[Federal Register Volume 80, Number 234 (Monday, December 7, 2015)]
[Rules and Regulations]
[Page 75946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30777]
[[Page 75946]]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9734]
RIN 1545-BJ56
Dividend Equivalents From Sources Within the United States;
Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations; correcting amendment.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to final and temporary
regulations (TD 9734) that was published in the Federal Register on
September 18, 2015 (80 FR 56866). These corrections include a change to
the effective date that was applicable to transactions issued on or
after January 1, 2016, and before January 1, 2017. This document
provides guidance to nonresident alien individuals and foreign
corporations that hold certain financial products providing for
payments that are contingent upon or determined by reference to U.S.
source dividend payments.
DATES: This correction is effective on December 7, 2015 and applicable
on September 18, 2015.
FOR FURTHER INFORMATION CONTACT: Peter Merkel or Karen Walny at (202)
317-6938 (not a toll free number).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations (TD 9734) that are the subject
of this correction are under sections 871 and 894 of the Internal
Revenue Code.
Need for Correction
As published, the final and temporary regulations (TD 9734) 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. Section 1.871-15 is amended by revising paragraphs (i)(4)
Example 1. (ii), (i)(4) Example 2. (ii), (r)(1), and (r)(3) and adding
paragraph (r)(4) to read as follows:
Sec. 1.871-15 Treatment of dividend equivalents.
* * * * *
(i) * * *
(4) * * *
Example 1. * * *
(ii) Subject to paragraph (i)(2)(iv) of this section, the
estimated dividend amounts are the per-share dividend amounts
because the estimates are reasonable and specified in accordance
with paragraph (i)(2)(iii) of this section. The estimated per-share
dividend amounts are dividend equivalents for purposes of this
section.
Example 2. * * *
(ii) Because the LIBOR leg of the swap contract is reduced to
reflect estimated dividends and the estimated dividend amounts are
not specified, Foreign Investor is treated as receiving the actual
dividend amounts are in accordance with paragraph (i)(2) of this
section. The actual per-share dividend amounts are dividend
equivalents for purposes of this section.
* * * * *
(r) * * * (1) In general. This section applies to payments made on
or after September 18, 2015 except as provided in paragraphs (r)(2),
(3), and (4) of this section.
* * * * *
(3) Effective/applicability date for paragraphs (d)(2) and (e).
Paragraphs (d)(2) and (e) of this section apply to any payment made on
or after January 1, 2017, with respect to any transaction issued on or
after January 1, 2017.
(4) Effective/applicability date for paragraphs (c)(2)(iv), (h),
and (q) of this section. [Reserved]. For further guidance, see Sec.
1.871-15T(r)(4).
0
Par. 3. Section 1.871-15T is amended by removing the language
``transaction'' and adding in its place ``complex contract'' in
paragraph (h)(7) Example. (iv) and revising paragraph (h)(7) Example.
(viii) to read as follows:
Sec. 1.871-15T Treatment of dividend equivalents (temporary).
* * * * *
(h) * * *
(7) * * *
Example. * * *
(viii) FI concludes that the Contract is not a section 871(m)
transaction because the complex contract calculation of 7.68 exceeds
the benchmark calculation of 4.473.
* * * * *
0
Par. 4. Section 1.1441-1 is amended by removing the second occurrence
of paragraph (e)(3)(ii)(E) and adding paragraph (e)(3)(ii)(F) to read
as follows:
Sec. 1.1441-1 Requirements for the deduction and withholding of tax
on payments to foreign persons.
* * * * *
(e) * * *
(3) * * *
(ii) * * *
(F) [Reserved]. For further guidance, see Sec. 1.1441-
1T(e)(3)(ii)(F).
* * * * *
0
Par. 5. Section 1.1441-1T is amended by revising the last sentence of
paragraph (f)(3) to read as follows:
Sec. 1.1441-1T Requirements for the deduction and withholding of tax
on payments to foreign persons (temporary).
* * * * *
(f) * * *
(3) * * * Paragraphs (e)(3)(ii)(E) and (e)(6) of this section apply
beginning September 18, 2015.
* * * * *
0
Par. 6. Section 1.1461-1 is amended by adding a second sentence to
paragraph (c)(2)(iii) to read as follows:
Sec. 1.1461-1 Payments and returns of tax withheld.
* * * * *
(c) * * *
(2) * * *
(iii) * * * Paragraphs (c)(2)(i)(M) and (c)(2)(ii)(J) of this
section apply beginning September 18, 2015.
* * * * *
Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2015-30777 Filed 12-4-15; 8:45 am]
BILLING CODE 4830-01-P