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72078 Federal Register/Vol. 85, No. 219/Thursday, November 12, 2020/Proposed Rules
DEPARTMENT OF THE TREASURY submissions to: CC:PA:LPD:PR (REG– published in the Federal Register (85
101657–20), Room 5203, Internal FR 43042).
Internal Revenue Service Revenue Service, P.O. Box 7604, Ben This document contains proposed
Franklin Station, Washington, DC regulations (the ‘‘proposed regulations’’)
26 CFR Part 1 20044. addressing: (1) The determination of
[REG–101657–20] FORFURTHERINFORMATIONCONTACT: foreign income taxes subject to the
Concerning the proposed regulations credit and deduction disallowance
RIN 1545–BP70 under §§1.245A(d)–1, 1.336–2, 1.338–9, provision of section 245A(d); (2) the
Guidance Related to the Foreign Tax 1.861–3, 1.861–20, 1.904–6, 1.960–1, determination of oil and gas extraction
Credit; Clarification of Foreign-Derived and 1.960–2, Suzanne M. Walsh, (202) income from domestic and foreign
Intangible Income 317–4908; concerning §§1.250(b)–1, sources and of electronically supplied
1.861–8, 1.861–9, and 1.861–14, Jeffrey services under the section 250
AGENCY: Internal Revenue Service (IRS), P. Cowan, (202) 317–4924; concerning regulations; (3) the impact of the repeal
Treasury. §1.250(b)–5, Brad McCormack, (202) of section 902 on certain regulations
ACTION: Notice of proposed rulemaking. 317–6911; concerning §§1.164–2, issued under section 367(b); (4) the
1.901–1, 1.901–2, 1.903–1, 1.905–1, and sourcing of inclusions under sections
SUMMARY: This document contains 1.905–3, Tianlin (Laura) Shi, (202) 317– 951, 951A, and 1293; (5) the allocation
proposed regulations relating to the 6987; concerning §§1.367(b)–3, and apportionment of interest
foreign tax credit, including guidance 1.367(b)–4, and 1.367(b)–10, Logan deductions, including rules for
on the disallowance of a credit or Kincheloe, (202) 317–6075; concerning allocating interest expense of foreign
deduction for foreign income taxes with §§1.367(b)–7, 1.861–10, 1.904–2, 1.904– bank branches and certain regulated
respect to dividends eligible for a 4, 1.904–5, and 1.904(f)–12, Jeffrey L. utility companies, an election to
dividends-received deduction; the Parry, (202) 317–4916; concerning capitalize research and experimental
allocation and apportionment of interest submissions of comments and requests expenditures and advertising expenses
expense, foreign income tax expense, for a public hearing, Regina Johnson, for purposes of calculating tax basis,
and certain deductions of life insurance (202) 317–5177 (not toll-free numbers). and a revision to the controlled foreign
companies; the definition of a foreign SUPPLEMENTARYINFORMATION: corporation (‘‘CFC’’) netting rule; (6) the
income tax and a tax in lieu of an allocation and apportionment of section
income tax; transition rules relating to Background 818(f) expenses of life insurance
the impact on loss accounts of net On December 7, 2018, the Treasury companies that are members of
operating loss carrybacks allowed by Department and the IRS published consolidated groups; (7) the allocation
reason of the Coronavirus Aid, Relief, proposed regulations (REG–105600–18) and apportionment of foreign income
and Economic Security Act; the relating to foreign tax credits in the taxes, including taxes imposed with
definition of foreign branch category Federal Register (83 FR 63200) (the respect to disregarded payments; (8) the
and financial services income; and the ‘‘2018 FTC proposed regulations’’). definitions of a foreign income tax and
time at which foreign taxes accrue and Those regulations addressed several a tax in lieu of an income tax, including
can be claimed as a credit. This significant changes that the Tax Cuts the addition of a jurisdictional nexus
document also contains proposed and Jobs Act (Pub. L. 115–97, 131 Stat. requirement and changes to the net gain
regulations clarifying rules relating to 2054, 2208 (2017)) (the ‘‘TCJA’’) made requirement, the treatment of certain tax
foreign-derived intangible income. The with respect to the foreign tax credit credits, the treatment of foreign tax law
proposed regulations affect taxpayers rules and related rules for allocating and elections for purposes of the
that claim credits or deductions for apportioning deductions in determining noncompulsory payment rules, and the
foreign income taxes, or that claim a the foreign tax credit limitation. On substitution requirement under section
