80 FR 18096 - Allocation of Controlled Group Research Credit
DEPARTMENT OF THE TREASURY
Internal Revenue Service Federal Register Volume 80, Issue 64 (April 3, 2015)
Internal Revenue Service
Federal Register Volume 80, Issue 64 (April 3, 2015)
| Page Range | 18096-18099 | |
| FR Document | 2015-07331 |
[Federal Register Volume 80, Number 64 (Friday, April 3, 2015)] [Rules and Regulations] [Pages 18096-18099] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-07331] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9717] RIN 1545-BL77 Allocation of Controlled Group Research Credit AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final and temporary regulations. ----------------------------------------------------------------------- SUMMARY: This document contains final and temporary regulations relating to the allocation of the credit for increasing research activities (research credit) to corporations and trades or businesses under common control (controlled groups)... This document also contains final and temporary regulations relating to the allocation of the railroad track maintenance credit and the election for a reduced research credit. The text of these temporary regulations also serves as the text of the proposed regulations (REG-133489-13) published in the Proposed Rules section in this issue of the Federal Register. DATES: Effective date: These regulations are effective April 3, 2015. Applicability date: For dates of applicability, see Sec. Sec. 1.41-6T(j), 1.45G-1T(g), and 1.280C-4T(c). FOR FURTHER INFORMATION CONTACT: James Holmes, at (202) 317-4137; (not a toll-free number). SUPPLEMENTARY INFORMATION: Background This document contains final and temporary regulations for Sec. 1.41-6, Sec. 1.45G-1, and Sec. 1.280C-4 of the Income Tax Regulations (26 CFR part 1). These regulations update the rules in a manner that is consistent with the amendments made to section 41(f)(1)(A)(ii) and section 41(f)(1)(B)(ii) in Section 301(c) of the Act. [[Page 18097]] Explanation of Provisions Section 41--Research Credit Section 41(a) provides an incremental tax credit for increasing research activities and is based on a percentage of a taxpayer's qualified research expenses over a base amount, basic research payments as determined under section 41(e)(1)(A), and amounts paid or incurred to energy research consortiums (collectively, ``QREs''). Under section 41(f)(1) and Sec. 1.41-6(b), all members of a controlled group are treated as a single taxpayer for purposes of computing the research credit for the group (group credit). Section 1.41-6(b) provides that the group credit is computed by applying all of the section 41 computational rules on an aggregate basis. Section 1.41-6(c) provides a method of allocating a group research credit among the members of the controlled group. Section 301(c) of the Act amended section 41(f)(1)(A)(ii) and section 41(f)(1)(B)(ii) by requiring the allocation of research credits to each controlled group member ``on a proportionate basis to its share of the aggregate of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums, taken into account by such controlled group for purposes of this section.'' Section 301(c) of the Act applies to taxable years beginning after December 31, 2011. Former section 41(f)(1)(A)(ii) and former section 41(f)(1)(B)(ii) provided that the research credit allowable to a controlled group member shall be its proportionate shares of the QREs giving rise to the credit. Prior to these regulations, Sec. 1.41-6(c)(1)(i) required a controlled group to allocate the group credit in proportion to each member's stand-alone entity credit, as defined in Sec. 1.41-6(c)(2), in cases in which the group credit does not exceed the sum of the stand-alone entity credits of all of the members. If the group credit does exceed this sum, then the excess of the group credit over the sum of the stand-alone entity credits of all of the members was allocated in proportion to the QREs of the members of the controlled group. See Sec. 1.41-6(c)(1)(ii). Notice 2013-20 (2013-15 IRB 902 (April 8, 2013)) was released on March 9, 2013, to provide interim guidance relating to the allocation of the controlled group research credit and is effective for taxable years beginning after December 31, 2011. Notice 2013-20 provides that the group credit is allocated to group members based on each member's share of QREs, without regard to whether the member would have a stand- alone entity credit or what the amount of any such credit would be. The final and temporary regulations implement the Act's changes to the allocation of the controlled group research credit by revising the allocation method in Sec. 1.41-6(c), (d), and (e). Section 1.41-6T(c) provides an allocation method that follows the approach taken in Notice 2013-20. Section 1.41-6T(c) provides that the group credit is allocated to group members based on a member's proportionate share of the controlled group's aggregate QREs. Members are no longer required to calculate a stand-alone entity credit. The temporary regulations also remove references to the stand-alone entity credit in Sec. 