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Timestamp: 2020-01-20 20:43:09
Document Index: 424667738

Matched Legal Cases: ['§ 1', 'ART 1', '§ 1', '§ 1', '§ 1', '§1', '§1', '§1', '§1', '§1', '§1', '§1', '§1', '§301', '§301', '§301', '§301', '§301', '§301']

CHAN ROBLES VIRTUAL LAW LIBRARY : 26 C.F.R. § 1.935-1T Coordination of individual income taxes with Guam and the Northern Mariana Islands (temporary).
United States> Code of Federal Regulations> Title 26 - Internal Revenue> PART 1--INCOME TAXES> § 1.935-1T Coordination of individual income taxes with Guam and the Northern Mariana Islands (temporary).
26 C.F.R. § 1.935-1T Coordination of individual income taxes with Guam and the Northern Mariana Islands (temporary).
§ 1.935-1T Coordination of individual income taxes with Guam and the Northern Mariana Islands (temporary).
(2) Individuals covered. This section shall apply to any individual who—
(i) The term section 935 possession means Guam or the Northern Mariana Islands, unless such possession has entered into an implementing agreement, as described in section 1271(b) of the Tax Reform Act of 1986 (Pub. L. 99–514 (100 Stat. 2085)), with the United States that is in effect for the entire taxable year.
(iii) The rules of §1.937–1T shall apply for determining whether an individual is a bona fide resident of a section 935 possession.
(iv) The rules of §1.937–2T generally shall apply for determining whether income is from sources within a section 935 possession. Pursuant to §1.937–2T(a), however, the rules of §1.937–2T(c)(1)(ii) and (c)(2) do not apply for purposes of section 935(a)(3) (as in effect before the effective date of its repeal) and paragraph (a)(2)(iii) of this section.
(v) The term citizen of the United States means any individual who is a citizen within the meaning of §1.1–1(c), except that the term does not include an individual who is a citizen of a section 935 possession but not otherwise a citizen of the United States. The term citizen of a section 935 possession but not otherwise a citizen of the United States means any individual who has become a citizen of the United States by birth or naturalization in the section 935 possession.
(vi) With respect to the United States, the term resident means an individual who is a citizen (as defined in §1.1–1(c)) or resident alien (as defined in section 7701(b)) and who does not have a tax home (as defined in section 911(d)(3)) in a foreign country during the entire taxable year. The term does not include an individual who is a bona fide resident of a section 935 possession.
(b) Filing requirement—(1) Tax jurisdiction. An individual described in paragraph (a)(2) of this section shall file an income tax return for the taxable year—
(2) [Reserved]. For further guidance, see §1.935–1(b)(2).
(3) Place for filing returns—(i) U.S. returns. A return required under this paragraph (b) to be filed with the United States shall be filed as directed in the applicable forms and instructions.
(4) [Reserved]. For further guidance, see §1.935–1(b)(4).
(5) Tax payments. The tax shown on the return shall be paid to the jurisdiction with which such return is required to be filed and shall be determined by taking into account any credit under section 31 for tax withheld by the relevant possession or the United States on wages, any credit under section 6402(b) for an overpayment of income tax to the relevant possession or the United States, and any payments under section 6315 of estimated income tax paid to the relevant possession or the United States.
(7) Information reporting. [Reserved]
(c) Extension of territory—(1) U.S. taxpayers—(i)General rule. With respect to a U.S. taxpayer, for purposes of taxes imposed by Chapter 1 of the Internal Revenue Code, the United States generally shall be treated, in a geographical and governmental sense, as including the relevant possession. The purpose of this rule is to facilitate the coordination of the tax systems of the United States and the relevant possession. Accordingly, the rule will have no effect where it is manifestly inapplicable or its application would be incompatible with the intent of any provision of the Internal Revenue Code.
(B) The determination of the source of income for purposes of the foreign tax credit (e.g.,, sections 901 through 904). Thus, for example, after a U.S. taxpayer determines which items of income constitute income from sources within the relevant possession under the rules of section 937(b), such income shall be treated as income from sources within the United States for purposes of section 904.
(iii) Nonapplication of general rule. Contexts in which the general rule of paragraph (c)(1)(i) of this section does not apply include:
(A) The application of any rules or regulations that explicitly treat the United States and any (or all) of its possessions as separate jurisdictions (e.g.,, sections 931 through 937, 7651, and 7654).
