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 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 19269 

services entity, the appropriate 

treatment of a loss in, or a loss with 

respect to, a pre-2007 separate category 

for high withholding tax interest, where 

no excess taxes in the loss category were 

carried over to post-2006 taxable years, 

is to allocate the loss to the post-2006 

separate category for general category 

income or to recapture the loss in 

subsequent years as general category 

income, as the case may be. 

Accordingly, the regulations have been 

revised to provide that if a financial 

services entity allocated under 

§ 1.904(f)–12T(h)(3) an OFL or SLL at 

the end of its last pre-2007 taxable year 

in the pre-2007 separate category for 

high withholding tax interest to the 

post-2006 separate category for passive 

category income, and no excess taxes in 

the loss category were carried over to 

post-2007 taxable years, the amount of 

any such loss that has not yet been 

recaptured will be allocated to the post2006 separate category for general 

category income. Similarly, if a financial 

services entity allocated under 

§ 1.904(f)–12T(h)(3) at the end of its last 

pre-2007 taxable year an SLL with 

respect to a pre-2007 separate category 

for high withholding tax interest, and no 

excess taxes in the separate category for 

high withholding tax interest were 

carried over to post-2007 taxable years 

(that is, the SLL would be subject to 

recapture as passive category income), 

the amount of any such SLL that has not 

yet been recaptured will be recaptured 

in subsequent taxable years as general 

category income. The regulations have 

also been revised to clarify that, in the 

case of a financial services entity, to the 

extent an SLL in the post-2006 separate 

category for general category income is 

recaptured as income in the post-2006 

separate category for passive category 

income, the amount that would 

otherwise be recaptured as passive 

income (as opposed to specified passive 

category income) will be recaptured as 

general category income. 

III. Section 952(c) Recapture Accounts 

Section 1.904–7(g)(3) of the final 

regulations clarifies that section 

952(c)(2) recapture accounts maintained 

by a controlled foreign corporation with 

respect to subpart F income in a 

separate category that was subject to the 

earnings and profits limitation of 

section 952(c)(1)(A) are allocated to 

separate categories in the same manner 

as the associated post-1986 

undistributed earnings. 

IV. Safe Harbors 

The 2007 temporary regulations 

provide several safe harbors that a 

taxpayer may apply in lieu of generally 

applicable rules. Section 1.904– 

2T(i)(1)(ii) provides a safe harbor for the 

carryover of unused foreign taxes in a 

pre-2007 separate category to a post2006 separate category; § 1.904– 

2T(i)(2)(ii) provides a safe harbor for the 

carryback of unused foreign taxes in a 

post-2006 separate category to a pre2007 separate category; § 1.904– 

7T(g)(3)(ii) provides safe harbors for 

allocating pools of post-1986 

undistributed earnings and post-1986 

foreign income taxes in the pre-2007 

separate categories of controlled foreign 

corporations and noncontrolled section 

902 corporations to the post-2006 

separate categories; and § 1.904(f)– 

12T(h)(5) provides an alternative 

method for determining the recapture in 

post-2006 taxable years of separate 

limitation losses and overall foreign 

losses incurred in pre-2007 taxable 

years. 

A question was raised as to how a safe 

harbor method election is to be made 

and the time frame for making the 

election. The final regulations provide 

that taxpayers may choose to use a safe 

harbor method on a timely filed 

(original or amended) tax return or 

during audit. If a taxpayer chooses to 

use the safe harbor method on an 

amended return or in the course of an 

audit, the taxpayer must make 

appropriate adjustments to eliminate 

any double benefit arising from 

application of the safe harbor method to 

years that are not open for assessment. 

A taxpayer’s choice to use the safe 

harbor method is evidenced by simply 

employing the method in determining 

its foreign tax credit limitation. No 

separate statement need be filed. 

V. Effective/Applicability Dates 

The effective/applicability dates are 

the same as those in the proposed and 

temporary regulations with minor 

clarifying changes. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

has also been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations, and because the 

regulations do not impose a collection 

of information on small entities, the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) does not apply. 

Drafting Information 

The principal author of these 

regulations is Jeffrey L. Parry of the 

Office of Chief Counsel (International). 

However, other personnel from the 

Treasury Department and the IRS 

participated in their development. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Adoption of Amendments to the 

Regulations 

Accordingly, 26 CFR part 1 is 

amended as follows: 

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 1.904–0 is amended by 

adding entries for §§ 1.904–2(i), 1.904– 

4(a), (b), (h)(3), and (l), 1.904–5(h)(3) 

and (o)(3), and1.904–7(g) to read as 

follows: 

§ 1.904–0 Outline of regulation provisions 

for section 904. 

* * * * * 

§ 1.904–2 Carryback and carryover 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. 

* * * * * 

§ 1.904–4 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. 

* * * * * 

(h) * * * 

(3) Exception. 

* * * * * 

(l) Priority rule. 

* * * * * 

§ 1.904–5 Look-through rules as applied to 

controlled foreign corporations and other 

entities. 

* * * * * 


srobinson on DSKHWCL6B1PROD with RULES
19270 Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 

(h) * * * 

(3) Income from the sale of a 

partnership interest. 

(i) In general. 

(ii) Exception for sale by 25-percent 

owner. 

* * * * * 

(o) * * * 

(3) Rules for income from the sale of 

a partnership interest. 

§ 1.904–7 Transition rules. 

* * * * * 

(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 pre2007 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. 

