81_FR_76709 81 FR 76496 - Credit for Increasing Research Activities; Correction

81 FR 76496 - Credit for Increasing Research Activities; Correction

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 213 (November 3, 2016)

Page Range76496-76497
FR Document2016-26522

This document contains corrections to final regulations (TD 9786) that were published in the Federal Register on Tuesday, October 4, 2016 (81 FR 68299). The final regulations provided guidance regarding the application of the credit for increasing research activities.

Federal Register, Volume 81 Issue 213 (Thursday, November 3, 2016)
[Federal Register Volume 81, Number 213 (Thursday, November 3, 2016)]
[Rules and Regulations]
[Pages 76496-76497]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26522]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9786]
RIN 1545-BC70


Credit for Increasing Research Activities; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

-----------------------------------------------------------------------

SUMMARY: This document contains corrections to final regulations (TD 
9786) that were published in the Federal Register on Tuesday, October 
4, 2016 (81 FR 68299). The final regulations provided guidance 
regarding the application of the credit for increasing research 
activities.

DATES: This correction is effective November 3, 2016 and is applicable 
on or after October 4, 2016.

FOR FURTHER INFORMATION CONTACT: Martha Garcia or Jennifer Records of 
the Office of Associate Chief Counsel (Passthroughs and Special 
Industries) at (202) 317-6853 (not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    The final regulations (TD 9786) that are the subject of this 
correction are under section 41 of the Internal Revenue Code.

Need for Correction

    As published, the final regulations (TD 9786) contain errors that 
may prove to be misleading and are in need of clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

    Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

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 * * *


0
Par. 2. Section 1.41-4(c)(6)(viii) is amended by:
0
a. Revising the fifth sentence of Example 14 paragraph (ii).
0
b. Revising the fifth sentence of Example 17 paragraph (i).
    The revisions read as follows:


Sec.  1.41-4  Qualified research for expenditures paid or incurred in 
taxable years ending on or after December 31, 2003.

* * * * *
    (c) * * *
    (6) * * *
    (viii) * * *

    Example 14. * * *
    (ii) * * * If X's research activities related to the development 
or improvement of Subset B constitute qualified research under 
section 41(d), without regard to section 41(d)(4)(E), and the 
allocable expenditures are qualified research expenditures under 
section 41(b), X may include $6,250 (25% x $25,000) of the software 
research expenditures of Subset B in computing the amount of X's 
credit, pursuant to paragraph (c)(6)(vi)(C) of this section.
* * * * *

    Example 17. * * *
    (i) * * * The ability to use the idle employees' computers would 
save X significant costs because X would not have

[[Page 76497]]

to buy new hardware to expand the computing power. * * *
* * * * *

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. 2016-26522 Filed 10-31-16; 4:15 pm]
 BILLING CODE 4830-01-P



                                                76496             Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Rules and Regulations

