1.367(a)-5T—Property subject to section 367(a)(1) regardless of use in trade or business (temporary).
(a) In general.
Section 367(a)(1) shall apply to a transfer of property described in this section regardless of whether the property is transferred for use in the active conduct of a trade or business. Certain exceptions to the operation of this rule are provided in this section, and a special gain limitation rule is provided in paragraph (e). A transfer of property described in this section is subject to section 367(a)(1) even if the transfer is a compulsory transfer described in § 1.367(a)-4T(f).
(b) Inventory, etc.
Regardless of use in an active trade or business, section 367(a)(1) shall apply to the transfer of—
(1)
Stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business; and
(2)
A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property, held by—
(ii)
In the case of a letter, memorandum, or similar property, a taxpayer from whom such property was prepared or produced; or
(iii)
A taxpayer in whose hands the basis of such property is determined, for purposes of determining gain from a sale or exchange, in whole or part by reference to the basis of such property in the hands of a taxpayer described in subdivision (i) or (ii) of this paragraph (b)(2).
Code of Federal Regulations
(c) Installment obligations, etc.
Regardless of use in an active trade or business, section 367(a)(1) shall apply to the transfer of installment obligations, accounts receivable, or similar property, but only to the extent that the principal amount of any such obligation has not previously been included by the taxpayer in its taxable income.
(d) Foreign currency, etc.—
(1) In general.
Regardless of use in an active trade or business, section 367(a)(1) shall apply to the transfer of foreign currency or other property denominated in foreign currency, including installment obligations, futures contracts, forward contracts, accounts receivable, or any other obligation entitling its payee to receive payment in a currency other than U.S. dollars.
(i)
Is denominated in the currency of the country in which the transferee foreign corporation is organized; and
(ii)
Was acquired in the ordinary course of the business of the transferor that will be carried on by the transferee foreign corporation,
Code of Federal Regulations
(3) Limitation of gain required to be recognized.
If section 367(a)(1) applies to a transfer of property described in this paragraph, then the gain required to be recognized shall be limited to—
(ii)
Any loss realized as part of the same transaction upon the transfer of property described in this paragraph (d).
Code of Federal Regulations
(e) Intangible property.
Regardless of use in an active trade or business, a transfer of intangible property pursuant to section 332 shall be subject to section 367(a)(1), unless it constitutes foreign goodwill or going concern value, as defined in § 1.367(a)-1T(d)(5)(iii). For rules concerning transfers of intangible property pursuant to section 351 or 361, see section 367(d) and § 1.367(d)-1T.
(f) Leased tangible property.
Regardless of use in an active trade or business, section 367(a)(1) shall apply to a transfer of tangible property with respect to which the transferor is a lessor at the time of the transfer, unless—
(1)
With respect to property that will not be leased by the transferee to third persons, the transferee was the lessee of the property at the time of the transfer; or
(2)
With respect to property that will be leased by the transferee to third persons, the transferee satisfies the conditions set forth in § 1.367(a)-4T(c)(1) or (2).
(3)
(i)
With respect to vessels and aircraft, including their component parts, that will be leased by the transferee to third persons, the transferee satisfies the conditions set forth in § 1.367(a)-4T(c).
(ii) Effective/applicability date.
The rules of this paragraph (f)(3) apply for transfers of property occurring on or after May 2, 2006. If the transferor makes the election to apply the provisions of § 1.367(a)-4T(c)(3) to transfers occurring on or after October 22, 2004, then paragraph (f)(3)(i) of this section will also be applicable for the transfers affected by that election.