SECTION 4. AREAS IN WHICH

LETTER RULINGS OR DETERMINATION LETTERS WILL NOT ORDINARILY BE ISSUED

.01 Specific Questions and Problems (1) Section 367(a). - Transfers of Property from the United States. - Whether an oil or gas working interest is transferred from the United States for use in the active conduct of a trade or business for purposes of § 367(a)(3); and whether any other property is so transferred, where the determination requires extensive factual inquiry.

(2) Section 367(b). - Other Transfers. Whether a foreign corporation is considered a corporation for purposes of any nonrecognition provision listed in § 367(b), and related issues, unless the letter ruling presents a significant legal issue or subchapter C rulings are requested in the context of reorganizations or liquidations involving foreign corporations. (These matters are dealt with in detail in § 7.367(b) of the Temporary Income Tax Regulations.)

(3) Section 864. - Definitions and Special Rules. - Whether a taxpayer is engaged in a trade or business within the United States, and whether income is effectively connected with the conduct of a trade or business within the United States; whether an instrument is a security as defined in § 1.864–2(c)(2); whether a taxpayer effects transactions in the United States in stocks or securities under § 1.864–2(c)(2); whether an instrument or item is a commodity as defined in § 1.864–2(d)(3); and for purposes of § 1.864–2(d)(1) and (2), whether a commodity is of a kind customarily dealt in on an organized commodity exchange, and whether a transaction is of a kind customarily consummated at such place.

United States Business. - Whether the income earned on contracts that do not qualify as annuities or life insurance contracts because of the limitations imposed by § 72(s) and § 7702(a) is portfolio interest as defined in § 881(c).

(6) Section 892. - Income of Foreign Governments and of International Organizations. - Whether income received by local governmental authorities of the United Kingdom from certain United States investments of money allocable to their superannuation funds is exempt from federal income taxation.

(7) Section 892. - Income of Foreign Governments and of International Organizations. - Whether a foreign government is engaged in commercial activities for purposes of § 892, and whether income received by a foreign government is derived from the conduct of such commercial activities.

(8) Section 893. - Compensation of Employees of Foreign Governments and International Organizations. - Whether a foreign government is engaged in commercial activities for purposes of § 893, and whether the services of an employee of a foreign government are primarily in connection with such commercial activities.

(9) Section 894. - Income Affected by Treaty. - Whether a taxpayer has a permanent establishment in the United States for purposes of any United States income tax treaty and whether income is attributable to a permanent establishment in the United States.

(10) Section 894. - Income Affected by Treaty. - Whether the income received by a nonresident alien student for services performed for a university or other educational institution is exempt from federal income tax or withholding under United States income tax treaties with Belgium, Peoples Republic of China, Cyprus, Egypt, Federal Republic of Germany, France, Iceland, Indonesia, Japan, Korea, Morocco, Netherlands, Norway, Pakistan, Philippines, Poland, Romania, Spain, Trinidad and Tobago, and Tunisia. Rev. Proc. 87–8, 1987–1 C.B. 366, as modified by Rev. Proc. 93–22, 1993–1 C.B. 535.

(11) Section 894. - Income Affected by Treaty. - Whether the income received by a nonresident alien performing research or teaching at a university is exempt from federal income tax or withholding under

(4) Section 871. - Tax on Nonresident Alien Individuals. - Whether the income earned on contracts that do not qualify as annuities or life insurance contracts because of the limitations imposed by § 72(s) and § 7702(a) is portfolio interest as defined in § 871(h).

(5) Section 881. - Tax on Income of Foreign Corporations Not Connected with

1999–1 I.R.B. 227 January 4, 1999

United States income tax treaties with Austria, Belgium, Peoples Republic of China, Denmark, Egypt, Federal Republic of Germany, France, Greece, Hungary, Iceland, India, Indonesia, Ireland, Italy, Jamaica, Japan, Korea, Luxembourg, Netherlands, Norway, Pakistan, Philippines, Poland, Romania, Sweden, Switzerland, Trinidad and Tobago, the former Union of Soviet Socialist Republics (Armenia, Azerbaijan, Byelarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan), and the United Kingdom. Rev. Proc. 87–9, 1987–1 C.B. 368, as modified by Rev. Proc. 93–22, 1993–1 C.B. 535.

(12) Section 894. - Income Affected by Treaty. - Whether a foreign recipient of payments made by a United States person is ineligible to receive the benefits of a United States tax treaty under the principles of Rev. Rul. 89–110, 1989–2 C.B. 275. (13) Section 894. - Income Affected by Treaty. - Whether a recipient of payments is or has been a resident of a country for purposes of any United States tax treaty. Pursuant to § 1.884–5(f), however, the Service may rule whether a corporation representing that it is a resident of a country is a qualified resident thereof for purposes of § 884.

(14) Section 894. - Income Affected by Treaty. - Whether an entity is treated as fiscally transparent by a foreign jurisdiction for purposes of §894(c) and the regulations thereunder.

