REVENUE RULE 95-63

1995-2 C.B. 85, 1995-37 I.R.B. 4

UPDATE OF REVENUE RULE 92-63

Released: August 23, 1995
Published: September 11, 1995

Section 901 - Taxes of Foreign Countries and of Possessions of United States

Update of Rev. Rul. 92-63. Rev. Rul. 92-63, 1992-2 C.B. 195 (as corrected by Rev. Rul. 92-63A, 1992-2 C.B. 197), is modified and superseded with respect to countries listed under section 901(j)(2)(A) of the Code.
Section 902. - Deemed Paid Credit Where Domestic Corporation Owns 10 Percent or More of Voting Stock of Foreign Corporation

Section 952. - Subpart F Income Defined
Rev. Rul. 92-63, 1992-2 C.B. 195, (as corrected by Rev. Rul. 92-63A, 1992-2 C.B. 197) is modified and superseded with respect to countries listed under section 901(j)(2)(A) of the Code.

Section 960. - Special Rules for Foreign Tax Credits
Rev. Rul. 92-63, 1992-2 C.B. 195, (as corrected by Rev. Rul. 92-63A, 1992-2 C.B. 197) is modified and superseded with respect to countries listed under section 901(j)(2)(A) of the Code.

This ruling modifies and supersedes Rev. Rul. 92-63, 1992-2 C.B. 195, (as corrected by Rev. Rul. 92-63A, 1992-2 C.B. 197) which lists countries subject to certain special tax rules under sections 901(j) and 952(a)(5) of the Internal Revenue Code.

LAW AND ANALYSIS

Sections 901, 902, and 960 of the Code generally allow U.S. taxpayers to claim a foreign tax credit for income, war profits, and excess profits taxes paid or accrued (or deemed paid or accrued) to any foreign country or to any possession of the United States.

Section 901(j)(1)(A) denies the credit for taxes paid or accrued (or deemed paid or accrued under sections 902 or 960) to any country described in section 901(j)(2)(A) if the taxes are with respect to income attributable to a period during which section 901(j) applies. Section 901(j)(1)(B) requires taxpayers to apply subsections (a), (b), and (c) of section 904 and sections 902 and 960 separately with respect to income attributable to such a period from sources within such country. In addition, section 952(a)(5) provides that subpart F income includes income derived by a controlled foreign corporation from any foreign country during any period during which section 901(j) applies to that foreign country.

Based on certifications by the Secretary of State, this revenue ruling states the dates on which Angola. Afghanistan, Cambodia and Vietnam ceased to be described in section 901(j)(2)(A). In addition, this revenue ruling reflects the addition of Sudan to the list of countries described in section 901(j)(2)(A). For any country that is first described in section 901(j)(2)(A) on a date after January 1, 1987, section 901(j) applies to taxes paid or accrued (or deemed paid or accrued under sections 902 and 960) to that country with respect to income attributable to any period beginning six months after that date. Sudan was first described in section 901(j)(2)(A) on August 12, 1993. Accordingly, sections 901(j) and 952(a)(2) apply to Sudan beginning on February 12, 1994.

All other countries and periods listed below are restated from Rev. Rul. 92-63, supra.

HOLDING AND EFFECTIVE DATES

Section 901(j)(2)(A) of the Code describes the following countries for the following periods:

Afghanistan   January 1, 1987             August 4, 1994

Albania       January 1, 1987             March 15, 1991

Angola        January 1, 1987             June 18, 1993

Cambodia      January 1, 1987             August 4, 1994

Cuba          January 1, 1987             still in effect

Iran          January 1, 1987             still in effect

Iraq          February 1, 1991            still in effect

Libya         January 1, 1987             still in effect

North Korea   January 1, 1987             still in effect

South Africa  January 1, 1988             July 10, 1991

Sudan         February 12, 1994           still in effect

Syria         January 1, 1987             still in effect

Vietnam       January 1, 1987             July 21, 1995

People's Democratic Republic of Yemen
              January 1, 1987            May 22, 1990

For guidance on issues arising in a taxable year when section 901(j) ceases to apply to a country, see Rev. Rul. 92-62, 1992-2 C.B. 193.

EFFECT ON OTHER REVENUE RULINGS

This ruling modifies and supersedes Rev. Rul. 92-63, 1992-2 C.B. 195, with respect to countries listed under section 901(j)(2)(A).

DRAFTING INFORMATION

The principal author of this revenue ruling is Carolyn D. Fanaroff of the Office of Associate Chief Counsel (International). For further information regarding this revenue ruling contact Ms. Fanaroff at (202) 622-3880 (not a toll-free call).

Rev. Rul. 95-63, 1995-2 C.B. 85, 1995-37 I.R.B. 4