Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Rules and Regulations 8143 

shareholder takes the related income 

into account. 

(10) Distributions of previously-taxed 

earnings and profits. Distributions and 

deemed distributions described in 

paragraph (d) of this section (including 

in the case of a section 902 shareholder 

that has chosen the alternative method 

described in paragraph (d)(4) of this 

section) do not include distributions of 

amounts described in section 959(c)(1) 

or (c)(2), which are distributed before 

amounts described in section 959(c)(3). 

(e) Special rules regarding pre-2011 

split taxes—(1) Taxes deemed paid prorata out of pre-2011 split taxes and 

other taxes. If the pre-2011 taxes of a 

section 902 corporation include both 

pre-2011 split taxes and other taxes, 

then foreign taxes deemed paid under 

section 902 or 960 or otherwise removed 

from post-1986 foreign income taxes in 

pre-2011 taxable years will be treated as 

attributable to pre-2011 split taxes and 

other taxes on a pro-rata basis. 

(2) Pre-2011 split taxes deemed paid 

in pre-2011 taxable years. Pre-2011 split 

taxes deemed paid in pre-2011 taxable 

years in connection with a dividend 

paid to a shareholder described in 

section 902(b) retain their character as 

pre-2011 split taxes. The section 902(b) 

shareholder will be treated as the payor 

section 902 corporation with respect to 

those pre-2011 split taxes. 

(3) Carryover of pre-2011 split taxes. 

Pre-2011 split taxes that carry over to 

another foreign corporation, including 

under section 381, § 1.367(b)–7 or 

similar rules, retain their character as 

pre-2011 split taxes. The transferee 

foreign corporation will be treated as the 

payor section 902 corporation with 

respect to those pre-2011 split taxes. 

(4) Determining when pre-2011 split 

taxes are no longer treated as pre-2011 

split taxes. For each pre-2011 splitter 

arrangement, as related income is taken 

into account by the payor section 902 

corporation or a section 902 shareholder 

as provided in paragraph (d) of this 

section, a ratable portion of the 

associated pre-2011 split taxes will no 

longer be treated as pre-2011 split taxes. 

In the case of a pre-2011 splitter 

arrangement involving a reverse hybrid 

or a foreign consolidated group (as 

described in paragraphs (b)(1) and (b)(2) 

of this section, respectively), if aggregate 

related income is reduced to zero (other 

than as a result of a distribution, 

deemed distribution, or inclusion 

described in paragraph (d) of this 

section) or less than zero, pre-2011 split 

taxes will retain their character as pre2011 split taxes until the amount of 

aggregate related income is positive and 

the related income is taken into account 

by the payor section 902 corporation or 

a section 902 shareholder as provided in 

paragraph (d) of this section. 

(f) Rules relating to partnerships and 

trusts—(1) Taxes paid or accrued by 

partnerships. In the case of foreign 

income taxes paid or accrued by a 

partnership, the taxes will be treated as 

pre-2011 split taxes to the extent such 

taxes are allocated to one or more 

section 902 corporations and would be 

pre-2011 split taxes if the partner 

section 902 corporation had paid or 

accrued the taxes directly on the date 

such taxes are included by the section 

902 corporation under sections 702 and 

706(a). Further, any foreign income 

taxes subject to section 909 will be 

suspended in the hands of the partner 

section 902 corporation. 

(2) Section 704(b) allocations. 

Partnership allocations that satisfy the 

requirements of section 704(b) and the 

regulations thereunder will not 

constitute pre-2011 splitter 

arrangements except to the extent the 

arrangement is otherwise described in 

paragraph (b) of this section (for 

example, a payment or accrual on a 

disregarded debt instrument that gives 

rise to a shared loss). 

(3) Trusts. Rules similar to the rules 

of paragraph (f)(1) of this section will 

apply in the case of any trust with one 

or more beneficiaries that is a section 

902 corporation. 

(g) Interaction between section 909 

and other Code provisions—(1) Section 

904(c). Section 909 does not apply to 

excess foreign income taxes that were 

paid or accrued in pre-2011 taxable 

years and carried forward and deemed 

paid or accrued under section 904(c) in 

a post-2010 taxable year. 

