions about this final 

rule, contact: Anne Moore, AGC–240, 

Office of Chief Counsel, Regulations 

Division, Federal Aviation 

Administration, (202) 267–3073; e-mail 

to anne.moore@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

On August 21, 2009, the FAA 

published a final rule entitled, ‘‘Pilot, 

Flight Instructor, and Pilot School 

Certification; Final Rule’’ (74 FR 42500). 

That final rule revised the training, 

qualification, certification, and 

operating requirements for pilots, flight 

instructors, ground instructors, and 

pilot schools. The FAA is now issuing 

a technical amendment to § 61.57 to 

reinsert paragraphs (d)(1) and (d)(2) 

because those paragraphs were 

inadvertently removed from the final 

rule. The FAA is also amending an 

incorrect reference in § 61.65(c). 

Technical Amendment 

Section 61.57(d) establishes the 

requirements for an instrument 

proficiency check. Prior to issuance of 

the 2009 final rule, § 61.57(d) contained 

introductory text as well as paragraph 

(d)(1), which set forth the aircraft in 

which an instrument proficiency check 

must be performed, and paragraph 

(d)(2), which set forth those persons 

who are authorized to conduct an 

instrument proficiency check. In the 

2009 final rule, the FAA stated in the 

amendatory instructions to § 61.57(d) 

that it was amending paragraph (d) 

rather than the introductory text to 

paragraph (d). As a result, paragraphs 

(d)(1) and (d)(2) were unintentionally 

removed from the final rule. The FAA 

is issuing this technical amendment to 

restore paragraphs (d)(1) and (d)(2) to 

§ 61.57. 

The FAA is also correcting a minor 

error to a reference in paragraph (c) of 

§ 61.65. In the 2009 final rule, the FAA 

added paragraphs (e) and (f) to this 

section. A corresponding change to a 

cross reference in paragraph (c) that 

would have accounted for these 

additions was unintentionally omitted. 

This technical edit will correct that 

omission. 

Because the changes in this technical 

amendment result in no substantive 

change, we find good cause exists under 

5 U.S.C. 553(d)(3) to make the 

amendment effective in less than 30 

days. 

List of Subjects in 14 CFR Part 61 

Aircraft, Airmen, Aviation safety. 

The Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

amends chapter I of title 14, Code of 

Federal Regulations as follows: 

PART 61—CERTIFICATION: PILOTS, 

FLIGHT INSTRUCTORS, AND GROUND 

INSTRUCTORS 

■ 1. The authority citation for part 61 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40113, 44701– 

44703, 44707, 44709–44711, 45102–45103, 

45301–45302. 

■ 2. Amend § 61.57 by adding 

paragraphs (d)(1) and (d)(2) to read as 

follows: 

§ 61.57 Recent flight experience: Pilot in 

command. 

* * * * * 

(d) * * * 

(1) The instrument proficiency check 

must be— 

(i) In an aircraft that is appropriate to 

the aircraft category; 

(ii) For other than a glider, in a flight 

simulator or flight training device that is 

representative of the aircraft category; or 

(iii) For a glider, in a single-engine 

airplane or a glider. 

(2) The instrument proficiency check 

must be given by— 

(i) An examiner; 

(ii) A person authorized by the U.S. 

Armed Forces to conduct instrument 

flight tests, provided the person being 

tested is a member of the U.S. Armed 

Forces; 

(iii) A company check pilot who is 

authorized to conduct instrument flight 

tests under part 121, 125, or 135 of this 

chapter or subpart K of part 91 of this 

chapter, and provided that both the 

check pilot and the pilot being tested 

are employees of that operator or 

fractional ownership program manager, 

as applicable; 

(iv) An authorized instructor; or 

(v) A person approved by the 

Administrator to conduct instrument 

practical tests. 

* * * * * 

■ 3. Amend § 61.65 by revising 

paragraph (c) introductory text to read 

as follows: 

§ 61.65 Instrument rating requirements. 

* * * * * 

(c) Flight proficiency. A person who 

applies for an instrument rating must 

receive and log training from an 

authorized instructor in an aircraft, or in 

a flight simulator or flight training 


srobinson on DSKHWCL6B1PROD with RULES
19268 Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 

device, in accordance with paragraph (g) 

of this section, that includes the 

following areas of operation: 

* * * * * 

Issued in Washington, DC, on April 1, 

2011. 

Pamela Hamilton-Powell, 

Director, Office of Rulemaking. 

[FR Doc. 2011–8226 Filed 4–6–11; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9521] 

RIN 1545–BG54 

Reduction of Foreign Tax Credit 

Limitation Categories Under Section 

904(d) 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document contains final 

regulations that provide guidance 

relating to the reduction of the number 

of separate foreign tax credit limitation 

categories under section 904(d) of the 

Internal Revenue Code. Changes to the 

applicable law were made by the 

American Jobs Creation Act of 2004 

(AJCA) reducing the number of section 

904(d) separate categories from eight to 

two, effective for taxable years 

beginning after December 31, 2006. The 

final regulations provide guidance 

needed to comply with these changes 

and affect individuals and corporations 

claiming foreign tax credits. 

DATES: Effective Date: These regulations 

are effective on April 7, 2011. 

