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Revenue Ruling

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 Rev. Rul. 73-40

1973-1 C.B. 468

Sec. 956

IRS Headnote

Certain short-term debt obligations of United States persons held by a foreign corporation are United States property not taken into account for purposes of determining qualification as a less developed country corporation under section 4916(c)(1)(C) of the Code.

Full Text

Rev. Rul. 73-40

X, a foreign corporation, for its annual accounting period, has assets consisting of debt obligations of United States persons (not arising in connection with the sale or processing of property) which at the time of issuance by United States persons or at the time of acquisition by X had periods remaining to maturity of one year or less, and debt obligations of less developed countries. The debt obligations of United States persons are not deposits with a person carrying on the banking business. The percentage of such assets and the percentage of the income derived therefrom for the annual accounting period are as follows:

                                 Assets-in        Income-in
                                  Percent          Percent
Debt obligations of United
States persons                     30               30
Debt obligations of less
developed countries                70               70
                                 ---------        ---------
       Total                       100              100

Held, for purposes of section 4916 of the Internal Revenue Code of 1954, the assets of X consisting of debt obligations of United States persons (not arising in connection with the sale or processing of property and other than deposits with a person carrying on the banking business) which, at the time of issuance by the United States persons or at the time of acquisition by X, have periods remaining to maturity of one year or less, constitute United States property described in section 956(b)(1)(C) of the Code. Therefore, such debt obligations will not be taken into account in determining whether the 80 percent tests of section 4916(c)(1)(C) of the Code have been met.