Rev. Rul. 69-485

A foreign corporation organized under the laws of a country designated as a "less developed country" pursuant to the provisions of section 955(c)(3) of the Internal Revenue Code of 1954 and Executive Order 11071, C.B. 1963-1, 137, subdivided and sold land that it had owned in the less developed country. These contracts generally required a small downpayment and the balance in equal monthly installments. Under the local law and according to the terms of the contracts, title to the land is legally retained by the seller until it is actually conveyed to the purchaser upon payment of the contract price in full. The purchaser only has an equitable right for specific performance with respect to obtaining title when he pays his contract in full.

Held, the contracts held by the foreign corporation in the instant case evidence "interests in real estate" within the meaning of section 1.955-5(a)(2)(ii) of the Income Tax Regulations. Therefore, these contracts are considered as property used in a trade or business and located in a less developed country for the purpose of determining whether the foreign corporation is a less developed country corporation under section 955(c)(1)(B)(i) of the Code.