IRS Corrects Guidance On 'Equivalent Exemption' Determinations For Foreign Corporations.

This document contains a correction to Rev. Rul. 2008-17, 2008-12 I.R.B. 626, which was published in the Internal Revenue Bulletin on March 24, 2008.

BACKGROUND

The revenue ruling ( Rev. Rul. 2008-17) that is the subject of this correction provides guidance to assist a foreign corporation engaged in the international operation of ships or aircraft, and its shareholders, in determining whether the foreign corporation is organized in a country that grants an "equivalent exemption" from tax for purposes of sections 883(a) and (c) of the Internal Revenue Code (Code). It also assists a nonresident alien individual engaged in the international operation of ships or aircraft in determining whether a country grants an equivalent exemption from tax for purposes of section 872(b) of the Code.

Part A of Table I of this revenue ruling provides a list of countries that grant an equivalent exemption as evidenced by a diplomat ic note exchanged with the United States. P art B of Table I provides a list of countries that grant an equivalent exemption to U. S. corporations by statute or decree, or by not imposing tax on income from the international operation of ships or aircraft. Table II of this revenue ruling provides a list of countries that have entered in to income tax conventions with the United States that include a shipping and air transport article or a gains article.

NEED FOR CORRECTION

As published, in Rev. Rul. 2008-17, Table II (Countries Granting Exemptions from Tax by Income Tax Convention), Column 9 (Cap Gains), two footnotes were inadvertently omitted. Footnote 26 applies to Cap Gains for India and footnote 18 applies to Cap Gains for New Zealand.

CORRECTION OF PUBLICATION

Accordingly, the publication of the revenue ruling ( Rev. Rul. 2008-17) is corrected as follows: On page 631 of Bulletin No. 2008-12, Table II is corrected by adding footnote 26 to the Cap Gains column f or India and footnote 18 to the Cap Gain s column for New Zealand as follows:

 TABLE II

Rev. Rul. 2008-17, 2008-12 I.R.B. 626, is modified.

DRAFTING INFORMATION

The principal author of this announcement is Patricia A. Bray of the Office of Associate Chief Counsel (International). For further information regarding this announcement, contact Patricia A. Bray at (202) 622-3880 (not a toll-free call).