1.41- 6(d)(1) and (3). New examples are provided in Sec. 1.41-6T(e). The first example illustrates a general application of the allocation method provided in these temporary regulations. The second example demonstrates an allocation under these temporary regulations where a consolidated group is treated as a single member of a controlled group pursuant to Sec. 1.41-6T(d). A commenter to Notice 2013-20 suggested that the IRS adopt a safe harbor under Sec. 1.41-6(c) that permits taxpayers to calculate and allocate group credits for taxable years ending prior to January 1, 2013, under the new law. The commenter's proposal would effectively make the Act's amendments retroactive to before the effective date of the statutory change (change effective for taxable years beginning after December 31, 2011). Therefore, the regulations do not adopt this suggestion for taxable years beginning before January 1, 2012. For taxable years beginning before January 1, 2012, taxpayers must apply the rules applicable to such taxable years. Section 45G--Railroad Track Maintenance Credit (RTMC) Section 45G, subject to limitations, generally provides a RTMC in an amount equal to fifty percent of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the year. Section 45G(e)(2) provides, for controlled groups, that rules similar to the rules of section 41(f)(1) shall apply for purposes of section 45G. Section 1.45G-1(f) provides guidance on determining the amount of RTMC under section 45G if a taxpayer is a member of a controlled group. Section 1.45G-1(f) applies rules similar to the rules of Sec. 1.41-6 for allocating a group RTMC. The temporary regulations add Sec. 1.45G-1T(f)(4) to provide an allocation method for the RTMC that is consistent with the Act's amendments to section 41(f)(1). Section 1.45G-1T(f)(5)(i) and (ii) of the temporary regulations remove references to the stand-alone entity credit. Section 280C(c)--Credit for Increasing Research Activities Section 280C(c)(1) generally disallows otherwise allowable deductions for QREs in an amount equal to the research credit determined under 41(a) for a taxable year. Section 280C(c)(3) provides a method to elect a reduced amount of research credit. Section 280C(c)(4) provides, by reference to section 280C(b)(3), that in the case of a corporation which is a member of a controlled group of corporations (within the meaning of section 41(f)(5)) or a trade or business treated as being under common control with other trades or business (within the meaning of section 41(f)(1)(B)), section 280C(c) shall be applied under rules prescribed by the Secretary similar to the rules applicable under section 41(f)(1)(A) and (B). Section 1.280C-4(b) relates to the election under section 280C(c)(3) that a member of a controlled group may make. Section 1.280C-4(b)(2) contains an example that includes references to the rules in Sec. 1.41-6(c). The temporary regulations update the example in Sec. 1.280C-4(b)(2) because it describes the rules of section 41(f) in effect before the Act's amendments. Effect on Other Documents Notice 2013-20 (2013-15 IRB 902) is obsolete for taxable years beginning on or after April 3, 2015. Effective/Applicability Dates The temporary regulations are applicable for taxable years beginning on or after April 3, 2015 and expire on April 2, 2018. A taxpayer may apply Sec. Sec. 1.41-6T, 1.45G-1T, and 1.280C-4T to taxable years beginning after December 31, 2011, but before April 3, 2015. For a taxpayer that does not apply these temporary regulations to a taxable year beginning after December 31, 2011, but before April 3, 2015, the guidance that applies to such taxable year is contained in Notice 2013-20 (2013-15 IRB 902). Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these [[Page 18098]] regulations. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble to the cross-referenced notice of proposed rulemaking published in the Proposed Rules section in this issue of the Federal Register. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. Drafting Information The principal author of these regulations is James Holmes, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1--INCOME TAXES 0 Paragraph 1. The authority citation for part 1 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * Section 1.41-6T also issued under 26 U.S.C. 41(f)(1) * * * Section 1.45G-1T also issued under 26 U.S.C. 45G(e)(2) * * * Section 1.280C-4T also issued under 26 U.S.C. 280C(c)(4) * * * 0 Par. 2. Section 1.41-0 is amended by removing the entries in the table of contents for Sec. 1.41-6(c)(1) and Sec. 1.41-6(c)(2) and adding an entry for Sec. Sec. 1.41-6(j)(4) and (5) to read as follows: Sec. 1.41-0. Table of contents. * * * * * (j) * * * (4) Taxable years beginning after December 31, 2011. (5) Taxable years ending before January 1, 2012. 