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Title 26 Part 1 → §1.951a-0

Title 26 → Chapter I → Subchapter A → Part 1 → §1.951a-0

Electronic Code of Federal Regulations e-CFR

Title 26 Part 1 → §1.951a-0

e-CFR data is current as of November 13, 2019

Title 26Chapter ISubchapter APart 1 → §1.951a-0


Title 26: Internal Revenue
PART 1—INCOME TAXES (CONTINUED)


§1.951A-0   Outline of section 951A regulations.

This section lists the headings for §§1.951A-1 through 1.951A-7.

§1.951A-1   General provisions.

(a) Overview.

(1) In general.

(2) Scope.

(b) Inclusion of global intangible low-taxed income.

(c) Determination of GILTI inclusion amount.

(1) In general.

(2) Definition of net CFC tested income.

(3) Definition of net deemed tangible income return.

(i) In general.

(ii) Definition of deemed tangible income return.

(iii) Definition of specified interest expense.

(4) Determination of GILTI inclusion amount for consolidated groups.

(d) Determination of pro rata share.

(1) In general.

(2) Tested income.

(i) In general.

(ii) Special rule for prior allocation of tested loss.

(3) Qualified business asset investment.

(i) In general.

(ii) Special rule for excess hypothetical tangible return.

(A) In general.

(B) Determination of pro rata share of hypothetical tangible return.

(C) Definition of hypothetical tangible return.

(iii) Examples.

(A) Example 1.

(1) Facts.

(2) Analysis.

(i) Determination of pro rata share of tested income.

(ii) Determination of pro rata share of qualified business asset investment.

(B) Example 2.

(1) Facts.

(2) Analysis.

(i) Determination of pro rata share of tested income.

(ii) Determination of pro rata share of qualified business asset investment.

(C) Example 3.

(1) Facts.

(2) Analysis.

(i) Determination of pro rata share of tested income.

(ii) Determination of pro rata share of qualified business asset investment.

(4) Tested loss.

(i) In general.

(ii) Special rule in case of accrued but unpaid dividends.

(iii) Special rule for stock with no liquidation value.

(iv) Examples.

(A) Example 1.

(1) Facts.

(2) Analysis.

(B) Example 2.

(1) Facts.

(2) Analysis.

(i) Year 1.

(ii) Year 2.

(5) Tested interest expense.

(6) Tested interest income.

(e) Treatment of domestic partnerships.

(1) In general.

(2) Non-application for determination of status as United States shareholder and controlled foreign corporation.

(3) Examples.

(i) Example 1.

(A) Facts.

(B) Analysis.

(1) CFC and United States shareholder determinations.

(2) Application of section 951A.

(ii) Example 2.

(A) Facts.

(B) Analysis.

(1) CFC and United States shareholder determination.

(2) Application of section 951A.

(f) Definitions.

(1) CFC inclusion year.

(2) Controlled foreign corporation.

(3) Hypothetical distribution date.

(4) Section 958(a) stock.

(5) Tested item.

(6) United States shareholder.

(7) U.S. shareholder inclusion year.

§1.951A-2   Tested income and tested loss.

(a) Scope.

(b) Definitions related to tested income and tested loss.

(1) Tested income and tested income CFC.

(2) Tested loss and tested loss CFC.

(c) Rules relating to the determination of tested income and tested loss.

(1) Definition of gross tested income.

(2) Determination of gross income and allowable deductions.

(i) In general.

(ii) Deemed payment under section 367(d).

(3) Allocation of deductions to gross tested income.

(4) Gross income taken into account in determining subpart F income.

(i) In general.

(ii) Items of gross income included in subpart F income.

(A) Insurance income.

(B) Foreign base company income.

(C) International boycott Income.

(D) Illegal bribes, kickbacks, or other payments.

(E) Income earned in certain foreign countries.

(iii) Coordination rules.

(A) Coordination with E&P limitation.

(B) Coordination with E&P recapture.

(C) Coordination with full inclusion rule and high tax exception.

(iv) Examples.

(A) Example 1.

(1) Facts.

(2) Analysis.

(i) Year 1.

(ii) Year 2.

(B) Example 2.

(1) Facts.

(2) Analysis.

(i) FC1.

(ii) FC2.

(C) Example 3.

(1) Facts.

(2) Analysis.

(i) Foreign base company income.

(ii) Recapture of subpart F income.

(iii) Gross tested income.

(5) Allocation of deduction or loss attributable to disqualified basis.

(i) In general.

(ii) Determination of deduction or loss attributable to disqualified basis.

(iii) Definitions.

(A) Disqualified basis.

(B) Residual CFC gross income.