deduction for foreign-derived intangible December 17, 2019, portions of the 2018 903; (9) the allocation of the liability for
income. FTC proposed regulations were foreign income taxes in connection with
DATES: Written or electronic comments finalized in TD 9882, published in the certain mid-year transfers or
and requests for a public hearing must Federal Register (84 FR 69022) (the reorganizations; (10) transition rules to
be received by February 10, 2021. ‘‘2019 FTC final regulations’’). On the account for the effect on loss accounts
ADDRESSES: Commenters are strongly same date, new proposed regulations of net operating loss carrybacks to pre-
encouraged to submit public comments were issued addressing changes made 2018 taxable years that are allowed
electronically. Submit electronic by the TCJA as well as other related under the Coronavirus Aid, Relief, and
submissions via the Federal foreign tax credit rules (the ‘‘2019 FTC Economic Security Act, Public Law
eRulemaking Portal at proposed regulations’’). Correcting 116–136, 134 Stat. 281 (2020); (11) the
www.regulations.gov (indicate IRS and amendments to the 2019 FTC final foreign branch category rules in §1.904–
REG–101657–20) by following the regulations and the 2019 FTC proposed 4(f) and the definition of a financial
online instructions for submitting regulations were published in the services entity for purposes of section
comments. Once submitted to the Federal Register on May 15, 2020, see 904; and (12) the time at which credits
Federal eRulemaking Portal, comments 85 FR 29323 (2019 FTC final for foreign income taxes can be claimed
cannot be edited or withdrawn. The IRS regulations) and 85 FR 29368 (2019 FTC pursuant to sections 901(a) and 905(a).
expects to have limited personnel proposed regulations). The 2019 FTC Explanation of Provisions
available to process public comments proposed regulations are finalized in the I. Foreign Income Taxes With Respect
that are submitted on paper through Rules and Regulations section of this to Dividends for Purposes of Section
mail. The Department of the Treasury issue of the Federal Register (the ‘‘2020 245A(d)
(the ‘‘Treasury Department’’) and the FTC final regulations’’).
IRS will publish for public availability On July 15, 2020, the Treasury Section 245A(d)(1) provides that no
any comment submitted electronically, Department and the IRS finalized credit is allowed under section 901 for
and to the extent practicable on paper, regulations under section 250 (the any taxes paid or accrued (or treated as
to its public docket. Send paper ‘‘section 250 regulations’’) in TD 9901, paid or accrued) with respect to any
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Federal Register/Vol. 85, No. 219/Thursday, November 12, 2020/Proposed Rules 72079
dividend for which a deduction is earnings and profits, even though the law) out of earnings and profits that,
allowed under that section. Section person paying or accruing the foreign under the rules in §1.861–20, are
245A(d)(2) disallows a deduction under income tax does not have a treated as distributed out of previously
chapter 1 for any tax for which a credit corresponding U.S. item in the form of taxed earnings and profits (and therefore
is not allowable under section 901 by a distribution of, or income inclusion foreign income taxes attributable to such
reason of section 245A(d)(1). Section with respect to, such earnings and amounts are not generally subject to the
245A(e)(3) also provides that no credit profits. See, for example, §1.861– disallowance under section 245A(d)),
or deduction is allowed for foreign 20(d)(2)(ii)(B), (C), or (D) (foreign law when there is no reduction of such
income taxes paid or accrued with distribution or foreign law disposition previously taxed earnings and profits
respect to a hybrid dividend or a tiered and certain foreign law transfers due to the absence of a distribution
hybrid dividend. between taxable units), (d)(3)(i)(C) under Federal income tax law. See
Proposed §1.245A(d)–1(a) generally (income from a reverse hybrid), proposed §1.245A(d)–1(e)(4) (Example
provides that neither a foreign tax credit (d)(3)(iii) (foreign law inclusion regime), 3). The Treasury Department and the
under section 901 nor a deduction is and proposed §1.861– IRS are concerned that because the rules
allowed for foreign income taxes (as 20(d)(3)(v)(C)(1)(i) (disregarded payment in §1.861–20(d) addressing foreign law
defined in §1.901–2(a)) that are treated as a remittance). Specified distributions and dispositions do not
