Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 7323 

the application of Executive Orders 

12372 and No. 13132. 

Executive Order 12988: Civil Justice 

Reform 

The Department has reviewed the 

regulations in light of Executive Order 

No. 12988 to eliminate ambiguity, 

minimize litigation, establish clear legal 

standards, and reduce burden. 

Executive Order 13563: Improving 

Regulation and Regulatory Review 

The Department has considered this 

rule in light of Executive Order 13563, 

dated January 18, 2011, and affirms that 

this regulation is consistent with the 

guidance therein. 

Paperwork Reduction Act 

This rule does not impose information 

collection requirements subject to the 

provisions of the Paperwork Reduction 

Act, 44 U.S.C. Chapter 35. 

List of Subjects in 22 CFR Part 96 

Adoption, Child welfare, Children 

immigration, Foreign persons. 

For the reasons stated in the 

preamble, the interim final rule 

amending 22 CFR part 96, which was 

published at 79 FR 40629 on July 14, 

2014, is adopted as a final rule with the 

following changes: 

PART 96—INTERCOUNTRY ADOPTION 

ACCREDITATION OF AGENCIES AND 

APPROVAL OF PERSONS 

■ 1. The authority citation for part 96 

continues to read as follows: 

Authority: The Convention on Protection 

of Children and Co-operation in Respect of 

Intercountry Adoption (done at the Hague, 

May 29, 1993), S. Treaty Doc. 105–51 (1998), 

1870 U.N.T.S. 167 (Reg. No. 31922 (1993)); 

The Intercountry Adoption Act of 2000, 42 

U.S.C. 14901–14954; The Intercountry 

Adoption Universal Accreditation Act of 

2012, Pub. L. 112–276, 42 U.S.C. 14925. 

§ 96.14 [Amended] 

■ 2. Amend § 96.14(a) by removing the 

terms ‘‘Convention adoption case’’ and 

‘‘intercountry adoptioncase’’ and adding 

in place of each the term ‘‘intercountry 

adoption case’’. 

Dated: January 27, 2015. 

David T. Donahue, 

Senior Advisor for Consular Affairs, U.S. 

Department of State. 

[FR Doc. 2015–02248 Filed 2–9–15; 8:45 am] 

BILLING CODE 4710–06–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9710] 

RIN 1545–BK50 

Foreign Tax Credit Splitting Events 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document contains final 

Income Tax Regulations with respect to 

a provision of the Internal Revenue 

Code (Code) that addresses situations in 

which foreign income taxes have been 

separated from the related income. 

These regulations are necessary to 

provide guidance on applying the 

statutory provision, which was enacted 

as part of legislation commonly referred 

to as the Education Jobs and Medicaid 

Assistance Act (EJMAA) on August 10, 

2010. These regulations affect taxpayers 

claiming foreign tax credits or deducting 

foreign income taxes. 

DATES: Effective date: These regulations 

are effective on February 10, 2015. 

Applicability dates: For dates of 

applicability, see §§ 1.704– 

1(b)(1)(ii)(b)(3), 1.909–1(e), 1.909–2(c), 

1.909–3(c), 1.909–4(b), 1.909–5(c), and 

1.909–6(h). 

FOR FURTHER INFORMATION CONTACT: 

Suzanne M. Walsh, (202) 317–6936 (not 

a toll-free call). 

SUPPLEMENTARY INFORMATION: 

Background 

On February 14, 2012, a notice of 

proposed rulemaking by cross-reference 

to temporary regulations (REG–132736– 

11) under sections 909 and 704 of the 

Code and temporary regulations (TD 

9577) (2012 temporary regulations) were 

published in the Federal Register at [77 

FR 8184] and [77 FR 8127], respectively. 

Section 1.909–6T of the 2012 

temporary regulations set forth an 

exclusive list of splitter arrangements 

that applied to foreign income taxes 

paid or accrued by a section 902 

corporation in a taxable year beginning 

on or before December 31, 2010, 

comprised of reverse hybrid structure 

splitter arrangements, foreign 

consolidated group splitter 

arrangements, group relief or other loss 

sharing regime splitter arrangements, 

and hybrid instrument splitter 

arrangements (pre-2011 splitter 

arrangements). 

For foreign income taxes paid or 

accrued by any person in a taxable year 

beginning on or after January 1, 2011, 

§ 1.909–5T of the 2012 temporary 

regulations adopted the same list of 

splitter arrangements as § 1.909–6T, but 

added partnership inter-branch payment 

splitter arrangements to the list. 

For foreign income taxes paid or 

accrued by any person in a taxable year 

beginning on or after January 1, 2012, 

§ 1.909–2T adopted the list of splitter 

arrangements applicable to prior taxable 

years with certain changes. Because 

regulations under section 901 were 

modified for taxable years beginning 

after February 14, 2012, to address the 

application of the legal liability rule to 

combined income regimes, consolidated 

group splitter arrangements were 

removed from the list (although § 1.909– 

5T applied the consolidated group 

splitter arrangement rules to foreign 

income taxes paid or accrued by any 

person in a taxable year beginning on or 

after January 1, 2012, and on or before 

February 14, 2012). In addition, the 

definitions of hybrid instrument splitter 

arrangements and loss-sharing splitter 

arrangements were expanded. 

Sections 1.909–3T and 1.909–6T 

provided interim mechanical rules for 

tracking taxes paid or accrued with 

respect to a splitter arrangement (split 

taxes) as well as the related income with 

respect to such taxes. 

The 2012 temporary regulations also 

removed the special rule for interbranch payments previously set forth in 

§ 1.704–1(b)(4)(viii)(d)(3). 

A public hearing was not requested 

and none was held. However, the IRS 

and the Treasury Department received 

written comments in response to the 

notice of proposed rulemaking. After 

consideration of all the comments, the 

proposed regulations under section 909 

are adopted as amended by this 

Treasury decision. The revisions are 

discussed in this preamble. This 

Treasury decision also adopts the 

proposed regulations under section 704 

without amendment. 

Explanation of Revisions and Summary 

of Comments 

I. Splitter Arrangements—In General 

This Treasury decision makes 

clarifying changes to certain of the 

definitions of splitter arrangements in 

§ 1.909–2T. It also makes a clarifying 

change to the interim mechanical rules 

for tracking split taxes and related 

income. Apart from this clarifying 

change, this Treasury decision does not 

address mechanical issues, which are 

still under consideration and will be 

addressed in future guidance. 


rljohnson on DSK3VPTVN1PROD with RULES
7324 Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 

II. Reverse Hybrid Splitter Arrangements 

Section 1.909–2T(b)(1) provides that a 

splitter arrangement exists with respect 

to a reverse hybrid entity when a payor 

pays or accrues foreign income taxes 

with respect to the income of the reverse 

hybrid. The split taxes are the taxes paid 

or accrued with respect to income of the 

reverse hybrid. The related income with 

respect to such split taxes is the 

earnings and profits of the reverse 

hybrid attributable to the activities of 

the reverse hybrid that gave rise to the 

foreign taxable income with respect to 

which the split taxes were paid or 

accrued. 

A comment indicated that there is 

confusion regarding the amount of the 

related income with respect to a reverse 

hybrid splitter arrangement in the case 

in which the reverse hybrid 

subsequently incurs a loss, causing its 

earnings and profits to fluctuate over 

multiple taxable years. The final 

regulations include two new examples 

at § 1.909–2(b)(1)(v) that clarify how to 

determine the related income amount 

with respect to split taxes from a reverse 

hybrid splitter arrangement. 

III. Loss-Sharing Splitter Arrangements 

Section 1.909–2T(b)(2) provides that a 

splitter arrangement exists to the extent 

that the ‘‘usable shared loss’’ of a ‘‘U.S. 

combined income group,’’ which is an 

individual or corporation and all the 

entities with which it combines items of 

income and expense under U.S. federal 

income tax law, is used to offset foreign 

taxable income of another U.S. 

combined income group. A usable 

shared loss is defined as a shared loss 

of a U.S. combined income group that 

could be used under foreign law to 

offset the group’s own income. 

A comment requested that the 

definition of a usable shared loss be 

clarified to exclude any shared loss that 

could not be used within the U.S. 

combined income group in a current 

foreign taxable year but that could be 

used within a group by carrying the loss 

either forward or back to a different 

foreign taxable year. The Treasury 

Department and the IRS agree that the 

usable shared loss definition should not 

require a U.S. combined income group 

to carry forward losses because it will 

not necessarily be foreseeable whether 

the group will have sufficient foreign 

taxable income in a future taxable year 

to use a loss that cannot be used 

currently or carried back within the 

group. It would be too unpredictable to 

adopt a ‘‘wait and see’’ rule that 

required a taxpayer to forego the 

opportunity to use a loss to reduce an 

affiliate’s foreign tax liability in a 

current (or prior) foreign taxable year 

based on the speculation that it may be 

able to use the loss itself in a future 

foreign taxable year. 

It is appropriate, however, that the 

usable shared loss definition include a 

shared loss that could be used to offset 

foreign taxable income of the group in 

a previous taxable year. Because 

taxpayers can know in a current foreign 

taxable year whether a loss can be 

carried back for foreign law purposes 

within the U.S. combined income 

group, they should not be permitted to 

share such a loss in a way that 

inappropriately separates foreign 

income taxes from the related income. 

Although this may require taxpayers to 

treat taxes previously paid or accrued as 

split taxes, this is an acceptable 

outcome in light of the policy concerns 

that the loss-sharing splitter rules are 

intended to address. Furthermore, 

taxpayers can avoid having to treat taxes 

as split taxes on a retroactive basis by 

carrying back the loss. Accordingly, the 

regulations modify the definition to 

clarify that a usable shared loss is a 

shared loss that could be used under 

foreign tax law to offset income of the 

U.S. combined income group in a 

current or previous foreign taxable year. 

Another comment recommended that 

sharing a usable shared loss outside of 

a U.S. combined income group should 

give rise to a splitter arrangement only 

to the extent that the gross amount of 

such a usable shared loss shared away 

from the U.S. combined income group 

exceeds the gross amount of shared 

losses from other U.S. combined income 

groups that are received by the group. 

The Treasury Department and the IRS 

have determined that it is too 

burdensome to administer such a 

netting rule, particularly in light of the 

fact that the comment did not provide 

a reason why a U.S. combined income 

group would seek to use shared losses 

from another U.S. combined income 

group while sharing its own usable 

shared loss outside the group, rather 

than using its usable shared loss within 

the group. Therefore, the comment is 

not adopted. 

A further comment recommended that 

a U.S. combined income group with 

split taxes resulting from sharing a 

usable shared loss away from the group 

in a prior year be treated as receiving a 

distribution of related income to the 

extent of any shared loss received by it 

from a different U.S. combined income 

group. The Treasury Department and 

the IRS have determined that it is too 

burdensome to administer such a rule, 

which would entail reconciling actual 

related income accounts with deemed 

distributions of related income resulting 

from the receipt of a shared loss from 

another U.S. combined income group. 

Therefore, the comment is not adopted. 

A question has arisen about when 

references to ‘‘income’’ in § 1.909– 

2T(b)(2) are intended to refer to income 

for purposes of U.S. federal income tax 

law or to income for purposes of foreign 

tax law. The regulations clarify that the 

reference to the term ‘‘income’’ of that 

U.S. combined income group in § 1.909– 

2(b)(2)(v) refers to income for purposes 

of foreign tax law. 

IV. Hybrid Instrument Splitter 

Arrangements 

Section 1.909–2T(b)(3)(i) provides 

that there is a U.S. equity hybrid 

instrument splitter arrangement if 

payments or accruals with respect to a 

U.S. equity hybrid instrument (i) give 

rise to foreign income taxes paid or 

accrued by the owner of such 

instrument, (ii) are deductible by the 

issuer under the laws of its foreign 

jurisdiction, and (iii) do not give rise to 

income for U.S. federal income tax 

purposes. 