(iv) Examples.

(A) Example 1: Sale of intangible property during the disqualified period.

(1) Facts.

(2) Analysis.

(B) Example 2: Related party transfer after the disqualified period; gain recognition.

(1) Facts.

(2) Analysis.

(C) Example 3: Related party transfer after the disqualified period; loss recognition.

(1) Facts.

(2) Analysis.

§1.951A-3   Qualified business asset investment.

(a) Scope.

(b) Qualified business asset investment.

(c) Specified tangible property.

(1) In general.

(2) Tangible property.

(d) Dual use property.

(1) In general.

(2) Definition of dual use property.

(3) Dual use ratio.

(4) Example.

(i) Facts.

(ii) Analysis.

(A) Dual use property.

(B) Depreciation not capitalized to inventory.

(C) Depreciation capitalized to inventory.

(e) Determination of adjusted basis in specified tangible property.

(1) In general.

(2) Effect of change in law.

(3) Specified tangible property placed in service before enactment of section 951A.

(i) In general.

(ii) Election to use income and earnings and profits depreciation method for property placed in service before the first taxable year beginning after December 22, 2017.

(A) In general.

(B) Manner of making the election.

(f) Special rules for short taxable years.

(1) In general.

(2) Determination of quarter closes.

(3) Reduction of qualified business asset investment.

(4) Example.

(i) Facts.

(ii) Analysis.

(A) Determination of short taxable years and quarters.

(B) Calculation of qualified business asset investment for the first short taxable year.

(C) Calculation of qualified business asset investment for the second short taxable year.

(g) Partnership property.

(1) In general.

(2) Determination of partnership QBAI.

(3) Determination of partner adjusted basis.

(i) In general.

(ii) Sole use partnership property.

(A) In general.

(B) Definition of sole use partnership property.

(iii) Dual use partnership property.

(A) In general.

(B) Definition of dual use partnership property.

(4) Determination of proportionate share of the partnership's adjusted basis in partnership specified tangible property.

(i) In general.

(ii) Proportionate share ratio.

(5) Definition of partnership specified tangible property.

(6) Determination of partnership adjusted basis.

(7) Determination of partner-specific QBAI basis.

(8) Examples.

(i) Facts.

(ii) Example 1: Sole use partnership property.

(A) Facts.

(B) Analysis.

(1) Sole use partnership property.

(2) Proportionate share.

(3) Partner adjusted basis.

(4) Partnership QBAI.

(iii) Example 2: Dual use partnership property.

(A) Facts.

(1) Asset C.

(2) Asset D.

(3) Asset E.

(B) Analysis.

(1) Asset C.

(i) Proportionate share.

(ii) Dual use ratio.

(iii) Partner adjusted basis.

(3) Asset D.

(i) Proportionate share.

(ii) Dual use ratio.

(iii) Partner adjusted basis.

(4) Asset E.

(i) Proportionate share.

(ii) Dual use ratio.

(iii) Partner adjusted basis.

(5) Partnership QBAI.

(iv) Example 3: Sole use partnership specified tangible property; section 743(b) adjustments.

(A) Facts.

(B) Analysis.

(v) Example 4: Tested income CFC with distributive share of loss from a partnership.

(A) Facts.

(B) Analysis.

(vi) Example 5: Tested income CFC sale of partnership interest before CFC inclusion date.

(A) Facts.

(B) Analysis.

(1) FC1.

(2) FC2.

(vii) Example 6: Partnership adjusted basis; distribution of property in liquidation of partnership interest.

(A) Facts.

(B) Analysis.

(h) Anti-avoidance rules related to certain transfers of property.

(1) Disregard of adjusted basis in specified tangible property held temporarily.

(i) In general.

(ii) Disregard of first quarter close.

(iii) Safe harbor for certain transfers involving CFCs.

(iv) Determination of principal purpose and transitory holding.

(A) Presumption for ownership less than 12 months.

(B) Presumption for ownership greater than 36 months.

(v) Determination of holding period.

(vi) Treatment as single applicable U.S. shareholder.

(vii) Examples.

(A) Facts.

(B) Example 1: Qualification for safe harbor.

(1) Facts.

(2) Analysis.

(C) Example 2: Transfers between CFCs with different taxable year ends.

(1) Facts.

(2) Analysis.

(D) Example 3: Acquisition from unrelated person.

(1) Facts.

(2) Analysis.

(E) Example 4: Acquisitions from tested loss CFCs.

(1) Facts.

(2) Analysis.

(2) Disregard of adjusted basis in property transferred during the disqualified period.

(i) Operative rules.

(A) In general.

(B) Application to dual use property.