(2) Section 905(a). For purposes of 

determining in post-2010 taxable years 

the allowable deduction for foreign 

income taxes paid or accrued under 

section 164(a), the carryover of excess 

foreign income taxes under section 

904(c), and the extended period for 

claiming a credit or refund under 

section 6511(d)(3)(A), foreign income 

taxes to which section 909 applies are 

first taken into account and treated as 

paid or accrued in the year in which the 

related income is taken into account, 

and not in the earlier year to which the 

tax relates (determined without regard 

to section 909). 

(3) Section 905(c). If a 

redetermination of foreign taxes claimed 

as a direct credit under section 901 

occurs in a post-2010 taxable year and 

the foreign tax redetermination relates 

to a pre-2011 taxable year, to the extent 

such foreign tax redetermination 

increased the amount of foreign income 

taxes paid or accrued with respect to the 

pre-2011 taxable year (for example, due 

to an additional assessment of foreign 

tax or a payment of a previously accrued 

tax not paid within two years), section 

909 will not apply to such taxes. If a 

redetermination of foreign tax paid or 

accrued by a section 902 corporation 

occurs in a post-2010 taxable year and 

increases the amount of foreign income 

taxes paid or accrued by the section 902 

corporation with respect to a pre-2011 

taxable year (for example, due to an 

additional assessment of foreign tax or 

a payment of a previously accrued tax 

not paid within two years), such taxes 

will be treated as pre-2011 taxes. 

Section 909 will apply to such taxes if 

they are pre-2011 split taxes and the 

taxes will be suspended in the post2010 taxable year in which they would 

otherwise be taken into account as a 

prospective adjustment to the section 

902 corporation’s pools of post-1986 

foreign income taxes. 

(4) Other foreign tax credit provisions. 

Section 909 does not affect the 

applicability of other restrictions or 

limitations on the foreign tax credit 

under existing law, including, for 

example, the substantiation 

requirements of section 905(b). 

(h) Effective/applicability date. This 

section applies to foreign income taxes 

paid or accrued by section 902 

corporations in pre-2011 taxable years 

for purposes of computing foreign 

income taxes deemed paid with respect 

to distributions or inclusions out of 

earnings and profits of section 902 

corporations in taxable years of the 

section 902 corporation beginning after 

December 31, 2010. 

(i) Expiration date. The applicability 

of this section expires on February 9, 

2015. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: February 8, 2012. 

Emily S. McMahon, 

Acting Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2012–3356 Filed 2–9–12; 4:15 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9568] 

RIN 1545–BI47 

Section 482; Methods To Determine 

Taxable Income in Connection With a 

Cost Sharing Arrangement; Correction 

AGENCY: Internal Revenue Service (IRS). 


pmangrum on DSK3VPTVN1PROD with RULES
8144 Federal Register / Vol. 77, No. 30 / Tuesday, February 14, 2012 / Rules and Regulations 

ACTION: Correcting amendment. 

SUMMARY: This document contains 

corrections to final regulations (TD 

9568), which were published in the 

Federal Register on Thursday, 

December 22, 2011 (76 FR 80082), 

relating to section 482 and methods to 

determine taxable income in connection 

with a cost sharing arrangement. 

DATES: This correction is effective on 

February 14, 2012 and is applicable 

beginning December 22, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Joseph L. Tobin at (202) 435–5265 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations that is the 

subject of these corrections are under 

section 482 of the Internal Revenue 

Code. 

Need for Correction 

As published, final regulations (TD 

9568), contains errors which may prove 

to be misleading and are in need of 

clarification. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Correction of Publication 

Accordingly, the final regulations (TD 

9568) that was the subject of FR Doc. 

2012–895 is corrected to read 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 * * * 

PART 1—[Corrected] 

■ Par. 2. Section 1.482–7 is amended 

by: 

1. Revising the title of the table of 

paragraph (g)(4)(viii), Example 2 (ii). 

2. Revising the fourth sentence of 

paragraph (g)(4)(viii), Example 3 (ii). 

The revisions read as follows: 

§ 1.482–7 Methods to determine taxable 

income in connection with a cost sharing 

arrangement. 