0 Par. 3. Section 1.41-6 is amended by revising paragraphs (c), (d)(1) and (3), and (e) and adding paragraphs (j)(4) and (5) to read as follows: Sec. 1.41-6. Aggregation of expenditures. * * * * * (c) [Reserved]. For further guidance, see Sec. 1.41-6T(c). * * * * * (d) * * * (1) [Reserved]. For further guidance, see Sec. 1.41-6T(d)(1). * * * * * (3) [Reserved]. For further guidance, see Sec. 1.41-6T(d)(3). (e) [Reserved]. For further guidance, see Sec. 1.41-6T(e). * * * * * (j) * * * (4) Taxable years beginning after December 31, 2011. [Reserved]. For further guidance, see Sec. 1.41-6T(j)(4). (5) Taxable years ending before January 1, 2012. [Reserved]. For further guidance, see Sec. 1.41-6T(j)(5). 0 Par. 4. Section 1.41-6T is added to read as follows: Sec. 1.41-6T. Aggregation of expenditures (temporary). (a) through (b) [Reserved]. For further guidance, see Sec. 1.41- 6(a) through (b). (c) Allocation of the group credit. The group credit is allocated to each member of the controlled group on a proportionate basis to its share of the aggregate of the qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums (collectively ``QREs'' for purposes of paragraphs (c), (d), and (e) of this section) taken into account for the taxable year by such controlled group for purposes of the credit. (d) Special rules for consolidated groups--(1) In general. For purposes of applying paragraph (c) of this section, members of a consolidated group who are members of a controlled group are treated as a single member of the controlled group. (2) [Reserved]. For further guidance, see Sec. 1.41-6(d)(2). (3) Special rule for allocation of group credit among consolidated group members. The portion of the group credit that is allocated to a consolidated group is allocated to each member of the consolidated group on a proportionate basis to its share of the aggregate of the QREs taken into account for the taxable year by such consolidated group for purposes of the credit. (e) Examples. The following examples illustrate the provisions of paragraphs (c) and (d) of this section. Example 1. Controlled group. A, B, and C are a controlled group. A had $100x, B $300x, and C $500x of qualified research expenses for the year, totaling $900x for the group. A, in the course of its trade or business, also made a payment of $100x to an energy research consortium for energy research. The group's QREs total 1000x and the group calculated its total research credit to be $60x for the year. Based on each member's proportionate share of the controlled group's aggregate QREs, A is allocated $12x, B $18x, and C $30x of the credit. Example 2. Consolidated group is a member of controlled group. The controlled group's members are D, E, F, G, and H. F, G, and H file a consolidated return and are treated as a single member (FGH) of the controlled group. D had $240x, E $360x, and FGH $600x of qualified research expenses for the year ($1,200x aggregate). The group calculated its research credit to be $100x for the year. Based on the proportion of each member's share of QREs to the controlled group's aggregate QREs for the taxable year D is allocated $20x, E $30x, and FGH $50x of the credit. The $50x of credit allocated to FGH is then allocated to the consolidated group members based on the proportion of each consolidated group member's share of QREs to the consolidated group's aggregate QREs. F had $120x, G $240x, and H $240x of QREs for the year. Therefore, F is allocated $10x, G is allocated $20x, and H is allocated $20x. (f) through (i) [Reserved]. For further guidance, see Sec. 1.41- 6(f) through (i). (j)(1) through (3) [Reserved]. For further guidance, see Sec. 1.41-6(j)(1) through (3). (4) Taxable years beginning after December 31, 2011. Section 1.41- 6T is applicable for taxable years beginning on or after April 3, 2015. Taxpayers may apply Sec. 1.41-6T to taxable years beginning after December 31, 2011, but before April 3, 2015. For a taxpayer that does not apply Sec. 1.41-6T to a taxable year beginning after December 31, 2011, but before April 3, 2015, the guidance that applies to such taxable year is contained in Notice 2013-20 (2013-15 IRB 902). (5) Taxable years beginning before January 1, 2012. See Sec. 1.41- 6 as contained in 26 CFR part 1, revised April 1, 2014. (6) Expiration date. The applicability of Sec. 1.41-6T expires on April 2, 2018. 0 Par. 5. Section 1.45G-0 is amended by removing the entries in the table of contents for Sec. 1.45G-1(f)(4)(i) and Sec. 1.45G-1(f)(4)(ii) and adding an entry in the table of contents for Sec. Sec. 1.45G-1(g)(4) and (5) to read as follows: Sec. 1.45G-0. Table of contents for the railroad track maintenance credit. * * * * * (g) * * * (4) Taxable years beginning after December 31, 2011. (5) Taxable years beginning before January 1, 2012. 0 Par. 6. Section 1.45G-1 is amended by revising paragraphs (f)(4) and (f)(5)(i) and (ii) and adding paragraphs (g)(4) and (5) to read as follows: Sec. 1.45G-1. Railroad track maintenance credit. * * * * * (f) * * * (4) [Reserved]. For further guidance, see Sec. 1.45G-1T(f)(4). [[Page 18099]] (5) [Reserved]. For further guidance see Sec. 1.45G-1T(f)(5). (g) * * * (4) Taxable years beginning after December 31, 2011. [Reserved]. For further guidance see Sec. 1.45G-1T(g)(4). (5) Taxable years beginning before January 1, 2012. [Reserved]. For further guidance see Sec. 1.45G-1T(g)(5). 