■ Par. 3. Section 1.904–2(i) is revised to 

read as follows: 

§ 1.904–2 Carryback and carryover 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. For 

purposes of this paragraph (i), the terms 

post-2006 separate category and pre2007 separate category have the 

meanings set forth in § 1.904–7(g)(1)(ii) 

and (iii). The rules of this paragraph 

(i)(1) apply to reallocate to the 

taxpayer’s post-2006 separate categories 

for general category income and passive 

category income any unused foreign 

taxes (as defined in § 1.904–2(b)(2)) that 

were paid or accrued or deemed paid 

under section 902 with respect to 

income in a pre-2007 separate category 

(other than a category described in 

§ 1.904–4(m)). To the extent any such 

unused foreign taxes are carried forward 

to a taxable year beginning after 

December 31, 2006, such taxes shall be 

allocated to the taxpayer’s post-2006 

separate categories to which those taxes 

would have been allocated if the taxes 

were paid or accrued in a taxable year 

beginning after December 31, 2006. For 

example, any foreign taxes paid or 

accrued or deemed paid with respect to 

financial services income in a taxable 

year beginning before January 1, 2007, 

that are carried forward to a taxable year 

beginning after December 31, 2006, will 

be allocated to the general category 

because the financial services income to 

which those taxes relate would have 

been allocated to the general category if 

it had been earned in a taxable year 

beginning after December 31, 2006. 

(ii) Safe harbor. In lieu of applying 

the rules of paragraph (i)(1)(i) of this 

section, a taxpayer may allocate all 

unused foreign taxes in the pre-2007 

separate category for passive income to 

the post-2006 separate category for 

passive category income, and allocate 

all other unused foreign taxes described 

in paragraph (i)(1)(i) of this section to 

the post-2006 separate category for 

general category income. A taxpayer 

may choose to use the safe harbor 

method on a timely filed (original or 

amended) tax return or during an audit. 

A taxpayer that uses the safe harbor 

method on an amended return or in the 

course of an audit must make 

appropriate adjustments to eliminate 

any double benefit arising from 

application of the safe harbor method to 

years that are not open for assessment. 

A taxpayer’s choice to use the safe 

harbor method is evidenced by 

employing the method. The taxpayer 

need not file any separate statement. 

(2) Carryback of unused foreign tax— 

(i) General rule. The rules of this 

paragraph (i)(2) apply to any unused 

foreign taxes that were paid or accrued 

or deemed paid under section 902 with 

respect to income in a post-2006 

separate category (other than a category 

described in § 1.904–4(m)). To the 

extent any such unused foreign taxes are 

carried back to a taxable year beginning 

before January 1, 2007, a credit for such 

taxes shall be allowed only to the extent 

of the excess limitation in the pre-2007 

separate category, or categories, to 

which the taxes would have been 

allocated if the taxes were paid or 

accrued in a taxable year beginning 

before January 1, 2007. For example, 

any foreign taxes paid or accrued or 

deemed paid with respect to income in 

the general category in a taxable year 

beginning after December 31, 2006, that 

are carried back to a taxable year 

beginning before January 1, 2007, will 

be allocated to the same separate 

categories to which the income would 

have been allocated if such income had 

been earned in a taxable year beginning 

before January 1, 2007. 

(ii) Safe harbor. In lieu of applying 

the rules of paragraph (i)(2)(i) of this 

section, a taxpayer may allocate all 

unused foreign taxes in the post-2006 

separate category for passive category 

income to the pre-2007 separate 

category for passive income, and may 

allocate all other unused foreign taxes 

described in paragraph (i)(2)(i) of this 

section to the pre-2007 separate category 

for general limitation income. A 

taxpayer may choose to use the safe 

harbor method on a timely filed 

(original or amended) tax return or 

during an audit. A taxpayer that uses 

the safe harbor method on an amended 

return or in the course of an audit must 

make appropriate adjustments to 

eliminate any double benefit arising 

from application of the safe harbor 

method to years that are not open for 

assessment. A taxpayer’s choice to use 

the safe harbor method is evidenced by 

employing the method. The taxpayer 

need not file any separate statement. 

(3) Effective/applicability date. This 

paragraph (i) applies to taxable years 

beginning after December 31, 2006 and 

ending on or after December 21, 2007. 

§ 1.904–2T [Removed]. 

■ Par. 4. Section 1.904–2T is removed. 

■ Par. 5. In § 1.904–4, paragraphs (a), 

(b), (h)(3), and (l) are revised, 

paragraphs (f) and (g) are removed and 

reserved, and a new sentence is added 

immediately after the heading of 

paragraph (n) to read as follows: 

§ 1.904–4 Separate application of section 

904 with respect to certain categories of 

income. 

(a) In general. A taxpayer is required 

to compute a separate foreign tax credit 

limitation for income received or 

accrued in a taxable year that is 

described in section 904(d)(1)(A) 

(passive category income), 904(d)(1)(B) 

(general category income), or § 1.904– 

4(m) (additional separate categories). 

(b) Passive category income—(1) In 

general. The term passive category 

income means passive income and 

specified passive category income. 

(2) Passive income—(i) In general. 

The term passive income means any— 

(A) Income received or accrued by 

any person that is of a kind that would 

be foreign personal holding company 

income (as defined in section 954(c)) if 

the taxpayer were a controlled foreign 

corporation, including any amount of 

gain on the sale or exchange of stock in 

excess of the amount treated as a 

dividend under section 1248; or 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 19271 

(B) Amount includible in gross 

income under section 1293. 