‘‘attributable to’’ certain amounts. For earnings and profits means earnings and currently make adjustments to a foreign
this purpose, the proposed regulations profits that would give rise to a section corporation’s earnings and profits to
rely on the rules in §1.861–20, 245A deduction (without regard to the reflect distributions that are not
contained in the 2020 FTC final holding period requirement under recognized for Federal income tax
regulations and proposed to be modified section 246 or the rules under §1.245A– purposes, such foreign law transactions
in these proposed regulations, that 5 that disallow a deduction under could be used to circumvent the
allocate and apportion foreign income section 245A(a) for certain dividends), a purposes of section 245A(d). Comments
taxes to income for purposes of various hybrid dividend, or a tiered hybrid are requested on potential revisions to
operative sections, including sections dividend, or a distribution sourced from §1.861–20(d) that could address these
904, 960, and 965(g). Specifically, section 245A(d) PTEP if an amount of concerns, including the possibility of
proposed §1.245A(d)–1 provides that money equal to all of the foreign maintaining separate earnings and
§1.861–20 (which includes portions corporation’s earnings and profits were profits accounts, characterized with
contained in these proposed regulations distributed. Therefore, for example, a reference to the relevant statutory and
as well as in the 2020 FTC final credit or deduction for foreign income residual groupings, for each taxable unit
regulations) applies for purposes of taxes paid or accrued by a domestic whereby the accounts would be
determining foreign income taxes paid corporation that is a United States adjusted annually to reflect transactions
or accrued that are attributable to any shareholder (‘‘U.S. shareholder’’) with that occurred under foreign law but not
dividend for which a deduction is respect to a distribution that is not under Federal income tax law.
allowed under section 245A(a), to a recognized for Federal income tax II. Clarifications to Regulations Under
hybrid dividend or tiered hybrid purposes (for example, in the case of a Section 250
dividend, or to previously taxed consent dividend under foreign tax law
earnings and profits that arose as a that is not regarded for Federal income A. Definition of Domestic and Foreign
result of a sale or exchange that by tax purposes, or a distribution of stock Oil and Gas Extraction Income
reason of section 964(e)(4) or 1248 gave that is excluded from gross income Section 250 provides a domestic
rise to a deduction under section under section 305(a) but is treated as a corporation a deduction (‘‘section 250
245A(a) or as a result of a tiered hybrid taxable dividend under foreign tax law) deduction’’) for its foreign-derived
dividend that by reason of section is not allowed under section 245A(d) to intangible income (‘‘FDII’’) as well as its
245A(e)(2) gave rise to an inclusion in the extent those foreign income taxes global intangible low-taxed income
the gross income of a United States are attributable to specified earnings (‘‘GILTI’’) inclusion amount and the
shareholder (collectively, such and profits. amount treated as a dividend under
previously taxed earnings and profits An anti-avoidance rule is included in section 78 that is attributable to its
are referred to as ‘‘section 245A(d) proposed §1.245A(d)–1 to address GILTI inclusion. The section 250
PTEP’’). situations in which taxpayers engage in deduction attributable to FDII is
In addition, the rules apply to foreign
income taxes that are imposed with transactions with a principal purpose of calculated in part by determining the
respect to certain foreign taxable events, avoiding the purposes of section foreign-derived portion of a
such as a deemed distribution under 245A(d), which is to disallow a foreign corporation’s deduction eligible income
foreign law or an inclusion under a tax credit or deduction with respect to (‘‘DEI’’). DEI is defined as the excess of
foreign law CFC inclusion regime, even foreign income taxes imposed on gross DEI over the deductions
though such event does not give rise to income that is effectively exempt from (including taxes) properly allocable to
a distribution or inclusion for Federal tax (due to the availability of a such gross income. See section
income tax purposes. Proposed deduction under section 245A(a)) or 250(b)(3)(A) and §1.250(b)–1(c)(2).