(C) Application to partnership specified tangible property.

(ii) Determination of disqualified basis.

(A) In general.

(B) Adjustments to disqualified basis.

(1) Reduction or elimination of disqualified basis.

(i) In general.

(ii) Exception for related party transfers.

(2) Increase to disqualified basis for nonrecognition transactions.

(i) Increase corresponding to adjustments in other property.

(ii) Exchanged basis property.

(iii) Increase by reason of section 732(d).

(3) Election to eliminate disqualified basis.

(i) In general.

(ii) Manner of making the election with respect to a controlled foreign corporation.

(iii) Manner of making the election with respect to a partnership.

(iv) Conditions of making an election.

(C) Definitions related to disqualified basis.

(1) Disqualified period.

(2) Disqualified transfer.

(3) Qualified gain amount.

(4) Related person.

(5) Transfer.

(6) Transferor CFC.

(iii) Examples.

(A) Example 1: Sale of asset; disqualified period.

(1) Facts.

(2) Analysis.

(B) Example 2: Sale of asset; no disqualified period.

(1) Facts.

(2) Analysis.

(C) Example 3: Sale of partnership interest.

(1) Facts.

(2) Analysis.

(D) Example 4: Distribution of property in liquidation of partnership interest.

(1) Facts.

(2) Analysis.

(E) Example 5: Distribution of property to a partner in basis reduction transaction.

(1) Facts.

(2) Analysis.

(F) Example 6: Dual use property with disqualified basis.

(1) Facts.

(2) Analysis.

§1.951A-4   Tested interest expense and tested interest income.

(a) Scope.

(b) Definitions related to specified interest expense.

(1) Tested interest expense.

(i) In general.

(ii) Interest expense.

(iii) Qualified interest expense.

(A) In general.

(B) Qualified asset.

(1) In general.

(2) Exclusion for related party receivables.

(3) Look-through rule for subsidiary stock.

(4) Look-through rule for certain partnership interests.

(iv) Tested loss QBAI amount.

(2) Tested interest income.

(i) In general.

(ii) Interest income.

(iii) Qualified interest income.

(A) In general.

(B) Exclusion for related party interest.

(c) Examples.

(1) Example 1: Wholly-owned CFCs.

(i) Facts.

(ii) Analysis.

(A) CFC-level determination; tested interest expense and tested interest income.

(1) Tested interest expense and tested interest income of FS1.

(2) Tested interest expense and tested interest income of FS2.

(B) United States shareholder-level determination; pro rata share and specified interest expense.

(2) Example 2: Less than wholly-owned CFCs.

(i) Facts.

(ii) Analysis.

(A) CFC-level determination; tested interest expense and tested interest income.

(B) United States shareholder-level determination; pro rata share and specified interest expense.

(3) Example 3: Operating company; qualified interest expense.

(i) Facts.

(ii) Analysis.

(A) CFC-level determination; tested interest expense and tested interest income.

(1) Tested interest expense and tested interest income of FS1.

(2) Tested interest expense and tested interest income of FS2.

(B) United States shareholder-level determination; pro rata share and specified interest expense.

(4) Example 4: Holding company; qualified interest expense.

(i) Facts.

(ii) Analysis.

(A) CFC-level determination; tested interest expense and tested interest income.

(1) Tested interest expense and tested interest income of FS1.

(2) Tested interest expense and tested interest income of FS2.

(3) Tested interest expense and tested interest income of FS3.

(B) United States shareholder-level determination; pro rata share and specified interest expense.

(5) Example 5: Specified interest expense and tested loss QBAI amount.

(i) Facts.

(ii) Analysis.

(A) CFC-level determination; tested interest expense and tested interest income.

(1) Tested interest expense and tested interest income of FS1.

(2) Tested interest expense and tested interest income of FS2.

(B) United States shareholder-level determination; pro rata share and specified interest expense.

§1.951A-5   Treatment of GILTI inclusion amounts.

(a) Scope.

(b) Treatment as subpart F income for certain purposes.

(1) In general.

(2) Allocation of GILTI inclusion amount to tested income CFCs.

(i) In general.

(ii) Example.

(A) Facts.

(B) Analysis.

(3) Translation of portion of GILTI inclusion amount allocated to tested income CFC.

(c) Treatment as an amount includible in the gross income of a United States person.

(d) Treatment for purposes of personal holding company rules.

§1.951A-6   Adjustments related to tested losses.

(a) Scope.

(b) Increase of earnings and profits of tested loss CFC for purposes of section 952(c)(1)(A).

(c) [Reserved]

§1.951A-7   Applicability dates.

[T.D. 9866, 84 FR 29341, June 21, 2019]


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