(ii) Exceptions. Passive income does 

not include any export financing 

interest (as defined in section 

904(d)(2)(G) and paragraph (h) of this 

section), any high-taxed income (as 

defined in section 904(d)(2)(F) and 

paragraph (c) of this section), or any 

active rents and royalties (as defined in 

paragraph (b)(2)(iii) of this section). In 

addition, passive income does not 

include any income that would 

otherwise be passive but is 

characterized as income in another 

separate category under the lookthrough rules of section 904(d)(3), (d)(4), 

and (d)(6)(C) and the regulations under 

those provisions. In determining 

whether any income is of a kind that 

would be foreign personal holding 

company income, the rules of section 

864(d)(5)(A)(i) and (6) (treating related 

person factoring income of a controlled 

foreign corporation as foreign personal 

holding company income that is not 

eligible for the export financing income 

exception to the separate limitation for 

passive income) shall apply only in the 

case of income of a controlled foreign 

corporation (as defined in section 957). 

Thus, income earned directly by a 

United States person that is related 

person factoring income may be eligible 

for the exception for export financing 

interest. 

(iii) Active rents or royalties—(A) In 

general. For rents and royalties paid or 

accrued after September 20, 2004, 

passive income does not include any 

rents or royalties that are derived in the 

active conduct of a trade or business, 

regardless of whether such rents or 

royalties are received from a related or 

an unrelated person. Except as provided 

in paragraph (b)(2)(iii)(B) of this section, 

the principles of section 954(c)(2)(A) 

and the regulations under that section 

shall apply in determining whether 

rents or royalties are derived in the 

active conduct of a trade or business. 

For this purpose, the term taxpayer shall 

be substituted for the term controlled 

foreign corporation if the recipient of 

the rents or royalties is not a controlled 

foreign corporation. 

(B) Active conduct of trade or 

business. Rents and royalties are 

considered derived in the active 

conduct of a trade or business by a 

United States person or by a controlled 

foreign corporation (or other entity to 

which the look-through rules apply) for 

purposes of section 904 (but not for 

purposes of section 954) if the 

requirements of section 954(c)(2)(A) are 

satisfied by one or more corporations 

that are members of an affiliated group 

of corporations (within the meaning of 

section 1504(a), determined without 

regard to section 1504(b)(3)) of which 

the recipient is a member. For purposes 

of this paragraph (b)(2)(iii)(B), an 

affiliated group includes only domestic 

corporations and foreign corporations 

that are controlled foreign corporations 

in which domestic members of the 

affiliated group own, directly or 

indirectly, at least 80 percent of the total 

voting power and value of the stock. For 

purposes of this paragraph (b)(2)(iii)(B), 

indirect ownership shall be determined 

under section 318 and the regulations 

under that section. 

(iv) Examples. The following 

examples illustrate the application of 

paragraph (b)(2) of this section. 

Example 1. P is a domestic corporation 

with a branch in foreign country X. P does 

not have any financial services income. For 

2008, P has a net foreign currency gain that 

would not constitute foreign personal 

holding company income if P were a 

controlled foreign corporation because the 

gain is directly related to the business needs 

of P. The currency gain is, therefore, general 

category income to P because it is not income 

of a kind that would be foreign personal 

holding company income. 

Example 2. Controlled foreign corporation 

S is a wholly-owned subsidiary of P, a 

domestic corporation. S is regularly engaged 

in the restaurant franchise business. P 

licenses trademarks, tradenames, certain 

know-how, related services, and certain 

restaurant designs for which S pays P an 

arm’s length royalty. P is regularly engaged 

in the development and licensing of such 

property. The royalties received by P for the 

use of its property are allocable under the 

look-through rules of § 1.904–5 to the 

royalties S receives from the franchisees. 

Some of the franchisees are unrelated to S 

and P. Other franchisees are related to S or 

P and use the licensed property outside of S’s 

country of incorporation. S does not satisfy, 

but P does satisfy, the active trade or 

business requirements of section 954(c)(2)(A) 

and the regulations under that section. The 

royalty income earned by S with regard to 

both its related and unrelated franchisees is 

foreign personal holding company income 

because S does not satisfy the active trade or 

business requirements of section 954(c)(2)(A) 

and, in addition, the royalty income from the 

related franchisees does not qualify for the 

same country exception of section 954(c)(3). 

However, all of the royalty income earned by 

S is general category income to S under 

§ 1.904–4(b)(2)(iii) because P, a member of 

S’s affiliated group (as defined therein), 

satisfies the active trade or business test 

(which is applied without regard to whether 

the royalties are paid by a related person). S’s 

royalty income that is taxable to P under 

subpart F and the royalties paid to P are 

general category income to P under the lookthrough rules of § 1.904–5(c)(1)(i) and (c)(3), 

respectively. 

(3) Specified passive category income 

means— 

(i) Dividends from a DISC or former 

DISC (as defined in section 992(a)) to 

the extent such dividends are treated as 

income from sources without the United 

States; 

(ii) Taxable income attributable to 

foreign trade income (within the 

meaning of section 923(b)); or 

(iii) Distributions from a FSC (or a 

former FSC) out of earnings and profits 

attributable to foreign trade income 

(within the meaning of section 923(b)) 

or interest or carrying charges (as 

defined in section 927(d)(1)) derived 

from a transaction which results in 

foreign trade income (as defined in 

section 923(b)). 

* * * * * 

(f) [Reserved]. 

(g) [Reserved]. 

(h) * * * 

(3) Exception. Unless it is received or 

accrued by a financial services entity, 

export financing interest shall be treated 

as passive category income if that 

income is also related person factoring 

income. For this purpose, related person 

factoring income is— 

(i) Income received or accrued by a 

controlled foreign corporation that is 

income described in section 864(d)(6) 

(income of a controlled foreign 

corporation from a loan for the purpose 

of financing the purchase of inventory 

property of a related person); or 

(ii) Income received or accrued by any 

person that is income described in 

section 864(d)(1) (income from a trade 

receivable acquired from a related 

person). 