§1.245A(d)–1(a) provides that foreign with respect to foreign income taxes Gross DEI is determined without regard
income taxes that are attributable to imposed on a hybrid dividend or tiered to domestic oil and gas extraction
‘‘specified earnings and profits’’ are also hybrid dividend. Such transactions may income (‘‘DOGEI’’), which is defined as
subject to the disallowance under include transactions to separate foreign income described in section 907(c)(1)
section 245A(d). Under proposed income taxes from the income to which determined by substituting ‘‘within the
§1.245A(d)–1(b), §1.861–20 applies to they relate in situations that are not United States’’ for ‘‘without the United
determine whether foreign income taxes explicitly covered under §1.861–20 States.’’ See section 250(b)(3)(B) and
are attributable to specified earnings (including, for example, loss sharing §1.250(b)–1(c)(7). Similarly, foreign oil
and profits. Under §1.861–20, foreign transactions under group relief regimes). and gas extraction income (‘‘FOGEI’’) as
income taxes may be allocated and Such transactions may also include defined in section 907(c)(1) is excluded
apportioned by reference to specified successive distributions (under foreign from the computation of gross tested
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72080 Federal Register/Vol. 85, No. 219/Thursday, November 12, 2020/Proposed Rules
income which is used to determine a service) are not electronically supplied offset only earnings and profits
U.S. shareholder’s GILTI inclusion services. For example, certain services accumulated by the foreign surviving
amount. See §1.951A–2(c)(1)(v). for which automation or electronic corporation after the section 381
The Treasury Department and the IRS delivery is not a primary driver of value, transaction. Under §1.367(b)–7(d)(2)(ii),
have determined that it would be such as legal, accounting, medical, or the reduction or offset was generally
inappropriate for taxpayers to use teaching services delivered deemed to occur as of the first day of the
inconsistent methods to determine the electronically and synchronously, are foreign surviving corporation’s first
amounts of DOGEI and FOGEI from the not electronically supplied services. taxable year following the year in which
sale of oil or gas that has been III. Carryover of Earnings and Profits the post-transaction earnings
transported or processed. Taxpayers and Taxes When One Foreign accumulated.
with both types of income may have an Corporation Acquires Assets of Another A nonpooling corporation is a foreign
incentive to minimize their DOGEI in Foreign Corporation in a Section 381 corporation that is not a pooling
order to maximize their potential Transaction corporation and, as a result, maintains
section 250 deduction attributable to ‘‘annual layers’’ of pre-1987
FDII, while in contrast maximizing their Section 1.367(b)–7 provides rules accumulated profits and pre-1987
FOGEI in order to minimize their gross regarding the manner and the extent to foreign income taxes. See §1.367(b)–
tested income, even though this would which earnings and profits and foreign 2(l)(10). In general, a foreign surviving
also decrease the amount of the section income taxes of a foreign corporation corporation maintains the annual layers
250 deduction attributable to their carry over when one foreign corporation of pre-1987 accumulated profits and
GILTI inclusion amount. Accordingly, (‘‘foreign acquiring corporation’’) pre-1987 foreign income taxes, and the
the proposed regulations provide that acquires the assets of another foreign taxes related to a deficit in an annual
taxpayers must use a consistent method corporation (‘‘foreign target layer cannot be associated with post-
for purposes of determining both DOGEI corporation’’) in a transaction described section 381 transaction earnings of the
and FOGEI. See proposed §1.250(b)– in section 381 (the combined foreign surviving corporation.
1(c)(7). Similarly, for purposes of corporation, the ‘‘foreign surviving As a result of the repeal of section 902
allocating and apportioning deductions, corporation’’). See §1.367(b)–7(a). in the TCJA, post-1986 foreign income
taxpayers are already required under Before the repeal of section 902 in the taxes and pre-1987 foreign income taxes
existing regulations to use the same TCJA, these rules were primarily of foreign corporations are generally no
method of allocation and the same relevant for determining the foreign longer relevant for taxable years
principles of apportionment where more income taxes of the foreign surviving beginning on or after January 1, 2018. In
than one operative section, for example corporation that were considered addition, consistent with the TCJA, the
sections 250 and 904, apply. See deemed paid by its U.S. shareholder Treasury Department and the IRS issued
§1.861–8(f)(2)(i). with respect to a distribution or regulations under section 960 clarifying
B. Definition of Electronically Supplied inclusion under section 902 or 960, that only current year taxes are taken
Service respectively. into account in determining taxes
Section 1.367(b)–7 applies differently deemed paid under section 960. See
Section 1.250(b)–5(c)(5) defines the with respect to ‘‘pooling corporations’’ §1.960–1(c)(2). Current year tax means
term ‘‘electronically supplied service’’ and ‘‘nonpooling corporations.’’ A certain foreign income tax paid or
to mean a general service (other than an pooling corporation is a foreign accrued by a controlled foreign
advertising service) that is delivered corporation with respect to which corporation in a current taxable year.
primarily over the internet or an certain ownership requirements were See §1.960–1(b)(4).
