SECTION 12. — Internal Revenue Bulletin 2007-34

ISSUES

Statute or Regulation Act Postponed

Sec. 482 and Treas. Reg. § 1.482–1(g)(4)(ii)(C)
Sec. 482 and Treas. Reg. § 1.482–1(j)(2)

A claim for a setoff of a section 482 allocation by the IRS must be filed within 30 days of either the date of the IRS’s letter transmitting an examination report with notice of the proposed adjustment or the date of a notice of deficiency.

A claim for retroactive application of the final section 482 regulations, otherwise effective only for taxable years beginning after October 6, 1994, must be filed prior to the expiration of the statute of limitations for the year for which retroactive application is sought.

August 20, 2007 401 2007–34 I.R.B.

Statute or Regulation Act Postponed

Sec. 482 and Treas. Reg. § 1.482–7(j)(2)
Treas. Reg. § 1.882–5(d)(2)(ii)(A)(2)
Treas. Reg. § 1.882–5(d)(2)(iii)(A)(1)
Treas. Reg. § 1.884–2T(b)(3)(i)
Treas. Reg. § 1.884–4(b)(3)(ii)(B)
Treas. Reg. § 1.922–1(i) (Q&A-13)
Sec. 922(a)(1)(E) and Treas. Reg. § 1.922–1(j) (Q&A-19)
Sec. 924(b)(2)(B) and Treas. Reg. § 1.924(a)–1T(j)(2)(i)
Sec. 924(c)(2) and Treas. Reg. § 1.924(c)–1(c)(4)
Sec. 924(c)(3) and Treas. Reg. § 1.924(c)–1(d)(1)
Sec. 924(c)(3) and Treas. Reg. § 1.924(c)–1(d)(2)
Sec. 924(c)(3) and Treas. Reg. § 1.924(c)–1(d)(3)
Sec. 924(e)(4) and Treas. Reg. § 1.924(e)–1(d)(2)(iii)

A participant in a cost-sharing arrangement must provide documentation regarding the arrangement, as well as documentation specified in sections 1.482–7(b)(4) and 1.482–7(c)(1), within 30 days of a request by the IRS.

Liabilities of a foreign corporation that is not a bank must be entered on a set of books at a time reasonably contemporaneous with the time the liabilities are incurred.

Liabilities of foreign corporations that are engaged in a banking business must be entered on a set of books relating to an activity that produces ECI before the close of the day on which the liability is incurred.

Requirement that marketable securities be identified on the books of a U.S. trade or business within 30 days of the date an equivalent amount of U.S. assets ceases to be U.S. assets. This requirement applies when a taxpayer has elected to be treated as remaining engaged in a U.S. trade or business for branch profits tax purposes.

Requirement that a foreign corporation which identifies liabilities as giving rise to U.S. branch interest, send a statement to the recipients of such interest within two months of the end of the calendar year in which the interest was paid, stating that such interest was U.S. source income (if the corporation did not make a return pursuant to section 6049 with respect to the interest payment).

The quarterly income statements for the first three quarters of the FSC year must be maintained at the FSC’s office no later than 90 days after the end of the quarter. The quarterly income statement for the fourth quarter of the FSC year, the final year-end income statement, the year-end balance sheet, and the final invoices (or summaries) or statements of account must be maintained at the FSC’s office no later than the due date, including extensions, of the FSC tax return for the applicable taxable year.

The FSC must appoint a new non-U.S. resident director within 30 days of the date of death, resignation, or removal of the former director, in the event that the sole non-U.S. resident director of a FSC dies, resigns, or is removed.

A taxpayer must execute an agreement regarding unequal apportionment at a time when at least 12 months remain in the period of limitations (including extensions) for assessment of tax with respect to each shareholder of the small FSC in order to apportion unequally among shareholders of a small FSC the $5 million foreign trading gross receipts used to determine exempt foreign trade income.

