Allocation of Controlled Group Research Credit (IRS final

Official source: Federal Register (GovInfo) (https://www.govinfo.gov/content/pkg/FR-2018-03-28/pdf/2018-06241.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

13183

Rules and Regulations Federal Register¶

Vol. 83, No. 60

Wednesday, March 28, 2018

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9832]

RIN 1545–BL76

Allocation of Controlled Group Research Credit

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

SUMMARY: This document contains final regulations relating to the allocation of the credit for increasing research activities (research credit) to corporations and trades or businesses under common control (controlled groups). This document also contains final regulations relating to the allocation of the railroad track maintenance credit and the election for a reduced research credit.

DATES: Effective date: These regulations are effective on April 2, 2018.

Applicability date: For dates of applicability, see §§ 1.41–6(j), 1.45G– 1(g), and 1.280C–4(c).

FOR FURTHER INFORMATION CONTACT: James Holmes, at (202) 317–4137; (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document amends 26 CFR part 1 to provide rules relating to sections 41, 45G, and 280C of the Internal Revenue Code (Code). On April 3, 2015, the Department of the Treasury (Treasury Department) and the IRS published final and temporary regulations (TD 9717) (temporary regulations) in the Federal Register (80 FR 18096) and a notice of proposed rulemaking by cross-reference to the temporary regulations (REG– 133489–13) in the Federal Register (80 FR 18171) (proposed regulations). On April 27, 2015, the Treasury Department and the IRS published corrections to TD 9717 in the Federal Register (80 FR 23237 and 80 FR 23238). The temporary regulations expire on April 2, 2018.

The preamble to the temporary regulations fully describes the updates to the regulations under sections 41, 45G, and 280C. See 80 FR 18097, April 3, 2015. The temporary regulations updated the section 41 rules in a

This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1140

[Docket No. FDA–2018–N–0011]

Cigarettes, Smokeless Tobacco, and Covered Tobacco Products; Change of Office Name and Address; Technical Amendment

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule; technical amendment.

SUMMARY: The Food and Drug Administration (FDA or Agency) is amending its Cigarettes, Smokeless Tobacco, and Covered Tobacco Products regulations to reflect a change of office name and mailing address for the Center for Tobacco Products’ (CTP’s) Office of Compliance and Enforcement. This action is editorial in nature and is intended to improve the accuracy of the Agency’s regulations.

DATES: This rule is effective March 28, 2018.

FOR FURTHER INFORMATION CONTACT: May Nelson, Center for Tobacco Products, Food and Drug Administration, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993, 1–877–CTP– 1373, ctpregulations@fda.hhs.gov.

SUPPLEMENTARY INFORMATION: FDA is amending our regulations in part 1140 (21 CFR part 1140) to reflect the change of an office name and the mailing address in the regulation. The office name was the Office of Compliance and the new office name is Office of Compliance and Enforcement. The mailing address for notices submitted under § 1140.30(a)(2) is updated to CTP’s Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993.

Publication of this document constitutes final action under the

Administrative Procedure Act (5 U.S.C. 553). FDA has determined that notice and public comment are unnecessary because the amendments to the regulations provide only technical changes to correct an office name and address, and are nonsubstantive. To the extent that 5 U.S.C. 553(d) applies, FDA has determined that, for the same reasons, good cause exists for making this rule effective upon publication in the Federal Register .

List of Subjects in 21 CFR Part 1140

Advertising, Labeling, Smoking, Tobacco.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 1140 is amended as follows:

PART 1140—CIGARETTES, SMOKELESS TOBACCO, AND COVERED TOBACCO PRODUCTS

1. The authority citation for part 1140 continues to read as follows:

Authority: 21 U.S.C. 301 et seq., Sec. 102, Pub. L. 111–31, 123 Stat. 1776.

1. Amend § 1140.30 by revising the last sentence of paragraph (a)(2) to read as follows:

§ 1140.30 Scope of permissible forms of labeling and advertising.

(a) * - (2) * - - The manufacturer, distributor, or retailer shall send this notice to the Office of Compliance and Enforcement, Center for Tobacco Products, Food and Drug Administration, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993.

Dated: March 21, 2018. Leslie Kux, Associate Commissioner for Policy.

[FR Doc. 2018–06164 Filed 3–27–18; 8:45 am]

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13184 Federal Register / Vol. 83, No. 60 / Wednesday, March 28, 2018 / Rules and Regulations

expenses, basic research payments, and amounts paid or incurred to energy research consortiums are collectively referred to as QREs.

(d) Special rules for consolidated groups —(1) In general. For purposes of applying paragraph (c) of this section, members of a consolidated group who are members of a controlled group are treated as a single member of the controlled group.

- - - (3) Special rule for allocation of group credit among consolidated group members. The portion of the group credit that is allocated to a consolidated group is allocated to each member of the consolidated group on a proportionate basis to its share of the aggregate of the QREs taken into account for the taxable year by such consolidated group for purposes of the credit.

