Sec. 1.6038B-1T Reporting certain transactions to foreign corporations. (temporary)

(i) In general. For purposes of this section, the date of a transfer described in section 367 is the first date on which title to, possession of, or rights to the use of stock, securities, or other property passes pursuant to the plan for purposes of Subtitle A of the Internal Revenue Code. A transfer will not be considered to begin with a decision of a board of directors or similar action unless the transaction otherwise takes effect for purposes of Subtitle A of the Internal Revenue Code on that date.

(ii) Termination of section 1504(d) election. A transfer deemed to occur as a result of the termination of an election under section 1504(d) will be considered to occur on the date the contiguous country corporation first fails to continue to qualify for the election under section 1504(d). The rule of this paragraph (b)(3)(ii) is illustrated by the following example.

Example. Domestic corporation W previously made a valid election under section 1504(d) to have its Mexican subsidiary S treated as a domestic corporation. On August 1, 1986, W disposes of its right, title, and interest in 10 percent of the stock of S by selling such stock to an unrelated United States person who is not a director of S. S first fails to continue to qualify for the election under section 1504(d) on August 1, 1986, since on such date it ceases to be directly or indirectly wholly owned or controlled by W. The constructive transfer of assets from "domestic" corporation S to Mexican corporation S is considered to occur on that date.

(iii) Change in classification. A transfer deemed to occur as a result of a change in classification of an entity caused by a change in the governing documents, articles, or agreements of the entity (as described in section 1.367(a)-1T(c)(6)) will be considered to occur on the date that such changes take effect for purposes of Subtitle A of the Internal Revenue Code.

(iv) U.S. resident under section 6013(g) or (h). A transfer made by an alien individual who is considered to be a U.S. resident by reason of a timely election under section 6013(g) or (h) will be considered to occur, for purposes of this section (but not for purposes of section 367), on the later of--

(i) Name, U.S. taxpayer identification number (if any), address, and country of incorporation of transferee foreign corporation;

(ii) A general description of the transfer, and any wider transaction of which it forms a part, including a chronology of the transfers involved and an identification of the other parties to the transaction to the extent known.

(i) through (c)(5) introductory text [Reserved].

(i) Branch operation. Describe the foreign branch the property of which is transferred, in accordance with the definition of section 1.367(a)-6T(g).

(ii) Branch property. Describe the property of the foreign branch, including its adjusted basis and fair market value. For this purpose property must be identified with reasonable particularity, but may be identified by category rather than listing every asset separately. Substantially similar property may be listed together for this purpose, and property of minor value may be grouped into functional categories. For example, a reasonable description of the property of a business office might include the following categories: Word processing or data processing equipment, other office equipment and furniture, and office supplies.

(iii) Previously deducted losses. Set forth a detailed calculation of the sum of the losses incurred by the foreign branch before the transfer, and a detailed calculation of any reduction of such losses, in accordance with section 1.367(a)-6T(d) and (e).

(iv) Character of gain. Set forth a statement of the character of the gain required to be recognized, in accordance with section 1.367(a)-6T(c)(1).

(i) Transferor. Provide the name, U.S. taxpayer identification number, and address of the U.S. person making the transfer.

(ii) Transfer. Provide information concerning the transfer, including:

(iii) Consideration received. Provide a description of the consideration received by the U.S. person making the transfer, including its estimated fair market value and, in the case of stock or securities, the class or type, amount, and characteristics of the interest received.

(iv) [Reserved].

(v) Annual payment. Provide and explain the calculation of the annual deemed payment for the use of the intangible property required to be recognized by the transferor under the rules of section 367(d).

(vi) Election to treat as sale. List any intangible with respect to which an election is being made under section 1.367(d)-1T(g)(2) to treat the transfer as a sale. Include the fair market value of the intangible on the date of the transfer and a calculation of the gain required to be recognized in the year of the transfer by reason of the election.

(vii) [Reserved].

(viii) Other intangibles. Describe any intangible property sold or licensed by the transferor to the transferee foreign corporation, and set forth the general terms of each sale or license.

(i) Transferor. Provide the name, U.S. taxpayer identification number, and address of the U.S. person making the transfer.

(ii) Initial transfer. Provide the following information concerning the initial transfer:

(iii) Subsequent transfer. Provide the following information concerning the subsequent transfer: