Rev. Rul. 87-80

1987-2 C.B. 292, 1987-35 I.R.B. 5.

OBSOLETE RULING

Published: August 31, 1987

SECTION 7805. -  RULES AND REGULATIONS, 26 CFR 301.7805-1: Rules and regulations.

(Also Part I, Section 884; Part II, United States- Netherlands Income Tax Convention.)

  Obsolete ruling. Rev. Rul. 75-23, 1975-1 C.B. 290, concerning the Netherlands Antilles is obsolete for taxable years beginning after December 31, 1986

FACTS

  Rev. Rul. 67-6, 1967-1 C.B. 576, announced a program for the review of rulings published before 1953 with the immediate objective of identifying and publishing lists of those rulings that, although not specifically revoked or superseded, are not considered determinative with respect to future transactions.

  Consistently with the objectives of that program, the Internal Revenue Service has periodically undertaken a review of certain rulings that were

published in the Internal Revenue Bulletin after 1952. The purpose of this revenue ruling is to declare obsolete Rev. Rul. 75-23, 1975-1 C.B. 290, for taxable years beginning after December 31, 1986. The ruling is obsolete because the Tax Reform Act of 1986, 1986-3 (Vol. 1) C.B. ___, added section 884 to the Internal Revenue Code of 1986, and because of the partial termination of the treaty discussed in the ruling.

  Section 884 of the Code, which applies to taxable years beginning on or after

January 1, 1987, imposes a branch tax on United States branches of foreign corporations and modifies the application of the 30 percent United States withholding tax to interest allocable to the effectively connected income of foreign corporations. Sections 884(e) and 884(f) prohibit corporations that are not 'qualified residents' (as defined therein) of a treaty country from claiming certain benefits under the treaty. The second holding of Rev. Rul. 75- 23 is based on Article XII of the United States-Netherlands Income Tax Convention, T.D. 5778, 1950-1 C.B. 92, as extended to the Netherlands Antilles (the Convention). Beginning January 1, 1987, section 884 renders the second holding of Rev. Rul. 75-23 inapplicable to corporations that are not qualified residents of the Antilles.

  A notice delivered by the United States to the Kingdom of the Netherlands on June 29, 1987, and modified on July 10, 1987, terminates all provisions of the Convention applying to the Antilles other than Article VIII and such other ancillary provisions of the Convention and supplementary agreements thereto as apply to effectuate, modify, or limit the exemption from tax provided in Article VIII for interest described therein. The termination will take effect January 1, 1988. Article XII of the Convention will therefore terminate on that date, and the ruling's second holding will not apply to corporations that are qualified residents of the Antilles.

HOLDING

  Rev. Rul. 75-23 is obsolete for taxable years beginning after December 31, 1986. This revenue ruling does not determine the applicability of Rev. Rul. 75- 23 to taxable years beginning on or before that date.

  The Service will continue to review other rulings published after 1952 to ascertain those that are inapplicable to future transactions because of the statutory and treaty changes discussed in this ruling. In view of the continuing nature of the review program, however, failure to announce the obsolescence of any particular ruling should not be construed as an indication that the ruling necessarily is determinative with respect to future transactions.

EFFECT ON OTHER DOCUMENTS

  Rev. Rul. 75-23 is obsolete.

Rev. Rul. 87-80, 1987-2 C.B. 292, 1987-35 I.R.B. 5