Tax News

CCH (cch.taxgroup.com) reports:

The IRS has issued final regulations for determining when a controlled foreign corporation's (CFC) distributive share of partnership income is excluded from foreign personal holding company income under the exception contained in Code Sec. 954(i). These final regulations are effective July 13, 2007. The temporary regulations (T.D. 9240), issued on January 17, 2006, are removed.
Reg. §1.954-2(a)(5)(ii)(C) provides that a CFC's distributive share of partnership income will be excluded from foreign personal holding company income under the exception contained in Code Sec. 954(i) if: (1) the CFC is a qualifying insurance company, as defined in Code Sec. 953(e)(3) and, (2) the partnership generates qualified insurance income within the meaning of Code Sec. 954(i)(2) taking into account only the partnership's income. Thus, the determination of whether the CFC's distributive share of partnership income is qualified insurance income is made at the partner level.
T.D. 9326, 2007FED ¶47,044
Other References:
Code Sec. 954
CCH Reference - 2007FED ¶28,535B
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