Rev. Proc. 75-54

Section 1. Purpose.

The purpose of this Revenue Procedure is to clarify Rev. Proc. 63-7, 1963-1 C.B. 485, concerning the changing of a taxable year by a foreign corporation.

Sec. 2. Implementation.

.01 The introductory paragraph of Rev. Proc. 63-7 is clarified to read as follows:

The purpose of this Revenue Procedure is to set forth rules for determining the taxable year of foreign corporations for purposes of section 902(d), sections 951 through 972, and sections 1246 through 1248 of the Internal Revenue Code of 1954, as amended or added by the Revenue Act of 1962. Foreign corporations subject to the rules set forth in this Revenue Procedure include both foreign corporations organized after the enactment of the Revenue Act of 1962 that qualify as controlled foreign corporations under the provisions of section 951 through 972 and foreign corporations in existence prior to the enactment of the Revenue Act of 1962 that qualify as controlled foreign corporations under the provisions of sections 951 through 972. The rules to be followed for the purpose of determining the taxable year are as follows.

.02 Rule 4 of Rev. Proc. 63-7 is clarified to read as follows:

Rule 4. A taxable year of a foreign corporation that has been established or adopted in accordance with this Revenue Procedure may be changed only with the prior approval of the Commissioner of Internal Revenue in accordance with section 442 of the Code, and by treating a foreign corporation that is not subject to United States income tax as though it were a taxpayer within the meaning of section 7701(a)(14). A foreign corporation, whether or not a controlled foreign corporation, may not under any circumstances change its taxable year without prior approval of the Commissioner. Application for approval to change such taxable year of a foreign corporation that is not subject to United States income tax shall be made one or more of its United States shareholders (as defined in section 951(b)) by filing an application in accordance with the principles of paragraph (b) of section 1.442-1 of the Income Tax Regulations. In general, a change of such a taxable year will be approved if the annual accounting period of the foreign corporation is changed to conform to requirements of foreign law or because bona fide foreign business reasons make such a change necessary or desirable, provided that the other applicable provisions or paragraph (b) of section 1.442-1 are satisfied.

Sec. 3. Effect on Other Documents.

Rev. Proc. 63-7 is clarified to read as set forth in Section 2 above. Section 1.442-1(c) of the Income Tax Regulations will be amended to reflect the above clarification.

¹ Also released as TIR 1421 dated November 28, 1975.