Rev. Proc. 63-2

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to set forth a transition rule for determination of the status of a foreign corporation as a less developed country corporation.

SEC. 2. BACKGROUND.

Sections 9, 12, and 15 of the Revenue Act of 1962 provide for the classification of certain foreign corporations as less developed country corporations. The statutory language, without clarification by regulations, does not afford sufficient guidance to taxpayers to determine, with reasonable certainty, the status of a foreign corporation with respect to the less developed country corporation rules. Furthermore, it will not be possible to prescribe such regulations before January 1, 1963.

SEC. 3. CONCLUSION.

In order to permit an orderly transition to the new rules, a foreign corporation will be treated as a less developed country corporation for its entire first taxable year beginning after December 31, 1962, if it meets the applicable tests for the period beginning 30 days after the date on which final regulations under section 955(c) of the Internal Revenue Code of 1954 are published in the Federal Register and ending on the last day of such taxable year.

¹ Also released as Technical Information Release 431, dated Dec. 21, 1962.