0 Par. 7. Section 1.45G-1T is added to read as follows: Sec. 1.45G-1T. Railroad track maintenance credit (temporary). (a) through (e) [Reserved]. For further guidance, see Sec. 1.45G- 1(a) through (e). (f)(1) through (3) [Reserved]. For further guidance, see Sec. 1.45G-1(f)(1) through (3). (4) Allocation of the group credit. The group credit is allocated to each member of the controlled group on a proportionate basis to its share of the aggregate of the QRTMEs taken into account for the taxable year by such controlled group for purposes of the credit. (5) Special rules for consolidated groups--(i) In general. For purposes of applying paragraph (f)(4) of this section, members of a consolidated group who are members of a controlled group are treated as a single member of the controlled group. (ii) Special rule for allocation of group credit among consolidated group members. The portion of the group credit that is allocated to a consolidated group is allocated to each member of the consolidated group on a proportionate basis to its share of the aggregate of the QRTMEs taken into account for the taxable year by such consolidated group for purposes of the credit. (6) through (8) [Reserved]. For further guidance, see Sec. 1.45G- 1(f)(6) through (8). (g)(1) through (3) [Reserved]. For further guidance, see Sec. 1.45G-1(g)(1) through (3). (4) Taxable years beginning after December 31, 2011. Section 1.45G- 1T is applicable for taxable years beginning on or after April 3, 2015. Taxpayers may apply Sec. 1.45G-1T to taxable years beginning after December 31, 2011, but before April 3, 2015. For a taxpayer that does not apply Sec. 1.45G-1T to a taxable year beginning after December 31, 2011, but before April 3, 2015, the guidance that applies to such taxable year is contained in Notice 2013-20 (2013-15 IRB 902). (5) Taxable years ending before January 1, 2012. See Sec. 1.45-1 as contained in 26 CFR part 1, revised April 1, 2014. (6) Expiration date. The applicability of Sec. 1.45G-1T expires on April 2, 2018. 0 Par. 8. Section 1.280C-4 is amended by revising paragraph (b)(2), redesignating paragraph (c) as (c)(1) and adding paragraphs (c)(2) and (3) to read as follows: Sec. 1.280C-4. Credit for increasing research activities. * * * * * (b) * * * (2) [Reserved]. For further guidance, see Sec. 1.280C-4T(b)(2). * * * * * (c) * * * (2) [Reserved]. For further guidance, see Sec. 1.280C-4T(c)(2). (3) [Reserved]. For further guidance, see Sec. 1.280C-4T(c)(3). 0 Par. 9. Section 1.280C-4T is added to read as follows: Sec. 1.280C-4T. Credit for increasing research activities (temporary). (a) [Reserved]. For further guidance, see Sec. 1.280C-4(a). (b) Controlled groups of corporations; trades or businesses under common control. (1) [Reserved]. For further guidance, see Sec. 1.280C- 4(b)(1). (2) Example. The following example illustrates an application of paragraph (b) of this section: A, B, and C, all of which are calendar year taxpayers, are members of a controlled group of corporations (within the meaning of section 41(f)(5)). A, B, and C each attach a statement to the 2012 Form 6765, ``Credit for Increasing Research Activities,'' showing A and C were the only members of the controlled group to have qualified research expenses when calculating the group credit. A and C report their allocated portions of the group credit on the 2012 Form 6765 and B reports no research credit on Form 6765. Pursuant to Sec. 1.280C-4(a), A and B, but not C, each make an election for the reduced credit under section 280(c)(3)(B) on the 2012 Form 6765. In December 2013, B determines it had qualified research expenses in 2012 resulting in an increased group credit. On an amended 2012 Form 6765, A, B, and C each report their allocated portions of the group credit. B reports its credit as a regular credit under section 41(a) and reduces the credit under section 280C(c)(3)(B). C may not reduce its credit under section 280(c)(3)(B) because C did not make an election for the reduced credit with its original return. (c)(1) [Reserved]. For further guidance see Sec. 1.280C-4(c)(1). (2) Taxable years beginning after December 31, 2011. Section 1.280C-4T is applicable for taxable years beginning on or after April 3, 2015. Taxpayers may apply Sec. 1.280C-4T to taxable years beginning after December 31, 2011, but before April 3, 2015. For a taxpayer that does not apply Sec. 1.280C-4T to a taxable year beginning after December 31, 2011, but before April 3, 2015, the guidance that applies to such taxable year is contained in Notice 2013-20 (2013-15 IRB 902). (3) For taxable years ending before January 1, 2012. See Sec. 1.280C-4 as contained in 26 CFR part 1, revised April 1, 2014. (4) Expiration date. The applicability of paragraph (b)(2) expires on April 2, 2018. John Dalrymple, Deputy Commissioner for Services and Enforcement. Approved: March 16, 2015. Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2015-07331 Filed 4-2-15; 8:45 am] BILLING CODE 4830-01-P
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III. Findings and Certification Environmental Review Ownership and Project Rehabilitation
This final rule does not direct, (12 U.S.C. 1715z).