A question has arisen as to whether 

there is a splitter arrangement if an 

accrual for foreign law purposes with 

respect to a U.S. equity hybrid 

instrument does not give rise to income 

under U.S. law but a separate payment 

of the accrued amount is made that 

gives rise to income under U.S. law 

equal to all or a portion of the amount 

of the accrual. The reference to 

‘‘payments or accruals’’ created 

confusion regarding the effect of a 

payment. The final regulations are 

clarified to provide that if an accrual 

under foreign law with respect to a U.S. 

equity hybrid instrument gives rise to a 

foreign-law deduction by the issuer, 

then regardless of whether a payment is 

made on the instrument, a splitter 

arrangement exists whenever an accrual 

gives rise to the imposition of foreign 

income taxes on the instrument owner 

without giving rise to income under 

U.S. federal income tax law. Any actual 

payment of the accrued amount, 

whether or not it is made periodically 

under the terms of the instrument, does 

not prevent the hybrid instrument from 

being a splitter arrangement. The 

payments, however, may be treated as a 

distribution of related income to the 

extent provided by § 1.909–3 and 

§ 1.909–6(d). An example is added at 

§ 1.909–2(b)(3)(i)(E) to illustrate the 

application of the rule. 

V. Mechanical Rules for Tracking 

Related Income and Split Taxes 

A comment recommended that the 

regulations should generally provide 

additional mechanical rules for tracking 


rljohnson on DSK3VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 7325 

related income. The Treasury 

Department and the IRS recognize that 

there are a number of mechanical issues 

related to tracking related income and 

split taxes that are not fully addressed 

in § 1.909–6T. Other mechanical issues 

are under consideration and will be 

addressed in future guidance. 

One comment recommended revising 

§ 1.909–6T(e)(3) to provide for the 

carryover of split taxes in the 

circumstance in which a payor of split 

taxes that is a section 902 corporation 

combines with a section 902 

shareholder in a transaction that is 

described in section 381. Section 1.909– 

6T(e)(3) provides that split taxes that 

carry over to a foreign corporation under 

section 381, § 1.367(b)–7, or similar 

rules retain their character as split taxes 

and, consequently, the transferee 

corporation is treated as the payor of the 

split taxes. That provision does not, 

however, provide that split taxes carry 

over to a domestic corporation in the 

case of a foreign-to-U.S. liquidation or 

other inbound transaction described in 

section 381. 

The Treasury Department and the IRS 

have determined that it is not 

appropriate to expand the scope of 

§ 1.909–6T(e)(3) as recommended by the 

comment. A carryover rule for inbound 

section 381 transactions would create 

preferential treatment, in certain fact 

patterns, of split foreign income taxes 

that are maintained by a section 902 

corporation in suspension accounts 

rather than included in post-1986 

foreign income tax pools, such as when 

the section 902 corporation has a deficit 

in post-1986 undistributed earnings and 

profits. In addition, if suspended foreign 

income taxes are carried over to a 

domestic section 902 shareholder, 

currency exchange rate fluctuations 

could cause a disparity between the 

dollar amount of income included by 

the domestic section 902 shareholder in 

respect of the functional currency 

amount of earnings and profits used to 

make the suspended tax payment and 

the creditable dollar amount of the 

foreign income taxes that are 

unsuspended. This disparity is 

inconsistent with the inclusion that 

results from unsuspending split taxes at 

the level of the payor section 902 

corporation, deeming such taxes to be 

paid by the section 902 shareholder, and 

including the dollar amount of taxes in 

the shareholder’s income under the 

section 78 gross-up. Moreover, 

taxpayers could choose to avoid 

permanent suspension of split taxes in 

an inbound transaction by, for example, 

causing a distribution of the related 

income to the payor of the split taxes 

before the payor of the split taxes is 

liquidated or otherwise combined with 

a domestic person. For these reasons, 

the final regulations do not modify 

§ 1.909–6T(e)(3) to treat split taxes as a 

carryover attribute in inbound section 

381 transactions. 

Another comment addressed the fact 

pattern in which a covered person with 

the related income ceases to be a 

covered person with respect to the 

payor of split taxes and the payor does 

not take the related income into account 

before, or in connection with, the 

termination of the covered person 

relationship, resulting in the permanent 

suspension of split taxes. The comment 

recommended that, in this case, if the 

covered person is a direct or indirect 

subsidiary of the payor of the split taxes, 

the payor should be treated as having 

paid the split taxes on behalf of the 

covered person and as having made a 

capital contribution in the amount of 

the split taxes to the covered person 

directly or indirectly through a chain of 

subsidiaries, thereby stepping up basis 

in the covered person’s stock. The 

comment also recommended reducing 

the earnings and profits of the covered 

person by the amount of the split taxes 

as though the covered person had paid 

the split taxes. Stepping up the basis of 

the stock of the covered person by the 

amount of the permanently suspended 

split taxes and reducing its earnings and 

profits by the same amount would 

ensure that any inclusion attributable to 

the earnings and profits or appreciated 

assets of the departing or liquidating 

covered person is reduced by the 

amount of the split taxes, effectively 

converting the permanently suspended 

split taxes into a deduction for the payor 

of the split taxes. 

Section 909 contemplates that split 

taxes may remain permanently 

suspended as a result of a disposition or 

liquidation of the covered person. 

Section 909 provides that split taxes are 

suspended until the related income is 

taken into account generally by the 

payor of the split tax or relevant section 

902 shareholder, and does not provide 

for a deduction of split taxes in lieu of 

a credit. If the covered person does not 

distribute the full amount of related 

income prior to the liquidation or 

disposition of the covered person, and 

such liquidation or disposition does not 

result in the reflection of the related 

income in the earnings and profits of the 

payor of the split tax (or the relevant 

section 902 shareholder), then the 

related income is not taken into account 

as prescribed by section 909. The 

Treasury Department and the IRS, 

therefore, have concluded that it is 

appropriate for split taxes to remain 

suspended until and unless the related 

income is taken into account. 

Accordingly, the comment is not 

adopted. 

VI. Taking Related Income Into Account 

as a Result of a Transaction Under 

Section 381 

A comment incorrectly interpreted 

§ 1.909–6T(d)(8)(ii) as providing that 

when a payor section 902 corporation 

with suspended split taxes combines 

with the covered person with the related 

income in a transaction described in 

section 381, all related income is treated 

as taken into account even if the full 

amount of related income is not 

reflected in the earnings and profits of 

the payor section 902 corporation (or 

surviving corporation) as a result of the 

transaction. 

The Treasury Department and the IRS 

did not intend for a transaction 

described under section 381 to result in 

the unsuspension of split taxes if the 

transaction does not cause the payor of 

the split taxes to take into account 

earnings and profits of the covered 

person equal to the amount of related 

income specified in the relevant splitter 

arrangement definition. Accordingly, 

the final regulations clarify that split 

taxes are unsuspended only when the 

appropriate amount of related income is 

taken into account by the payor section 

902 corporation either as a result of a 

distribution or inclusion out of the 

earnings and profits of the covered 

person or as a result of the combination 

of the payor section 902 corporation and 

the covered person in a transaction 

described in section 381. 

VII. Additional Splitter Arrangement 

Fact Patterns 

A comment recommended that the 

U.S. debt hybrid instrument splitter 

arrangement definition be expanded to 

include certain fact patterns in which 

the instrument owner is not related to 

the issuer of the instrument. The 

Treasury Department and the IRS have 

concluded that it is not appropriate at 

this time to extend the existing splitter 

arrangement list to include transactions 

between unrelated persons and do not 

adopt the comment. The Treasury 

Department and the IRS continue, 

however, to consider other 

arrangements that inappropriately 

separate foreign income taxes from the 

related income, and the circumstances 

under which a splitter arrangement 

described in regulations or other 

guidance under section 909 should be 

applied to arrangements between 

unrelated persons. 


rljohnson on DSK3VPTVN1PROD with RULES
7326 Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 

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. Pursuant to section 

7805(f) of the Internal Revenue Code, 

the NPRM preceding this regulation was 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small businesses. 

Drafting Information 

The principal author of these 

regulations is Suzanne M. Walsh of the 

Office of Associate Chief Counsel 

(International). However, other 

personnel from the IRS and the Treasury 

Department 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 is amended by adding an entry 

in numerical order to read as follows: 

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

Sections 1.909–1 through 1.906–6 also issued 

under 26 U.S.C. 909(e). * * * 

■ Par. 2. Section 1.704–1 is amended as 

follows: 

■ a. Paragraph (b)(0) is amended by 

adding entries for § 1.704– 

1(b)(1)(ii)(b)(3) and § 1.704– 

1(b)(4)(viii)(d)(3). 

■ b. Paragraph (b)(1)(ii)(b)(3) is revised. 

■ c. Paragraph (b)(4)(viii)(d)(3) is 

revised. 

■ c. Paragraph (b)(5), Example 24, is 

revised. 

The revisions read as follows: 

§ 1.704–1. Partner’s distributive share. 

* * * * * 

(b) Determination of partner’s 

distributive share –(0) Cross-references. 

Heading Section 

*******

Special rules for certain interbranch payments ......................................................................................................... 1.704–1(b)(1)(ii)(b)(3) 

*******

Special rules for certain interbranch payments ......................................................................................................... 1.704–1(b)(4)(viii)(d)(3) 

*******

(1) * * * 

(ii) * * * 

(b) * * * 

(3) Special rules for certain interbranch payments—(A) In general. The 

provisions of § 1.704–1(b)(4)(viii)(d)(3) 

apply for partnership taxable years 

ending after February 9, 2015. See 26 

CFR 1.704–1T(b)(4)(viii)(d)(3) (revised 

as of April 1, 2014) for rules applicable 

to taxable years beginning on or after 

January 1, 2012, and ending on or before 

February 9, 2015. 

(B) Transition rule. Transition relief is 

provided herein to partnerships whose 

agreements were entered into prior to 

February 14, 2012. In such cases, if 

there has been no material modification 

to the partnership agreement on or after 

February 14, 2012, then the partnership 

may apply the provisions of § 1.704– 

1(b)(4)(viii)(c)(3)(ii) and § 1.704– 

1(b)(4)(viii)(d)(3) (revised as of April 1, 

2011). For purposes of this paragraph 

(b)(1)(ii)(b)(3), any change in ownership 

constitutes a material modification to 

the partnership agreement. This 

transition rule does not apply to any 

taxable year in which persons bearing a 

relationship to each other that is 

specified in section 267(b) or section 

707(b) collectively have the power to 

amend the partnership agreement 

without the consent of any unrelated 

party (and all subsequent taxable years). 

* * * * * 

(4) * * * 

(vii) * * * 

(d) * * * 

(3) Special rules for inter-branch 

payments. For rules relating to foreign 

tax paid or accrued in partnership 

taxable years beginning before January 

1, 2012, in respect of certain interbranch payments, see 26 CFR 1.704– 

1(b)(4)(viii)(d)(3) (revised as of April 1, 

2011). 