                                                the meaning of section 654 of the                         Consumer Financial Protection and                     (Passthroughs and Special Industries) at
                                                Treasury and General Government                           Access. * * *                                         (202) 317–6853 (not a toll-free number).
                                                Appropriations Act, 1999, Public Law                      *    *    *   *     *                                 SUPPLEMENTARY INFORMATION:
                                                105–277, 112 Stat. 2681 (1998).
                                                                                                          PART 790—DESCRIPTION OF NCUA;                         Background
                                                List of Subjects
                                                                                                          REQUESTS FOR AGENCY ACTION
                                                12 CFR Part 708a                                                                                                  The final regulations (TD 9786) that
                                                                                                          ■ 5. The authority citation for part 790              are the subject of this correction are
                                                  Credit unions, Charter conversions.
                                                                                                          continues to read as follows:                         under section 41 of the Internal Revenue
                                                12 CFR Part 708b                                              Authority: 12 U.S.C. 1766, 1789, 1795f.           Code.
                                                  Credit unions, Mergers of credit                        ■ 6. Revise paragraphs (b)(15)(i)                     Need for Correction
                                                unions.                                                   introductory text and (b)(15)(ii) of
                                                                                                          § 790.2 to read as follows:                             As published, the final regulations
                                                12 CFR Part 790
                                                                                                                                                                (TD 9786) contain errors that may prove
                                                  Organization and functions                              § 790.2 Central and field office                      to be misleading and are in need of
                                                (Government agencies).                                    organization.                                         clarification.
                                                  By the National Credit Union                            *       *    *     *    *
                                                Administration Board, on October 27, 2016.                                                                      List of Subjects in 26 CFR Part 1
                                                                                                             (b) * * *
                                                Gerard Poliquin,                                             (15) Office of Consumer Financial                    Income taxes, Reporting and
                                                Secretary of the Board.                                   Protection and Access. (i) The Office of              recordkeeping requirements.
                                                  For the reasons discussed above, the                    Consumer Financial Protection and
                                                                                                          Access contains four divisions:                       Correction of Publication
                                                National Credit Union Administration
                                                amends 12 CFR parts 708a, 708b, and                       *       *    *     *    *                               Accordingly, 26 CFR part 1 is
                                                790 as follows:                                              (ii) The Office provides consumer                  corrected by making the following
                                                                                                          services, including consumer education                correcting amendments:
                                                PART 708a—BANK CONVERSIONS                                and complaint resolution; establishes,
                                                AND MERGERS                                               consolidates, and coordinates consumer                PART 1—INCOME TAXES
                                                                                                          financial protections within the agency;
                                                ■ 1. The authority citation for part 708a                 acts as the central liaison on consumer
                                                continues to read as follows:                                                                                   ■ Paragraph 1. The authority citation
                                                                                                          financial protection with other federal               for part 1 continues to read in part as
                                                  Authority: 12 U.S.C. 1766, 1785(b), and                 agencies; and nationalizes field of                   follows:
                                                1785(c).                                                  membership processing and chartering
                                                                                                          activities.                                               Authority: 26 U.S.C. 7805 * * *
                                                ■ 2. Revise the first sentence of the
                                                definition of ‘‘Regional Director’’ in                    *       *    *     *    *                             ■ Par. 2. Section 1.41–4(c)(6)(viii) is
                                                § 708a.101 to read as follows:                            [FR Doc. 2016–26495 Filed 11–2–16; 8:45 am]           amended by:
                                                                                                          BILLING CODE 7535–01–P
                                                § 708a.101       Definitions.                                                                                   ■ a. Revising the fifth sentence of
                                                *     *     *     *   *                                                                                         Example 14 paragraph (ii).
                                                  Regional Director means either the                                                                            ■ b. Revising the fifth sentence of
                                                                                                          DEPARTMENT OF THE TREASURY
                                                director for the NCUA Regional Office                                                                           Example 17 paragraph (i).
                                                for the region where a natural person                     Internal Revenue Service                                The revisions read as follows:
                                                credit union’s main office is located or
                                                the director of the NCUA’s Office of                      26 CFR Part 1                                         § 1.41–4 Qualified research for
                                                Consumer Financial Protection and                                                                               expenditures paid or incurred in taxable
                                                Access. * * *                                             [TD 9786]                                             years ending on or after December 31, 2003.
                                                *     *     *     *   *                                   RIN 1545–BC70                                         *       *        *    *   *
                                                PART 708b—MERGERS OF                                      Credit for Increasing Research                            (c) * *     *
                                                FEDERALLY-INSURED CREDIT                                  Activities; Correction                                    (6) * *     *
                                                UNIONS; VOLUNTARY TERMINATION                                                                                       (viii) *    * *
                                                OR CONVERSION OF INSURED                                  AGENCY:  Internal Revenue Service (IRS),
                                                STATUS                                                    Treasury.                                                Example 14. * * *
                                                                                                          ACTION: Correcting amendment.                            (ii) * * * If X’s research activities related
                                                ■ 3. The authority citation for part 708b                                                                       to the development or improvement of
                                                continues to read as follows:                             SUMMARY:   This document contains                     Subset B constitute qualified research under
                                                                                                          corrections to final regulations (TD                  section 41(d), without regard to section
                                                  Authority: 12 U.S.C. 1752(7), 1766, 1785,
                                                1786, and 1789.                                           9786) that were published in the                      41(d)(4)(E), and the allocable expenditures
                                                                                                          Federal Register on Tuesday, October 4,               are qualified research expenditures under
                                                ■ 4. Revise the first sentence of the                     2016 (81 FR 68299). The final                         section 41(b), X may include $6,250 (25% ×
                                                definition of ‘‘Regional Director’’ in                    regulations provided guidance regarding               $25,000) of the software research
                                                § 708b.2 to read as follows:                              the application of the credit for                     expenditures of Subset B in computing the
                                                                                                          increasing research activities.                       amount of X’s credit, pursuant to paragraph
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                                                § 708b.2   Definitions.
                                                                                                          DATES: This correction is effective                   (c)(6)(vi)(C) of this section.
                                                *     *     *     *   *
                                                  Regional Director means either the                      November 3, 2016 and is applicable on                 *        *       *    *   *
                                                director for the NCUA Regional Office                     or after October 4, 2016.                               Example 17. * * *
                                                for the region where a natural person                     FOR FURTHER INFORMATION CONTACT:                        (i) * * * The ability to use the idle
                                                credit union’s main office is located or                  Martha Garcia or Jennifer Records of the              employees’ computers would save X
                                                the director of the NCUA’s Office of                      Office of Associate Chief Counsel                     significant costs because X would not have