Regulatory Flexibility Act (2) [Reserved]
provide for assistance or loan and
The Regulatory Flexibility Act (RFA) mortgage insurance for, or otherwise
PART 235—[Removed]
(5 U.S.C. 601 et seq.) generally requires govern, or regulate, real property
an agency to conduct a regulatory acquisition, disposition, leasing, ■ 3. Remove part 235.
flexibility analysis of any rule subject to rehabilitation, alteration, demolition, or
Dated: March 27, 2015.
notice and comment rulemaking new construction, or establish, revise or
provide for standards for construction or Biniam Gebre,
requirements, unless the agency certifies
that the rule will not have a significant construction materials, manufactured Acting Assistant Secretary for Housing—
housing, or occupancy. Accordingly, Federal Housing Commissioner.
economic impact on a substantial
under 24 CFR 50.19(c)(1), this final rule [FR Doc. 2015–07597 Filed 4–2–15; 8:45 am]
number of small entities. Because HUD
has determined that good cause exists to is categorically excluded from BILLING CODE 4210–67–P
issue this rule without prior public environmental review under the
comment, this rule is not subject to the National Environmental Policy Act of
requirement to publish an initial or final 1969 (42 U.S.C. 4321). DEPARTMENT OF THE TREASURY
regulatory flexibility analysis under the List of Subjects Internal Revenue Service
RFA as part of such action.
24 CFR Part 200
Unfunded Mandates Reform 26 CFR Part 1
Administrative practice and
Section 202 of the Unfunded procedure, Claims, Equal employment [TD 9717]
Mandates Reform Act of 1995 (UMRA) 2 opportunity, Fair housing, Home
improvement, Housing standards, RIN 1545–BL77
requires that an agency prepare a
budgetary impact statement before Incorporation by reference, Lead
Allocation of Controlled Group
promulgating a rule that includes a poisoning, Loan programs—housing and
Research Credit
community development, Minimum
Federal mandate that may result in the
property standards, Mortgage insurance, AGENCY: Internal Revenue Service (IRS),
expenditure by state, local and tribal
Organization and functions Treasury.
governments, in the aggregate, or by the
(Government agencies), Penalties, ACTION: Final and temporary
private sector of $100 million or more Reporting and recordkeeping
in any one year. If a budgetary impact regulations.
requirements, Social security,
statement is required, section 205 of Unemployment compensation, Wages. SUMMARY: This document contains final
UMRA also requires an agency to and temporary regulations relating to
identify and consider a reasonable 24 CFR Part 235
the allocation of the credit for increasing
number of regulatory alternatives before Condominiums, Cooperatives, Grant research activities (research credit) to
promulgating a rule.3 However, the programs—housing and community corporations and trades or businesses
UMRA applies only to rules for which development, Low and moderate under common control (controlled
an agency publishes a general notice of income housing, Mortgage insurance, groups)... This document also contains
proposed rulemaking pursuant to the Reporting and recordkeeping final and temporary regulations relating
APA.4 As discussed above, HUD has requirements. to the allocation of the railroad track
determined for good cause that the APA For the reasons set forth in the maintenance credit and the election for
does not require general notice and preamble, and under the authority of 42 a reduced research credit. The text of
public comment on this rule and, U.S.C. 3535(d), HUD amends 24 CFR these temporary regulations also serves
therefore, the UMRA does not apply to parts 200 and 235 as follows: as the text of the proposed regulations
this final rule. (REG–133489–13) published in the
PART 200—INTRODUCTION TO FHA Proposed Rules section in this issue of
Executive Order 13132, Federalism PROGRAMS the Federal Register.
Executive Order 13132 (entitled ■ 1. The authority citation for part 200 DATES: Effective date: These regulations
‘‘Federalism’’) prohibits an agency from continues to read as follows: are effective April 3, 2015.
publishing any rule that has federalism Applicability date: For dates of
Authority: 12 U.S.C. 1702–1715z–21; 42
implications if the rule either imposes U.S.C. 3535(d). applicability, see §§ 1.41–6T(j), 1.45G–
substantial direct compliance costs on 1T(g), and 1.280C–4T(c).
■ 2. Add § 200.1301(g) to read as
state and local governments and is not FOR FURTHER INFORMATION CONTACT:
follows:
required by statute, or the rule preempts James Holmes, at (202) 317–4137; (not a
state law, unless the agency meets the § 200.1301 Expiring programs—Savings toll-free number).
consultation and funding requirements clause. SUPPLEMENTARY INFORMATION:
of section 6 of the Executive Order. This * * * * *
final rule will not have federalism Background
(g) Any existing loan assistance
implications and would not impose (including recapture of loan assistance), This document contains final and
asabaliauskas on DSK5VPTVN1PROD with RULES
substantial direct compliance costs on ongoing participation, or insured loans temporary regulations for § 1.41–6,
state and local governments or preempt under the program listed in this § 1.45G–1, and § 1.280C–4 of the Income
state law within the meaning of the paragraph will continue to be governed Tax Regulations (26 CFR part 1). These
Executive Order. by the regulations in effect as they regulations update the rules in a manner
existed immediately before May 4, 2015 that is consistent with the amendments
22 U.S.C. 1532. (24 CFR part 235, 2014 Edition): made to section 41(f)(1)(A)(ii) and
32 U.S.C. 1534. (1) Part 235, Mortgage Insurance and section 41(f)(1)(B)(ii) in Section 301(c)
4 2 U.S.C. 1532(a). Assistance Payments for Home of the Act.