* * * * * 

(l) Priority rule. Income that meets the 

definitions of a separate category 

described in paragraph (m) of this 

section and another category of income 

described in section 904(d)(2)(A)(i) and 

(ii) will be subject to the separate 

limitation described in paragraph (m) of 

this section and will not be treated as 

general category income described in 

section 904(d)(2)(A)(ii). 

* * * * * 

(n) * * * Paragraphs (a), (b), (h)(3), 

and (l) of this section shall apply to 

taxable years of United States persons 

and, for purposes of section 906, foreign 

persons beginning after December 31, 

2006 and ending on or after December 

21, 2007, and to taxable years of a 

foreign corporation which end with or 

within taxable years of its domestic 

corporate shareholder beginning after 

December 31, 2006 and ending on or 

after December 21, 2007. * * * 

§ 1.904–4T [Removed]. 

■ Par. 6. Section 1.904–4T is removed. 

■ Par. 7. In § 1.904–5, paragraphs (h)(3) 

and (o)(3) are revised to read as follows: 


srobinson on DSKHWCL6B1PROD with RULES
19272 Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 

§ 1.904–5 Look-through rules as applied to 

controlled foreign corporations and other 

entities. 

* * * * * 

(h) * * * 

(3) Income from the sale of a 

partnership interest—(i) In general. To 

the extent a partner recognizes gain on 

the sale of a partnership interest, that 

income shall be treated as passive 

category income to the partner, unless 

the income is considered to be hightaxed under section 904(d)(2)(B)(iii)(II) 

and § 1.904–4(c). 

(ii) Exception for sale by 25-percent 

owner. In the case of a sale of an interest 

in a partnership by a partner that is a 

25-percent owner of the partnership, 

determined by applying section 

954(c)(4)(B) and substituting ‘‘controlled 

foreign corporation’’ with ‘‘partner’’ 

every place it appears, for purposes of 

determining the separate category to 

which the income recognized on the 

sale of the partnership interest is 

assigned such partner shall be treated as 

selling the proportionate share of the 

assets of the partnership attributable to 

such interest. 

* * * * * 

(o) * * * 

(3) Rules for income from the sale of 

a partnership interest. Paragraph (h)(3) 

of this section shall apply to taxable 

years of United States persons and, for 

purposes of section 906, foreign persons 

beginning after December 31, 2006 and 

ending on or after December 21, 2007, 

and to taxable years of a foreign 

corporation which end with or within 

taxable years of its domestic corporate 

shareholder beginning after December 

31, 2006 and ending on or after 

December 21, 2007. 

§ 1.904–5T [Removed]. 

■ Par. 8. Section 1.904–5T is removed. 

■ Par. 9. Section 1.904–7, paragraph (g) 

is revised to read as follows: 

§ 1.904–7 Transition rules. 

* * * * * 

(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 means the pools in each separate 

category of post-1986 undistributed 

earnings (as defined in § 1.902–1(a)(9)) 

that were accumulated, and post-1986 

foreign income taxes (as defined in 

§ 1.902–1(a)(8)) paid, accrued, or 

deemed paid, in taxable years beginning 

before January 1, 2007. 

(ii) Pre-2007 separate categories 

means the separate categories of income 

described in section 904(d) as 

applicable to taxable years beginning 

before January 1, 2007, and any other 

separate category of income described in 

§ 1.904–4(m). 

(iii) Post-2006 separate categories 

means the separate categories of income 

described in section 904(d) as 

applicable to taxable years beginning 

after December 31, 2006, and any other 

separate category of income described in 

§ 1.904–4(m). 

(2) Treatment of pre-2007 pools of a 

controlled foreign corporation or a 

noncontrolled section 902 corporation. 

Any post-1986 undistributed earnings in 

a pre-2007 pool of a controlled foreign 

corporation or a noncontrolled section 

902 corporation shall be treated in 

taxable years beginning after December 

31, 2006, as if they were accumulated 

during a period in which the rules 

governing the determination of post2006 separate categories applied. Post1986 foreign income taxes paid, 

accrued, or deemed paid with respect to 

such earnings shall be treated as if they 

were paid, accrued, or deemed paid 

during a period in which the rules 

governing the determination of post2006 separate categories (including the 

rules of section 904(d)(3)(E)) applied as 

well. Any such earnings and taxes in 

pre-2007 pools shall constitute the 

opening balance of the foreign 

corporation’s post-1986 undistributed 

earnings and post-1986 foreign income 

taxes on the first day of the foreign 

corporation’s first taxable year 

beginning after December 31, 2006, in 

accordance with the rules of paragraph 

(g)(3) of this section. Similar rules shall 

apply to characterize any deficits in the 

pre-2007 pools and previously-taxed 

earnings and profits described in section 

959(c)(1) and (2) that are attributable to 

earnings in the pre-2007 pools. Any 

section 952(c)(2) recapture account with 

respect to a separate category shall be 

allocated in the same manner as the 

post-1986 undistributed earnings in the 

associated pre-2007 pool. 

(3) Substantiation of post-2006 

character of earnings and taxes in a pre2007 pool—(i) Reconstruction of 

earnings and taxes pools. In order to 

substantiate the post-2006 

characterization of post-1986 

undistributed earnings (as well as 

deficits and previously-taxed earnings, 

if any) and post-1986 foreign income 

taxes in pre-2007 pools of a controlled 

foreign corporation or a noncontrolled 

section 902 corporation, the taxpayer 

shall make a reasonable, good-faith 

effort to reconstruct the pre-2007 pools 

of post-1986 undistributed earnings (as 

well as deficits and previously-taxed 

earnings, if any) and post-1986 foreign 

income taxes following the rules 

governing the determination of post2006 separate categories for each taxable 

year beginning before January 1, 2007, 

beginning with the first year in which 

post-1986 undistributed earnings were 

accumulated in the pre-2007 pool. 

