46346 Federal Register / Vol. 74, No. 173 / Wednesday, September 9, 2009 / Rules and Regulations 

■ 4. The last sentence of paragraph (g)(2) 

Example 2. (iii) is revised. 

■ 5. The table of paragraph (k)(3) 

Example 2. (iii) is revised. 

The revisions read as follows: 

§ 1.482–9 Methods to determine taxable 

income in connection with a controlled 

services transaction. 

* * * * * 

(b) * * * 

(8) * * * 

Example 22. (i) * * * Company P’s total 

services cost for services A, B, C, and D 

charged within the group is 100. 

* * * * * 

(e) * * * 

(4) * * * 

Example 4. * * * 

(ii) * * * 

Category Rate 

Project managers ...... $100 per hour. 

Technical staff ........... $75 per hour. 

* * * * * 

(g) * * * 

(2) * * * 

Example 2. * * * 

(iii) * * * In an effort to submit a winning 

bid to secure the contract, Company B points 

to its Level 2 license and its record of 

successful completion of projects, and also 

demonstrates to Country 2 government that it 

has access to substantial technical expertise 

pertaining to processing of Level 1 waste. 

* * * * * 

(k) * * * 

(3) * * * 

Example 2. * * * 

(iii) * * * 

Company A B Total 

Allocation ................................................................................................................................................. 400/500 100/500 ....................

Amount ..................................................................................................................................................... 80 20 100 

* * * * * 

■ Par. 6. Section 1.861–8 is amended by 

revising the fourth sentence of 

paragraph (g). Example 17. (ii)(A) to 

read as follows: 

§ 1.861–8 Computation of taxable income 

from sources within the United States and 

from other sources and activities. 

* * * * * 

(g) * * * 

Example 17. * * * 

(ii) * * * 

(A) * * * For purposes of applying the 

foreign tax credit limitation, the statutory 

grouping is general category gross income 

from sources without the United States and 

the residual grouping is gross income from 

sources with in the United States. * * * 

* * * * * 

LaNita Van Dyke, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel (Procedure and Administration). 

[FR Doc. E9–21226 Filed 9–8–09; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9456] 

RIN 1545–BI78, 1545–BI79, 1545–BI80 

Treatment of Services Under Section 

482; Allocation of Income and 

Deductions From Intangible Property; 

Apportionment of Stewardship 

Expense; Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correction to final regulations. 

SUMMARY: This document contains 

corrections to final regulations (TD 

9456) that were published in the 

Federal Register on Tuesday, August 4, 

2009 (74 FR 38830) providing guidance 

regarding the treatment of controlled 

services transactions under section 482 

and the allocation of income from 

intangible property, in particular with 

respect to contributions by a controlled 

party to the value of intangible property 

owned by another controlled party. 

These final regulations modify 

regulations under section 861 

concerning stewardship expenses to be 

consistent with the changes made to the 

guidance under section 482. 

DATES: This correction is effective on 

September 9, 2009, and is applicable on 

August 4, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Carol B. Tan or Gregory A. Spring, (202) 

435–5265 for matters relating to section 

482, or Richard L. Chewning, (202) 622– 

3850 for matters relating to stewardship 

expenses (not toll-free numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations that are the 

subject of this document are under 

sections 482, 861, 6038, and 6662 of the 

Internal Revenue Code. 

Need for Correction 

As published, the final regulations 

(TD 9456) contain errors that may prove 

to be misleading and are in need of 

clarification. 

Correction of Publication 

Accordingly, the publication of the 

final regulations (TD 9456), which was 

the subject of FR Doc. E9–18326, is 

corrected as follows: 

1. On page 38830, column 1, in the 

title, the language ‘‘Treatment of 

Services Under Section 482; Allocation 

of Income and Deductions From 

Intangible Property; Stewardship 

Expense’’ is corrected to read 

‘‘Treatment of Services Under Section 

482; Allocation of Income and 

Deductions From Intangible Property; 

Apportionment of Stewardship 

Expense’’. 