* * * * * 

(b) 

(5) * * * 

Example 24. (i) The facts are the same as 

in Example 21, except that businesses M and 

N are conducted by entities (DE1 and DE2, 

respectively) that are corporations for 

country X and Y tax purposes and 

disregarded entities for U.S. Federal income 

tax purposes. Also, assume that DE1 makes 

payments of $75,000 during 2012 to DE2 that 

are deductible by DE1 for country X tax 

purposes and includible in income of DE2 for 

country Y tax purposes. As a result of such 

payments, DE1 has taxable income of $25,000 

for country X purposes on which $10,000 of 

taxes are imposed and DE2 has taxable 

income of $125,000 for country Y purposes 

on which $25,000 of taxes are imposed. For 

U.S. Federal income tax purposes, $100,000 

of AB’s income is attributable to the activities 

of DE1 and $50,000 of AB’s income is 

attributable to the activities of DE2. Pursuant 

to the partnership agreement, all partnership 

items from business M, excluding CFTEs 

paid or accrued by business M, are allocated 

75% to A and 25% to B, and all partnership 

items from business N, excluding CFTEs paid 

or accrued by business N, are split evenly 

between A and B (50% each). Accordingly, 

A is allocated 75% of the income from 

business M ($75,000), and 50% of the income 

from business N ($25,000). B is allocated 

25% of the income from business M 

($25,000), and 50% of the income from 

business N ($25,000). 

(ii) Because the partnership agreement 

provides for different allocations of the net 

income attributable to businesses M and N, 

the net income attributable to each of 

business M and business N is income in 

separate CFTE categories. See paragraph 

(b)(4)(viii)(c)(2) of this section. Under 

paragraph (b)(4)(viii)(c)(3) of this section, the 

$100,000 of net income attributable to 

business M is in the business M CFTE 

category and the $50,000 of net income 

attributable to business N is in the business 

N CFTE category. Under paragraph 

(b)(4)(viii)(d)(1) of this section, the $10,000 of 

country X taxes is allocated to the business 

M CFTE category and $10,000 of the country 

Y taxes is allocated to the business N CFTE 

category. The additional $15,000 of country 

Y tax imposed with respect to the interbranch payment is assigned to the business 

M CFTE category because for U.S. Federal 

income tax purposes, the related $75,000 of 

income that country Y is taxing is in the 

business M CFTE category. Therefore, 

$25,000 of taxes ($10,000 of country X taxes 

and $15,000 of the country Y taxes) is related 

to the $100,000 of net income in the business 

M CFTE category and the other $10,000 of 

country Y taxes is related to the $50,000 of 

net income in the business N CFTE category. 

See paragraph (b)(4)(viii)(c)(1) of this section. 


rljohnson on DSK3VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 7327 

The allocations of country X taxes will be in 

proportion to the distributive shares of 

income to which they relate and will be 

deemed to be in accordance with the 

partners’ interests in the partnership if such 

taxes are allocated 75% to A and 25% to B. 

The allocations of country Y taxes will be in 

proportion to the distributive shares of 

income to which they relate and will be 

deemed to be in accordance with the 

partners’ interests in the partnership if 

$15,000 of such taxes is allocated 75% to A 

and 25% to B and the other $10,000 of such 

taxes is allocated 50% to A and 50% to B. 

No inference is intended with respect to the 

application of other provisions to 

arrangements that involve disregarded 

payments. 

(iii) Assume that the facts are the same as 

in paragraph (i) of this Example 24, except 

that in order to reflect the $75,000 payment 

from DE1 to DE2, the partnership agreement 

allocates $75,000 of the income attributable 

to business M equally between A and B (50% 

each). In order to prevent separating the 

CFTEs from the related foreign income, the 

$75,000 payment is treated as a divisible part 

of the business M activity and, therefore, a 

separate activity. See paragraph 

(b)(4)(viii)(c)(2)(iii) of this section. Because 

items from the disregarded payment and 

business N are both shared equally between 

A and B, the disregarded payment activity 

and the business N activity are treated as a 

single CFTE category. See paragraph 

(b)(4)(viii)(c)(2)(i) of this section. 

Accordingly, $25,000 of net income 

attributable to business M is in the business 

M CFTE category and $75,000 of income of 

business M attributable to the disregarded 

payment and the $50,000 of net income 

attributable to business N are in the business 

N CFTE category. Under paragraph 

(b)(4)(viii)(d)(1) of this section, the $10,000 of 

country X taxes is allocated to the business 

M CFTE category and all $25,000 of the 

country Y taxes is allocated to the business 

N CFTE category. The allocations of country 

X taxes will be in proportion to the 

distributive shares of income to which they 

relate and will be deemed to be in 

accordance with the partners’ interests in the 

partnership if such taxes are allocated 75% 

to A and 25% to B. The allocations of 

country Y taxes will be in proportion to the 

distributive shares of income to which they 

relate and will be deemed to be in 

accordance with the partners’ interests in the 

partnership if such taxes are allocated 50% 

to A and 50% to B. 

* * * * * 

§ 1.704–1T [Removed] 

■ Par. 3. Section 1.704–1T is removed. 

■ Par. 4. Section 1.909–0 is added to 

read as follows: 

§ 1.909–0 Outline of regulation provisions 

for section 909. 

This section lists the headings for 

§§ 1.909–1 through 1.909–6. 

§ 1.909–1 Definitions and special rules. 

(a) Definitions. 

(b) Taxes paid or accrued by a 

partnership, S corporation or trust. 

(c) Related income of a partnership, S 

corporation or trust. 

(d) Application of section 909 to pre1987 accumulated profits and pre-1987 

foreign income taxes. 

(e) Effective/applicability date. 

§ 1.909–2 Splitter arrangements. 

(a) Foreign tax credit splitting event. 

(1) In general. 

(2) Split taxes not taken into account. 

(b) Splitter arrangements. 

(1) Reverse hybrid splitter 

arrangements. 

(i) In general. 

(ii) Split taxes from a reverse hybrid 

splitter arrangement. 

(iii) Related income from a reverse 

hybrid splitter arrangement. 

(iv) Reverse hybrid. 

(v) Examples. 

(2) Loss-sharing splitter arrangements. 

(i) In general. 

(ii) U.S. combined income group. 

(iii) Income and shared loss of a U.S. 

combined income group. 

(iv) Split taxes from a loss-sharing 

splitter arrangement. 

(v) Related income from a loss-sharing 

splitter arrangement. 

(vi) Foreign group relief or other losssharing regime. 

(vii) Examples. 

(3) Hybrid instrument splitter 

arrangements. 

(i) U.S. equity hybrid instrument 

splitter arrangement. 

(ii) U.S. debt hybrid instrument 

splitter arrangement. 

(4) Partnership inter-branch payment 

splitter arrangements. 

(i) In general. 

(ii) Split taxes from a partnership 

inter-branch payment splitter 

arrangement. 

(iii) Related income from a 

partnership inter-branch payment 

splitter arrangement. 

(c) Effective/applicability date. 

§ 1.909–3 Rules regarding related income 

and split taxes. 

(a) Interim rules for identifying 

related income and split taxes. 

(b) Split taxes on deductible 

disregarded payments. 

(c) Effective/applicability date. 

§ 1.909–4 Coordination rules. 

(a) Interim rules. 

(b) Effective/applicability date. 

§ 1.909–5 2011 and 2012 splitter 

arrangements. 

(a) Taxes paid or accrued in taxable 

years beginning in 2011. 

(b) Taxes paid or accrued in certain 

taxable years beginning in 2012 with 

respect to a foreign consolidated group 

splitter arrangement. 

(c) Effective/applicability date. 

§ 1.909–6 Pre-2011 foreign tax credit 

splitting events. 

(a) Foreign tax credit splitting event. 

(1) In general. 

(2) Taxes not subject to suspension 

under section 909. 

(3) Taxes subject to suspension under 

section 909. 

(b) Pre-2011 splitter arrangements. 

(1) Reverse hybrid structure splitter 

arrangements. 

(2) Foreign consolidated group splitter 

arrangements. 

(3) Group relief or other loss-sharing 

regime splitter arrangements. 

(i) In general. 

(ii) Split taxes and related income. 

(4) Hybrid instrument splitter 

arrangements. 

(i) In general. 

(ii) U.S. equity hybrid instrument 

splitter arrangement. 

(iii) U.S. debt hybrid instrument 

splitter arrangement. 

(c) General rules for applying section 

909 to pre-2011 split taxes and related 

income. 

(1) Annual determination. 

(2) Separate categories. 

(d) Special rules regarding related 

income. 

(1) Annual adjustments. 

(2) Effect of separate limitation losses 

and deficits. 

(3) Pro rata method for distributions 

out of earnings and profits that include 

both related income and other income. 

(4) Alternative method for 

distributions out of earnings and profits 

that include both related income and 

other income. 

(5) Distributions, deemed 

distributions, and inclusions out of 

related income. 

(6) Carryover of related income. 

(7) Related income taken into account 

by a section 902 shareholder. 

(8) Related income taken into account 

by a payor section 902 corporation. 

(9) Related income taken into account 

by an affiliated group of corporations 

that includes a section 902 shareholder. 

(10) Distributions of previously-taxed 

earnings and profits. 

(e) Special rules regarding pre-2011 

split taxes. 

(1) Taxes deemed paid pro rata out of 

pre-2011 split taxes and other taxes. 

(2) Pre-2011 split taxes deemed paid 

in pre-2011 taxable years. 

(3) Carryover of pre-2011 split taxes. 

(4) Determining when pre-2011 split 

taxes are no longer treated as pre-2011 

split taxes. 

(f) Rules relating to partnerships and 

trusts. 

(1) Taxes paid or accrued by 

partnerships. 


rljohnson on DSK3VPTVN1PROD with RULES
7328 Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 

(2) Section 704(b) allocations. 

(3) Trusts. 

(g) Interaction between section 909 

and other Code provisions. 

(1) Section 904(c). 

(2) Section 905(a). 

(3) Section 905(c). 

(4) Other foreign tax credit provisions. 

(h) Effective/applicability date. 

§ 1.909–0T [Removed] 

■ Par. 5. Section 1.909–0T is removed. 

■ Par. 6. Sections 1.909–1 is added to 

read as follows: 

§ 1.909–1 Definitions and special rules. 

(a) Definitions. For purposes of 

section 909, this section, and §§ 1.909– 

2 through 1.909–5, the following 

definitions apply: 

(1) The term section 902 corporation 

means any foreign corporation with 

respect to which one or more domestic 

corporations meet the ownership 

requirements of section 902(a) or (b). 

(2) The term section 902 shareholder 

means any domestic corporation that 

meets the ownership requirements of 

section 902(a) or (b) with respect to a 

section 902 corporation. 

(3) The term payor means a person 

that pays or accrues a foreign income 

tax within the meaning of § 1.901–2(f), 

and also includes a person that takes 

foreign income taxes paid or accrued by 

a partnership, S corporation, estate or 

trust into account pursuant to section 

702(a)(6), section 901(b)(5) or section 

1373(a). 

(4) The term covered person means, 

with respect to a payor— 

(i) Any entity in which the payor 

holds, directly or indirectly, at least a 10 

percent ownership interest (determined 

by vote or value); 

(ii) Any person that holds, directly or 

indirectly, at least a 10 percent 

ownership interest (determined by vote 

or value) in the payor; or 

(iii) Any person that bears a 

relationship that is described in section 

267(b) or 707(b) to the payor. 

(5) The term foreign income tax 

means any income, war profits, or 

excess profits tax paid or accrued to any 

foreign country or to any possession of 

the United States. A foreign income tax 

includes any tax paid or accrued in lieu 

of such a tax within the meaning of 

section 903. 

(6) The term post-1986 foreign income 

taxes has the meaning provided in 

§ 1.902–1(a)(8). 

(7) The term post-1986 undistributed 

earnings has the meaning provided in 

§ 1.902–1(a)(9). 

(8) The term disregarded entity means 

an entity that is disregarded as an entity 

separate from its owner, as provided in 

§ 301.7701–2(c)(2)(i) of this chapter. 

(9) The term hybrid partnership 

means a partnership that is subject to 

income tax in a foreign country as a 

corporation (or otherwise at the entity 

level) on the basis of residence, place of 

incorporation, place of management or 

similar criteria. 