VerDate Sep<11>2014 16:21 Apr 02, 2015 Jkt 235001 PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 E:\FR\FM\03APR1.SGM 03APR1](https://thefederalregister.org/doc/80_FR_18160/page/1.svg)
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regulations. For the applicability of the (3) [Reserved]. For further guidance, group’s members are D, E, F, G, and H. F, G,
Regulatory Flexibility Act (5 U.S.C. see § 1.41–6T(d)(3). and H file a consolidated return and are
chapter 6), refer to the Special Analyses (e) [Reserved]. For further guidance, treated as a single member (FGH) of the
section of the preamble to the cross- see § 1.41–6T(e). controlled group. D had $240x, E $360x, and
FGH $600x of qualified research expenses for
referenced notice of proposed * * * * * the year ($1,200x aggregate). The group
rulemaking published in the Proposed (j) * * * calculated its research credit to be $100x for
Rules section in this issue of the Federal (4) Taxable years beginning after the year. Based on the proportion of each
Register. Pursuant to section 7805(f) of December 31, 2011. [Reserved]. For member’s share of QREs to the controlled
the Code, these regulations have been further guidance, see § 1.41–6T(j)(4). group’s aggregate QREs for the taxable year
submitted to the Chief Counsel for (5) Taxable years ending before D is allocated $20x, E $30x, and FGH $50x
Advocacy of the Small Business January 1, 2012. [Reserved]. For further of the credit. The $50x of credit allocated to
Administration for comment on their guidance, see § 1.41–6T(j)(5). FGH is then allocated to the consolidated
impact on small business. group members based on the proportion of
■ Par. 4. Section 1.41–6T is added to
each consolidated group member’s share of
Drafting Information read as follows: QREs to the consolidated group’s aggregate
The principal author of these § 1.41–6T. Aggregation of expenditures QREs. F had $120x, G $240x, and H $240x
(temporary). of QREs for the year. Therefore, F is allocated
regulations is James Holmes, Office of $10x, G is allocated $20x, and H is allocated
the Associate Chief Counsel (a) through (b) [Reserved]. For further $20x.
(Passthroughs and Special Industries). guidance, see § 1.41–6(a) through (b).
However, other personnel from the IRS (c) Allocation of the group credit. The (f) through (i) [Reserved]. For further
and Treasury Department participated group credit is allocated to each member guidance, see § 1.41–6(f) through (i).
in their development. of the controlled group on a (j)(1) through (3) [Reserved]. For
proportionate basis to its share of the further guidance, see § 1.41–6(j)(1)
List of Subjects in 26 CFR Part 1 through (3).
aggregate of the qualified research
Income taxes, Reporting and expenses, basic research payments, and (4) Taxable years beginning after
recordkeeping requirements. amounts paid or incurred to energy December 31, 2011. Section 1.41–6T is
research consortiums (collectively applicable for taxable years beginning
Amendments to the Regulations
‘‘QREs’’ for purposes of paragraphs (c), on or after April 3, 2015. Taxpayers may
Accordingly, 26 CFR part 1 is (d), and (e) of this section) taken into apply § 1.41–6T to taxable years
amended as follows: account for the taxable year by such beginning after December 31, 2011, but
controlled group for purposes of the before April 3, 2015. For a taxpayer that
PART 1—INCOME TAXES does not apply § 1.41–6T to a taxable
credit.
■ Paragraph 1. The authority citation (d) Special rules for consolidated year beginning after December 31, 2011,
for part 1 continues to read in part as groups—(1) In general. For purposes of but before April 3, 2015, the guidance
follows: applying paragraph (c) of this section, that applies to such taxable year is
members of a consolidated group who contained in Notice 2013–20 (2013–15
Authority: 26 U.S.C. 7805 * * *
Section 1.41–6T also issued under 26 are members of a controlled group are IRB 902).
U.S.C. 41(f)(1) * * * treated as a single member of the (5) Taxable years beginning before
Section 1.45G–1T also issued under 26 controlled group. January 1, 2012. See § 1.41–6 as
U.S.C. 45G(e)(2) * * * (2) [Reserved]. For further guidance, contained in 26 CFR part 1, revised
Section 1.280C–4T also issued under 26 see § 1.41–6(d)(2). April 1, 2014.
