International Rev Ruls

Front 1

Rev. Rul. 60-55

Back 1

[Sales Commissions Sourced to Location of Sales Activities]

Commissions received by a foreign corporation, operating only in a foreign country from a U.S. corporation for the purpose of securing orders from non-U.S. customers constituted foreign-source income under IRC § 862(a)(3).

Front 2

Rev. Rul. 68-443

Back 2

[Foreign Trademark Royalties Are Foreign Source Income]

Holder of right to use trademark outside the U.S. granted an exclusive license for a limited term of years to a U.S. manufacturer, which affixed the trademark to goods sold in the U.S. for shipment to foreign customers. The place of use of the trademark was the place were used, not where trademark affixed.

Front 3

Rev. Rul. 70-424

Back 3

[Domestic Corp is Foreign Corp's Agent]

Foreign corporation was engaged in a U.S. trade or business where a foreign corporation designated a U.S. corporation its exclusive agent for the sale of its products in the U.S.

Front 4

Rev. Rul. 2004-3

Back 4

[Foreign Partner Deemed to Have A Fixed Base in the U.S.]

A service partnership's fixed base in the United States was attributed to nonresident alien partner (making him subject to tax) even though he performed no services in the United States.

Front 5

Rev. Rul. 80-362

Back 5

[Cascading Royalties]

Under back-to-back licensing arrangements, the same royalties could be repeatedly subject to U.S. taxation. For example, in this ruling, a foreign corporation not entitled to treaty protection licensed certain rights to a ND corporation entitled to treaty protection. In turn, the ND corporation licensed those rights to a U.S. corporation. While the royalties paid by the U.S. corporation to the ND corporation were exempt from tax under the treaty, the royalties paid by the ND corporation to the foreign corporation were also U.S.–source income subject to a 30 percent tax.

Front 6

Rev. Rul. 87-89

Back 6

[Lending Intermediary Disregarded in Cross-Border Lending Transactions]

Foreign Sub deposited amounts in a foreign bank that were then lent to U.S. parent subsequently (at favorable terms). Loan from bank treated as a direct loan from Sub to Parent because the loan to the U.S. parent would not have been made without the deposit by its foreign subsidiary.

Note: Ruling has been obsoleted and now covered by Reg § 1.881-3.

Front 7

Rev. Rul. 92-85

Back 7

[FDAP Withholding on 304 Transaction]

In a 304, the deemed dividend is paid out of the E&P of both Target and Acquiring. Where the deemed dividend is outbound (U.S. to foreign), withholding tax under 1441 may be applicable to the dividend. (Keep in mind that under 304(b)(2), the deemed dividend comes first out of Acquiror’s E&P and then Target’s E&P.)

Front 8

Rev. Rul. 2004-76

Back 8

[Treaty Benefits: Incorporated in One Jurisdiction and Managed & Controlled in Another]

Corporate residence and situs for U.S. treaty purposes controlled by designated residence clause in treaty between two foreign countries when taxpayer is a legal resident in both countries.

Front 9

Rev. Rul. 63-113

Back 9

[No PE for Consignment Sales to U.S. Trading Company]

Foreign corp. shipped goods on consignment to U.S. company. Title passed immediately prior to ultimate sale. Corp. had no U.S. employees or other U.S. business. It had no “permanent establishment” under treaty.

Front 10

Rev. Rul. 76-322

Back 10

[No PE for Consignment Sales to U.S. Subsidiary]

Australian corp. that sells products on consignment to wholly owned U.S. subsidiary, which resells them to independent wholesalers and retailers in U.S. at prices determined by wholly owned subsidiary, isn't subject to U.S. income tax; Australian corporation doesn't have permanent establishment in U.S. under U.S.-Australia Convention.

Front 11

Rev. Rul. 81-132

Back 11

[Transferor Ownership Not Attributed in 351 Exchange for Treaty Purposes]

Lower treaty rate did not apply to dividend paid by US Sub to ND Parent that had acquired US Sub in a 351 for E&P earned prior to contribution.

Front 12

Rev. Rul. 70-373

Back 12

[Deemed Paid Credit Impact of Lower-Tier 332 Liquidation]

When a second-tier foreign corporation liquidated under Section 332 into a first-tier foreign corporation, the profits and foreign-tax history of the second-tier corporation carried over to the first-tier corporation. Those earnings and foreign taxes could result in Section 902 credits when a 10 percent U.S. shareholder received a distribution from the first-tier corporation.