(b) Taxes paid or accrued by a 

partnership, S corporation or trust. 

Under section 909(c)(1), section 909 

applies at the partner level, and similar 

rules apply in the case of an S 

corporation or trust. Accordingly, in the 

case of foreign income taxes paid or 

accrued by a partnership, S corporation 

or trust, taxes allocated to one or more 

partners, shareholders or beneficiaries 

(as the case may be) will be treated as 

split taxes to the extent such taxes 

would be split taxes if the partner, 

shareholder or beneficiary had paid or 

accrued the taxes directly on the date 

such taxes are taken into account by the 

partner under sections 702 and 706(a), 

by the shareholder under section 

1373(a), or by the beneficiary under 

section 901(b)(5). Any such split taxes 

will be suspended in the hands of the 

partner, shareholder or beneficiary. 

(c) Related income of a partnership, S 

corporation or trust. For purposes of 

determining whether related income is 

taken into account by a covered person, 

related income of a partnership, S 

corporation or trust is considered to be 

taken into account by the partner, 

shareholder or beneficiary to whom the 

related income is allocated. 

(d) Application of section 909 to pre1987 accumulated profits and pre-1987 

foreign income taxes. Section 909 and 

§§ 1.909–1 through 1.909–5 will apply 

to pre-1987 accumulated profits (as 

defined in § 1.902–1(a)(10)(i)) and pre1987 foreign income taxes (as defined in 

§ 1.902–1(a)(10)(iii)) of a section 902 

corporation attributable to taxable years 

beginning on or after January 1, 2012. 

(e) Effective/applicability date. This 

section applies to taxable years ending 

after February 9, 2015. See 26 CFR 

1.909–1T (revised as of April 1, 2014) 

for rules applicable to taxable years 

beginning on or after January 1, 2011, 

and ending on or before February 9, 

2015. 

§ 1.909–1T [Removed] 

■ Par. 7. Section 1.909–1T is removed. 

■ Par. 8. Section 1.909–2 is added to 

read as follows: 

§ 1.909–2 Splitter arrangements. 

(a) Foreign tax credit splitting event— 

(1) In general. There is a foreign tax 

credit splitting event with respect to 

foreign income taxes paid or accrued if 

and only if, in connection with an 

arrangement described in paragraph (b) 

of this section (a splitter arrangement) 

the related income was, is or will be 

taken into account for U.S. Federal 

income tax purposes by a person that is 

a covered person with respect to the 

payor of the tax. Foreign income taxes 

that are paid or accrued in connection 

with a splitter arrangement are split 

taxes to the extent provided in 

paragraph (b) of this section. Income (or, 

as appropriate, earnings and profits) that 

was, is or will be taken into account by 

a covered person in connection with a 

splitter arrangement is related income to 

the extent provided in paragraph (b) of 

this section. 

(2) Split taxes not taken into account. 

Split taxes will not be taken into 

account for U.S. Federal income tax 

purposes before the taxable year in 

which the related income is taken into 

account by the payor or, in the case of 

split taxes paid or accrued by a section 

902 corporation, by a section 902 

shareholder of such section 902 

corporation. Therefore, in the case of 

split taxes paid or accrued by a section 

902 corporation, split taxes will not be 

taken into account for purposes of 

sections 902 or 960, or for purposes of 

determining earnings and profits under 

section 964(a), before the taxable year in 

which the related income is taken into 

account by the payor section 902 

corporation, a section 902 shareholder 

of the section 902 corporation, or a 

member of the section 902 shareholder’s 

consolidated group. See § 1.909–3(a) for 

rules relating to when split taxes and 

related income are taken into account. 

(b) Splitter arrangements. The 

arrangements set forth in this paragraph 

(b) are splitter arrangements. 

(1) Reverse hybrid splitter 

arrangements—(i) In general. A reverse 

hybrid is a splitter arrangement when a 

payor pays or accrues foreign income 

taxes with respect to income of a reverse 

hybrid. A reverse hybrid splitter 

arrangement exists even if the reverse 

hybrid has a loss or a deficit in earnings 

and profits for a particular year for U.S. 

Federal income tax purposes (for 

example, due to a timing difference). 

(ii) Split taxes from a reverse hybrid 

splitter arrangement. The foreign 

income taxes paid or accrued with 

respect to income of the reverse hybrid 

are split taxes. 

(iii) Related income from a reverse 

hybrid splitter arrangement. The related 

income with respect to split taxes from 

a reverse hybrid splitter arrangement is 

the earnings and profits (computed for 

U.S. Federal income tax purposes) of the 

reverse hybrid attributable to the 

activities of the reverse hybrid that gave 

rise to income included in the payor’s 

foreign tax base with respect to which 


rljohnson on DSK3VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 7329 

the split taxes were paid or accrued. 

Accordingly, related income of the 

reverse hybrid includes items of income 

or expense attributable to a disregarded 

entity owned by the reverse hybrid only 

to the extent that the income 

attributable to the activities of the 

disregarded entity is included in the 

payor’s foreign tax base. 

(iv) Reverse hybrid. The term reverse 

hybrid means an entity that is a 

corporation for U.S. Federal income tax 

purposes but is a fiscally transparent 

entity (under the principles of § 1.894– 

1(d)(3)) or a branch under the laws of a 

foreign country imposing tax on the 

income of the entity. 

(v) Examples. The following examples 

illustrate the rules of paragraph (b)(1) of 

this section. 

Example 1. (i) Facts. USP, a domestic 

corporation, wholly owns DE, a disregarded 

entity for U.S. federal income tax purposes 

that is organized in country A and treated as 

a corporation for country A tax purposes. DE 

wholly owns RH, a corporation for U.S. 

Federal income tax purposes that is 

organized in country A and treated as a 

fiscally transparent entity for country A tax 

purposes. Country A imposes an income tax 

at the rate of 30% on DE with respect to the 

items of income earned by RH. Prior to year 

1, RH had no income for country A purposes 

and had no post-1986 earnings and profits for 

U.S. Federal income tax purposes. In year 1, 

RH earns 200u of income on which DE pays 

60u of country A tax. Pursuant to § 1.901– 

2(f)(4)(ii), USP is treated as legally liable for 

the 60u of country A taxes paid by DE. DE 

has no other income. In year 2, RH earns no 

income and incurs no losses or expenses. At 

the end of year 2, RH distributes 100u to DE. 

(ii) Result. (A) Split taxes and related 

income. Pursuant to § 1.909–2(b)(1)(iv), RH is 

a reverse hybrid because it is a corporation 

for U.S. Federal income tax purposes and a 

fiscally transparent entity for country A 

purposes. Pursuant to § 1.909–2(b)(1), RH is 

a covered person with respect to USP 

because USP wholly owns RH for U.S. 

Federal income tax purposes. Pursuant to 

§ 1.909–2(b)(1)(i), there is a splitter 

arrangement with respect to RH because USP 

paid country A tax with respect to the 

income of RH. All 60u of taxes paid by USP 

in year 1 with respect to the income of RH 

are split taxes pursuant to § 1.909–2(b)(1)(ii). 

The post-1986 earnings and profits of RH are 

200u as of the end of year 1. Pursuant to 

§ 1.909–2(b)(1)(iii), the related income in year 

1 is the 200u of RH’s earnings and profits that 

are attributable to the activities that gave rise 

to the split taxes. No additional split taxes or 

related income arise in year 2. 

(B) Distribution. Because DE is a 

disregarded entity, the 100u distribution by 

RH at the end of year 2 is treated as a 

dividend to USP. Pursuant to § 1.909–6(d)(7) 

and § 1.909–3(a), 100u of the 200u of related 

income of RH, or 50%, is taken into account 

by USP by reason of the 100u dividend. 

Accordingly, pursuant to § 1.909–6(e)(4) and 

§ 1.909–3(a), a ratable portion of the split 

taxes, or 30u of taxes (50% of 60u), is no 

longer treated as split taxes and is taken into 

account by USP for U.S. Federal income tax 

purposes. 

Example 2. (i) Facts. The facts are the same 

as in Example 1, except that in year 2, RH 

has a 100u loss for U.S. Federal income tax 

purposes as well as for country A tax 

purposes. For country A tax purposes, DE 

takes the 100u loss into account in year 2 and 

may not carry back the 100u loss to offset its 

country A taxable income for year 1. At the 

end of year 2, RH distributes 100u to DE. 

(ii) Result. (A) Split taxes and related 

income. The split taxes and related income 

for year 1 are the same as in Example 1. 

Pursuant to § 1.909–2(b)(1)(iii), § 1.909– 

6(d)(1) and § 1.909–3(a), the total related 

income of RH is reduced to 100u (200u ¥ 

100u) in year 2 because RH incurred a 100u 

loss in year 2 attributable to the activities that 

are included in DE’s country A tax base. 

(B) Distribution. Because DE is a 

disregarded entity, the 100u distribution by 

RH at the end of year 2 is treated as a 

dividend to USP. Pursuant to § 1.909–6(d)(7) 

and § 1.909–3(a), 100u of the 100u of related 

income of RH, or 100%, is taken into account 

by USP by reason of the 100u dividend. 

Accordingly, pursuant to § 1.909–6(e)(4) and 

§ 1.909–3(a), a ratable portion of the split 

taxes, or 60u of taxes (100% of 60u), is no 

longer treated as split taxes and is taken into 

account by USP for U.S. Federal income tax 

purposes. 

(2) Loss-sharing splitter 

arrangements—(i) In general. A foreign 

group relief or other loss-sharing regime 

is a loss-sharing splitter arrangement to 

the extent that a shared loss of a U.S. 

combined income group could have 

been used to offset income of that group 

in the current or in a prior foreign 

taxable year (usable shared loss) but is 

used instead to offset income of another 

U.S. combined income group. 

(ii) U.S. combined income group. The 

term U.S. combined income group 

means an individual or a corporation 

and all entities (including entities that 

are fiscally transparent for U.S. Federal 

income tax purposes under the 

principles of § 1.894–1(d)(3)) that for 

U.S. Federal income tax purposes 

combine any of their respective items of 

income, deduction, gain or loss with the 

income, deduction, gain or loss of such 

individual or corporation. A U.S. 

combined income group can arise, for 

example, as a result of an entity being 

disregarded or, in the case of a 

partnership or hybrid partnership and a 

partner, as a result of the allocation of 

income or any other item of the 

partnership to the partner. For purposes 

of this paragraph (b)(2)(ii), a branch is 

treated as an entity, all members of a 

U.S. affiliated group of corporations (as 

defined in section 1504) that file a 

consolidated return are treated as a 

single corporation, and two or more 

individuals that file a joint return are 

treated as a single individual. A U.S. 

combined income group may consist of 

a single individual or corporation and 

no other entities, but cannot include 

more than one individual or 

corporation. In addition, an entity may 

belong to more than one U.S. combined 

income group. For example, a hybrid 

partnership with two corporate partners 

that do not combine any of their items 

of income, deduction, gain or loss for 

U.S. Federal income tax purposes is in 

a separate U.S. combined income group 

with each of its partners. 

(iii) Income and shared loss of a U.S. 

combined income group—(A) Income. 

Except as otherwise provided in this 

paragraph (b)(2)(iii)(A), the income of a 

U.S. combined income group is the 

aggregate amount of taxable income 

recognized or taken into account for 

foreign tax purposes by those members 

that have positive taxable income for 

foreign tax purposes. In the case of an 

entity that is fiscally transparent (under 

the principles of § 1.894–1(d)(3)) for 

foreign tax purposes and that is a 

member of more than one U.S. 

combined income group, the foreign 

taxable income of the entity is allocated 

between or among the groups under 

foreign tax law. In the case of an entity 

that is not fiscally transparent for 

foreign tax purposes and that is a 

member of more than one U.S. 

combined income group, the foreign 

taxable income of the entity is allocated 

between or among those groups based 

on U.S. Federal income tax principles. 