Applicability Dates: For dates of 

applicability see §§ 1.904–2(i)(3), 1.904– 

4(n), 1.904–5(o)(3), 1.904–7(g)(6), and 

1.904(f)–12(h)(6). 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey L. Parry, (202) 622–3850 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

On December 21, 2007, a notice of 

proposed rulemaking by cross-reference 

to temporary regulations (REG–114126– 

07) under section 904 of the Code and 

temporary regulations (TD 9368) (the 

2007 temporary regulations) were 

published in the Federal Register (72 

FR 72645) and (72 FR 72582), 

respectively. Corrections to those 

temporary regulations were published 

on March 21, 2008, in the Federal 

Register (73 FR 15063). No written 

comments were received. A public 

hearing was not requested and none was 

held. This Treasury decision adopts the 

proposed regulation with the changes 

discussed in this preamble. 

Explanation of Changes in This Final 

Rule 

I. Gain From the Sale of a Partnership 

Interest 

Section 954(c)(4), which was enacted 

by the AJCA, provides a look-through 

rule for sales of 25-percent-owned 

partnerships. Because the definition of 

passive income in section 904(d)(2)(B) 

refers to section 954(c), § 1.904– 

5T(h)(3)(ii) of the 2007 temporary 

regulations provides that in the case of 

a sale of a partnership interest by a 25- 

percent partner, under the principles of 

section 954(c)(4)(B) the income 

recognized on such sale is assigned to 

the separate category for general 

category income, to the extent that the 

gain would not be classified as foreign 

personal holding company income 

under the section 954(c)(4) look-through 

rule. The rule has been revised to clarify 

that the look-through rule applies to a 

sale by any 25-percent owner of a 

partnership (and not just controlled 

foreign corporations that are 25-percent 

partners). The language of this provision 

has also been revised to be more 

consistent with the language of the lookthrough rule as provided under section 

954(c)(4). 

II. Losses in and Losses With Respect to 

the Pre-2007 Separate Category for High 

Withholding Tax Interest 

Section 1.904(f)–12T(h) of the 2007 

temporary regulations provides 

transition rules for recapture in a 

taxable year beginning after December 

31, 2006 (post-2006 taxable year) of an 

overall foreign loss (OFL) or separate 

limitation loss (SLL) in a pre-2007 

separate category (as defined in § 1.904– 

7T(g)(ii)) that offset U.S. source income 

or income in another pre-2007 separate 

category, respectively. Section 1.904(f)– 

12T(h)(3) provides that to the extent a 

taxpayer had an OFL or SLL at the end 

of the taxpayer’s last pre-2007 taxable 

year in the pre-2007 separate category 

for high withholding tax interest, the 

allocation of such OFL or SLL to the 

taxpayer’s post-2006 separate categories 

follows the taxpayer’s allocation of 

excess taxes in the high withholding tax 

interest loss category for section 904(c) 

carryover purposes. If there were no 

excess taxes in the loss category that 

carried over to post-2006 taxable years, 

an OFL or SLL in the pre-2007 separate 

category for high withholding tax 

interest is allocated to the post-2006 

separate category for passive category 

income. Similarly, § 1.904(f)–12T(h)(3) 

provides that where a taxpayer had an 

SLL in a pre-2007 separate category that 

offset high withholding tax interest (that 

is, an SLL with respect to a pre-2007 

separate category for high withholding 

tax interest), the SLL will be recaptured 

in subsequent taxable years pro rata as 

income in the post-2006 separate 

categories for general category income 

and passive category income based on 

how the taxpayer allocated excess taxes 

in the pre-2007 separate category for 

high withholding tax interest. If no 

excess taxes in the pre-2007 separate 

category for high withholding tax 

interest were carried over to post-2006 

taxable years, the SLL will be 

recaptured in subsequent taxable years 

as income in the post-2006 separate 

category for passive category income. 

A question was raised as to whether 

it was appropriate, in the case of a 

financial services entity that had a loss 

in, or a loss with respect to, a pre-2007 

separate category for high withholding 

tax interest, and no excess taxes in the 

loss category were carried over to post2006 taxable years, that the loss be 

allocated to the post-2006 separate 

category for passive category income (in 

the case of a loss in the pre-2007 

separate category for high withholding 

tax interest) or that the loss be 

recaptured in subsequent taxable years 

as income in the post-2006 separate 

category for passive category income (in 

the case of a loss with respect to a pre2007 separate category for high 

withholding tax interest). 

Section 904(d)(2)(C)(i), as amended by 

the AJCA, provides that financial 

services income is treated as general 

category income in the case of a member 

of a financial services group and any 

other person predominantly engaged in 

the active conduct of a banking, 

insurance, financing or similar business 

(a financial services entity). Financial 

services income includes passive 

income that is received or accrued by 

any person predominantly engaged in 

the active conduct of a banking, 

insurance, financing, or similar 

business, but does not include specified 

passive category income. See section 

904(d)(2)(D)(i)(II). Accordingly, in post2006 taxable years, income that 

otherwise would be treated as passive 

income (and assigned to the separate 

category for passive category income) 

will instead be treated as general 

category income in the case of a 

financial services entity. 

The IRS and the Treasury Department 

believe that, in the case of a financial 


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