26 C.F.R. § 1.957-3T   United States person defined (temporary).


Title 26 - Internal Revenue


Title 26: Internal Revenue
PART 1—INCOME TAXES
controlled foreign corporations

Browse Previous |  Browse Next

§ 1.957-3T   United States person defined (temporary).

(a) Basic rule—(1) In general. The term United States person has the same meaning for purposes of sections 951 through 965 which it has under section 7701(a)(30) and the regulations thereunder, except as provided in paragraphs (b) and (c) of this section which provide, with respect to corporations organized in possessions of the United States, that certain residents of such possessions are not United States persons. The effect of determining that an individual is not a United States person for such purposes is to exclude such individual in determining whether a foreign corporation created or organized in, or under the laws of, a possession of the United States is a controlled foreign corporation. See §1.957–1 for the definition of the term controlled foreign corporation.

(2) Special provisions applicable to possessions of the United States. For purposes of this section—

(i) The term possession of the United States means the Commonwealth of Puerto Rico (Puerto Rico) or any section 931 possession.

(ii) The term section 931 possession has the same meaning which it has under §1.931–1T(c)(1).

(iii) The rules of §1.937–1T shall apply for determining whether an individual is a bona fide resident of a possession of the United States.

(iv) The rules of §1.937–2T shall apply for determining whether income is from sources within a possession of the United States.

(v) The rules of §1.937–3T shall apply for determining whether income is effectively connected with the conduct of a trade or business in a possession of the United States.

(b) Puerto Rico corporation and resident. An individual (who, without regard to this paragraph (b), is a United States person) shall not be considered a United States person with respect to a foreign corporation created or organized in, or under the laws of, Puerto Rico for the taxable year of such corporation which ends with or within the taxable year of such individual if—

(1) Such individual is a bona fide resident of Puerto Rico during his entire taxable year in which or with which the taxable year of such foreign corporation ends; and

(2) A dividend received by such individual from such corporation during the taxable year of such corporation would, for purposes of section 933(1), be treated as income derived from sources within Puerto Rico.

(c) Section 931 possession corporation and resident. An individual (who, without regard to this paragraph (c), is a United States person) shall not be considered a United States person with respect to a foreign corporation created or organized in, or under the laws of, a section 931 possession for the taxable year of such corporation which ends with or within the taxable year of such individual if—

(1) Such individual is a bona fide resident of such section 931 possession during his entire taxable year in which or with which the taxable year of such foreign corporation ends; and

(2) Such corporation satisfies the following conditions—

(i) 80 percent or more of its gross income for the 3-year period ending at the close of the taxable year (or for such part of such period as such corporation or any predecessor has been in existence) was derived from sources within section 931 possessions or was effectively connected with the conduct of a trade or business in section 931 possessions; and

(ii) 50 percent or more of its gross income for such period (or part) was derived from the active conduct of a trade or business within section 931 possessions.

(d) Effective date. This section shall apply for taxable years ending after October 22, 2004.

[T.D. 9194, 70 FR 18945, Apr. 11, 2005]

Browse Previous |  Browse Next






















chanrobles.com


ChanRobles Legal Resources:

ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review : www.chanroblesbar.com

ChanRobles MCLE On-line

ChanRobles Lawnet Inc. - ChanRobles MCLE On-line : www.chanroblesmcleonline.com