For example, in the case of a hybrid 

partnership, the foreign taxable income 

of the partnership is allocated between 

or among the groups in the manner the 

partnership allocates the income under 

section 704(b). To the extent the foreign 

taxable income would be income under 

U.S. Federal income tax principles in 

another year, the income is allocated 

between or among the groups based on 

how the hybrid partnership would 

allocate the income if the income were 

recognized for U.S. Federal income tax 

purposes in the year in which the 

income is recognized for foreign tax 

purposes. To the extent the foreign 

taxable income would not constitute 

income under U.S. Federal income tax 

principles in any year, the income is 

allocated between or among the groups 

in the same manner as the partnership 

items attributable to the activity giving 

rise to the foreign taxable income. 

(B) Shared loss. The term shared loss 

means a loss of one entity for foreign tax 

purposes that, in connection with a 

foreign group relief or other loss-sharing 

regime, is taken into account by one or 

more other entities. Except as otherwise 

provided in this paragraph (b)(2)(iii)(B), 

the amount of shared loss of a U.S. 


rljohnson on DSK3VPTVN1PROD with RULES
7330 Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 

combined income group is the sum of 

the shared losses of all members of the 

U.S. combined income group. In the 

case of an entity that is fiscally 

transparent (under the principles of 

§ 1.894–1(d)(3)) for foreign tax purposes 

and that is a member of more than one 

U.S. combined income group, the 

shared loss of the entity is allocated 

between or among the groups under 

foreign tax law. In the case of an entity 

that is not fiscally transparent for 

foreign tax purposes and that is a 

member of more than one U.S. 

combined income group, the shared loss 

of the entity will be allocated between 

or among those groups based on U.S. 

Federal income tax principles. For 

example, in the case of a hybrid 

partnership, the shared loss of the 

partnership will be allocated between or 

among the groups in the manner the 

partnership allocates the loss under 

section 704(b). To the extent the shared 

loss would be a loss under U.S. Federal 

income tax principles in another year, 

the loss is allocated between or among 

the groups based on how the 

partnership would allocate the loss if 

the loss were recognized for U.S. 

Federal income tax purposes in the year 

in which the loss is recognized for 

foreign tax purposes. To the extent the 

shared loss would not constitute a loss 

under U.S. Federal income tax 

principles in any year, the loss is 

allocated between or among the groups 

in the same manner as the partnership 

items attributable to the activity giving 

rise to the shared loss. 

(iv) Split taxes from a loss-sharing 

splitter arrangement. Split taxes from a 

loss-sharing splitter arrangement are 

foreign income taxes paid or accrued by 

a member of the U.S. combined income 

group with respect to income from the 

current foreign taxable year, or, in the 

case of a foregone carryback loss, from 

the prior foreign taxable year, equal to 

the amount of the usable shared loss of 

that group that offsets income of another 

U.S. combined income group. 

(v) Related income from a losssharing splitter arrangement. The 

related income with respect to split 

taxes from a loss-sharing splitter 

arrangement is an amount of income of 

the individual or corporate member of 

the U.S. combined income group equal 

to the amount of income under foreign 

tax law of that U.S. combined income 

group that is offset by the usable shared 

loss of another U.S. combined income 

group. 

(vi) Foreign group relief or other losssharing regime. A foreign group relief or 

other loss-sharing regime exists when an 

entity may surrender its loss to offset 

the income of one or more other entities. 

A foreign group relief or other losssharing regime does not include an 

allocation of loss of an entity that is a 

partnership or other fiscally transparent 

entity (under the principles of § 1.894– 

1(d)(3)) for foreign tax purposes or 

regimes in which foreign tax is imposed 

on combined income (such as a foreign 

consolidated regime), as described in 

§ 1.901–2(f)(3). 

(vii) Examples. The following 

examples illustrate the rules of 

paragraph (b)(2) of this section. 

Example 1. (i) Facts. USP, a domestic 

corporation, wholly owns CFC1, a 

corporation organized in country A. CFC1 

wholly owns CFC2 and CFC3, both 

corporations organized in country A. CFC2 

wholly owns DE, an entity organized in 

country A. DE is a corporation for country A 

tax purposes and a disregarded entity for U.S. 

Federal income tax purposes. Country A has 

a loss-sharing regime under which a loss of 

CFC1, CFC2, CFC3 or DE may be used to 

offset the income of one or more of the 

others. Country A imposes an income tax at 

the rate of 30% on the taxable income of 

corporations organized in country A. In year 

1, before any loss sharing, CFC1 has no 

income, CFC2 has income of 50u, CFC3 has 

income of 200u, and DE has a loss of 100u. 

Under the provisions of country A’s losssharing regime, the group decides to use DE’s 

100u loss to offset 100u of CFC3’s income. 

After the loss is shared, for country A’s tax 

purposes, CFC2 still has 50u of income on 

which it pays 15u of country A tax. CFC3 has 

income of 100u (200u less the 100u shared 

loss) on which it pays 30u of country A tax. 

For U.S. Federal income tax purposes, the 

loss sharing with CFC3 is not taken into 

account. Because DE is a disregarded entity, 

its 100u loss is taken into account by CFC2 

and reduces its earnings and profits for U.S. 

Federal income tax purposes. Accordingly, 

before application of section 909, CFC2 has 

a loss for earnings and profits purposes of 

65u (50u income less 15u taxes paid to 

country A less 100u loss of DE). CFC2 also 

has the U.S. dollar equivalent of 15u of 

foreign income taxes to add to its post-1986 

foreign income taxes pool. CFC3 has earnings 

and profits of 170u (200u income less 30u of 

taxes) and the dollar equivalent of 30u of 

foreign income taxes to add to its post-1986 

foreign income taxes pool. 

(ii) Result. Pursuant to § 1.909–2(b)(2)(ii), 

CFC2 and DE constitute one U.S. combined 

income group, while CFC1 and CFC3 each 

constitute separate U.S. combined income 

groups. Pursuant to § 1.909–2(b)(2)(iii)(A), 

the income of the CFC2 U.S. combined 

income group is 50u (CFC2’s country A 

taxable income of 50u). The income of the 

CFC3 U.S. combined income group is 200u 

(CFC3’s country A taxable income of 200u). 

Pursuant to § 1.909–2(b)(2)(iii)(B), the shared 

loss of the CFC2 U.S. combined income 

group includes the 100u of shared loss 

incurred by DE. The usable shared loss of the 

CFC2 U.S. combined income group is 50u, 

the amount of the group’s shared loss that 

could have otherwise offset CFC2’s 50u of 

country A taxable income that is included in 

the income of the CFC2 U.S. combined 

income group. There is a splitter arrangement 

because the 50u usable shared loss of the 

CFC2 U.S. combined income group was used 

instead to offset income of CFC3, which is 

included in the CFC3 U.S. combined income 

group. Pursuant to § 1.909–2(b)(2)(iv), the 

split taxes are the 15u of country A income 

taxes paid by CFC2 on 50u of income, an 

amount of income of the CFC2 U.S. 

combined income group equal to the amount 

of usable shared loss of that group that was 

used to offset income of the CFC3 U.S. 

combined income group. Pursuant to 

§ 1.909–2(b)(2)(v), the related income is the 

50u of CFC3’s income that equals the amount 

of income of the CFC3 U.S. combined income 

group that was offset by the usable shared 

loss of the CFC2 U.S. combined income 

group. 

Example 2. (i) Facts. USP, a domestic 

corporation, wholly owns CFC1, a 

corporation organized in country B. CFC1 

wholly owns CFC2 and CFC3, both 

corporations organized in country B. CFC2 

wholly owns DE, an entity organized in 

country B. DE is a corporation for country B 

tax purposes and a disregarded entity for U.S. 

Federal income tax purposes. CFC2 and 

CFC3 each own 50% of HP1, an entity 

organized in country B. HP1 is a corporation 

for country B tax purposes and a partnership 

for U.S. Federal income tax purposes. All 

items of income and loss of HP1 are allocated 

for U.S. Federal income tax purposes equally 

between CFC2 and CFC3, and all entities use 

the country B currency ‘‘u’’ as their 

functional currency. Country B has a losssharing regime under which a loss of any of 

CFC1, CFC2, CFC3, DE, and HP1 may be used 

to offset the income of one or more of the 

others. Country B imposes an income tax at 

the rate of 30% on the taxable income of 

corporations organized in country B. In year 

1, before any loss sharing, CFC2 has income 

of 100u, CFC1 and CFC3 have no income, DE 

has a loss of 100u, and HP1 has income of 

200u. Under the provisions of country B’s 

loss-sharing regime, the group decides to use 

DE’s 100u loss to offset 100u of HP1’s 

income. After the loss is shared, for country 

B tax purposes, CFC2 has 100u of income on 

which it pays 30u of country B income tax, 

and HP1 has 100u of income (200u less the 

100u shared loss) on which it pays 30u of 

country B income tax. For U.S. Federal 

income tax purposes, the loss sharing with 

HP1 is not taken into account, and, because 

DE is a disregarded entity, its 100u loss is 

taken into account by CFC2 and reduces 

CFC2’s earnings and profits for U.S. Federal 

income tax purposes. The 200u income of 

HP1 is allocated 50/50 to CFC2 and CFC3, as 

is the 30u of country B income tax paid by 

HP1. Accordingly, before application of 

section 909, for U.S. Federal income tax 

purposes, CFC2 has earnings and profits of 

55u (100u income plus 100u share of HP1’s 

income less 100u loss of DE less 30u country 

B income tax paid by CFC2 less 15u share of 

HP1’s country B income tax) and the dollar 

equivalent of 45u of country B income tax to 

add to its post-1986 foreign income taxes 

pool. CFC3 has earnings and profits of 85u 

(100u share of HP1’s income less 15u share 

of HP1’s country B income taxes) and the 


rljohnson on DSK3VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 7331 

dollar equivalent of 15u of country B income 

tax to add to its post-1986 foreign income 

taxes pool. 

(ii) U.S. combined income groups. 

Pursuant to § 1.909–2(b)(2)(ii), because the 

income and loss of HP1 are combined in part 

with the income and loss of both CFC2 and 

CFC3, it belongs to both of the separate CFC2 

and CFC3 U.S. combined income groups. DE 

is a member of the CFC2 U.S. combined 

income group. 

(iii) Income of the U.S. combined income 

groups. Pursuant to § 1.909–2(b)(2)(iii)(A), 

the income of the CFC2 U.S. combined 

income group is the 200u country B taxable 

income of the members of the group with 

positive taxable incomes (CFC2’s country B 

taxable income of 100u plus 50% of HP1’s 

country B taxable income of 200u, or 100u). 

Because DE does not have positive taxable 

income for country B tax purposes, its 100u 

loss is not included in the income of the 

CFC2 U.S. combined income group. The 

income of the CFC3 U.S. combined income 

group is 100u (50% of HP1’s country B 

taxable income of 200u, or 100u). 

(iv) Shared loss of the U.S. combined 

income groups. Pursuant to § 1.909– 

2(b)(2)(iii)(B), the shared loss of the CFC2 

U.S. combined income group is the 100u loss 

incurred by DE that is used to offset 100u of 

HP1’s income. The CFC3 U.S. combined 

income group has no shared loss. Pursuant to 

§ 1.909–2(b)(2)(i), the usable shared loss of 

the CFC2 U.S. combined income group is 

100u, the full amount of the group’s 100u 

shared loss that could have been used to 

offset income of the CFC2 U.S. combined 

income group had the loss been used to offset 

100u of CFC2’s country B taxable income. 