The FSC must open a new qualifying foreign bank account within 30 days of the date of termination of the original bank account, if a FSC’s qualifying foreign bank account terminates during the taxable year due to circumstances beyond the control of the FSC.

The FSC must transfer funds from its foreign bank account to its U.S. bank account, equal to the dividends, salaries, or fees disbursed, and such transfer must take place within 12 months of the date of the original disbursement from the U.S. bank account, if dividends, salaries, or fees are disbursed from a FSC’s U.S. bank account.

The FSC must reimburse from its own bank account any dividends or other expenses that are paid by a related person, on or before the due date (including extensions) of the FSC’s tax return for the taxable year to which the reimbursement relates.

If the Commissioner determines that the taxpayer acted in good faith, the taxpayer may comply with the reimbursement requirement by reimbursing the funds within 90 days of the date of the Commissioner’s determination, notwithstanding a taxpayer’s failure to meet the return-filing-date reimbursement deadline in section 1.924(c)–1(d)(2).

If a payment with respect to a transaction is made directly to the FSC or the related supplier in the United States, the funds must be transferred to and received by the FSC bank account outside the United States no later than 35 days after the receipt of good funds ( i.e., date of check clearance) on the transaction.

2007–34 I.R.B. 402 August 20, 2007

Statute or Regulation Act Postponed

Temp. Treas. Reg. § 1.925(a)–1T(e)(4)
Sec. 927(f)(3)(A) and Treas. Reg. § 1.927(f)–1(b) (Q&A-12)
Sec. 927 and Temp. Treas. Reg. § 1.927(a)–1T (d)(2)(i)(B)
Sec. 927 and Temp. Treas. Reg. § 1.927(b)–1T(e)(2)(i)
Sec. 927 and Treas. Reg. § 1.927(f)–1(a) (Q&A 4)
Sec. 936 and Treas. Reg. § 1.936–11
Treas. Reg. §§ 1.964–1T(c)(3)

A FSC and its related supplier may redetermine a transfer pricing method, the amount of foreign trading gross receipts, and costs and expenses, provided such redetermination occurs before the expiration of the statute of limitations for claims for refund for both the FSC and related supplier, and provided the statute of limitations for assessment applicable to the party that has a deficiency in tax on account of the redetermination is open. See Treas. Reg. § 1.925(a)–1(c)(8)(i) for time limitations with respect to FSC administrative pricing grouping redeterminations and for a cross-reference to section 1.925(a)–1T(e)(4).

A corporation may terminate its election to be treated as a FSC or a small FSC by revoking the election during the first 90 days of the FSC taxable year (other than the first year in which the election is effective) in which the revocation was to take effect.

A taxpayer may satisfy the destination test with respect to property sold or leased by a seller or lessor if such property is delivered by the seller or lessor (or an agent of the seller or lessor) within the United States to a purchaser or lessee, if the property is ultimately delivered outside the United States (including delivery to a carrier or freight forwarder for delivery outside the United States) by the purchaser or lessee (or a subsequent purchaser or sublessee) within one year after the sale or lease.

A taxpayer that claims FSC commission deductions must designate the sales, leases, or rentals subject to the FSC commission agreement no later than the due date (as extended) of the tax return of the FSC for the taxable year in which the transaction(s) occurred.

A transferee or other recipient of shares in the corporation (other than a shareholder that previously consented to the election) must consent to be bound by the prior election within 90 days of the first day of the FSC’s taxable year to preserve the status of a corporation that previously qualified as a FSC or as a small FSC.

A taxpayer that elects retroactive application of the regulation regarding separate lines of business for taxable years beginning after December 31, 1995, must elect to do so prior to the expiration of the statute of limitations for the year in question.

An election, adoption or change in a method of accounting or tax year on behalf of a CFC or noncontrolled section 902 corporation by its controlling domestic shareholders requires the filing of a statement with the shareholder’s return for its year with or within which ends the foreign corporation’s taxable year for which the election is made or the method or tax year is adopted or changed, and the filing of a written notice on or before the filing date of the shareholder’s return.

