1.6038B-1T—Reporting of certain transactions to foreign corporations (temporary).
(4) Date of transfer—
(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
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.
Code of Federal Regulations
(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 § 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
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—
(B)
The date on which the transfer would otherwise be considered to occur under the rules of this paragraph (b)(3).
The rule of this paragraph (b)(3)(iv) is illustrated by the following example.
Code of Federal Regulations
(1) Transferor.
Provide the name, U.S. taxpayer identification number, and address of the U.S. person making the transfer.
(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.
(3) 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.
(4) Property transferred.
Provide a description of the property transferred. The description must be divided into the following categories, and must include the estimated fair market value and adjusted basis of the property, as well as any additional information specified below.
(i) Active business property.
Describe any transferred property (other than stock or securities) to be used in the active conduct of a trade or business outside of the United States. Provide here a general description of the business conducted (or to be conducted) by the transferee, including the location of the business, the number of its employees, the nature of the business, and copies of the most recently prepared balance sheet and profit and loss statement. Property listed within this category may be identified by general type. For example, upon the transfer of the assets of a manufacturing operation, a reasonable description of the property to be used in the business might include the categories of office equipment and supplies, computers and related equipment, motor vehicles, and several major categories of manufacturing equipment. However, any property that is includible both in this subdivision (i) and in subdivision (iii) of this paragraph (c)(4) (property subject to depreciation recapture under § 1.367(a)-4T (b)) must be identified in the manner required in subdivision (iii). If property is considered to be transferred for use in the active conduct of a trade or business under a special rule in § 1.367(a)-4T, specify the applicable rule and provide information supporting the application of the rule. If property is subject to section 367(a)(1) regardless of its use in a trade or business under the rules of § 1.367(a)-4T or § 1.367(a)-5T, list the property only in response to subdivision (vii) of this paragraph (c)(4).
(ii) Stock or securities.
Describe any transferred stock or securities, including the class or type, amount, and characteristics of the transferred stock or securities, as well as the name, address, place of incorporation, and general description of the corporation issuing the stock. In addition, provide the following information if applicable:
(A) Active trade or business stock.
If the stock or securities are considered to be transferred for use in the active conduct of a trade or business outside of the United States under the rules of § 1.367(a)-3T(d)(2), provide information supporting the application of the rule.
(B) Application of special rules.
If any provision of § 1.367(a)-3T applies to except the transfer of stock or securities from the rule of section 367(a)(1), provide information supporting the claimed application of such provision (including information supporting the nonapplicability of either anti-abuse rule under § 1.367(a)-3T(h) ). If the transferor is entering into an agreement to recognize gain upon a later disposition of the transferred stock by the transferee foreign corporation under § 1.367(a)-3T(g), attach the agreement and waiver as required by the rules of that paragraph.
(iii) Depreciated property.
Describe any property that is subject to depreciation recapture under the rules of § 1.367(a)-4T(b). Property within this category must be separately identified to the same extent as was required for purposes of the previously claimed depreciation deduction. Specify with respect to each such asset the relevant recapture provision, the number of months in which such property was in use within the United States, the total number of months the property was in use, the fair market value of the property, a schedule of the depreciation deduction taken with respect to the property, and a calculation of the amount of depreciation required to be recaptured.
(iv) Property to be leased.
Describe any property to be leased to other persons by the transferee foreign corporation (unless such property is considered to be transferred for use in the active conduct of a trade or business and was thus listed under subdivision (i) of this paragraph (c)(4)). If the rules of § 1.367(a)-4T(c)(2) apply to except the transfer from the rule of section 367(a)(1), provide information supporting the claimed application of such provision.
(v) Property to be sold.
Describe any transferred property that is to be sold or otherwise disposed of by the transferee foreign corporation, as described in § 1.367(a)-4T(d).
(vi) Transfers to FSCs.
