SOURCING REGULATIONS FOR SPACE, OCEAN, AND COMMUNICATIONS INCOME INCLUDE SECTION 482 ALLOCATION PRINCIPLES

The IRS has issued TD 9305, under Section 863, on the sourcing of income from space, ocean and communications activities. The simple general rule in Section 863(d)(1) is that space and ocean income is US-source income if earned by a US person, and foreign-source income if earned by a foreign person....

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Bibliographic Details
Published in:Journal of International Taxation 2007-07, Vol.18 (7), p.60
Main Authors: Dubert, Carl, Lubkin, Greg
Format: Article
Language:English
Subjects:
Commercial space ventures
Communications industry
Controlled foreign corporations
Foreign source income
Internal Revenue Code
International taxation
Inventory
Sales
Section 863
Source rules
Tax regulations
TD 9305
Transfer pricing
Underwater exploration
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Summary:The IRS has issued TD 9305, under Section 863, on the sourcing of income from space, ocean and communications activities. The simple general rule in Section 863(d)(1) is that space and ocean income is US-source income if earned by a US person, and foreign-source income if earned by a foreign person. Reg. 1.863-8 now provides an exception to this general rule for US persons, under which a US person's space and ocean income is foreign-source income to the extent that it is attributable to functions performed, resources employed, or risks assumed in a foreign country or countries. The final Regulations provide two other exceptions to the general rule for foreign persons, one for controlled foreign corporations and the other for foreign persons engaged in a US trade or business. The final regulations expand the definition of "international communications" to include income earned by a taxpayer that is paid to transmit foreign-originating communications from a point in space or international water to a point in the US.
ISSN:1049-6378