INCOME TAX

Rev. Rul. 2006–27, page 915. Down payment assistance; home buyers. This ruling sets forth the applicable rules and standards for determining whether organizations that provide down payment assistance to home buyers qualify as tax-exempt charities. In addition, the ruling addresses whether assistance received for a down payment is treated as a gift and included in a home buyer’s basis.

T.D. 9261, page 919. Final regulations under section 1502 of the Code relate to intercompany transactions. Section 1.1502–13(c)(7)(ii), Example 13, illustrates the treatment of manufacturer incentive payments. This example relies, in part, upon the premise that manufacturer incentive payment is an ordinary and necessary business expense deductible under section 162. Because this treatment is now under reconsideration (see Rev. Rul. 2005–28, 2005–19 I.R.B. 997), these final regulations remove and reserve this example.

Notice 2006–43, page 921. This notice announces that the Treasury Department and the Service will amend the regulations under section 883 of the Code. The regulations exclude from gross income the income derived from the international operation of a ship or ships or aircraft by a corporation organized in a foreign country that grants an equivalent exemption to U.S. corporations. To receive this benefit, a foreign corporation must also satisfy one of three ownership tests. One such test applies to a controlled foreign corporation (CFC), as defined in section 957(a). To satisfy the CFC ownership test, section 1.883–3(a) requires a CFC to meet an “income inclusion test,” as defined in section 1.883–3(b). After the repeal of section 954(a)(4) and (f) (for

Finding Lists begin on page ii.