Rev. Rul. 68-613

The taxpayer, a United States person as defined in section 4920(a)(4) of the Internal Revenue Code of 1954, acquired stock of a foreign issuer held in the name of a United States broker, a participating firm as defined in 4918(c) of the Code, but in fact beneficially owned by a foreign person.

Held, the acquisition by the taxpayer of the stock of a foreign issuer in the instant case is not exempt from the interest equalization tax for prior American ownership and compliance provided by section 4918(a) of the Code since such exemption does not apply where a United States person acquires stock of a foreign issuer beneficially owned by someone other than a United States person.

It should be noted that a participating firm may be liable for the penalty provided by section 6681(b)(1) of the Code if such firm issues an "interest equalization tax clean confirmation," a "broker-dealer confirmation," or a "written comparison" under the procedures in section 4918 (d) or (e) of the Code, which establish the exemption from the interest equalization tax provided under section 4918(a) of the Code, with respect to a sale of foreign stock (or debt obligation) to a United States person where such stock (or debt obligation) is held in the name of such firm or other United States person but is beneficially owned by a foreign person. Similarly, a participating firm or participating custodian, as defined in section 4918(f) of the Code, may be liable for the penalty under section 6681(b)(2) of the Code if such firm or custodian issues a transfer of custody certificate, as defined in section 4918(h) of the Code, with regard to the delivery of foreign stock (or debt obligation) that is beneficially owned by a foreign person.r