* * * * * 

(g) * * * 

(4) * * * 

(viii) Examples. * * * 

Example 2. * * * 

(ii) * * * 

‘‘INCOME METHOD APPLICATION 

NUMBER:’’ 

* * * * * 

Example 3. * * * 

(ii) * * * FS determines that the discount 

rate that would be applied to determine the 

present value of income and costs 

attributable to its participation in the 

licensing alternative would be 12.5% as 

compared to the 15% discount rate that 

would be applicable in determining the 

present value of the net income attributable 

to its participation in the CSA (reflecting the 

increased risk borne by FS in bearing a share 

of the R & D costs in the cost sharing 

alternative). * * * 

* * * * * 

Guy R. Traynor, 

Federal Register Liaison, Legal Processing 

Division, Publication & Regulation Branch, 

Associate Chief Counsel (Procedure and 

Administration). 

[FR Doc. 2012–3351 Filed 2–13–12; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9568] 

RIN 1545–BI47 

Section 482; Methods To Determine 

Taxable Income in Connection With a 

Cost Sharing Arrangement; Correction 

AGENCY: Internal Revenue Service (IRS). 

ACTION: Correction to notice of 

correcting amendments. 

SUMMARY: This document contains 

corrections to a correcting amendment 

(TD 9568), which was published in the 

Federal Register on Wednesday, 

January 25, 2012 (77 FR 3606) relating 

to section 482 and methods to 

determine taxable income in connection 

with a cost sharing arrangement. 

DATES: This correction is effective on 

February 14, 2012, and is applicable 

beginnning December 22, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Joseph L. Tobin at (202) 435–5265 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations that are the 

subject of these corrections are under 

section 482 of the Internal Revenue 

Code. 

Need for Correction 

As published, the correcting 

amendments to final regulations (TD 

9568), contains errors which may prove 

to be misleading and are in need of 

clarification. 

Correction of Publication 

Accordingly, the publication of the 

correcting amendments to final 

regulations, (TD 9568), which were the 

subject of FR Doc. 2012–895, is 

corrected as follows: 

1. On page 3606, second column, 

instructional paragraph 3., item 4. the 

language ‘‘4. Revising paragraph 

(k)(2)(ii)(3) is corrected to read ‘‘5. 

Revising paragraph (k)(2)(ii)(A)(3). 

2. On page 3606, second column, 

under the instructional paragraph 3., the 

language ‘‘4. Revising the fourth 

sentence of paragraph (g)(4)(viii), 

Example 3.’’ is added. 

§ 1.482–7 [Corrected]. 

3. On page 3606, third column, 

§ 1.482–7(g)(2)(v)(C), Example (i), add 

three asterisks to the end of the 

paragraph and remove the five asterisks 

from below the paragraph. 

4. On page 3606, third column, 

§ 1.482–7(g)(2) after the five asterisks 

following paragraph (ii) the language 

‘‘(3) * * *’’, is corrected to read ‘‘(4) 

* * *’’. 

5. On page 3606, third column, 

§ 1.482–7 (g)(4)(viii), the language ‘‘(viii) 

* * *’’ is corrected to read ‘‘(viii) 

Examples. * * *’’ 

6. On page 3606, third column, 

§ 1.482–7(k)(2) below the five asterisks 

following paragraph (viii), Example 3 

add ‘‘(A)* * *’’ below ‘‘(ii)* * *’’ and 

above ‘‘(3)’’ and underscore ‘‘(3)’’. 

Guy R. Traynor, 

Federal Register Liaison, Legal Processing 

Division, Publication and Regulations 

Branch, Associate Chief Counsel (Procedure 

and Administration). 

[FR Doc. 2012–3353 Filed 2–13–12; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE INTERIOR 

Office of Surface Mining Reclamation 

and Enforcement 

30 CFR Part 943 

[SATS Nos. TX–061–FOR; TX–062–FOR; 

TX–063–FOR; Docket No. OSM–2011–0007] 

Texas Regulatory Program 

AGENCY: Office of Surface Mining 

Reclamation and Enforcement, Interior. 

ACTION: Final rule; approval of 

amendment. 

SUMMARY: We, the Office of Surface 

Mining Reclamation and Enforcement 

(OSM), are approving three amendments 

to the Texas regulatory program under 

the Surface Mining Control and 

Reclamation Act of 1977 (SMCRA or the 

Act). Texas at its own initiative 

submitted three separate amendments to 

its program: SATS Nos. TX–061–FOR, 

TX–062–FOR, and TX–063–FOR. Texas 

proposed revisions in TX–061–FOR by 


pmangrum on DSK3VPTVN1PROD with RULES