(e) Examples. The following examples illustrate the provisions of paragraphs (c) and (d) of this section.

Example 1. Controlled group. A, B, and C are a controlled group. A had $100x, B $300x, and C $500x of qualified research expenses for the year, totaling $900x for the group. A, in the course of its trade or business, also made a payment of $100x to an energy research consortium for energy research. The group’s QREs total 1000x and the group calculated its total research credit to be $60x for the year. Based on each member’s proportionate share of the controlled group’s aggregate QREs, A is allocated $12x, B $18x, and C $30x of the credit.

Example 2. Consolidated group is a member of controlled group. The controlled group’s members are D, E, F, G, and H. F, G, and H file a consolidated return and are treated as a single member (FGH) of the controlled group. D had $240x, E $360x, and FGH $600x of qualified research expenses for the year ($1,200x aggregate). The group calculated its research credit to be $100x for the year. Based on the proportion of each member’s share of QREs to the controlled group’s aggregate QREs for the taxable year D is allocated $20x, E $30x, and FGH $50x of the credit. The $50x of credit allocated to FGH is then allocated to the consolidated group members based on the proportion of each consolidated group member’s share of QREs to the consolidated group’s aggregate QREs. F had $120x, G $240x, and H $240x of QREs for the year. Therefore, F is allocated $10x, G is allocated $20x, and H is allocated $20x.

- - - (j) * - (4) Taxable years beginning after December 31, 2011. Paragraphs (c), (d)(1) and (3), (e), and (j)(4) and (5) of this section apply to taxable years beginning on or after April 2, 2018. For taxable years ending before April 2, 2018, see § 1.41–6T as contained in 26 CFR part 1, as revised April 1, 2017.

manner that is consistent with the amendments made to section 41(f)(1)(A)(ii) and section 41(f)(1)(B)(ii) contained in Section 301(c) of the American Taxpayer Relief Act of 2012, Public Law 112–240, H.R. 8 (ATRA). The temporary regulations also updated the regulations under § 1.45G–1(f) and an example under § 1.280C–4(b)(2) because they are based on the rules of section 41(f) in effect before the ATRA amendments.

One written comment responding to the proposed regulations was received. No requests for a public hearing were made and no public hearing was held. After consideration of the comment, the proposed regulations are adopted without change by this Treasury decision.

Summary of Comment and Explanation of Provisions

No comments were received related to the proposed regulations under section 41 or section 280C. One commenter requested the regulations under § 1.45G–1(f)(8) be amended to explicitly provide that qualified railroad track maintenance expenditures (QRTMEs) associated with a track assignment reside with the assignee (and not with the track owner) when there has been an intra-group track assignment. Revising those rules is beyond the scope of these regulations. Therefore, the Treasury Department and IRS decline to adopt the comment.

Effect on Other Documents

The temporary regulations are obsolete for taxable years beginning on or after April 2, 2018.

Special Analyses

Certain IRS regulations, including these, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. Because the final regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking that preceded the final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. No comments were received on the proposed regulations.

These final regulations provide necessary guidance for corporations that file a consolidated return regarding the allocation of the group credit to members of certain controlled groups of

corporations and trades or businesses under common control. It is necessary to provide this administrative relief for these controlled groups as of April 2, 2018, the expiration date of the temporary regulations, to remove impediments to claiming the research and railroad track maintenance credits and making the election for a reduced research credit. Accordingly, good cause is found for dispensing with a delayed effective date pursuant to 5 U.S.C. 553(d).

Drafting Information

The principal author of these regulations is James Holmes, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the Treasury Department and the IRS participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by revising the sectional authority entires for §§ 1.41–6 and 1.280C–4 and adding a sectional authority for § 1.45G–1 in numerical order to read in part as follows:

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

Section 1.41–6 also issued under 26 U.S.C. 41(f)(1) and 1502.

Section 1.45G–1 also issued under 26 U.S.C. 45G(e)(2).

Section 1.280C–4 also issued under 26 U.S.C. 280C(c)(4).

Par. 2. Section 1.41–6 is amended by revising paragraphs (c), (d)(1) and (3), (e), and (j)(4) and (5) to read as follows:

§ 1.41–6 Aggregation of expenditures.

- - - (c) Allocation of the group credit. The group credit is allocated to each member of the controlled group on a proportionate basis to its share of the aggregate of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums taken into account for the taxable year by such controlled group for purposes of the credit. For purposes of paragraphs (c), (d), and (e) of this section, qualified research

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(5) Taxable years beginning before January 1, 2012. See § 1.41–6 as contained in 26 CFR part 1, revised April 1, 2014.

§ 1.41–6T [Removed]

Par. 3. Section 1.41–6T is removed.
Par. 4. Section 1.45G–1 is amended by revising paragraphs (f)(4) and (5) and (g)(4) and (5) to read as follows:

§ 1.45G–1 Railroad track maintenance credit.