(v) Income offset by shared loss. The 

shared loss of the CFC2 combined income 

group is used to offset 100u country B taxable 

income of HP1. Because the taxable income 

of HP1 is allocated 50/50 between the CFC2 

and CFC3 U.S. combined income groups, the 

shared loss is treated as offsetting 50u of the 

CFC2 U.S. combined income group’s income 

and 50u of the CFC3 U.S. combined income 

group’s income. 

(vi) Splitter arrangement. There is a splitter 

arrangement because 50u of the 100u usable 

shared loss of the CFC2 U.S. combined 

income group was used to offset income of 

the CFC3 U.S. combined income group. 

Pursuant to § 1.909–2(b)(2)(iv), the split taxes 

are the 15u of country B income tax paid by 

CFC2 on 50u of its income, which is equal 

to the amount of the CFC2 U.S. combined 

income group’s usable shared loss that was 

used to offset income of another U.S. 

combined income group. Pursuant to 

§ 1.909–2(b)(2)(v), the related income is the 

50u of CFC3’s income that was offset by the 

usable shared loss of the CFC2 U.S. 

combined income group. 

(3) Hybrid instrument splitter 

arrangements—(i) U.S. equity hybrid 

instrument splitter arrangement—(A) In 

general. A U.S. equity hybrid 

instrument is a splitter arrangement if: 

(1) Under the laws of a foreign 

jurisdiction in which the instrument 

owner is subject to tax, the instrument 

gives rise to income includible in the 

instrument owner’s income and such 

inclusion results in foreign income taxes 

paid or accrued by the instrument 

owner; 

(2) Under the laws of a foreign 

jurisdiction in which the issuer is 

subject to tax, the instrument gives rise 

to deductions that are incurred or 

otherwise taken into account by the 

issuer; and 

(3) The events that give rise to income 

includible in the instrument owner’s 

income for foreign tax purposes as 

described in paragraph (b)(3)(i)(A)(1) of 

this section, and to deductions for the 

issuer for foreign tax purposes as 

described in paragraph (b)(3)(i)(A)(2) of 

this section, do not result in an 

inclusion of income for the instrument 

owner for U.S. federal income tax 

purposes. 

(B) Split taxes from a U.S. equity 

hybrid instrument splitter arrangement. 

Split taxes from a U.S. equity hybrid 

instrument splitter arrangement equal 

the total amount of foreign income taxes 

paid or accrued by the owner of the 

hybrid instrument less the amount of 

foreign income taxes that would have 

been paid or accrued had the owner of 

the U.S. equity hybrid instrument not 

been subject to foreign tax on income 

from the instrument with respect to the 

events described in § 1.909–2(b)(3)(i)(A). 

(C) Related income from a U.S. equity 

hybrid instrument splitter arrangement. 

The related income with respect to split 

taxes from a U.S. equity hybrid 

instrument splitter arrangement is 

income of the issuer of the U.S. equity 

hybrid instrument in an amount equal 

to the amounts giving rise to the split 

taxes that are deductible by the issuer 

for foreign tax purposes, determined 

without regard to the actual amount of 

the issuer’s income or earnings and 

profits for U.S. Federal income tax 

purposes. 

(D) U.S. equity hybrid instrument. The 

term U.S. equity hybrid instrument 

means an instrument that is treated as 

equity for U.S. Federal income tax 

purposes but for foreign income tax 

purposes either is treated as 

indebtedness or otherwise entitles the 

issuer to a deduction with respect to 

such instrument. 

(E) Example. (i) Facts. USP, a domestic 

corporation, wholly owns CFC1, which 

wholly owns CFC2. Both CFC1 and CFC2 are 

corporations organized in country A. CFC2 

issues an instrument to CFC1 that is treated 

as indebtedness for country A tax purposes 

but equity for U.S. Federal income tax 

purposes. Under country A’s income tax 

laws, the instrument accrues interest at the 

end of each month, which results in a 

deduction for CFC2 and an income inclusion 

and tax liability for CFC1 in country A. The 

accrual of interest does not result in an 

inclusion of income for CFC1 for U.S. Federal 

income tax purposes. Pursuant to the terms 

of the instrument, CFC2 makes a distribution 

at the end of the year equal to the amounts 

of interest that have accrued during the year, 

and such payment is treated as a dividend 

that is included in the income of CFC1 for 

U.S. Federal income tax purposes. 

(ii) Result. Pursuant to § 1.909– 

2(b)(3)(i)(D), because the instrument is 

treated as equity for U.S. Federal income tax 

purposes but is treated as indebtedness for 

country A tax purposes, it is a U.S. equity 

hybrid instrument. Pursuant to § 1.909– 

2(b)(3)(i)(A)(3), because the accrual of 

interest under foreign law does not result in 

an inclusion of income of CFC1 for U.S. 

Federal income tax purposes, there is a 

splitter arrangement. The fact that the 

payment of the accrued amount at the end of 

the year pursuant to the terms of the 

instrument gives rise to a dividend that is 

included in income of CFC1 for U.S. Federal 

income tax purposes does not change the 

result because it is the accrual of interest and 

not the payment that gives rise to income or 

deductions under foreign law. The payments 

will be treated as a distribution of related 

income to the extent provided by § 1.909–3 

and § 1.909–6(d). 

(ii) U.S. debt hybrid instrument 

splitter arrangement—(A) In general. A 

U.S. debt hybrid instrument is a splitter 

arrangement if foreign income taxes are 

paid or accrued by the issuer of a U.S. 

debt hybrid instrument with respect to 

income in an amount equal to the 

interest (including original issue 

discount) paid or accrued on the 

instrument that is deductible for U.S. 

Federal income tax purposes but that 

does not give rise to a deduction under 

the laws of a foreign jurisdiction in 

which the issuer is subject to tax. 

(B) Split taxes from a U.S. debt hybrid 

instrument splitter arrangement. Split 

taxes from a U.S. debt hybrid 

instrument splitter arrangement are the 

foreign income taxes paid or accrued by 

the issuer on the income that would 

have been offset by the interest paid or 

accrued on the U.S. debt hybrid 

instrument had such interest been 

deductible for foreign tax purposes. 

(C) Related income from a U.S. debt 

hybrid instrument splitter arrangement. 

The related income from a U.S. debt 

hybrid instrument splitter arrangement 

is the gross amount of the interest 

income recognized for U.S. Federal 

income tax purposes by the owner of the 

U.S. debt hybrid instrument, 

determined without regard to the actual 

amount of the owner’s income or 

earnings and profits for U.S. Federal 

income tax purposes. 

(D) U.S. debt hybrid instrument. The 

term U.S. debt hybrid instrument means 

an instrument that is treated as equity 

for foreign tax purposes but as 


rljohnson on DSK3VPTVN1PROD with RULES
7332 Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 

indebtedness for U.S. Federal income 

tax purposes. 

(4) Partnership inter-branch payment 

splitter arrangements—(i) In general. An 

allocation of foreign income tax paid or 

accrued by a partnership with respect to 

an inter-branch payment as described in 

§ 1.704–1(b)(4)(viii)(d)(3) (revised as of 

April 1, 2011) (the inter-branch 

payment tax) is a splitter arrangement to 

the extent the inter-branch payment tax 

is not allocated to the partners in the 

same proportion as the distributive 

shares of income in the CFTE category 

to which the inter-branch payment tax 

is or would be assigned under § 1.704– 

1(b)(4)(viii)(d) without regard to 

§ 1.704–1(b)(4)(viii)(d)(3). 

(ii) Split taxes from a partnership 

inter-branch payment splitter 

arrangement. The split taxes from a 

partnership inter-branch splitter 

arrangement equal the excess of the 

amount of the inter-branch payment tax 

allocated to a partner under the 

partnership agreement over the amount 

of the inter-branch payment tax that 

would have been allocated to the 

partner if the inter-branch payment tax 

had been allocated to the partners in the 

same proportion as the distributive 

shares of income in the CFTE category 

referred to in paragraph (b)(4)(i) of this 

section. 

(iii) Related income from a 

partnership inter-branch payment 

splitter arrangement. The related 

income from a partnership inter-branch 

payment splitter arrangement equals the 

amount of income allocated to a partner 

that exceeds the amount of income that 

would have been allocated to the 

partner if income in the CFTE category 

referred to in paragraph (b)(4)(i) of this 

section in the amount of the interbranch payment had been allocated to 

the partners in the same proportion as 

the inter-branch payment tax was 

allocated under the partnership 

agreement. 

(c) Effective/applicability date. This 

section applies to foreign income taxes 

paid or accrued in taxable years ending 

after February 9, 2015. However, a 

taxpayer may choose to apply the 

provisions of § 1.909–2T (as contained 

in 26 CFR part 1, revised as of April 1, 

2014) in lieu of this section to foreign 

income taxes paid or accrued in its first 

taxable year ending after February 9, 

2015, and in taxable years of foreign 

corporations with respect to which the 

taxpayer is a domestic shareholder (as 

defined in § 1.902–1(a)) that end with or 

within that first taxable year. See 26 

CFR 1.909–2T (revised as of April 1, 

2014) for rules applicable to foreign 

income taxes paid or accrued in taxable 

years beginning on or after January 1, 

2012, and ending on or before February 

9, 2015. 

§ 1.909–2T [Removed] 

■ Par. 9. Section 1.909–2T is removed. 

■ Par.10. Section 1.909–3 is added to 

read as follows: 

§ 1.909–3 Rules regarding related income 

and split taxes. 

(a) Interim rules for identifying related 

income and split taxes. The principles 

of paragraphs (d) through (f) of § 1.909– 

6 apply to related income and split taxes 

in taxable years beginning on or after 

January 1, 2011, except that the 

alternative method for identifying 

distributions of related income 

described in § 1.909–6(d)(4) applies 

only to identify the amount of pre-2011 

split taxes of a section 902 corporation 

that are suspended as of the first day of 

the section 902 corporation’s first 

taxable year beginning on or after 

January 1, 2011. 

(b) Split taxes on deductible 

disregarded payments. Split taxes 

include taxes paid or accrued in taxable 

years beginning on or after January 1, 

2011, with respect to the amount of a 

disregarded payment that is deductible 

by the payor of the disregarded payment 

under the laws of a foreign jurisdiction 

in which the payor of the disregarded 

payment is subject to tax on related 

income from a splitter arrangement. The 

amount of the deductible disregarded 

payment to which this paragraph (b) 

applies is limited to the amount of 

related income from such splitter 

arrangement. 

(c) Effective/applicability date. This 

section applies to taxable years ending 

after February 9, 2015. See 26 CFR 

1.909–3T (revised as of April 1, 2014) 

for rules applicable to taxable years 

beginning on or after January 1, 2011, 

and ending on or before February 9, 

2015. 

§ 1.909–3T [Removed] 

■ Par. 11. Section 1.909–3T is removed. 

■ Par. 12. Section 1.909–4 is added to 

read as follows: 

§ 1.909–4 Coordination rules. 

(a) Interim rules. The principles of 

paragraph (g) of § 1.909–6 apply to 

taxable years beginning on or after 

January 1, 2011. 

(b) Effective/applicability date. This 

section applies to taxable years ending 

after February 9, 2015. See 26 CFR 

1.909–4T (revised as of April 1, 2014) 

for rules applicable to taxable years 

beginning on or after January 1, 2011, 

and ending on or before February 9, 

2015. 

§ 1.909–4T [Removed] 

■ Par. 13. Section 1.909–4T is removed. 

■ Par. 14. Section 1.909–5 is added to 

read as follows: 

§ 1.909–5 2011 and 2012 splitter 

arrangements. 