Front 13

Rev. Rul. 72-197

Back 13

["Shareholders" Liable for Foreign Taxes of Reverse Hybrid Entity]

If owners of reverse hybrid (corp. for U.S., partnership for foreign) are subject to tax under local country law, then the reverse hybrid can’t claim the foreign tax credit – the credit goes to the owners.

Front 14

Rev. Rul. 74-387

Back 14

[Section 902 Deemed Paid Credits in D Reorganization With Boot]

Similar to Rev. Rul. 70-240, except with the clarification that the dividend issued in the D Reorganization qualifies as a dividend under Section 902.

Front 15

Rev. Rul. 77-209

Back 15

[Section 902 Credits and "Fiscal Unity"]

Where a corporation pays a foreign tax assessed jointly and severally against it and its foreign subsidiaries, the tax must be prorated and each corporation is deemed to have paid only the portion of the tax attributable to its income.

Front 16

Rev. Rul. 67-158

Back 16

[Section 911 Exclusion of Partner's Distributive Share]

If no special allocation of profits is made, the foreign earned income of a partner who works in a foreign country is that proportion of his distributive share of partnership income which the partnership's foreign earned income bears to all its income. Thus, if partnership foreign earned income is 1% of all its income, the partner's foreign earned income is 1% of his distributive share.

Front 17

Rev. Rul. 82-16

Back 17

[Subpart F Income with Less Than 100% U.S. Ownership]

Lower tier CFC has 100mm of Subpart F income that is included in P’s income and 100mm on non-subpart F income. Lower tier CFC then makes a divided of $200mm to upper tier CFC. Only 100mm is included in upper tier CFC’s subpart F income (the rest is PTI). P is taxed on 70 related to this distribution (140mm total for the year).

Front 18

Rev. Rul. 97-48

Back 18

[Contract Manufacturing - No Branch But No Attribution]

Under 954(d)(2), a CFC that operates through a branch (e.g., manufacturing) in another country runs risk of creating FBC Income (branch treated like Subco). However, if an unrelated corporation manufactures for the CFC, the unrelated corporation won’t be treated as a branch.

Front 19

Rev. Rul. 76-192

Back 19

[Third Party "Filter" was Ineffective / CFC Created to Avoid Section 956]

Where funds deposited by one CFC in bank were borrowed by another CFC, which in turn “loaned” those amounts to the U.S. parent, the transaction was treated as an investment in U.S. property by the first sub.

Front 20

Rev. Rul. 90-112

Back 20

[Investment in U.S. Property Through Partnership]

A CFC partner in a partnership that acquires U.S. real estate has a § 956 acquisition to the extent of his partnership interest percentage. Treas. Reg § 1.956-2(a)(3).

Front 21

Rev. Rul. 78-281

Back 21

[Non-Functional Currency Borrowing & Purchase]

Basis of business property purchased with foreign currency borrowed from foreign bank before devaluation of currency is equivalent to U.S. dollars of cost of property on date of purchase. This ruling pre-dates the enactment of sections 985, 987 and 988. If a "qualified business unit" (QBU) exists in the foreign country, then separate rules apply.

Front 22

Rev. Rul. 87-47

Back 22

[Corporation Formed to Hold Stock of Foreign Corporation]

311(b) gain on distribution of Foreign Sub to US Parent characterized as dividend under 1248. (Actual distribution was US HoldCo with foreign stock, but 1248(e) treats as direct distribution of foreign stock.)

Front 23

Rev. Rul. 87-96

Back 23

[Intercompany In-Kind Dividend of Foreign Subsidiary]

On transfer to parent of appreciated stock of controlled foreign corp., transaction will be treated as sale for purposes of Code Sec. 1248(a), but sub. will not recognize Code Sec. 311(b) gain as dividend income until triggering event of Reg § 1.1502-13(f) occurs.

Front 24

Rev. Rul. 90-31

Back 24

[Section 959(e): Section 1248 PTI Account]

Earnings and profits of a CFC are decreased by amounts previously included in gross income of the transferor shareholder as a dividend under Code Sec. 1248 at the time of the actual distribution of PTI attributable to such dividend (i.e., 959(c)(2) pool) and not at the time of the sale triggering the 1248 inclusion.