Reconstruction shall be based on 

reasonably available books and records 

and other relevant information. To the 

extent any pre-2007 separate category 

includes earnings that would be 

allocated to more than one post-2006 

separate category, the taxpayer must 

account for earnings distributed and 

taxes deemed paid in these years for 

such category as if they were distributed 

and deemed paid pro rata from the 

amounts that were added to that 

category during each taxable year 

beginning before January 1, 2007. 

(ii) Safe harbor method—(A) In 

general. Subject to the rules of 

paragraph (g)(3)(iii) of this section, a 

taxpayer may allocate the post-1986 

undistributed earnings and post-1986 

foreign income taxes in pre-2007 pools 

of a controlled foreign corporation or a 

noncontrolled section 902 corporation 

(as well as deficits and previously-taxed 

earnings, if any) under one of the safe 

harbor methods described in paragraphs 

(g)(3)(ii)(B) and (g)(3)(ii)(C) of this 

section. A taxpayer may choose to use 

the safe harbor method on a timely filed 

(original or amended) tax return or 

during an audit. A taxpayer that uses 

the safe harbor method on an amended 

return or in the course of an audit must 

make appropriate adjustments to 

eliminate any double benefit arising 

from application of the safe harbor 

method to years that are not open for 

assessment. A taxpayer’s choice to use 

the safe harbor method is evidenced by 

employing the method. The taxpayer 

need not file any separate statement. 

(B) General safe harbor method—(1) 

Any post-1986 undistributed earnings 

(as well as deficits and previously-taxed 

earnings, if any) and post-1986 foreign 

income taxes of a noncontrolled section 

902 corporation or a controlled foreign 

corporation in a pre-2007 separate 

category for passive income, certain 

dividends from a DISC or former DISC, 

taxable income attributable to certain 

foreign trade income, or certain 

distributions from a FSC or former FSC 

shall be allocated to the post-2006 

separate category for passive category 

income. 

(2) Any post-1986 undistributed 

earnings (as well as deficits and 

previously-taxed earnings, if any) and 

post-1986 foreign income taxes of a 

noncontrolled section 902 corporation 

or a controlled foreign corporation in a 

pre-2007 separate category for financial 

services income, shipping income or 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 19273 

general limitation income shall be 

allocated to the post-2006 separate 

category for general category income. 

(3) Except as provided in paragraph 

(g)(3)(ii)(B)(4) of this section, any post1986 undistributed earnings (as well as 

deficits and previously-taxed earnings, 

if any) and post-1986 foreign income 

taxes of a noncontrolled section 902 

corporation or a controlled foreign 

corporation in a pre-2007 separate 

category for high withholding tax 

interest shall be allocated to the post2006 separate category for passive 

category income. 

(4) If a controlled foreign corporation 

has positive post-1986 undistributed 

earnings and post-1986 foreign income 

taxes in a pre-2007 separate category for 

high withholding tax interest, such 

earnings and taxes shall be allocated to 

the post-2006 separate category for 

general category income if the earnings 

would qualify as income subject to high 

foreign taxes under section 954(b)(4) if 

the entire amount of post-1986 

undistributed earnings were treated as a 

net item of income subject to the rules 

of § 1.954–1(d). If the high withholding 

tax interest earnings would not qualify 

as income subject to high foreign taxes 

under section 954(b)(4), then the 

earnings and taxes shall be allocated to 

the post-2006 separate category for 

passive category income. 

(C) Interest apportionment safe 

harbor. A taxpayer may allocate the 

post-1986 undistributed earnings (as 

well as deficits and previously-taxed 

earnings, if any) and post-1986 foreign 

income taxes in pre-2007 pools of a 

controlled foreign corporation or a 

noncontrolled section 902 corporation 

following the principles of paragraph 

(f)(4)(ii) of this section. 

(iii) Consistency rule. The election to 

apply a safe harbor method under 

paragraph (g)(3)(ii) of this section in lieu 

of the rules described in paragraph 

(g)(3)(i) of this section may be made on 

a separate category by separate category 

basis. However, if a taxpayer elects to 

apply a safe harbor to allocate pre-2007 

pools of more than one pre-2007 

separate category of a controlled foreign 

corporation or a noncontrolled section 

902 corporation, such safe harbor (the 

general safe harbor described in 

paragraph (g)(3)(ii)(B) of this section or 

the interest apportionment safe harbor 

described in paragraph (g)(3)(ii)(C) of 

this section) shall apply to allocate post1986 undistributed earnings (as well as 

deficits and previously-taxed earnings, 

if any) and post-1986 foreign income 

taxes for the pre-2007 pools in each pre2007 separate category of the foreign 

corporation for which the taxpayer 

elected to apply a safe harbor method in 

lieu of reconstructing the pre-2007 

pools. 

(4) Treatment of pre-1987 

accumulated profits. Any pre-1987 

accumulated profits (as defined in 

§ 1.902–1(a)(10)) of a noncontrolled 

section 902 corporation or a controlled 

foreign corporation shall be treated in 

taxable years beginning after December 

31, 2006, as if they had been 

accumulated during a period in which 

the rules governing the determination of 

post-2006 separate categories applied. 