(a) Taxes paid or accrued in taxable 

years beginning in 2011. (1) Foreign 

income taxes paid or accrued by any 

person in a taxable year beginning on or 

after January 1, 2011, and before January 

1, 2012, in connection with a pre-2011 

splitter arrangement (as defined in 

§ 1.909–6(b)), are split taxes to the same 

extent that such taxes would have been 

treated as pre-2011 split taxes if such 

taxes were paid or accrued by a section 

902 corporation in a taxable year 

beginning on or before December 31, 

2010. The related income with respect 

to split taxes from such an arrangement 

is the related income described in 

§ 1.909–6(b), determined as if the payor 

were a section 902 corporation. 

(2) Foreign income taxes paid or 

accrued by any person in a taxable year 

beginning on or after January 1, 2011, 

and before January 1, 2012, in 

connection with a partnership interbranch payment splitter arrangement 

described in § 1.909–2(b)(4) are split 

taxes to the extent that such taxes are 

identified as split taxes in § 1.909– 

2(b)(4)(ii). The related income with 

respect to the split taxes is the related 

income described in § 1.909–2(b)(4)(iii). 

(b) Taxes paid or accrued in certain 

taxable years beginning in 2012 with 

respect to a foreign consolidated group 

splitter arrangement. Foreign income 

taxes paid or accrued by any person in 

a taxable year beginning on or after 

January 1, 2012, and on or before 

February 14, 2012, in connection with a 

foreign consolidated group splitter 

arrangement described in § 1.909– 

6(b)(2) are split taxes to the same extent 

that such taxes would have been treated 

as pre-2011 split taxes if such taxes 

were paid or accrued by a section 902 

corporation in a taxable year beginning 

on or before December 31, 2010. The 

related income with respect to split 

taxes from such an arrangement is the 

related income described in § 1.909– 

6(b)(2), determined as if the payor were 

a section 902 corporation. 

(c) Effective/applicability date. The 

rules of this section apply to foreign 

income taxes paid or accrued in taxable 

years beginning on or after January 1, 

2011, and on or before February 14, 

2012. 

§ 1.909–5T [Removed] 

■ Par. 15. Section 1.909–5T is removed. 

■ Par. 16. Sections 1.909–6 is added to 

read as follows: 


rljohnson on DSK3VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 7333 

§ 1.909–6 Pre-2011 foreign tax credit 

splitting events. 

(a) Foreign tax credit splitting event— 

(1) In general. This section provides 

rules for determining whether foreign 

income taxes paid or accrued by a 

section 902 corporation (as defined in 

section 909(d)(5)) in taxable years 

beginning on or before December 31, 

2010 (pre-2011 taxable years and pre2011 taxes) are suspended under section 

909 in taxable years beginning after 

December 31, 2010, (post-2010 taxable 

years) of a section 902 corporation. 

Paragraph (b) of this section identifies 

an exclusive list of arrangements that 

will be treated as giving rise to foreign 

tax credit splitting events in pre-2011 

taxable years (pre- 2011 splitter 

arrangements). Paragraphs (c), (d), and 

(e) of this section provide rules for 

determining the related income and pre2011 split taxes paid or accrued with 

respect to pre-2011 splitter 

arrangements. Paragraph (f) of this 

section provides rules concerning the 

application of section 909 to 

partnerships and trusts. Paragraph (g) of 

this section provides rules concerning 

the interaction between section 909 and 

other Internal Revenue Code (Code) 

provisions. 

(2) Taxes not subject to suspension 

under section 909. Pre-2011 taxes that 

will not be suspended under section 909 

or paragraph (a) of this section are: 

(i) Any pre-2011 taxes that were not 

paid or accrued in connection with a 

pre-2011 splitter arrangement identified 

in paragraph (b) of this section; 

(ii) Any pre-2011 taxes that were paid 

or accrued in connection with a pre2011 splitter arrangement identified in 

paragraph (b) of this section (pre-2011 

split taxes) but that were deemed paid 

under section 902(a) or 960 on or before 

the last day of the section 902 

corporation’s last pre-2011 taxable year; 

(iii) Any pre-2011 split taxes if either 

the payor section 902 corporation took 

the related income into account in a pre2011 taxable year or a section 902 

shareholder (as defined in § 1.909– 

1(a)(2)) of the relevant section 902 

corporation took the related income into 

account on or before the last day of the 

section 902 corporation’s last pre-2011 

taxable year; and 

(iv) Any pre-2011 split taxes paid or 

accrued by a section 902 corporation in 

taxable years of such section 902 

corporation beginning before January 1, 

1997. 

(3) Taxes subject to suspension under 

section 909. To the extent that the 

section 902 corporation paid or accrued 

pre-2011 split taxes that are not 

described in paragraph (a)(2) of this 

section, section 909 and the regulations 

under that section will apply to such 

pre-2011 split taxes for purposes of 

applying sections 902 and 960 in post2010 taxable years of the section 902 

corporation. Accordingly, these taxes 

will be removed from the section 902 

corporation’s pools of post-1986 foreign 

income taxes and suspended under 

section 909 as of the first day of the 

section 902 corporation’s first post-2010 

taxable year. There is no increase to a 

section 902 corporation’s earnings and 

profits for the amount of any pre-2011 

taxes to which section 909 applies that 

were previously deducted in computing 

earnings and profits in a pre-2011 

taxable year. 

(b) Pre-2011 splitter arrangements. 

The arrangements set forth in this 

paragraph (b) are pre-2011 splitter 

arrangements. 

(1) Reverse hybrid structure splitter 

arrangements. A reverse hybrid 

structure exists when a section 902 

corporation owns an interest in a 

reverse hybrid. A reverse hybrid is an 

entity that is a corporation for U.S. 

Federal income tax purposes but is a 

pass-through entity or a branch under 

the laws of a foreign country imposing 

tax on the income of the entity. As a 

result, the owner of the reverse hybrid 

is subject to tax on the income of the 

entity under foreign law. A pre-2011 

splitter arrangement involving a reverse 

hybrid structure exists when pre-2011 

taxes are paid or accrued by a section 

902 corporation with respect to income 

of a reverse hybrid that is a covered 

person with respect to the section 902 

corporation. A pre-2011 splitter 

arrangement involving a reverse hybrid 

structure may exist even if the reverse 

hybrid has a deficit in earnings and 

profits for a particular year (for example, 

due to a timing difference). Such taxes 

paid or accrued by the section 902 

corporation are pre-2011 split taxes. The 

related income is the earnings and 

profits (computed for U.S. Federal 

income tax purposes) of the reverse 

hybrid attributable to the activities of 

the reverse hybrid that gave rise to 

income included in the foreign tax base 

with respect to which the pre-2011 split 

taxes were paid or accrued. 

Accordingly, related income of the 

reverse hybrid would not include any 

item of income or expense attributable 

to a disregarded entity (as defined in 

§ 301.7701–2(c)(2)(i) of this chapter) 

owned by the reverse hybrid if income 

attributable to the activities of the 

disregarded entity is not included in the 

foreign tax base. 

(2) Foreign consolidated group splitter 

arrangements. A foreign consolidated 

group exists when a foreign country 

imposes tax on the combined income of 

two or more entities. Tax is considered 

imposed on the combined income of 

two or more entities even if the 

combined income is computed under 

foreign law by attributing to one such 

entity the income of one or more 

entities. A foreign consolidated group is 

a pre-2011 splitter arrangement to the 

extent that the taxpayer did not allocate 

the foreign consolidated tax liability 

among the members of the foreign 

consolidated group based on each 

member’s share of the consolidated 

taxable income included in the foreign 

tax base under the principles of § 1.901– 

2(f)(3) (revised as of April 1, 2011). A 

pre-2011 splitter arrangement involving 

a foreign consolidated group may exist 

even if one or more members has a 

deficit in earnings and profits for a 

particular year (for example, due to a 

timing difference). Pre-2011 taxes paid 

or accrued with respect to the income of 

a foreign consolidated group are pre2011 split taxes to the extent that taxes 

paid or accrued by one member of the 

foreign consolidated group are imposed 

on a covered person’s share of the 

consolidated taxable income included 

in the foreign tax base. The related 

income is the earnings and profits 

(computed for U.S. Federal income tax 

purposes) of such other member 

attributable to the activities of that other 

member that gave rise to income 

included in the foreign tax base with 

respect to which the pre-2011 split taxes 

were paid or accrued. No inference 

should be drawn from the treatment of 

foreign consolidated groups under 

section 909 as to the determination of 

the person who paid the foreign income 

tax for U.S. Federal income tax 

purposes. 

(3) Group relief or other loss-sharing 

regime splitter arrangements—(i) In 

general. A foreign group relief or other 

loss-sharing regime exists when one 

entity with a loss permits the loss to be 

used to offset the income of one or more 

entities (shared loss). A pre-2011 

splitter arrangement involving a shared 

loss exists when the following three 

conditions are met: 

(A) There is an instrument that is 

treated as indebtedness under the laws 

of the jurisdiction in which the issuer is 

subject to tax and that is disregarded for 

U.S. Federal income tax purposes 

(disregarded debt instrument). Examples 

of a disregarded debt instrument 

include a debt obligation between two 

disregarded entities that are owned by 

the same section 902 corporation, two 

disregarded entities that are owned by a 

partnership with one or more partners 

that are section 902 corporations, a 

section 902 corporation and a 

disregarded entity that is owned by that 


rljohnson on DSK3VPTVN1PROD with RULES
7334 Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 

section 902 corporation, or a 

partnership in which the section 902 

corporation is a partner and a 

disregarded entity that is owned by such 

partnership. 

(B) The owner of the disregarded debt 

instrument pays a foreign income tax 

attributable to a payment or accrual on 

the instrument. 

(C) The payment or accrual on the 

disregarded debt instrument gives rise 

to a deduction for foreign tax purposes 

and the issuer of the instrument incurs 

a shared loss that is taken into account 

under foreign law by one or more 

entities that are covered persons with 

respect to the owner of the instrument. 

(ii) Split taxes and related income. In 

situations described in paragraph 

(b)(3)(i) of this section, pre-2011 taxes 

paid or accrued by the owner of the 

disregarded debt instrument with 

respect to amounts paid or accrued on 

the instrument (up to the amount of the 

shared loss) are pre-2011 split taxes. 

The related income of a covered person 

is an amount equal to the shared loss, 

determined without regard to the actual 

amount of the covered person’s earnings 

and profits. 

(4) Hybrid instrument splitter 

arrangements—(i) In general. A hybrid 

instrument for purposes of this 

paragraph (b)(4) is an instrument that 

either is treated as equity for U.S. 

Federal income tax purposes but is 

treated as indebtedness for foreign tax 

purposes (U.S. equity hybrid 

instrument), or is treated as 

indebtedness for U.S. Federal income 

tax purposes but is treated as equity for 

foreign tax purposes (U.S. debt hybrid 

instrument). 

(ii) U.S. equity hybrid instrument 

splitter arrangement. If the issuer of a 

U.S. equity hybrid instrument is a 

covered person with respect to a section 

902 corporation that is the owner of the 

U.S. equity hybrid instrument, there is 

a pre-2011 splitter arrangement with 

respect to the portion of the pre-2011 

taxes paid or accrued by the owner 

section 902 corporation with respect to 

the amounts on the instrument that are 

deductible by the issuer as interest 

under the laws of a foreign jurisdiction 

in which the issuer is subject to tax but 

that do not give rise to income for U.S. 

Federal income tax purposes. Pre-2011 

split taxes paid or accrued by the 

section 902 corporation equal the total 

amount of pre-2011 taxes paid or 

accrued by the section 902 corporation 

less the amount of pre-2011 taxes that 

would have been paid or accrued had 

the section 902 corporation not been 

subject to tax on income from the U.S. 

equity hybrid instrument. The related 

income of the issuer of the U.S. equity 

hybrid instrument is an amount equal to 

the amounts that are deductible by the 

issuer for foreign tax purposes, 

determined without regard to the actual 

amount of the issuer’s earnings and 

profits. 

