rr-16-08.pdf

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Part I

Section 901.—Taxes of Foreign countries and of possessions of United States

26 CFR 1.901-2: Income, war profits, or excess profits tax paid or accrued
(Also: Section 952(a)(5))

Modification of Rev. Rul. 2005-3. Rev. Rul. 2005-3, 2005-1 C.B. 334, with respect to
countries described in section 901(j)(2)(A) of the Internal Revenue Code (“Code”), is
modified.

Rev. Rul. 2016-8

This ruling modifies Rev. Rul. 2005-3, 2005-1 C.B. 334, which lists countries subject to
special rules under sections 901(j) and 952(a)(5) of the 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. The foreign tax credit is subject to various limitations and restrictions under
section 901.

Section 901(j)(1) imposes restrictions in the case of income and taxes attributable to
certain countries. Section 901(j)(1)(A) denies the credit for taxes paid or accrued (or
deemed paid or accrued under section 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.

The special rules under sections 901(j) and 952(a)(5) cease to apply to a country when
the Secretary of State certifies to the Secretary of the Treasury that such country is no
longer described in section 901(j)(2)(A). Revenue Ruling 2005-3 sets forth the
countries which are (or were) described in section 901(j)(2)(A) and the period during

which the special rules under sections 901(j) and 952(a)(5) apply with respect to each
such country. Based on the certification by the Secretary of State, this revenue ruling
states the date on which Cuba ceased to be described in section 901(j)(2)(A).

HOLDING AND EFFECTIVE DATE
The list of countries in Revenue Ruling 2005-3 is modified by changing the reference to
Cuba as follows:

Country Starting Date Ending Date

Cuba January 1, 1987 December 21, 2015

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 Rev. Rul. 2005-3, 2005-1 C.B. 334, with respect to countries
subject to special rules under sections 901(j) and 952(a)(5) of the Code.

DRAFTING INFORMATION

The principal author of this revenue ruling is Richard L. Chewning of the Office of
Associate Chief Counsel (International). For further information regarding this revenue
ruling, contact Mr. Chewning at (202) 317-6936 (not a toll-free call).