SECTION 3. SECTION 954 GUIDANCE

Future guidance will amend the regulations under section 954 to address the determination of whether rents derived from leasing an aircraft or vessel in foreign commerce will be treated as derived in the active conduct of a trade or business under section 954(c)(2)(A), as amended by section 415 of the AJCA. Comments are requested on whether there are issues with regard to this determination that require clarification.

In addition, future guidance will clarify that an aircraft or vessel will be considered to be leased in foreign commerce, for purposes of section 954(c)(2)(A), only if the aircraft or vessel is used in foreign commerce, within the meaning of § 1.954–6(b)(3), and is used predominately outside the United States. For this purpose, an aircraft or vessel will be

treated as used predominately outside the United States if it would be so treated under § 1.956–2(b)(1)(vi) with the phrase “more than 50 percent” substituted for the phrases “70 percent or more” or “70 percent.”