Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has further extended the application of the regulations described in Notice 2008-91, 2008-2 CB 1001 regarding the elective exclusion of certain obligations held by controlled foreign corporations (CFCs) from the definition of the term "obligation" for purposes of Code Sec. 956 (Notice 2010-12). Thus, these regulations will apply to the tax year of a CFC that immediately follows the last tax year of the CFC to which the regulations described in Notice 2008-91 could apply without regard to Notice 2010-12. Such regulations, however, will not apply to a tax year of a CFC beginning on or after January 1, 2011, and the IRS does not anticipate extending the application of these regulations to any additional periods. The IRS has also extended the application of Rev. Proc. 2008-26, 2008-1 CB 1014 to any day during calendar year 2010, for which it is relevant whether securities are readily marketable for purposes of Code Sec. 956(c)(2)(J) (in addition to any day during calendar years 2007, 2008 and 2009).

  In Notice 2008-91, the IRS announced that it intends to issue regulations under Code Sec. 956(e) that will allow a CFC to choose to exclude from the definition of the term "obligation" an obligation held by the CFC that would constitute an investment in U.S. property, provided the obligation is collected within 60 days from the time it is incurred. This exclusion will not apply, however, if the CFC holds for 180 or more calendar days during its tax year obligations that, without regard to the 60 day rule, would constitute an investment in U.S. property. Notice 2008-91 provides that the elective exclusion will apply for the first two tax years of a CFC ending after October 3, 2008. It will not, however, apply to tax years of a CFC beginning after December 31, 2009. The IRS subsequently issued Notice 2009-10, 2009-1 CB 419 to provide that the regulations described in Notice 2008-91 will also apply to the third consecutive tax year of a CFC, if any, that ends after October 3, 2008, and on or before December 31, 2009.

 
Rev. Proc. 2008-26 generally applies to determine whether securities are "readily marketable" for purposes of Code Sec. 956(c)(2)(J) for any day during calendar years 2007 or 2008, for which it is relevant whether securities are readily marketable for purposes of that provision. Notice 2009-10 subsequently extended that period to include any such day during calendar year 2009.

Notice 2010-12, 2010FED ¶46,220

Other References:

 
Code Sec. 956

  CCH Reference - 2009FED ¶28,576.023

  CCH Reference - 2009FED ¶28,576.35

  Tax Research Consultant

  CCH Reference - TRC INTLOUT: 9,256.15