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Rev. Rul. 70-251


Rev. Rul. 70-251; 1970-1 C.B. 182

DATED
DOCUMENT ATTRIBUTES
  • Cross-Reference

    26 CFR 1.1442-1: Withholding of tax on foreign corporations.

    (Also Section 1441; 1.1441-4.)

  • Code Sections
  • Language
    English
  • Tax Analysts Electronic Citation
    not available
Citations: Rev. Rul. 70-251; 1970-1 C.B. 182

Obsoleted by T.D. 8734 A domestic corporation must withhold the appropriate tax, required by section 1442 of the Code or any applicable treaty, on interest credited to its foreign subsidiaries; O.D. 330 superseded.

Rev. Rul. 70-251 1

M, a domestic corporation, owns 100 percent of the outstanding capital stock of several foreign corporations.

M, which uses the accrual method of accounting, maintains open accounts with its foreign subsidiaries. At the close of the taxable year M debited or credited the accounts of the subsidiaries with the interest payable or receivable on the open accounts.

Held, M must include in its gross income the total amount of interest charged against each of the foreign subsidiaries and may claim as deductions from such gross income the total amount of interest credited to each of the foreign subsidiaries. M must also withhold the appropriate tax on the amount of interest credited to the foreign subsidiaries pursuant to the provisions of section 1442 of the Internal Revenue Code of 1954 or any applicable treaty.

O.D. 330, C.B. 1, 239 (1919), is hereby superseded, since the position stated therein is set forth under the current statute and regulations in this Revenue Ruling.

1 Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.

DOCUMENT ATTRIBUTES
  • Cross-Reference

    26 CFR 1.1442-1: Withholding of tax on foreign corporations.

    (Also Section 1441; 1.1441-4.)

  • Code Sections
  • Language
    English
  • Tax Analysts Electronic Citation
    not available
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