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                                                                 Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Rules and Regulations                                      76497

                                                to buy new hardware to expand the                       Background                                            temporary regulations. This preamble
                                                computing power. * * *                                                                                        does not discuss the formal written
                                                                                                           On September 2, 2015, the
                                                *      *     *       *      *                           Department of the Treasury (Treasury                  comments concerning other rules in the
                                                                                                        Department) and the IRS published final               1988 proposed regulations, which are
                                                Martin V. Franks,
                                                                                                        and temporary regulations under                       beyond the scope of these final
                                                Chief, Publications and Regulations Branch,                                                                   regulations. The other portions of the
                                                Legal Processing Division, Associate Chief              sections 954 and 956 (TD 9733) (the
                                                                                                        2015 temporary regulations) in the                    1988 proposed regulations remain in
                                                Counsel, (Procedure and Administration).
                                                                                                        Federal Register (80 FR 52976, as                     proposed form, except to the extent
                                                [FR Doc. 2016–26522 Filed 10–31–16; 4:15 pm]
                                                                                                        corrected at 80 FR 66415 and 80 FR                    withdrawn in the partial withdrawal of
                                                BILLING CODE 4830–01–P
                                                                                                        66416). On the same date, the Treasury                the notice of proposed rulemaking
                                                                                                        Department and the IRS published a                    published in the Proposed Rules section
                                                                                                        notice of proposed rulemaking (REG–                   of this issue of the Federal Register
                                                DEPARTMENT OF THE TREASURY                                                                                    (REG–122387–16).
                                                                                                        155164–09) (the 2015 proposed
                                                Internal Revenue Service                                                                                        The Treasury Department and the IRS
                                                                                                        regulations) in the Federal Register (80
                                                                                                                                                              published Revenue Ruling 90–112
                                                                                                        FR 53058, as corrected at 80 FR 66485)
                                                                                                                                                              (1990–2 CB 186) (see
                                                26 CFR Part 1                                           cross-referencing the temporary
                                                                                                                                                              § 601.601(d)(2)(ii)(b)), on December 31,
                                                                                                        regulations and proposing additional
                                                [TD 9792]                                                                                                     1990, before promulgating the rule in
                                                                                                        regulations under section 956 regarding
                                                RIN 1545–BJ48                                                                                                 § 1.956–2(a)(3) that, prior to
                                                                                                        the treatment as United States property
                                                                                                                                                              modification by this document,
                                                                                                        of property held by a CFC in connection               addressed the application of section 956
                                                United States Property Held by                          with certain transactions involving
                                                Controlled Foreign Corporations in                                                                            when a CFC is a partner in a partnership
                                                                                                        partnerships. No public hearing was                   that holds property that would be
                                                Transactions Involving Partnerships;                    requested or held. Formal written
                                                Rents and Royalties Derived in the                                                                            United States property if owned directly
                                                                                                        comments were received with respect to                by the CFC. This Treasury decision
                                                Active Conduct of a Trade or Business                   the 2015 proposed regulations under                   withdraws Revenue Ruling 90–112.
                                                AGENCY:  Internal Revenue Service (IRS),                section 956 and are available at
                                                Treasury.                                               www.regulations.gov or upon request.                  Summary of Comments and
                                                                                                        No comments were received with                        Explanation of Revisions
                                                ACTION: Final regulations and removal of
                                                temporary regulations.                                  respect to the 2015 proposed regulations                 Section 956 determines the amount
                                                                                                        under section 954. This Treasury                      that a United States shareholder (as
