SECTION 7. COMMENTS

Comments are requested on whether any other changes to the regulations under sections 367, 954, and 956 are necessary to implement the purposes of section 415 of the AJCA. Specifically, Treasury and

by virtue of section 48(a)(2)(B) and was subject to depreciation by the transferor or a related person. Total use is the total number of months that the property was used (or was available for use), and subject to depreciation, by the transferor or a related person. Property is not considered to be used outside the United States during any period in which the property was, for purposes of section 38 or 168, treated as property not used predominately outside the United States pursuant to the provisions of section 48(a)(2)(B).

Therefore, to apply the section 367 recapture provisions, transferors must determine the number of months that the property was used in the United States or qualified as section 38 property. Mobile assets such as airplanes and vessels may enter and leave the United States a number of times during a month, thus raising the issue of how to determine whether such an asset was used predominately outside the United States during that month. Rev. Rul. 71–178, 1971–1 C.B. 6, provides generally that each day an aircraft under foreign registry is physically located in the United States for more than 12 hours is considered a day within the United States for purposes of § 1.48–1(g). There is no guidance under either section 48 or section 367, however, that specifies how to determine whether the aircraft was used predominately outside the United States for a particular month.