Foreign income taxes paid, accrued, or 

deemed paid with respect to such 

earnings shall be treated as if they were 

paid, accrued, or deemed paid during a 

period in which the rules governing the 

determination of post-2006 separate 

categories applied as well. The taxpayer 

must substantiate the post-2006 

characterization of the pre-1987 

accumulated profits and pre-1987 

foreign income taxes in accordance with 

the rules of paragraph (g)(3) of this 

section, including the safe harbor 

provisions. Similar rules shall apply to 

characterize any deficits or previouslytaxed earnings and profits described in 

section 959(c)(1) and (2) that are 

attributable to 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. 

The rules of paragraphs (g)(1) through 

(4) of this section apply to post-1986 

undistributed earnings (as well as 

deficits and previously-taxed earnings, 

if any) and post-1986 foreign income 

taxes in pre-2007 pools, and pre-1987 

accumulated profits and pre-1987 

foreign income taxes, of a lower-tier 

controlled foreign corporation or 

noncontrolled section 902 corporation. 

(6) Effective/applicability date. This 

paragraph (g) shall apply to taxable 

years of United States persons and, for 

purposes of section 906, foreign persons 

beginning after December 31, 2006 and 

ending on or after December 21, 2007, 

and to taxable years of a foreign 

corporation which end with or within 

taxable years of its domestic corporate 

shareholder beginning after December 

31, 2006 and ending on or after 

December 21, 2007. 

§ 1.904–7T [Removed]. 

■ Par. 10. Section 1.904–7T is removed. 

■ Par. 11. Section 1.904(f)–0 is amended 

by adding an entry for § 1.904(f)–12(h) 

to read as follows: 

§ 1.904(f)–0 Outline of regulation 

provisions. 

* * * * * 

§ 1.904(f)–12 Transition rules. 

* * * * * 

(h) Recapture in years beginning after 

December 31, 2006, of separate 

limitation losses and overall foreign 

losses incurred in years beginning 

before January 1, 2007. 

(1) Losses related to pre-2007 separate 

categories for passive income, certain 

dividends from a DISC or former DISC, 

taxable income attributable to certain 

foreign trade income or certain 

distributions from a FSC or former FSC. 

(i) Recapture of separate limitation 

loss or overall foreign loss incurred in 

a pre-2007 separate category for passive 

income, certain dividends from a DISC 

or former DISC, taxable income 

attributable to certain foreign trade 

income or certain distributions from a 

FSC or former FSC. 

(ii) Recapture of separate limitation 

loss with respect to a pre-2007 separate 

category for passive income, certain 

dividends from a DISC or former DISC, 

taxable income attributable to certain 

foreign trade income or certain 

distributions from a FSC or former FSC. 

(2) Losses related to pre-2007 separate 

categories for shipping, financial 

services income or general limitation 

income. 

(i) Recapture of separate limitation 

loss or overall foreign loss incurred in 

a pre-2007 separate category for 

shipping income, financial services 

income or general limitation income. 

(ii) Recapture of separate limitation 

loss with respect to a pre-2007 separate 

category for shipping income, financial 

services income or general limitation 

income. 

(3) Losses related to a pre-2007 

separate category for high withholding 

tax interest. 

(i) Recapture of separate limitation 

loss or overall foreign loss incurred in 

a pre-2007 separate category for high 

withholding tax interest. 

(ii) Recapture of separate limitation 

loss with respect to a pre-2007 separate 

category for high withholding tax 

interest. 

(4) Elimination of certain separate 

limitation loss accounts. 

(5) Alternative method. 

(6) Effective/applicability date. 

Par. 12. Section 1.904(f)–12(h) is 

revised to read as follows: 

§ 1.904(f)–12 Transition rules. 

* * * * * 

(h) Recapture in years beginning after 

December 31, 2006, of separate 

limitation losses and overall foreign 

losses incurred in years beginning 

before January 1, 2007—(1) Losses 

related to pre-2007 separate categories 

for passive income, certain dividends 


srobinson on DSKHWCL6B1PROD with RULES
19274 Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 

from a DISC or former DISC, taxable 

income attributable to certain foreign 

trade income or certain distributions 

from a FSC or former FSC—(i) 

Recapture of separate limitation loss or 

overall foreign loss incurred in a pre2007 separate category for passive 

income, certain dividends from a DISC 

or former DISC, taxable income 

attributable to certain foreign trade 

income or certain distributions from a 

FSC or former FSC. To the extent that 

a taxpayer has a balance in any separate 

limitation loss or overall foreign loss 

account in a pre-2007 separate category 

(as defined in § 1.904–7(g)(1)(ii)) for 

passive income, certain dividends from 

a DISC or former DISC, taxable income 

attributable to certain foreign trade 

income or certain distributions from a 

FSC or former FSC, at the end of the 

taxpayer’s last taxable year beginning 

before January 1, 2007, the amount of 

such balance, or balances, shall be 

allocated on the first day of the 

taxpayer’s next taxable year to the 

taxpayer’s post-2006 separate category 

(as defined in § 1.904–7(g)(1)(iii)) for 

passive category income. 

(ii) Recapture of separate limitation 

loss with respect to a pre-2007 separate 

category for passive income, certain 

dividends from a DISC or former DISC, 

taxable income attributable to certain 

foreign trade income or certain 

distributions from a FSC or former FSC. 

To the extent that a taxpayer has a 

balance in any separate limitation loss 

account in any pre-2007 separate 

category with respect to a pre-2007 

separate category for passive income, 

certain dividends from a DISC or former 

DISC, taxable income attributable to 

certain foreign trade income or certain 

distributions from a FSC or former FSC 

at the end of the taxpayer’s last taxable 

year beginning before January 1, 2007, 

such loss shall be recaptured in 

subsequent taxable years as income in 

the post-2006 separate category for 

passive category income. 

