n-08-91.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

Part III - Administrative, Procedural, and Miscellaneous

Treatment of Certain Obligations under Section 956(c)

Notice 2008-91

SECTION 1. OVERVIEW
Section 956(c) defines United States property generally to include an obligation
of a United States person. On September 16, 1988, the Internal Revenue Service and
the Treasury Department published Notice 88-108, 1988-2 C.B. 445, which announced
that final regulations issued under section 956 will exclude from the definition of the
term "obligation" an obligation that would constitute an investment in United States
property if held at the end of the controlled foreign corporation’s taxable year, so long as
the obligation is collected within 30 days from the time it is incurred. This exclusion
shall not apply, however, if the controlled foreign corporation holds for 60 or more
calendar days during such taxable year obligations which, without regard to the 30 day
rule described in the preceding sentence, would constitute an investment in United
States property if held at the end of the controlled foreign corporation's taxable year.
See
S. Rep. No. 103-37, at 178 (1993) (“The bill is not intended to change the
measurement of U.S. property that may apply, for example, in the case of short-term
obligations, as provided in IRS Notice 88-108”).
SECTION 2. TREATMENT OF CERTAIN OBLIGATIONS UNDER SECTION 956(c)
Recently, circumstances affecting liquidity have made it difficult for taxpayers to

2
fund their operations. To facilitate liquidity in the near term, this notice announces that
the Internal Revenue Service and the Treasury Department will issue regulations under
section 956(e) that, for purposes of section 956, a controlled foreign corporation (within
the meaning of section 957(a)) may choose to exclude from the definition of the term
“obligation” an obligation held by the controlled foreign corporation that would constitute
an investment in United States property provided the obligation is collected within 60
days from the time it is incurred. This exclusion shall not apply, however, if the
controlled foreign corporation holds for 180 or more calendar days during its taxable
year obligations that, without regard to the 60 day rule described in the preceding
sentence, would constitute an investment in United States property.
This notice does not otherwise affect the application of Notice 88-108. A
controlled foreign corporation may apply this notice or Notice 88-108, but not both.
SECTION 3. RELIANCE ON NOTICE
This notice shall only apply for the first two taxable years of a foreign corporation
ending after October 3, 2008. However, this notice shall not apply to taxable years of a
foreign corporation beginning after December 31, 2009. Thus, if a foreign corporation
has a calendar tax year, this notice shall apply for the foreign corporation’s taxable
years ending December 31, 2008, and December 31, 2009.
SECTION 4. DRAFTING INFORMATION
The principal author of this notice is Ethan A. Atticks of the Office of Associate
Chief Counsel (International). For further information regarding this notice contact Mr.
Atticks at (202) 622-3840 (not a toll free call).