U.S.C. 280C(c)(4) * * * (3) Special rule for allocation of group (6) Expiration date. The applicability
■ Par. 2. Section 1.41–0 is amended by credit among consolidated group of § 1.41–6T expires on April 2, 2018.
removing the entries in the table of members. The portion of the group ■ Par. 5. Section 1.45G–0 is amended by
contents for § 1.41–6(c)(1) and § 1.41– credit that is allocated to a consolidated removing the entries in the table of
6(c)(2) and adding an entry for §§ 1.41– group is allocated to each member of the contents for § 1.45G–1(f)(4)(i) and
6(j)(4) and (5) to read as follows: consolidated group on a proportionate § 1.45G–1(f)(4)(ii) and adding an entry
basis to its share of the aggregate of the in the table of contents for §§ 1.45G–
§ 1.41–0. Table of contents. QREs taken into account for the taxable 1(g)(4) and (5) to read as follows:
* * * * * year by such consolidated group for
(j) * * * purposes of the credit. § 1.45G–0. Table of contents for the
(4) Taxable years beginning after (e) Examples. The following examples railroad track maintenance credit.
December 31, 2011. illustrate the provisions of paragraphs * * * * *
(5) Taxable years ending before (c) and (d) of this section. (g) * * *
January 1, 2012. (4) Taxable years beginning after
Example 1. Controlled group. A, B, and C
■ Par. 3. Section 1.41–6 is amended by are a controlled group. A had $100x, B December 31, 2011.
revising paragraphs (c), (d)(1) and (3), $300x, and C $500x of qualified research (5) Taxable years beginning before
and (e) and adding paragraphs (j)(4) and expenses for the year, totaling $900x for the January 1, 2012.
(5) to read as follows: group. A, in the course of its trade or ■ Par. 6. Section 1.45G–1 is amended by
business, also made a payment of $100x to revising paragraphs (f)(4) and (f)(5)(i)
§ 1.41–6. Aggregation of expenditures. an energy research consortium for energy and (ii) and adding paragraphs (g)(4)
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* * * * * research. The group’s QREs total 1000x and
the group calculated its total research credit
and (5) to read as follows:
(c) [Reserved]. For further guidance,
see § 1.41–6T(c). to be $60x for the year. Based on each § 1.45G–1. Railroad track maintenance
member’s proportionate share of the credit.
* * * * * controlled group’s aggregate QREs, A is
(d) * * * allocated $12x, B $18x, and C $30x of the * * * * *
(1) [Reserved]. For further guidance, credit. (f) * * *
see § 1.41–6T(d)(1). Example 2. Consolidated group is a (4) [Reserved]. For further guidance,
* * * * * member of controlled group. The controlled see § 1.45G–1T(f)(4).
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![Federal Register / Vol. 80, No. 64 / Friday, April 3, 2015 / Rules and Regulations 18099
(5) [Reserved]. For further guidance ■ Par. 8. Section 1.280C–4 is amended contained in Notice 2013–20 (2013–15
see § 1.45G–1T(f)(5). by revising paragraph (b)(2), IRB 902).
(g) * * * redesignating paragraph (c) as (c)(1) and (3) For taxable years ending before
(4) Taxable years beginning after adding paragraphs (c)(2) and (3) to read January 1, 2012. See § 1.280C–4 as
December 31, 2011. [Reserved]. For as follows: contained in 26 CFR part 1, revised
further guidance see § 1.45G–1T(g)(4). April 1, 2014.
(5) Taxable years beginning before § 1.280C–4. Credit for increasing research (4) Expiration date. The applicability
January 1, 2012. [Reserved]. For further activities.
of paragraph (b)(2) expires on April 2,
guidance see § 1.45G–1T(g)(5). * * * * * 2018.
■ Par. 7. Section 1.45G–1T is added to (b) * * *
(2) [Reserved]. For further guidance, John Dalrymple,
read as follows:
see § 1.280C–4T(b)(2). Deputy Commissioner for Services and
§ 1.45G–1T. Railroad track maintenance * * * * * Enforcement.
credit (temporary). (c) * * * Approved: March 16, 2015.
(a) through (e) [Reserved]. For further (2) [Reserved]. For further guidance, Mark J. Mazur,
guidance, see § 1.45G–1(a) through (e). see § 1.280C–4T(c)(2). Assistant Secretary of the Treasury (Tax
(f)(1) through (3) [Reserved]. For (3) [Reserved]. For further guidance, Policy).
further guidance, see § 1.45G–1(f)(1) see § 1.280C–4T(c)(3). [FR Doc. 2015–07331 Filed 4–2–15; 8:45 am]
through (3). ■ Par. 9. Section 1.280C–4T is added to BILLING CODE 4830–01–P
(4) Allocation of the group credit. The read as follows:
group credit is allocated to each member
of the controlled group on a § 1.280C–4T. Credit for increasing
research activities (temporary). DEPARTMENT OF JUSTICE
proportionate basis to its share of the
aggregate of the QRTMEs taken into (a) [Reserved]. For further guidance, 28 CFR Part 16
account for the taxable year by such see § 1.280C–4(a).
controlled group for purposes of the (b) Controlled groups of corporations; [Docket No. OAG 140; AG Order No. 3517–
trades or businesses under common 2015]
credit.