Describe any property that is subject to the special rule of § 1.367(a)-4T(g) for transfers to FSCs. Provide information supporting the claimed application of that rule.
(vii) Tainted property.
Describe any property that is subject to § 1.367(a)-5T (concerning property that is subject to the rule of section 367(a)(1) regardless of whether it is transferred for use in the active conduct of a trade or business outside of the United States). Such description must be divided into the relevant categories, as follows:
Code of Federal Regulations
(ix) Other intangibles.
Describe an intangible property sold or licensed by the transferor to the transferee foreign corporation, and set forth the general terms of each sale or license.
(5) Transfer of foreign branch with previously deducted losses.
If the property transferred is property of a foreign branch with previously deducted losses subject to the rules of § 1.367(a)-6T, provide the following information:
(i) Branch operation.
Describe the foreign branch the property of which is transferred, in accordance with the definition of § 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 § 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 § 1.367(a)-6T(c)(1).
(d) Transfers subject to
(1) Initial transfer.
A U.S. person that transfers inntangible property to a foreign corporation in an exchange described in section 351 or 361 must provide the following information in paragraphs labelled to correspond with the number or letter set forth below. If a particular item is not applicable to the subject transfer, list its heading and state that it is not applicable. The information required by subdivisions (i) through (iii) need only be provided if such information was not otherwise provided under paragraph (c) of this section. (Note that the U.S. transferor may subsequently be required to file another return under paragraph (d)(2) of this section.)
(i) Transferor.
Provide the name, U.S. taxpayer identification number, and address of the U.S. person making the transfer.
(A)
Name, U.S. taxpayer identification number (if any), address, and country of incorporation of the transferee foreign corporation;
(B)
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.
(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) Intangible property transferred.
Provide a description of the intangible property transferred, including its adjusted basis. Generally, each intangible asset must be separately identified. Operating intangibles and foreign goodwill or going concern value, as defined in § 1.367(a)-1T(d)(5) (ii) and (iii), should be so identified and classified.
(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 § 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) Coordination with loss rules.
List any intangible property subject to section 367(d) the transfer of which also gives rise to the recognition of gain under section 904(f)(3) or § 1.367(a)-6T. Provide a calculation of the gain required to be recognized with respect to such property, in accordance with the provisions of § 1.367(d)-1T(g)(4).
(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.
(2) Subsequent transfers.
If a U.S. person transfers intangible property to a foreign corporation in an exchange described in section 351 or 361, and at any time thereafter (within the useful life of the intangible property) either that U.S. person disposes of the stock of the transferee foreign corporation or the transferee foreign corporation disposes of the transferred intangible, then the U.S. person must provide the following information in paragraphs labelled to correspond with the number or letter set forth below. The information required by subdivisions (i) and (ii) need only be provided if such information was not otherwise provided in the same return, pursuant to paragraph (c) or (d)(1) of this section. For purposes of determining the date on which a return under this subparagraph (2) is required to be filed, the date of transfer is the date of the subsequent transfer of stock or intangible property.
(i) Transferor.
Provide the name, U.S. taxpayer identification number, and address of the U.S. person making the transfer.
(B)
The name, U.S. taxpayer identification number (if any), address, and country of incorporation of the transferee foreign corporation; and
(A)
A general description of the subsequent transfer and any wider transaction of which it forms a part;
(B)
A calculation of any gain required to be recognized by the U.S. person under the rules of § 1.367(d)-1T (d) through (f); and
(C)
The name, address, and identifying number of each person that under the rules of § 1.367(d)-1T (e) or (f) will be considered to receive contingent annual payments for the use of the intangible property.
(g) Effective date.
This section applies to transfers occurring after December 31, 1984. See § 1.6038B-1T(a) through (b)(2), (c) introductory text, and (f) ( 26 CFR part 1, revised April 1, 1998) for transfers occurring prior to July 20, 1998. See § 1.6038B-1 for transfers occurring on or after July 20, 1998.