SERVICE SPECIFIES INTERNATIONAL NO-RULING AREAS.

Rev. Proc. 89-6

SECTION 1. PURPOSE AND NATURE OF CHANGES

01 Purpose.

The purpose of this revenue procedure is to update Rev. Proc. 87-6, 1987-1 C.B. 45, as amplified and amended by subsequent revenue procedures, by providing a list of subject matters under the jurisdiction of the Associate Chief Counsel (International) in which the Internal Revenue Service will not issue advance rulings or determination letters. Rev. Proc. 89-3, 1989-1 I.R.B. 29, amplified by Rev. Proc. 89-7, 1989-3 I.R.B. 27, lists the subject matters under the jurisdiction of the Associate Chief Counsel (Technical) in which the Service will not issue advance rulings or determination letters.

02 Changes.

1. Old section 3.012 has been deleted because the regulations on which it was based have been amended.

2. New section 3.012 refers to section 954 of the Code. See Rev. Proc. 87-61, 1987-2 C.B. 765.

3. New section 3.021 modifies old section 3.021. See Rev. Proc. 88-50, 1988-12 I.R.B. 81.

4. New section 3.022 modifies old section 3.022.

5. New section 3.026 refers to issues subject to the taxpayer's pending request for competent authority assistance under United States tax treaty.

6. New section 4.011 refers to section 367 of the Code.

7. New section 4.013 modifies old section 4.012.

8. New section 4.014 refers to section 882 of the Code.

9. New section 4.016 refers to section 892 of the Code.

10. New section 4.017 refers to section 893 of the Code.

11. New section 4.0112 refers to section 894 of the Code. See Rev. Proc. 87-39, 1987-2 C.B. 514.

12. New section 4.0113 refers to section 894 of the Code. See Rev. Proc. 87-39, 1987-2 C.S. 514.

13. Old section 4.019 has been deleted because regulations have been issued under section 897(e) of the Code.

14. New section 4.0115 refers to section 985 of the Code.

15. New section 4.0116 refers to section 989 of the Code.

16. Old section 4.0111 has been deleted as obsolete.

17. New section 4.0117 modifies old section 4.013.

18. New section 4.0118 modifies old sections 4.0112 and 4.0113.

19. New section 4.0119 refers to section 7701 of the Code.

20. New section 4.02 refers to a taxpayer's business purpose for a transaction or arrangement.

SEC. 2. BACKGROUND AND SCOPE OF APPLICATION

01. Background.

Whenever appropriate to sound tax administration, the Service answers inquiries from individuals and organizations about their status for tax purposes and the tax effects of their acts or transactions, before the filing of returns or reports that are required by the Internal Revenue Code. There are, however, areas where the Service will not issue advance rulings or determination letters, either because the issues are inherently factual or for other reasons. This revenue procedure lists those areas.

Section 3 gives areas in which advance rulings and determinations will not be issued under any circumstances. Section 4 gives areas in which they will not ordinarily be issued; in these areas, unique and compelling reasons may justify issuing a ruling or determination letter. The Service may provide a general information letter in response to inquires in areas on either list.

These lists are not all-inclusive. Future revenue procedures may add or delete items. The Service may also decline to rule on an individual case for reasons peculiar to that case; such decisions wi11 not be announced in the Bulletin.

02. Scope of Application.

This revenue procedure does not preclude District Directors, the Assistant Commissioner (International), or Appeals Offices from submitting requests for technical advice in the areas listed to the National Office.

SEC. 3 AREAS IN WHICH RULINGS OR DETERMINATION LETTERS WILL NOT BE ISSUED

01. Specific Questions and Problems.

1. Section 871(g). -- Special Rules for Original Issue Discount. -- Whether a debt instrument having original issue discount within the meaning of section 1273 of the Internal Revenue Code of 1986 is not an original issue discount obligation within the meaning of section 871(g)(1)(B)(i) when the instrument is payable 183 days or less from the date of original issue (without regard to the period held by the taxpayer) and the instrument is issued by a domestic corporation and purchased by its controlled foreign corporation.

2. Section 954. -- Foreign Base Company Income. -- The effective rate of tax that a foreign country will impose on income.

3. Section 7701. -- Definitions. -- Whether a foreign arrangement that is a participant in a domestic arrangement classified as a partnership for United States tax purposes will itself be classified as a partnership.

4. Section 7701. -- Definitions. -- Whether a foreign limited liability company will be classified as a partnership, if a taxpayer who holds an interest therein seeks the partnership classification and (1) the taxpayer is a corporation and independent parties hold else than 20 percent of the interests in the limited liability company, or (2) the taxpayer is not a corporation and independent parties hold only a nominal interest in the company.

02. General Areas.

1. The prospective application of the estate tax to the property or the estate of a living person, except that rulings may be issued on any international issues in a ruling request accepted pursuant to Rev. Proc. 88-50, 1988-42 I.R.B. 81.

2. The federal tax consequences of proposed federal, state, local, municipal, or foreign legislation.

3. Whether reasonable cause exists under Subtitle F (procedure and Administration) of the Code.

4. Whether a proposed transaction would subject a taxpayer to criminal penalties.

5. Any area, where the ruling request does not comply with the requirements of Rev. Proc. 87-4, 1987-1 C.B. 33, as modified by Rev. Proc. 88-4, 1988-1 I.R.B. 36, and modified and amplified by Rev. Proc. 88-8, 1988-4 I.R.B. 22 (as modified by Rev. Proc. 88-13, 1988-7 I.R.B. 7, and Rev. Proc. 88-27, 1988-22 I.R.B. 54) and Rev. Proc. 89- 4, 1989-3 I.R.B. 18.