(5) Special rules for consolidated control. (1) [Reserved]. For further RIN 1105–AB27
groups—(i) In general. For purposes of guidance, see § 1.280C–4(b)(1).
applying paragraph (f)(4) of this section, (2) Example. The following example Revision of Department’s Freedom of
members of a consolidated group who illustrates an application of paragraph (b) of Information Act Regulations
are members of a controlled group are this section: A, B, and C, all of which are
AGENCY: Department of Justice.
treated as a single member of the calendar year taxpayers, are members of a
controlled group. controlled group of corporations (within the ACTION: Final rule.
(ii) Special rule for allocation of group meaning of section 41(f)(5)). A, B, and C each
attach a statement to the 2012 Form 6765, SUMMARY: This rule amends the
credit among consolidated group Department’s regulations under the
‘‘Credit for Increasing Research Activities,’’
members. The portion of the group Freedom of Information Act (‘‘FOIA’’).
showing A and C were the only members of
credit that is allocated to a consolidated the controlled group to have qualified The regulations have been revised to
group is allocated to each member of the research expenses when calculating the update and streamline the language of
consolidated group on a proportionate group credit. A and C report their allocated several procedural provisions and to
basis to its share of the aggregate of the portions of the group credit on the 2012 Form incorporate changes brought about by
QRTMEs taken into account for the 6765 and B reports no research credit on
the amendments to the FOIA under the
taxable year by such consolidated group Form 6765. Pursuant to § 1.280C–4(a), A and
B, but not C, each make an election for the OPEN Government Act of 2007.
for purposes of the credit. Additionally, the regulations have been
(6) through (8) [Reserved]. For further reduced credit under section 280(c)(3)(B) on
the 2012 Form 6765. In December 2013, B updated to reflect developments in the
guidance, see § 1.45G–1(f)(6) through case law and to include current cost
determines it had qualified research expenses
(8). in 2012 resulting in an increased group figures to be used in calculating and
(g)(1) through (3) [Reserved]. For credit. On an amended 2012 Form 6765, A, charging fees.
further guidance, see § 1.45G–1(g)(1) B, and C each report their allocated portions
through (3). DATES: Effective May 4, 2015.
of the group credit. B reports its credit as a
(4) Taxable years beginning after regular credit under section 41(a) and FOR FURTHER INFORMATION CONTACT:
December 31, 2011. Section 1.45G–1T is reduces the credit under section Lindsay Roberts, Attorney-Advisor,
applicable for taxable years beginning 280C(c)(3)(B). C may not reduce its credit Office of Information Policy, (202) 514–
on or after April 3, 2015. Taxpayers may under section 280(c)(3)(B) because C did not 3642.
apply § 1.45G–1T to taxable years make an election for the reduced credit with
SUPPLEMENTARY INFORMATION:
beginning after December 31, 2011, but its original return.
before April 3, 2015. For a taxpayer that (c)(1) [Reserved]. For further guidance Background Information
does not apply § 1.45G–1T to a taxable see § 1.280C–4(c)(1). On March 21, 2011, the Department of
year beginning after December 31, 2011, (2) Taxable years beginning after Justice published a proposed rule to
but before April 3, 2015, the guidance December 31, 2011. Section 1.280C–4T revise its existing regulations under the
that applies to such taxable year is is applicable for taxable years beginning FOIA. See 76 FR 15236. On September
asabaliauskas on DSK5VPTVN1PROD with RULES
contained in Notice 2013–20 (2013–15 on or after April 3, 2015. Taxpayers may 19, 2011, the Department reopened the
IRB 902). apply § 1.280C–4T to taxable years comment period for another thirty days
(5) Taxable years ending before beginning after December 31, 2011, but in order to consider additional public
January 1, 2012. See § 1.45–1 as before April 3, 2015. For a taxpayer that comments. See 76 FR 57940.
contained in 26 CFR part 1, revised does not apply § 1.280C–4T to a taxable
April 1, 2014. year beginning after December 31, 2011, Comments
(6) Expiration date. The applicability but before April 3, 2015, the guidance Interested persons were afforded the
of § 1.45G–1T expires on April 2, 2018. that applies to such taxable year is opportunity to participate in the
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Document Created: 2015-12-18 15:29:13
Document Modified: 2015-12-18 15:29:13
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final and temporary regulations. | |
| Contact | James Holmes, at (202) 317-4137; (not a toll-free number). | |
| FR Citation | 80 FR 18096 | |
| RIN Number | 1545-BL77 | |
| CFR Associated | Income Taxes and Reporting and Recordkeeping Requirements |
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