SECTION 1. OVERVIEW

This notice provides guidance relating to amendments made by section 415 of the American Jobs Creation Act of 2004 (Public Law 108–357) (October 24, 2004) (AJCA), which affect the treatment of certain income and assets related to the leasing of aircraft or vessels in foreign commerce. The Treasury Department (Treasury) and the Internal Revenue Service

inclusion test with a test that determines whether certain U.S. persons, who are not flow-through entities own, directly or indirectly, more than 50 percent of the value of the CFC for more than half of the days in the CFC’s taxable year. Some commentators suggested that CFCs organized in a foreign country that provides a reciprocal exemption to U.S. corporations on their income from the international operation of their ships or aircraft should be eligible for the exclusion under section 883(a)(1) and (2) without further limitation.