                                                SUMMARY:   This document contains final                 decision adopts the 2015 proposed                     defined in section 951(b)) of a CFC must
                                                regulations that provide rules regarding                regulations, with the changes described               include in gross income with respect to
                                                the treatment as United States property                 in the Summary of Comments and                        the CFC under section 951(a)(1)(B). This
                                                of property held by a controlled foreign                Explanation of Revisions section of this              amount is determined, in part, based on
                                                corporation (CFC) in connection with                    preamble, as final regulations and                    the average of the amounts of United
                                                certain transactions involving                          removes the corresponding temporary                   States property held, directly or
                                                partnerships. In addition, the final                    regulations. No changes are made to the               indirectly, by the CFC at the close of
                                                regulations provide rules for                           regulations under section 954.                        each quarter during its taxable year. For
                                                determining whether a CFC is                               Additionally, on June 14, 1988, the                this purpose, in general, the amount
                                                considered to derive rents and royalties                Treasury Department and the IRS                       taken into account with respect to any
                                                in the active conduct of a trade or                     published temporary regulations under                 United States property is the adjusted
                                                business for purposes of determining                    sections 304, 864, and 956 (TD 8209) in               basis of the property, reduced by any
                                                foreign personal holding company                        the Federal Register (53 FR 22163),                   liability to which the property is
                                                income (FPHCI), as well as rules for                    which included guidance under section                 subject. See section 956(a) and § 1.956–
                                                determining whether a CFC holds                         956(c)(3) treating as United States                   1(e). Section 956(e) grants the Secretary
                                                United States property as a result of                   property certain trade or service                     authority to prescribe such regulations
                                                certain related party factoring                         receivables acquired by a CFC from a                  as may be necessary to carry out the
                                                transactions. This document finalizes                   related United States person in certain               purposes of section 956, including
                                                proposed regulations, and withdraws                     factoring transactions (the 1988                      regulations to prevent the avoidance of
                                                temporary regulations, published on                     temporary regulations). On the same                   section 956 through reorganizations or
                                                September 2, 2015. It also finalizes                    date, the Treasury Department and the                 otherwise.
                                                proposed regulations, and withdraws                     IRS published a notice of proposed                       These final regulations retain the
                                                temporary regulations, published on                     rulemaking (INTL–49–86, subsequently                  basic approach and structure of the 2015
                                                June 14, 1988. The final regulations                    converted to REG–209001–86) (the 1988                 proposed regulations and the portion of
                                                affect United States shareholders of                    proposed regulations) in the Federal                  the 1988 proposed regulations that
                                                CFCs.                                                   Register (53 FR 22186) cross-referencing              relates to § 1.956–3, with certain
                                                                                                        the 1988 temporary regulations.                       revisions, as discussed in this Summary
                                                DATES:
                                                                                                        Although formal written comments                      of Comments and Explanation of
                                                   Effective Date: These regulations are                were received on the 1988 proposed
                                                effective on November 3, 2016.                                                                                Revisions.
                                                                                                        regulations, none relate to the specific
                                                   Applicability Dates: For dates of                    issues addressed in these final                       1. Changes to § 1.956–1 To Conform to
                                                applicability, see §§ 1.954–2(i), 1.956–
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                                                                                                        regulations. This Treasury decision                   the Current Statute
                                                1(g), 1.956–2(h), 1.956–3(d), and 1.956–                adopts § 1.956–3 of the 1988 proposed                    These final regulations take into
                                                4(f).                                                   regulations without substantive change                account certain statutory changes in
                                                FOR FURTHER INFORMATION CONTACT: Rose                   as a final regulation (together with the              section 13232(a) of the Revenue
                                                E. Jenkins, (202) 317–6934 (not a toll-                 2015 proposed regulations adopted as                  Reconciliation Act of 1993 (Pub. L. 103–
                                                free number).                                           final regulations, these final regulations)           66, 107 Stat. 312) (the 1993 Act)
                                                SUPPLEMENTARY INFORMATION:                              and removes the corresponding                         regarding the methodology for


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Document Created: 2016-11-03 03:24:03
Document Modified: 2016-11-03 03:24:03
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionCorrecting amendment.
DatesThis correction is effective November 3, 2016 and is applicable on or after October 4, 2016.
ContactMartha Garcia or Jennifer Records of the Office of Associate Chief Counsel (Passthroughs and Special Industries) at (202) 317-6853 (not a toll-free number).
FR Citation81 FR 76496 
RIN Number1545-BC70
CFR AssociatedIncome Taxes and Reporting and Recordkeeping Requirements

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