[Federal Register Volume 79, Number 91 (Monday, May 12, 2014)]
[Rules and Regulations]
[Pages 26836-26837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10856]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9650]
RIN 1545-BK67; RIN 1545-BK91


Definitions and Reporting Requirements for Shareholders of 
Passive Foreign Investment Companies; Insurance Income of a Controlled 
Foreign Corporation for Taxable Years Beginning After December 31, 
1986; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document contains corrections to final and temporary 
regulations (TD 9650) that were published in the Federal Register on 
Tuesday, December 31, 2013 (78 FR 79602). The regulations provide 
guidance on determining ownership of a passive foreign investment 
company (``PFIC'') and on the annual filing requirements for 
shareholders of PFICs.

DATES: This correction is effective May 12, 2014 and applicable 
beginning December 31, 2013.

[[Page 26837]]


FOR FURTHER INFORMATION CONTACT: Susan Massey at (202) 317-6934 (not a 
toll free number).

SUPPLEMENTARY INFORMATION:

Background

    The final and temporary regulations (TD 9650) that are the subject 
of this correction are under sections 1291, 1298, 6038, and 6046 of the 
Internal Revenue Code.

Need for Correction

    As published, the final and temporary regulations (TD 9650) contain 
errors that may prove to be misleading and are in need of 
clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

    Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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


0
Par. 2. The section heading for Sec.  1.6038-2T is revised to read as 
follows:


Sec.  1.6038-2T  Information returns required of United States persons 
with respect to annual accounting periods of certain foreign 
corporations beginning after December 31, 1962 (temporary).

* * * * *

0
Par. 3. Section 1.6046-1 is amended as follows:
0
1. Paragraphs (a)(2)(i)(a) and (b) and (c)(1) and (3) are revised.
0
2. The language ``in value'' is removed wherever it appears in 
paragraphs (a)(3) Example 2.(i), (a)(3) Example 3., and (c)(2).
0
3. The language ``M'' in the first sentence of paragraphs (a)(3) 
Example 2.(i), (c)(2) Example 3.(i), and (c)(2) Example 5.(i) is 
removed and the language ``M Corporation'' added in its place.
0
4. The language ``liability'' in paragraph (a)(3) Example 2. (ii) is 
removed and the language ``liability for A'' added in its place.
0
5. The language ``U.S.'' in paragraph (c) introductory text and 
paragraph (c)(1) introductory text is removed and the language ``United 
States'' added in its place.
0
6. Paragraph (l)(2) is revised.
    The revisions read as follows:


Sec.  1.6046-1  Returns as to organizations or reorganizations of 
foreign corporations and as to acquisitions of their stock.

    (a) * * *
    (2) * * *
    (i) * * *
    (a) Acquires (whether in one or more transactions) outstanding 
stock of such corporation which equals, or which when added to any such 
stock then owned by him equals, 10 percent or more of the total 
combined voting power of all classes of stock of the foreign 
corporation entitled to vote or the total value of the stock of the 
foreign corporation;
    (b) Acquires (whether in one or more transactions) an additional 10 
percent or more of the total combined voting power of all classes of 
stock of the foreign corporation entitled to vote or the total value of 
the stock of the foreign corporation; or
* * * * *
    (c) Returns required of United States when liability to file arises 
after January 1, 1963--(1) United States persons required to file. A 
return on Form 5471, containing the information required by paragraph 
(c)(4) of this section, shall be made by each United States person when 
at any time after January 1, 1963:
    (i) Such person acquires (whether in one or more transactions) 
outstanding stock of such foreign corporation which equals, or which 
when added to any such stock then owned by him equals, 10 percent or 
more of the total combined voting power of all classes of stock of the 
foreign corporation entitled to vote or the total value of the stock of 
the foreign corporation;
    (ii) Such person, having already acquired the interest referred to 
in paragraph (b) of this section or in paragraph (c)(1)(i) of this 
section--
    (a) Acquires (whether in one or more transactions) an additional 10 
percent or more of the total combined voting power of all classes of 
stock of the foreign corporation entitled to vote or the total value of 
the stock of the foreign corporation;
    (b) Owns 10 percent or more of the total combined voting power of 
all classes of stock of the foreign corporation entitled to vote or the 
total value of the stock of the foreign corporation when such foreign 
corporation is reorganized (as defined in paragraph (f)); or
    (c) Disposes of sufficient stock in such foreign corporation to 
reduce his interest to less than 10 percent of the total combined 
voting power of all classes of stock of the foreign corporation 
entitled to vote or the total value of the stock of the foreign 
corporation; or
    (iii) Such person is, at any time after January 1, 1987, treated as 
a United States shareholder under section 953(c) with respect to a 
foreign corporation.
* * * * *
    (3) Shareholders who become United States persons. A return on Form 
5471, containing the information required by paragraph (c)(4) of this 
section, shall be made by each person who at any time after January 1, 
1963, becomes a United States person while owning 10 percent or more of 
the total combined voting power of all classes of stock of the foreign 
corporation entitled to vote or the total value of the stock of the 
foreign corporation.
* * * * *
    (l) * * *
    (2) Paragraph (c)(1)(iii) of this section applies to taxable years 
ending on or after December 31, 2013.
* * * * *
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Par. 4. Section 1.6046-1T is amended by revising paragraph (e)(5) to 
read as follows:


Sec.  1.6046-1T  Returns as to organizations or reorganizations of 
foreign corporations and as to acquisitions of their stock (temporary).

* * * * *
    (e) * * *
    (5) Persons excepted from furnishing items of information. Any 
person required to furnish any item of information under paragraph (b) 
or (c) of this section with respect to a foreign corporation may, if 
such item of information is furnished by another person having an equal 
or greater stock interest (measured in terms of the total combined 
voting power of all classes of stock of the foreign corporation 
entitled to vote or the total value of the stock of the foreign 
corporation) in such foreign corporation, satisfy such requirement by 
filing a statement with his return on Form 5471 indicating that such 
liability has been satisfied and identifying the return in which such 
item of information was included. This paragraph (e)(5) does not apply 
to persons excepted from filing a return by reason of the provisions of 
paragraph (e)(4) of this section.
* * * * *

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. 2014-10856 Filed 5-9-14; 8:45 am]
BILLING CODE 4830-01-P