(15) Section 901. - Taxes of Foreign Countries and of Possessions of the United States. - Whether a person claiming a credit has established, based on all of the relevant facts and circumstances, the amount (if any) paid by a dual capacity taxpayer under a qualifying levy that is not paid in exchange for a specific economic benefit. See § 1.901–2A(c)(2).

(16) Sections 927, 936, 954, 993. Manufactured Product. - Whether a product is manufactured or produced for purposes of § 927(a), § 936(h)(5), § 954(d), and § 993(c).

(17) Section 936. - Puerto Rico and Possession Tax Credit. - What constitutes a substantial line of business.

(18) Section 956. - Investment of Earnings in United States Property. Whether a pledge of the stock of a con

trolled foreign corporation is an indirect pledge of the assets of that corporation. See § 1.956–2(c)(2).

(19) Section 985. - Functional Currency. - Whether a currency is the functional currency of a qualified business unit.

(20) Section 989(a). - Qualified Business Unit. - Whether a unit of the taxpayer’s trade or business is a qualified business unit.

(21) Section 1058. - Transfers of Securities under Certain Agreements. Whether the amount of any payment described in § 1058(b)(2) or the amount of any other payment made in connection with a transfer of securities described in § 1058 is from sources within or without the United States; the character of such amounts; and whether the amounts constitute a particular kind of income for purposes of any United States income tax treaty.

(22) Section 1503(d).-Dual Consolidated Loss.-Whether an event presumptively constitutes a triggering event for purposes of § 1.1503–2(g)(2)(iii)(A)(1)– (7), apart from possible rebuttal of the presumption under § 1.1503–2(g)(2)(iii)(B). See section 3.01(4), Rev. Proc. 99–7.

(23) Section 2501. - Imposition of Tax. - Whether a partnership interest is intangible property for purposes of § 2501(a)(2) (dealing with transfers of intangible property by a nonresident not a citizen of the United States).

(24) Section 7701. - Tax on Nonresident Alien Individuals. - Whether an alien individual is either a resident or a nonresident of the United States, in situations where the determination depends on facts that cannot be confirmed until the close of the taxable year (including, for example, the length of the alien’s stay or the nature of the alien’s activities).

(25) Section 7701. - Definitions. Whether an estate or trust is a foreign estate or trust for federal income tax purposes.

(26) Section 7701. - Definitions.Whether an intermediate entity is a conduit entity under §1.881–3(a)(4); whether a transaction is a financing transaction under §1.881–3(a)(ii); whether the participation of an intermediate entity in a financing arrangement is pursuant to a tax avoidance plan under §1.881–3(b); whether an intermediate entity performs

significant financing activities under §1.881–3(b)(3)(ii); whether an unrelated intermediate entity would not have participated in a financing arrangement on substantially the same terms under §1.881–3(c).

.02 General Areas (1) Whether a taxpayer has a business purpose for a transaction or arrangement.

(2) Any transaction or series of transactions that is designed to achieve a different tax consequence or classification under U.S. tax law (including tax treaties) and the tax law of a foreign country, where the results of that different tax consequence or classification are inconsistent with the purposes of U.S. tax law (including tax treaties).

(3) Questions involving the validity of the federal income tax and other taxes set forth in the Code, questions on the authority or jurisdiction of the Service to enforce the Code or collect information, or similar matters.

(4)(a) Situations where a taxpayer or a related party is domiciled or organized in a foreign jurisdiction with which the United States does not have an effective mechanism for obtaining tax information with respect to civil tax examinations and criminal tax investigations, which would preclude the Service from obtaining information located in such jurisdiction that is relevant to the analysis or examination of the tax issues involved in the ruling request.

(b) The provisions of subsection 4.02(4)(a) above shall not apply if the taxpayer or affected related party (i) consents to the disclosure of all relevant information requested by the Service in processing the ruling request or in the course of an examination to verify the accuracy of the representations made and to otherwise analyze or examine the tax issues involved in the ruling request, and (ii) waives all claims to protection of bank or commercial secrecy laws in the foreign jurisdiction with respect to the information requested by the Service. In the event the taxpayer’s or related party’s consent to disclose relevant information or to waive protection of bank or commercial secrecy is determined by the Service to be ineffective or of no force and effect, then the Service may retroactively rescind any ruling rendered in reliance on such consent.

January 4, 1999 228 1999–1 I.R.B.

(5)(a) Situations involving the interpretation of foreign law or foreign documents. The interpretation of a foreign law or foreign document means making a judgment about the import or effect of the foreign law or document that goes beyond its plain meaning.

(b) The Service, at its discretion, may consider rulings that involve the interpretation of foreign laws or foreign documents. In these cases, the Service may request information in addition to that listed

26 CFR 601.201: Rulings and determination letters.

Rev. Proc. 99–8

TABLE OF CONTENTS

in sections 8.01(2)(b) and (c) of Revenue Procedure 99–1, including a discussion of the implications of any authority believed to interpret the foreign law or foreign document, such as pending legislation, treaties, court decisions, notices or administrative decisions.