(C) The determination of the source of income for purposes other than the foreign tax credit (e.g., sections 935, 937, and 7654). Thus, for example, income determined to be derived from sources within the relevant possession under section 937(b) shall not be considered income from sources within the United States for purposes of Form 5074, “Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands”.
(2) Application in relevant possession. In applying the territorial income tax of the relevant possession, such possession generally shall be treated, in a geographical and governmental sense, as including the United States. Thus, for example, income tax paid to the United States may be taken into account under sections 31, 6315, and 6402(b) as payments to the relevant possession. Moreover, a citizen of the United States (as defined in paragraph (a)(3) of this section) not a resident of the relevant possession will not be treated as a nonresident alien individual for purposes of the territorial income tax of the relevant possession. Thus, for example, a citizen of the United States (as so defined), or a resident of the United States, will not be treated as a nonresident alien individual for purposes of section 1361(b)(1)(C) of the Guamanian Territorial income tax.
(4) Place for payment. Estimated income tax required under this paragraph (d) to be paid to Guam or the Northern Mariana Islands shall be paid as directed in the applicable forms and instructions issued by the relevant possession. Estimated income tax required under paragraph (d)(1) of this section to be paid to the United States shall be paid as directed in the applicable forms and instructions.
(6) Underpayments. The liability of an individual described in paragraph (a)(2) of this section for underpayments of estimated income tax for a taxable year, as determined under section 6654, shall be to the jurisdiction with which the individual is required under paragraph (b) of this section to file his or her return for the taxable year.
(e) Entity status consistency requirement—(1) In general. Taxpayers should make consistent entity status elections (as defined in paragraph (e)(3)(ii) of this section), when applicable, in both the United States and section 935 possessions. In the case of a business entity to which this paragraph (e) applies:
(iii) If inconsistent entity status elections are filed with the relevant possession and the Internal Revenue Service, both the Commissioner and the appropriate tax authority of the relevant possession may, at their individual discretion, treat the elections they each received as invalid and may deem the election filed in the other jurisdiction to have been made also for tax purposes in their own jurisdiction. (See Rev. Proc. 89–8 (1989–1 C.B. 778) for procedures for requesting the assistance of the Internal Revenue Service when a taxpayer is or may be subject to inconsistent tax treatment by the Internal Revenue Service and a U.S. possession tax agency.)
(i) A business entity (as defined in §301.7701–2(a) of this chapter) that is domestic (as defined in §301.7701–5 of this chapter), or otherwise treated as domestic for purposes of the Internal Revenue Code, and that is owned in whole or in part by any person who is either a bona fide resident of a section 935 possession or a business entity created or organized in a section 935 possession.
(ii) The term entity status election includes an election under §301.7701–3(c) of this chapter, an election under section 1362(a), and any other similar elections.
(4) Default status. Solely for the purpose of determining classification of an eligible entity under §301.7701–3(b), and §301.7701–3(b) as mirrored in the relevant possession, an eligible entity subject to this paragraph (e) shall be classified for both U.S. Federal and the relevant possession tax purposes using the rule that applies to domestic eligible entities.
(5) Transition rules—(i) In the case of an election filed prior to April 11, 2005, except as provided in paragraph (e)(5)(ii) of this section, the rules of paragraph (e)(1) of this section shall apply as of the first day of the first taxable year of the entity beginning after April 11, 2005.
(ii) In the unlikely circumstance that inconsistent elections described in paragraph (e)(1)(iii) are filed prior to April 11, 2005, and the entity cannot change its classification to achieve consistency because of the sixty-month limitation described in §301.7701–3(c)(1)(iv) of this chapter, then the entity may nevertheless request permission from the Commissioner or appropriate tax authority of the relevant possession to change such election to avoid inconsistent treatment by the Commissioner and the appropriate tax authority of the relevant possession.
Examples 1–2. [Reserved]
(g) Effective date. This section shall apply for taxable years ending after October 22, 2004.
[T.D. 9194, 70 FR 18937, Apr. 11, 2005; 70 FR 32490, June 3, 2005; T.D. 9248, 71 FR 5001, Jan. 31, 2006]