(2) Losses related to pre-2007 separate 

categories for shipping, financial 

services income or general limitation 

income—(i) Recapture of separate 

limitation loss or overall foreign loss 

incurred in a pre-2007 separate category 

for shipping income, financial services 

income or general limitation income. To 

the extent that a taxpayer has a balance 

in any separate limitation loss or overall 

foreign loss account in a pre-2007 

separate category for shipping income, 

financial services income or general 

limitation income at the end of the 

taxpayer’s last taxable year beginning 

before January 1, 2007, the amount of 

such balance, or balances, shall be 

allocated on the first day of the 

taxpayer’s next taxable year to the 

taxpayer’s post-2006 separate category 

for general category income. 

(ii) Recapture of separate limitation 

loss with respect to a pre-2007 separate 

category for shipping income, financial 

services income or general limitation 

income. To the extent that a taxpayer 

has a balance in any separate limitation 

loss account in any pre-2007 separate 

category with respect to a pre-2007 

separate category for shipping income, 

financial services income or general 

limitation income at the end of the 

taxpayer’s last taxable year beginning 

before January 1, 2007, such loss shall 

be recaptured in subsequent taxable 

years as income in the post-2006 

separate category for general category 

income. 

(3) Losses related to a pre-2007 

separate category for high withholding 

tax interest—(i) Recapture of separate 

limitation loss or overall foreign loss 

incurred in a pre-2007 separate category 

for high withholding tax interest. To the 

extent that a taxpayer has a balance in 

any separate limitation loss or overall 

foreign loss account in a pre-2007 

separate category for high withholding 

tax interest at the end of the taxpayer’s 

last taxable year beginning before 

January 1, 2007, the amount of such 

balance shall be allocated on the first 

day of the taxpayer’s next taxable year 

on a pro rata basis to the taxpayer’s 

post-2006 separate categories for general 

category and passive category income, 

based on the proportion in which any 

unused foreign taxes in the same pre2007 separate category for high 

withholding tax interest are allocated 

under § 1.904–2(i)(1). If the taxpayer, 

other than a financial services entity as 

defined in § 1.904–4(e)(3), has no 

unused foreign taxes in the pre-2007 

separate category for high withholding 

tax interest, then any loss account 

balance in that category shall be 

allocated to the post-2006 separate 

category for passive category income. If 

the taxpayer is a financial services 

entity, as defined in § 1.904–4(e)(3), and 

has no unused foreign taxes in the pre2007 separate category for high 

withholding tax interest, then any loss 

account balance in that category shall be 

allocated to the post-2006 separate 

category for general category income. 

(ii) Recapture of separate limitation 

loss with respect to a pre-2007 separate 

category for high withholding tax 

interest. To the extent that a taxpayer 

has a balance in a separate limitation 

loss account in any pre-2007 separate 

category with respect to a pre-2007 

separate category for high withholding 

tax interest at the end of the taxpayer’s 

last taxable year beginning before 

January 1, 2007, such loss shall be 

recaptured in subsequent taxable years 

on a pro rata basis as income in the 

post-2006 separate categories for general 

category and passive category income, 

based on the proportion in which any 

unused foreign taxes in the pre-2007 

separate category for high withholding 

tax interest are allocated under § 1.904– 

2(i)(1). If the taxpayer, other than a 

financial services entity as defined in 

§ 1.904–4(e)(3), has no unused foreign 

taxes in the pre-2007 separate category 

for high withholding tax interest, then 

the loss account balance shall be 

recaptured in subsequent taxable years 

solely as income in the post-2006 

separate category for passive category 

income. If the taxpayer is a financial 

services entity, as defined in § 1.904– 

4(e)(3), and has no unused foreign taxes 

in the pre-2007 separate category for 

high withholding tax interest, then the 

loss account balance shall be recaptured 

in subsequent taxable years solely as 

income in the post-2006 separate 

category for general category income. 

(4) Elimination of certain separate 

limitation loss accounts. After 

application of paragraphs (h)(1) through 

(h)(3) of this section, any separate 

limitation loss account allocated to the 

post-2006 separate category for passive 

category income for which income is to 

be recaptured as passive category 

income, as determined under those 

same provisions, shall be eliminated. 

Similarly, after application of 

paragraphs (h)(1) through (h)(3) of this 

section, any separate limitation loss 

account allocated to the post-2006 

separate category for general category 

income for which income is to be 

recaptured as general category income, 

as determined under those same 

provisions, shall be eliminated. 

(5) Alternative method. In lieu of 

applying the rules of paragraphs (h)(1) 

through (h)(3) of this section, a taxpayer 

may apply the principles of paragraphs 

(g)(1) and (g)(2) of this section to 

determine recapture in taxable years 

beginning after December 31, 2006, of 

separate limitation losses and overall 

foreign losses incurred in taxable years 

beginning before January 1, 2007. A 

taxpayer may choose to use the 

alternative method on a timely filed 

(original or amended) tax return or 

during an audit. A taxpayer that uses 

the alternative method on an amended 

return or in the course of an audit must 

make appropriate adjustments to 

eliminate any double benefit arising 

from application of the alternative 

method to years that are not open for 

assessment. A taxpayer’s choice to use 

the alternative method is evidenced by 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Rules and Regulations 19275 

employing the method. The taxpayer 

need not file any separate statement. 