- - - (f) * - (4) Allocation of the group credit. The group credit is allocated to each member of the controlled group on a proportionate basis to its share of the aggregate of the QRTMEs taken into account for the taxable year by such controlled group for purposes of the credit.

(5) Special rules for consolidated groups —(i) In general. For purposes of applying paragraph (f)(4) of this section, members of a consolidated group who are members of a controlled group are treated as a single member of the controlled group.

(ii) Special rule for allocation of group credit among consolidated group members. The portion of the group credit that is allocated to a consolidated group is allocated to each member of the consolidated group on a proportionate basis to its share of the aggregate of the QRTMEs taken into account for the taxable year by such consolidated group for purposes of the credit.

- - - (g) * - (4) Taxable years beginning after December 31, 2011. Paragraphs (f)(4) and (5) and (g)(4) and (5) of this section apply to taxable years beginning on or after April 2, 2018. For taxable years ending before April 2, 2018, see § 1.45G–1T as contained in 26 CFR part 1, as revised April 1, 2017. (5) Taxable years beginning before January 1, 2012. See § 1.45–1 as contained in 26 CFR part 1, revised April 1, 2014.

§ 1.45G–1T [Removed]

Par. 5. Section 1.45G–1T is removed.
Par. 6. Section 1.280C–4 is amended by revising paragraphs (b)(2) and (c)(2) and (3) to read as follows:

§ 1.280C–4 Credit for increasing research activities.

- - - (b) * -

(2) Example. The following example illustrates an application of paragraph (b) of this section: A, B, and C, all of which are calendar year taxpayers, are members of a

controlled group of corporations (within the meaning of section 41(f)(5)). A, B, and C each attach a statement to the 2012 Form 6765, ‘‘Credit for Increasing Research Activities,’’ showing A and C were the only members of the controlled group to have qualified research expenses when calculating the group credit. A and C report their allocated portions of the group credit on the 2012 Form 6765 and B reports no research credit on Form 6765. Pursuant to paragraph (a) of this section, A and B, but not C, each make an election for the reduced credit under section 280C(c)(3)(B) on the 2012 Form 6765. In December 2013, B determines it had qualified research expenses in 2012 resulting in an increased group credit. On an amended 2012 Form 6765, A, B, and C each report their allocated portions of the group credit. B reports its credit as a regular credit under section 41(a) and reduces the credit under section 280C(c)(3)(B). C may not reduce its credit under section 280C(c)(3)(B) because C did not make an election for the reduced credit with its original return.

(c) * - (2) Taxable years beginning after December 31, 2011. Paragraphs (b)(2) and (c)(2) and (3) of this section apply to taxable years beginning on or after April 2, 2018. For taxable years ending before April 2, 2018, see § 1.280C–4T as contained in 26 CFR part 1, as revised April 1, 2017.

(3) For taxable years ending before January 1, 2012. See § 1.280C–4 as contained in 26 CFR part 1, revised April 1, 2014.

§ 1.280C–4T [Removed]

Par. 7. Section 1.280C–4T is removed.

Kirsten Wielobob, Deputy Commissioner for Services and Enforcement.

Approved: March 7, 2018. David J. Kautter, Assistant Secretary of the Treasury (Tax Policy).

[FR Doc. 2018–06241 Filed 3–27–18; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG–2018–0229]

RIN 1625–AA00

Safety Zone; Lower Mississippi River, Port Gibson, MS

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

SUMMARY: The Coast Guard is establishing an emergency temporary

safety zone for all navigable waters of the Lower Mississippi River, extending the entire width of the river, from mile marker (MM) 405 to MM 408. This emergency safety zone is necessary to protect persons, property, and infrastructure from potential damage and safety hazards associated with vessels transiting this area during high water. This rule prohibits persons and vessels from entering the safety zone area unless specifically authorized by the Captain of the Port Sector Lower Mississippi River (COTP) or a designated representative.

DATES: This rule is effective without actual notice from March 28, 2018 through 7 p.m. on March 31, 2018. For the purposes of enforcement, actual notice will be used from 10 a.m. on March 13, 2018 through March 28, 2018.

ADDRESSES: To view documents mentioned in this preamble as being available in the docket, go to http:// www.regulations.gov, type USCG–2018– 0229 in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on ‘‘Open Docket Folder’’ on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, call or email Petty Officer Todd Manow, Sector Lower Mississippi River Prevention Department, U.S. Coast Guard; telephone 901–521–4813, email Todd.M.Manow@uscg.mil.

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations

CFR Code of Federal Regulations COTP Captain of the Port Sector Lower Mississippi River DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code

II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are ‘‘impracticable, unnecessary, or contrary to the public interest.’’ Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable and contrary to the public interest. Increasing high water in this area requires immediate action to

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Exceptions & meaning →