2. On page 38830, column 3, in the 

preamble, under the paragraph heading 

‘‘Background’’, first paragraph of the 

column, third line from the bottom of 

the paragraph, the language ‘‘years after 

December 31, 2006) as the’’ is corrected 

to read ‘‘years beginning after December 

31, 2006) as the’’. 

3. On page 38832, column 1, in the 

preamble, under the paragraph heading 

‘‘e. Business Judgment Rule’’, first 

paragraph, eleventh line, the language 

‘‘one or more trades or business of the’’ 

is corrected to read ‘‘one or more trades 

or businesses of the’’. 

4. On page 38833, column 1, in the 

preamble, under the paragraph heading 

‘‘g. Shared Services Arrangements’’, 

second paragraph, fifth line, the 

language ‘‘under an SSA to the service 

provider’’ is corrected to read ‘‘under a 

SSA to the service provider’’. 

5. On page 38835, column 2, in the 

preamble, under the paragraph heading 

‘‘7. Controlled Services Transactions 

and Shareholder Activities—Treas. Reg. 

§ 1.482–9(l)’’, second paragraph of the 

column, lines 1 and 2 from the bottom 

of the paragraph, the language 

‘‘aggregate activity; rather than a 

component activity-by-activity basis.’’ is 

corrected to read ‘‘aggregate-activity 

basis; rather than a component activityby-activity basis.’’. 

6. On page 38835, column 3, in the 

preamble, under the paragraph heading 

‘‘b. Global Dealing Operations’’, last line 

of the paragraph, the language ‘‘of global 


jlentini on DSKJ8SOYB1PROD with RULES
Federal Register / Vol. 74, No. 173 / Wednesday, September 9, 2009 / Rules and Regulations 46347 

dealing regulations.’’ is corrected to read 

‘‘of new global dealing regulations.’’. 

7. On page 38837, column 1, in the 

first paragraph heading, the language 

‘‘D. Stewardship Expenses—§ 1.861–8’’ 

is corrected to read ‘‘D. Apportionment 

of Stewardship Expenses—§ 1.861–8’’. 

LaNita Van Dyke, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel (Procedure and Administration). 

[FR Doc. E9–21227 Filed 9–8–09; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 9460] 

RIN 1545–BD67 

Declaratory Judgments—Gift Tax 

Determinations 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations under section 7477 of the 

Internal Revenue Code (Code) regarding 

petitions filed with the United States 

Tax Court for declaratory judgments 

with respect to the valuation of gifts. 

Changes to the applicable law were 

made by section 506(c)(1) of the 

Taxpayer Relief Act of 1997. These final 

regulations primarily affect individuals 

who are donors of gifts. The final 

regulations provide rules for 

determining whether a donor may 

petition the Tax Court for a 

determination regarding the value of a 

gift, including guidance regarding the 

definition of ‘‘exhaustion of 

administrative remedies.’’ 

DATES: Effective date: These regulations 

are effective September 9, 2009. 

Applicability date: For the date of 

applicability, see § 301.7477–1(f). 

FOR FURTHER INFORMATION CONTACT: 

Deborah S. Ryan or George Masnik (202) 

622–3090 (not a toll free number). 

Background 

Section 7477, enacted in conjunction 

with other provisions as part of the 

Taxpayer Relief Act of 1997 (TRA) (Pub. 