(6) Effective/applicability date. This 

paragraph (h) shall apply to taxable 

years beginning after December 31, 

2006, and ending on or after December 

21, 2007. However, taxpayers may 

choose to apply 26 CFR 1.904(f)–12T(h) 

as it appeared in the Code of Federal 

Regulations as of April 1, 2010, in lieu 

of this paragraph (h) to taxable years 

beginning after December 31, 2006 and 

ending on or after December 21, 2007, 

but ending before April 7, 2011 

provided that appropriate adjustments 

are made to eliminate duplicate benefits 

arising from application of 26 CFR 

1.904(f)–12T(h) to taxable years that are 

not open for assessment. In addition, if 

a taxpayer that is a financial services 

entity (as defined in § 1.904–4(e)(3)) 

chooses to apply 26 CFR 1.904(f)–12T(h) 

to taxable years ending before April 7, 

2011, then as of the beginning of the 

taxpayer’s first taxable year ending on or 

after April 7, 2011 any remaining 

balance in a passive category loss 

account that is attributable to a loss 

account in a pre-2007 separate category 

for high withholding tax interest shall 

be allocated to the general category or 

eliminated pursuant to § 1.904(f)– 

12(h)(4), and any remaining balance in 

a separate limitation loss account with 

respect to passive category income that 

is attributable to a loss account with 

respect to a pre-2007 separate category 

for high withholding tax interest will be 

recaptured in such year and subsequent 

taxable years as general category income 

or eliminated pursuant to § 1.904(f)– 

12(h)(4). 

§ 1.904(f)–12T [Removed]. 

■ Par. 13. Section 1.904(f)–12T is 

removed. 

Approved: March 29, 2011. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

Michael Mundaca, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2011–8229 Filed 4–6–11; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

46 CFR Parts 115, 170, 176, and 178 

[USCG–2007–0030] 

RIN 1625–AB20 

Passenger Weight and Inspected 

Vessel Stability Requirements 

AGENCY: Coast Guard, DHS. 

ACTION: Rule; information collection 

approval. 

SUMMARY: On December 14, 2010, the 

Coast Guard amended its regulations 

governing the maximum weight and 

number of passengers that may safely be 

permitted on board a vessel and other 

stability regulations, including 

increasing the Assumed Average Weight 

per Person (AAWPP) to 185 lb. The 

amendment triggered new information 

collection requirements affecting 

documentation needed from certain 

inspected vessels as part of the Coast 

Guard commercial vessel safety 

program. This document announces that 

the Office of Management and Budget 

(OMB) approved changes to the 

collections of information with control 

numbers 1625–0057 and 1625–0064, 

which will now be enforced. 

DATES: Changes to the collection of 

information requirements with OMB 

control numbers 1625–0057 and 1625– 

0064 will be enforced under 46 CFR 

parts 115, 170, 176, and 178 beginning 

April 7, 2011. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions about this 

document, contact Mr. William Peters at 

202–372–1371 or 

William.S.Peters@uscg.mil. If you have 

questions about viewing the docket 

(USCG–2007–0030), call Ms. Renee V. 

Wright, Program Manager, Docket 

Operations, telephone 202–366–9826. 

SUPPLEMENTARY INFORMATION: With the 

exception of revised collection of 

information provisions, the Passenger 

Weight and Inspected Vessel Stability 

Requirements rule became effective on 

March 14, 2011. Under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520), an agency may not conduct or 

sponsor a collection of information until 

the collection is approved by OMB. 

Accordingly, the preamble to the final 

rule stated that the Coast Guard would 

not enforce the new collection of 

information requirements in 46 CFR 

parts 115, 170, 176, and 178 until the 

collection of information requests were 

approved by OMB, and also stated that 

the Coast Guard would publish a notice 

in the Federal Register announcing the 

effective date of those requirements after 

OMB approved the collections. 

The Coast Guard submitted the 

information collection requests to OMB 

for approval in accordance with the 

Paperwork Reduction Act of 1995. OMB 

approved the collections of information 

on March 4, 2011, for 1625–0064, and 

on March 14, 2011, for 1625–0057. The 

approval for these collections of 

information expires on March 31, 2014. 

Copies of the OMB notices of action are 

available in our online docket (USCG– 

2007–0030) at http:// 

www.regulations.gov. 

Dated: March 30, 2011. 

F.J. Sturm, 

Acting Director of Commercial Regulations 

and Standards, U.S. Coast Guard. 

[FR Doc. 2011–8119 Filed 4–6–11; 8:45 am] 

BILLING CODE 9110–04–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 73 

[MB Docket No. 11–8; RM–11618, DA 11– 

516] 

Television Broadcasting Services; 

Jackson, MS 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: The Commission grants a 

petition for rulemaking issued in 

response to a petition for rulemaking 

filed by George S. Flinn, Jr. (‘‘Flinn’’), the 

licensee of WWJX, channel 51, Jackson, 

Mississippi, requesting the substitution 

of channel 23 for channel 51 at Jackson. 

Flinn raises concerns regarding 

potential interference that may occur to 

Long Term Evolution cellular base 

stations operating on adjacent channel 

spectrum and believes substituting 

channel 23 for channel 51 will better 

serve the public interest. 

DATES: This rule is effective May 9, 

2011. 

FOR FURTHER INFORMATION CONTACT: 

Joyce L. Bernstein, 

joyce.bernstein@fcc.gov, Media Bureau, 

(202) 418–1600. 

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s Report 

and Order, MB Docket No. 11–8, 

adopted March 16, 2011, and released 

March 21, 2011. The full text of this 

document is available for public 

inspection and copying during normal 

business hours in the FCC’s Reference 

Information Center at Portals II, CY– 


srobinson on DSKHWCL6B1PROD with RULES