(iii) U.S. debt hybrid instrument 

splitter arrangement. If the owner of a 

U.S. debt hybrid instrument is a covered 

person with respect to a section 902 

corporation that is the issuer of the U.S. 

debt hybrid instrument, there is a pre2011 splitter arrangement with respect 

to the portion of the pre-2011 taxes paid 

or accrued by the section 902 

corporation on income in an amount 

equal to the interest (including original 

issue discount) paid or accrued on the 

instrument that is deductible for U.S. 

Federal income tax purposes but that 

does not give rise to a deduction under 

the laws of a foreign jurisdiction in 

which the issuer is subject to tax. Pre2011 split taxes are the pre-2011 taxes 

paid or accrued by the section 902 

corporation on the income that would 

have been offset by the interest paid or 

accrued on the U.S. debt hybrid 

instrument had such interest been 

deductible for foreign tax purposes. The 

related income with respect to a U.S. 

debt hybrid instrument is the gross 

amount of the interest income 

recognized for U.S. Federal income tax 

purposes by the owner of the U.S. debt 

hybrid instrument, determined without 

regard to the actual amount of the 

owner’s earnings and profits. 

(c) General rules for applying section 

909 to pre-2011 split taxes and related 

income—(1) Annual determination. The 

determination of related income, other 

income, pre-2011 split taxes, and other 

taxes, and the portion of these amounts 

that were distributed, deemed paid or 

otherwise transferred or eliminated 

must be made on an annual basis 

beginning with the first taxable year of 

the section 902 corporation beginning 

after December 31, 1996 (post-1996 

taxable year) in which the section 902 

corporation paid or accrued a pre-2011 

tax with respect to a pre-2011 splitter 

arrangement and ending with the 

section 902 corporation’s last pre-2011 

taxable year. Annual amounts of related 

income and pre-2011 split taxes are 

aggregated for each separate pre-2011 

splitter arrangement. 

(2) Separate categories. The 

determination of annual and aggregate 

amounts of related income and pre-2011 

split taxes with respect to each pre-2011 

splitter arrangement must be made for 

each separate category as defined in 

§ 1.904–4(m) of the section 902 

corporation, each covered person, and 

any other person that succeeds to the 

related income and pre-2011 split taxes. 

In the case of a pre-2011 splitter 

arrangement involving a shared loss (as 

described in paragraph (b)(3) of this 

section), the amount of the related 

income in each separate category of the 

covered person is equal to the amount 

of income in that separate category that 

was offset by the shared loss for foreign 

tax purposes. In the case of a pre-2011 

splitter arrangement involving a U.S. 

equity hybrid instrument (as described 

in paragraph (b)(4)(ii) of this section), 

the related income is assigned to the 

issuer’s separate categories in the same 

proportions as the pre-2011 split taxes. 

Earnings and profits, including related 

income, are assigned to separate 

categories under the rules of §§ 1.904– 

4, 1.904–5, and 1.904–7. Foreign income 

taxes, including pre-2011 split taxes, are 

assigned to separate categories under 

the rules of § 1.904–6. A section 902 

shareholder must consistently apply 

methodologies for determining pre-2011 

split taxes and related income with 

respect to all pre-2011 splitter 

arrangements. 

(d) Special rules regarding related 

income—(1) Annual adjustments. In the 

case of each pre-2011 splitter 

arrangement involving a reverse hybrid 

or a foreign consolidated group (as 

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

this section, respectively), a covered 

person’s aggregate amount of related 

income must be adjusted each year by 

the net amount of income and expense 

attributable to the activities of the 

covered person that give rise to income 

included in the foreign tax base, even if 

the net amount is negative and 

regardless of whether the section 902 

corporation paid or accrued any pre2011 split taxes in such year. 

(2) Effect of separate limitation losses 

and deficits. Related income is 

determined without regard to the 

application of § 1.960–1(i)(4) (relating to 

the effect of separate limitation losses 

on earnings and profits in another 

separate category) or section 952(c)(1) 

(relating to certain earnings and profits 

deficits). 

(3) Pro rata method for distributions 

out of earnings and profits that include 

both related income and other income. 

If the earnings and profits of a covered 

person include amounts attributable to 

both related income and other income, 

including earnings and profits 

attributable to taxable years beginning 

before January 1, 1997, then 

distributions, deemed distributions, and 

inclusions out of earnings and profits 

(for example, under sections 301, 304, 

367(b), 951(a), 964(e), 1248, or 1293) of 

the covered person are considered made 

out of related income and other income 

on a pro rata basis. Any reduction of a 


rljohnson on DSK3VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 7335 

covered person’s earnings and profits 

that results from a payment on stock 

that is not treated as a dividend for U.S. 

Federal income tax purposes (for 

example, pursuant to section 312(n)(7)) 

will also reduce related income and 

other income on a pro rata basis. 

(4) Alternative method for 

distributions out of earnings and profits 

that include both related income and 

other income. Solely for purposes of 

identifying the amount of pre-2011 split 

taxes of a section 902 corporation that 

are suspended as of the first day of the 

section 902 corporation’s first post-2010 

taxable year, in lieu of the rule set forth 

in paragraph (d)(3) of this section, a 

section 902 shareholder may choose to 

treat all distributions, deemed 

distributions, and inclusions out of 

earnings and profits of a covered person 

as attributable first to related income. A 

section 902 shareholder may choose to 

use this alternative method on a timely 

filed original income tax return for the 

first post-2010 taxable year in which the 

shareholder computes an amount of 

foreign income taxes deemed paid with 

respect to a section 902 corporation that 

paid or accrued pre-2011 split taxes. 

Such choice by a section 902 

shareholder is evidenced by employing 

the method on its income tax return; the 

section 902 shareholder need not file a 

separate statement. A section 902 

shareholder that chooses this alternative 

method must consistently apply it with 

respect to all pre-2011 splitter 

arrangements. 

(5) Distributions, deemed 

distributions, and inclusions of related 

income. Distributions, deemed 

distributions, and inclusions of related 

income (including indirectly through a 

partnership) to persons other than the 

payor section 902 corporation retain 

their character as related income with 

respect to the associated pre-2011 split 

taxes. 

(6) Carryover of related income. 

Related income carries over to other 

corporations in the same manner as 

earnings and profits carry over under 

section 381, § 1.367(b)-7, or similar 

rules, and retains its character as related 

income with respect to the associated 

pre-2011 split taxes. 

(7) Related income taken into account 

by a section 902 shareholder. Related 

income will be considered taken into 

account by a section 902 shareholder to 

the extent that the related income is 

recognized as gross income by the 

section 902 shareholder, or by an 

affiliated corporation described in 

paragraph (d)(9) of this section, upon a 

distribution, deemed distribution, or 

inclusion (such as under section 951(a)) 

out of the earnings and profits of the 

covered person attributable to such 

related income. 

(8) Related income taken into account 

by a payor section 902 corporation. 

Related income will be considered taken 

into account by a payor section 902 

corporation to the extent that: 

(i) The related income is reflected in 

the earnings and profits of such section 

902 corporation for U.S. Federal income 

tax purposes by reason of a distribution, 

deemed distribution, or inclusion out of 

the earnings and profits of the covered 

person attributable to such related 

income; or 

(ii) The related income is reflected as 

a positive adjustment to the earnings 

and profits of such section 902 

corporation for U.S. Federal income tax 

purposes by reason of the section 902 

corporation and the covered person 

combining in a transaction described in 

section 381(a)(1) or (a)(2). 

(9) Related income taken into account 

by an affiliated group of corporations 

that includes a section 902 shareholder. 

A section 902 shareholder will be 

considered to have taken related income 

into account if one or more members of 

an affiliated group of corporations (as 

defined in section 1504) that files a 

consolidated Federal income tax return 

that includes the section 902 

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 income 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 (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. 


rljohnson on DSK3VPTVN1PROD with RULES
7336 Federal Register / Vol. 80, No. 27 / Tuesday, February 10, 2015 / Rules and Regulations 

(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 income 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 ending after 

February 9, 2015. See 26 CFR 1.909–6T 

(revised as of April 1, 2014) for rules 

applicable 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, and 

ending on or before February 9, 2015. 

§ 1.909–6T [Removed] 

■ Par. 17. Section 1.909–6T is removed. 

Rosemary Sereti, 

Acting Deputy Commissioner for Services and 

Enforcement. 

Approved: February 4, 2015. 

Mark J. Mazur, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2015–02614 Filed 2–9–15; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 51 and 52 

RIN 2060–AS20 

[EPA–HQ–OAR–2015–0045; FRL–9922–54– 

OAR] 

Revisions to the Clean Air Act Section 

110 Submission Requirements for 

State Implementation Plans and Notice 

of Availability of an Option for 

Electronic Reporting 

AGENCY: Environmental Protection 

Agency. 

ACTION: Final rule. 

SUMMARY: In this final rule and notice of 

availability, the Environmental 

Protection Agency (EPA) is revising the 

requirements for how state and tribal 

implementation plans (hereinafter, 

collectively referred to as SIPs) under 

the Clean Air Act (CAA) are required to 

be submitted to the EPA. Specifically, 

we are providing state, local and tribal 

air agencies (hereinafter, collectively 

referred to as states or air agencies) an 

option to submit SIPs, including any 

necessary supporting documents, using 

our new electronic SIP (eSIP) 

submission system, which is web-based. 

We are providing notification that 

electronic submission via the eSIP 

submission system is now our preferred 

method for air agencies to make SIP 

submissions, and that if a SIP 

submission is made through the eSIP 

submission system, all documents 

transmitted through the system will be 

considered part of the official SIP 

submission from the air agency. We are 

also simplifying submission 

requirements for those air agencies that 

still wish to make paper submissions by 

reducing the number of paper copies 

required, and providing non-binding 

guidelines for SIP submissions that will 

aid in SIP processing. 

DATES: The effective date of this action 

is March 16, 2015, when the eSIP 

submission system will be available to 

air agencies. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Mia South, Office of Air Quality 

Planning and Standards, Air Quality 

Policy Division, Mail Code C504–2, 109 

TW Alexander Drive, Research Triangle 

Park, NC 27709; (919) 541–5550; 

south.mia@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Does this action apply to me? 

This action affects state, local and 

tribal air agencies that submit SIP 

revisions to meet the requirements of 

section 110 of the CAA and the EPA 

rules contained in 40 CFR part 51, 

Requirements for Preparation, 

Adoption, and Submisson of 

Implementation Plans. If you have 

questions regarding applicability of this 

action to a SIP submission, please use 

the contact information under FOR

FURTHER INFORMATION CONTACT. 

B. How can I get copies of this document 

and other related information? 

The EPA has established a docket for 

this action under Docket ID No. EPA– 

HQ–OAR–2015–0045. Publicly available 

docket materials are available either 

electronically through 

www.regulations.gov or in hard copy at 

the EPA Docket Center, EPA/DC, 

William Jefferson Clinton West 

Building, Room 3334, 1301 Constitution 

Avenue NW., Washington, DC. The 

Public Reading Room is open from 8:30 

a.m. to 4:30 p.m., Monday through 

Friday, excluding legal holidays. The 

telephone number for the Public 

Reading Room is (202) 566–1744 and 

the telephone number for the Office of 

Air and Radiation Docket and 

Information Center is (202) 566–1742. 

C. Where do I go if I have a state-specific 

question? 

For questions related to specific 

states, please contact the appropriate 

EPA Regional Office SIP Contacts: 


rljohnson on DSK3VPTVN1PROD with RULES