SECTION 2. TRANSACTION AT

ISSUE

On December 29, 2008, the Treasury Department and the IRS issued Notice 2009–7, 2009–3 I.R.B. 312, identifying the following transaction (and substantially similar transactions) as a transaction of interest for purposes of § 1.6011–4(b)(6) and §§ 6111 and 6112 of the Code. A United States taxpayer (Taxpayer) wholly owns two controlled foreign corporations (CFC1 and CFC2), each of which owns 50 percent of another controlled foreign corporation (CFC3) through a domestic partnership. CFC3 has amounts described in § 951(a)(1). Taxpayer takes the position that it does not have an income inclusion under § 951(a) with respect to CFC3 because the domestic partnership is the first United States person in the chain of ownership of CFC3. As stated in Notice 2009–7, the Treasury Department and IRS believe that Taxpayer’s position is contrary to the purpose and intent of § 951 of the Code.