L. 105–34, 111 Stat. 855), provides a 

declaratory judgment procedure 

pursuant to which taxpayers may 

contest in the United States Tax Court 

an IRS determination regarding the 

value of a gift. Prior law did not provide 

a judicial remedy in situations where 

the proposed IRS adjustment would not 

result in a gift tax deficiency or a tax 

overpayment. The new procedure 

applies, for example, where an increase 

in gift tax determined under section 

2502 is offset by the taxpayer’s 

applicable credit amount under section 

2505(a), so that no additional tax is 

assessed as a result of a valuation 

increase. Because there is no tax 

deficiency, in the absence of section 

7477, the taxpayer would be unable to 

challenge the IRS determination, even 

though, upon the expiration of the 

statute of limitations, that determination 

would become binding for purposes of 

calculating the cumulative gift tax on all 

future gifts of that taxpayer, as well as 

the taxpayer’s estate tax liability. See 

H.R. Conf. Rep. No. 105–220, at 407–408 

(1997). 

On June 9, 2008, proposed regulations 

under section 7477 were published in 

the Federal Register (REG–143716–04, 

73 FR 32503, 2008–25 IRB 1170). The 

IRS received no written or oral 

comments responding to the notice of 

proposed rulemaking. No public hearing 

was requested or held. 

The final regulations include a few 

clarifications. In particular, under 

section 7477, in order to be eligible for 

the declaratory judgment procedure, the 

Tax Court must determine that the 

donor exhausted all administrative 

remedies. In general, the proposed 

regulations provide that the IRS will 

consider a donor to have exhausted all 

administrative remedies if an Appeals 

conference is requested timely and the 

donor (or an authorized representative) 

‘‘participates fully’’ in the Appeals 

process. The final regulations contain a 

separate subsection specifying that full 

participation requires timely submission 

of requested information and disclosure 

of all relevant information regarding the 

controversy. In addition, a provision has 

been added specifying that, if Appeals 

does not grant the donor’s request for a 

conference, the donor will be treated as 

having exhausted all administrative 

remedies if, after filing a Tax Court 

petition for a declaratory judgment, the 

donor (or authorized representative) 

participates fully in the Appeals office 

consideration when offered by the IRS 

while the case is in docketed status. 

Special Analyses 

It has been determined that this 

Treasury decision is not a significant 

regulatory action as defined in 

Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has 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 these 

regulations do not impose on small 

entities a collection of information 

requirement, the Regulatory Flexibility 

Act (5 U.S.C. chapter 6) does not apply. 

Pursuant to section 7805(f) of the Code, 

the notice of proposed rulemaking 

preceding this regulation was submitted 

to the Chief Counsel for Advocacy of the 

Small Business Administration for 

comment on its impact on small 

business. 

Drafting Information 

The principal authors of these final 

regulations are Deborah Ryan and Juli 

Ro Kim, Office of the Associate Chief 

Counsel (Passthroughs and Special 

Industries), IRS. Other personnel from 

the IRS and the Treasury Department 

participated in their development. 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and recordkeeping 

requirements. 

Adoption of Amendments to the 

Regulations 

■ Accordingly, 26 CFR part 301 is 

amended as follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

■ Paragraph 1. The authority citation 

for part 301 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 301.7477–1 is revised 

to read as follows: 

§ 301.7477–1 Declaratory judgments 

relating to the value of certain gifts for gift 

tax purposes. 

(a) In general. If the adjustment(s) 

proposed by the Internal Revenue 

Service (IRS) will not result in any 

deficiency in or refund of the donor’s 

gift tax liability for the calendar year, 

and if the requirements contained in 

paragraph (d) of this section are 

satisfied, then the declaratory judgment 

procedure under section 7477 is 

available to the donor for determining 

the amount of one or more of the 

donor’s gifts during that calendar year 

for Federal gift tax purposes. 

(b) Declaratory judgment procedure— 

(1) In general. If a donor does not 

resolve a dispute with the IRS 

concerning the value of a transfer for gift 

tax purposes at the Examination level, 

the donor will be sent a notice of 

preliminary determination of value 

(Letter 950–G or such other document as 

may be utilized by the IRS for this 

purpose from time to time, but referred 

to in this section as Letter 950–G), 

inviting the donor to file a formal 


jlentini on DSKJ8SOYB1PROD with RULES