Sec. 982(c)(2)(A) Any person to whom a formal document request is mailed shall have the right to bring a proceeding to quash such request not later than the 90th day after the day such request was mailed.
Treas. Reg. § 1.988–1(a)(7)(ii)
Sec. 988(c)(1)(E)(iii)(V) (qualified fund) and Treas. Reg. § 1.988–1(a)(8)(i)(E)
Treas. Reg. § 1.988–3(b)
Treas. Reg. § 1.988–5(a)(8)(i)
Treas. Reg. § 1.988–5(b)(3)(i)

An election to have section 1.988–1(a)(2)(iii) apply to regulated futures contracts and nonequity options must be made on or before the first day of the taxable year, or if later, on or before the first day during such taxable year on which the taxpayer holds a contract described in section 988(c)(1)(D)(ii) and section 1.988–1(a)(7)(ii). A late election may be made within 30 days after the time prescribed for the election.

A qualified fund election must be made on or before the first day of the taxable year, or if later, on or before the first day during such taxable year on which the partnership holds an instrument described in section 988(c)(1)(E)(i).

An election to treat (under certain circumstances) any gain or loss recognized on a contract described in section 1.988–2(d)(1) as capital gain or loss must be made by clearly identifying such transaction on taxpayer’s books and records on the date the transaction is entered into.

Taxpayer must establish a record, and before the close of the date the hedge is entered into, the taxpayer must enter into the record for each qualified hedging transaction the information contained in sections 1.988–5(a)(8)(i)(A) through (E).

Taxpayer must establish a record and before the close of the date the hedge is entered into, the taxpayer must enter into the record a clear description of the executory contract and the hedge.

August 20, 2007 403 2007–34 I.R.B.

Statute or Regulation Act Postponed

Treas. Reg. § 1.988–5(c)(2)

Taxpayer must identify a hedge and underlying stock or security under the rules of section 1.988–5(b)(3).

Sec. 991 A corporation that elects IC-DISC treatment (other than in the corporation’s first taxable year) must file Form 4876–A, Election To Be Treated as an Interest Charge DISC, with the regional service center during the 90-day period prior to the beginning of the tax year in which the election is to take effect.
Sec. 991 and Treas. Reg. § 1.991–2(g)(2)
Sec. 992 and Treas. Reg. § 1.992–2(a)(1)(i)
Sec. 992 and Treas. Reg. § 1.992–2(e)(2)
Sec. 992 and Treas. Reg. § 1.992–3(c)(3)
Sec. 993 and Treas. Reg. § 1.993–3(d)(2)(i)(b)
Sec. 1445 Treas. Reg. § 1.1445–1

A corporation that filed a tax return as a DISC, but subsequently determines that it does not wish to be treated as a DISC, must notify the Commissioner more than 30 days before the expiration of period of limitations on assessment applicable to the tax year.

A qualifying corporation must file Form 4876–A or attachments thereto, containing the consent of every shareholder of the corporation to be treated as a DISC as of the beginning of the corporation’s first taxable year.

A corporation seeking to revoke a prior election to be treated as a DISC, must file a statement within the first 90 days of the taxable year in which the revocation is to take effect with the service center with which it filed the election or, if the corporation filed an annual information return, by filing the statement at the service center with which it filed its most recent annual information return.

A DISC that makes a deficiency distribution with respect to the 95 percent of gross receipts test or the 95 percent assets test, or both tests, for a particular taxable year, must make such distribution within 90 days of the date of the first written notification from the IRS that the DISC failed to satisfy such test(s).

In certain cases, property may not qualify as export property for DISC purposes unless, among other things, such property is ultimately delivered, directly used, or directly consumed outside the U.S. within one year of the date of sale or lease of the property.

Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests, must be filed by a buyer or other transferee of a U.S. real property interest, and a corporation, partnership, or fiduciary that is required to withhold tax. The amount withheld is to be transmitted with Form 8288, which is generally to be filed by the 20th day after the date of transfer.

Sec. 1446 All partnerships with effectively connected gross income allocable to a foreign partner in any tax year must file Forms 8804, Annual Return for Partnership Withholding Tax (Section 1446), and 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax, on or before the 15th day of the 4th month following the close of the partnership’s taxable year.
Sec. 1446 Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446), is used to pay the withholding tax under section 1446 for all partnerships with effectively connected gross income allocable to a foreign partner in any tax year. Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446), must accompany each payment of section 1446 tax made during the partnership’s taxable year. Form 8813 is to be filed on or before the 15th day of the 4th, 6th, 9th, and 12th months of the partnership’s taxable year for U.S. income tax purposes.
Sec. 6038A(d)(2) and Treas. Reg. § 1.6038A–4(d)(1)
Sec. 6038A(d)(2) and Treas. Reg. § 1.6038A–4(d)(1)
Sec. 6038A(a) and Treas. Reg. § 1.6038A–2(d)
Sec. 6038A(e)(1) and Treas. Reg. § 1.6038A–5(b)

A reporting corporation must cure any failure to furnish information or failure to maintain records within 90 days after the IRS gives notice of the failure to avoid the continuation penalty.

A reporting corporation must cure any failure to furnish information or failure to maintain records before the beginning of each 30-day period after expiration of the initial 90-day period to avoid additional continuation penalties.

A reporting corporation must file a duplicate Form 5472 at the same time it files its income tax return unless Form 5472 is filed electronically.

A reporting corporation must furnish an authorization of agent within 30 days of a request by the IRS to avoid a penalty.

Sec. A reporting corporation must commence any proceeding to quash a summons filed by the IRS in 6038A(e)(4)(A) connection with an information request within 90 days of the date the summons is issued.

2007–34 I.R.B. 404 August 20, 2007

Statute or Regulation Act Postponed

Sec. A reporting corporation must commence any proceeding to review the IRS’s determination of 6038A(e)(4)(B) noncompliance with a summons within 90 days of the IRS’s notice of noncompliance.
Sec. 6038A and Treas. Reg. § 1.6038A–3(b)(3)
Sec. 6038A and Treas. Reg. § 1.6038A–3(f)(2)
Sec. 6038A and Treas. Reg. § 1.6038A–3(f)(2)(i)
Sec. 6038A and Treas. Reg. § 1.6038A–3(f)(4)
Secs. 6038, 6038B, and 6046A

A reporting corporation must supply an English translation of records provided pursuant to a request for production within 30 days of a request by the IRS for a translation to avoid a penalty.

A reporting corporation must, within 60 days of a request by the IRS for records maintained outside the United States, either provide the records to the IRS, or move them to the United States and provide the IRS with an index to the records to avoid a penalty.

A reporting corporation must supply English translations of documents maintained outside the United States within 30 days of a request by the IRS for translation to avoid a penalty.

A reporting corporation must request an extension of time to produce or translate documents maintained outside the United States beyond the period specified in the regulations within 30 days of a request by the IRS to avoid a penalty.

The filing of Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, for those taxpayers who do not have to file an income tax return. The form is due at the time that an income tax return would have been due had the taxpayer been required to file an income tax return or at the time any required information return is due.

Secs. 6039F and Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign 6048 Gifts, must be filed by the due date of the U.S. person’s income tax return, including extensions.
Sec. 6662(e) and Treas. Reg. § 1.6662–6(d)(2)(iii)(A)

A taxpayer must provide, within 30 days of a request by the IRS, specified “principal documents” regarding the taxpayer’s selection and application of transfer pricing method to avoid potential penalties in the event of a final transfer pricing adjustment by the IRS. See also Treas. Reg. § 1.6662–6(d)(2)(iii)(C) (similar requirement re: background documents).