electronic network, and provides that satisfied in pre-2018 taxable years and In light of the changes made by the
such services include, by way of that, as a result, maintained ‘‘pools’’ of TCJA and subsequent implementing
examples, cloud computing and digital post-1986 undistributed earnings and regulations, the proposed regulations
streaming services. related post-1986 foreign income taxes. provide rules to clarify the treatment of
Since the publication of the section See §1.367(b)–2(l)(9). In general, if the foreign income taxes of a foreign
250 regulations, the Treasury foreign surviving corporation was a surviving corporation in taxable years of
Department and the IRS have pooling corporation, the post-1986 foreign corporations beginning on or
determined that the definition of undistributed earnings and post-1986 after January 1, 2018, and for taxable
electronically supplied services could foreign income taxes of the foreign years of U.S. shareholders in which or
be interpreted in a manner that includes acquiring corporation and the foreign with which such taxable years of foreign
services that were not primarily target corporation were combined on a corporations end (‘‘post-2017 taxable
electronic and automated in nature but separate category-by-separate category years’’). The proposed regulations
rather where the renderer applies basis. See §1.367(b)–7(d)(1). However, provide that all foreign target
human effort or judgment, such as the regulations required the foreign corporations, foreign acquiring
professional services that are provided surviving corporation to combine the corporations, and foreign surviving
through the internet or an electronic taxes related to a deficit in a separate corporations are treated as nonpooling
network. Therefore, these proposed category of post-1986 undistributed corporations in post-2017 taxable years
regulations clarify that the value of the earnings of one or both of the foreign and that any amounts remaining in the
service to the end user must be derived acquiring corporation or foreign target post-1986 undistributed earnings and
primarily from the service’s automation corporation (a ‘‘hovering deficit’’) with post-1986 foreign income taxes of any
or electronic delivery in order to be an other post-1986 foreign income taxes in such corporation as of the end of the
electronically supplied service. The that separate category only on a pro rata foreign corporation’s last taxable year
regulations further provide that services basis as the hovering deficit was beginning before January 1, 2018, are
that primarily involve the application of absorbed by post-transaction earnings in treated as earnings and taxes in a single
human effort by the renderer to provide the same separate category. See pre-pooling annual layer in the foreign
the service (not including the effort §1.367(b)–7(d)(2)(iii). Similarly, a corporation’s post-2017 taxable years.
involved in developing or maintaining hovering deficit in a separate category of The proposed regulations also clarify
the technology to enable the electronic post-1986 undistributed earnings could that foreign income taxes that are
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Federal Register/Vol. 85, No. 219/Thursday, November 12, 2020/Proposed Rules 72081
related to non-previously taxed earnings 4(b)(2)(i)(B) is revised to require that a dividend to which such section 951
of a foreign acquiring corporation and a domestic corporation owns at least 10 inclusion gave rise by reason of taxes
foreign target corporation that were percent of the transferee foreign deemed paid by such domestic
accumulated in taxable years before the corporation by vote or value. corporation, was derived from sources
current taxable year of the foreign Comments are requested as to within the foreign country or possession
corporation, or in a foreign target whether further changes to §1.367(b)–4 of the United States under the laws of
corporation’s taxable year that ends on or 1.367(b)–7, or any changes to other which such foreign corporation, or the
the date of the section 381 transaction, regulations issued under section 367, first-tier corporation in the same chain
are not treated as current year taxes (as are appropriate in order to clarify their of ownership as such foreign
defined in §1.960–1(b)(4)) of a foreign application after the repeal of section corporation, was created or organized.
surviving corporation in any post-2017 902. In addition, the Treasury Although section 904(h)(1) treats as
taxable year. Furthermore, the proposed Department and the IRS are studying the from sources within the United States
regulations clarify that foreign income interaction of §1.367(b)–4(b)(2) with certain amounts included in gross
taxes related to hovering deficits are not section 245A and other Code provisions income under section 951(a) that
current year taxes in the year that the and considering whether additional otherwise would be treated as derived
hovering deficit is absorbed, in part revisions to the regulation are from sources without the United States,
because the hovering deficit is not appropriate in light of TCJA generally. absent former §1.960–1(h)(1), no rule
considered to offset post-1986 Comments are specifically requested specifies the source of inclusions under
undistributed earnings until the first with respect to the proposed revisions section 951 before the application of
day of the foreign surviving to §1.367(b)–4(b)(2), including whether section 904(h)(1). In addition, the rule
corporation’s first taxable year following there is a continuing need to prevent in former §1.960–1(h)(1) only provided
the year in which the post-transaction excessive potential shifting of earnings for the source of a domestic
earnings accumulated. In addition, and profits through the use of preferred corporation’s section 951 inclusions for
because such taxes were paid or accrued stock in light of the TCJA generally. For purposes of section 904. A similar lack
by a foreign corporation in a prior example, the Treasury Department and of guidance exists with respect to the
taxable year, they are not considered the IRS are considering, and request source of inclusions under section
paid or accrued by the foreign comments on, the extent to which, in 951A. See section 951A(f)(1)(A)
corporation in the current taxable year certain transactions described in (requiring the application of section
and therefore are not current year taxes §1.367(b)–4(b)(2), (1) an exchanging 904(h)(1) with respect to amounts
under §1.960–1(b)(4). Finally, foreign shareholder who would not qualify for included in gross income under section
income taxes related to a hovering a deduction under section 245A could 951A(a) in the same manner as amounts
deficit in pre-1987 accumulated profits potentially shift earnings and profits of included under section 951(a)(1)(A)).
generally will not be reduced or deemed a foreign acquired corporation to a The removal of former §1.960–1(h)(1)
paid unless a foreign tax refund restores transferee foreign corporation with a also left uncertain the source of amounts
a positive balance to the associated domestic corporate shareholder that included in gross income as a result of
earnings pursuant to section 905(c); would qualify for a deduction under an election under section 1293(a),
therefore, such foreign income taxes are section 245A, or (2) a domestic because under section 1293(f)(1), such
never included in current year taxes. corporate exchanging shareholder of a amounts are treated for purposes of
In addition to the proposed changes to foreign acquired corporation with no section 960 as amounts included in
§1.367(b)–7, the proposed regulations earnings and profits could access the gross income under section 951(a).
remove some references to section 902 earnings and profits of a transferee To clarify the source of income
in other regulations issued under foreign corporation. inclusions after the removal of former
section 367(b) that are no longer IV. Source of Inclusions Under Sections §1.960–1(h)(1), the proposed
relevant as a result of the repeal of 951, 951A, 1293, and Associated regulations include a new rule in
section 902. For example, pursuant to Section 78 Dividend §1.861–3(d), which provides that for
§1.367(b)–4(b)(2), a deemed dividend purposes of the sourcing provisions an
Sections 861(a) and 862(a) contain amount included in the gross income of
inclusion is required in certain cases rules to determine the source of certain a United States person under section
upon the receipt of preferred stock by an items of gross income. Section 863(a) 951 is treated as a dividend received by
exchanging shareholder, in order to provides that the source of items of the United States person directly from
prevent the excessive potential shifting gross income not specified in sections the foreign corporation that generated
of earnings and profits, notwithstanding 861(a) and 862(a) will be determined the inclusion.
that the exchanging shareholder’s status under regulations prescribed by the This proposed rule differs from
as a section 1248 shareholder is Secretary. As a result of changes to former §1.960–1(h)(1) in two respects.
preserved. One of the conditions for section 960 made by the TCJA, the First, former §1.960–1(h)(1) provided
application of the rule requires a Treasury Department and the IRS that if the foreign corporation that
domestic corporation to meet the revised the regulations under section generated the income included under
ownership threshold of section 902(a) or 960. As part of that revision, the section 951 was held indirectly through
(b) and, thus, be eligible for a deemed Treasury Department and the IRS other foreign corporations, the amount
paid credit on distributions from the removed former §1.960–1(h)(1), which included was treated as if it had been
transferee foreign corporation. contained a source rule for the amount paid through such intermediate
§1.367(b)–4(b)(2)(i)(B). These proposed included in gross income under section corporations and as received from the
rules generally retain the substantive 951 and the associated section 78 first-tier foreign corporation. The
ownership threshold of this dividend. Section 1.960–1(h)(1) Treasury Department and the IRS have
requirement, but without reference to provided that, for purposes of section determined that, in light of the repeal of
section 902 and by modifying the 904, the amount included in gross section 902, and because a section 951
ownership threshold requirement to income of a domestic corporation under inclusion with respect to a lower-tier
consider not only voting power but section 951 with respect to a foreign CFC is not treated as a deemed
value as well. Specifically, §1.367(b)– corporation, plus any section 78 distribution through the first-tier CFC,
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