6. Any area, where the same issue is the subject of the taxpayer's pending request for competent authority assistance under a United States tax treaty.

SEC. 4. AREAS IN WHICH RULINGS OR DETERMINATION LETTERS WILL NOT ORDINARILY BE ISSUED

01. Specific Questions and Problems.

1. Section 367(a). -- Transfers of Property from the United States. -- Whether an oil or gas working interest is transferred from the United States for use in the active conduct of a trade or business for purposes of section 367(a)(3) of the Code; and whether any other property is so transferred, where the determination required extensive factual inquiry.

2. Section 367(b). -- Other Transfers. -- Whether a foreign corporation is considered a corporation for purposes of any nonrecognition provision listed in section 367(b), and related issues, unless the ruling presents a significant legal issue. (These matters are dealt with in detail in section 7.367(b) of the Temporary Income Tax Regulations.)

3. Section 864. -- Definitions and Special Rules. -- Whether a taxpayer is engaged in a trade or business within the United States, and whether income is effectively connected with the conduct of a trade or business within the United States; and in particular, whether a taxpayer trading in stocks, securities, or commodities is engaged in a trade or business within the United States under section 1.864-2(c) and (d) of the regulations.

4. Section 882. -- Tax on Income of Foreign Corporations Connected with United States Business. -- Under section 1.882-5(b) of the regulations, whether a taxpayer using the actual ratio may change to the fixed ratio, and whether a taxpayer electing either the branch book/dollar pool method or the separate currency pools method may change methods.

5. Section 892. -- Income of Foreign Governments and of International Organizations. -- Whether income received by local governmental authorities of the United Kingdom from certain United States investments of money allocable to their super annuation funds is exempt from federal income taxation.

6. Section 892. -- Income of Foreign Governments and of International Organizations. -- Whether a foreign government is engaged in commercial activities for purposes of section 892, and whether income received by a foreign government is derived from the conduct of such commercial activities.

7. Section 893. -- Compensation of Employees of Foreign Governments and International Organizations. -- Whether a foreign government is engaged in commercial activities for purposes of section 893, and whether the services of an employee of a foreign government are primarily in connection with such commercial activities.

8. Section 894. -- Income Affected by Treaty. -- Whether a taxpayer has a permanent establishment in the United States for purposes of any United States income tax treaty.

9. Section 894. -- Income Affected by Treaty. -- Whether the income received by a nonresident alien student for services performed for a university or other educational institution is exempt from federal income tax or withholding under United States income tax treaties with Belgium, China, Cyprus, Egypt, Finland, France, Iceland, Japan, Korea, Morocco, the Netherlands, Norway, Pakistan, the Philippines, Poland, Romania, and Trinidad and Tobago.

10. Section 894. -- Income Affected by Treaty. -- Whether the income received by a nonresident alien performing research or teaching at a university is exempt from federal income tax or withholding under United States income tax treaties with Belgium, China, Egypt, Finland, France, Hungary, Iceland, Italy, Jamaica, Japan, Korea, Luxembourg, the Netherlands, Norway, the Philippines, Poland, Romania, Sweden, Trinidad and Tobago, the Union of Soviet Socialist Republics, and the United Kingdom.

11. Section 894. -- Income Affected by Treaty. -- Whether the income received by a nonresident alien teaching at a university is exempt from federal income tax or withholding under United States income tax treaties with Austria, Denmark, the Federal Republic of Germany, Greece, Ireland, Pakistan, and Switzerland.

12. Section 894. -- Income Affected by Treaty. -- Whether a foreign recipient of payments made by a United States person is ineligible to receive the benefits of a United States tax treaty under the principles of Rev. Rul. 84-152, 1984-2 C.B. 381, and Rev. Rul. 84-153, 1984-2 C.B. 383.

13. Section 894. -- Income Affected by Treaty. -- Whether a recipient of payments is or has been a resident of a country for purposes of any United States tax treaty. Pursuant to section 1.884- 5T(f) of the temporary regulations, however, the Service will rule whether a corporation representing that it is a resident of a country is a qualified resident thereof for purposes of section 884.

14. Section 901. -- Taxes of Foreign Countries and of Possessions of United States. -- Whether a person claiming a credit has established, based on all of the relevant facts and circumstances, the amount (if any) paid by a dual capacity taxpayer under a qualifying levy that is not paid in exchange for a specific economic benefit. See section 1.901-2A(c)(2) of the regulations.

15. Section 985. -- Functional Currency. -- Whether a currency is the functional currency of a qualified business unit.

16. Section 989(a). -- Qualified Business Unit. -- Whether a unit of the taxpayer's trade or business is a qualified business unit.

17. Section 7701. -- Tax on Nonresident Alien Individuals. -- Whether an alien individual is either a resident or nonresident of the United States, in situations where the determination depends on facts that cannot be confirmed until the close of the taxable year (including, for example, the length of the alien's stay or the nature of the alien's activities).

18. Section 7701. -- Definitions. -- Whether a foreign corporation will be classified as a partnership for United States tax purposes, if the taxpayer seeks the partnership status; and whether a foreign partnership will be classified as an association for United States tax purposes, if the taxpayer seeks the association status. Requests for advance rulings about the classification of foreign entities should be submitted according to Rev. Proc. 89-1, 1989-1 I.R.B. 8. the Office of the Associate Chief Counsel (Technical) coordinates the response to such requests with the Office of the Associate Chief Counsel (International).

19. Section 7701. -- Definitions. -- Whether an estate or trust is a foreign estate or trust for federal income tax purposes.

02. General Areas.

Whether a taxpayer has a business purpose for a transaction or arrangement.

SEC. 5. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 87-6, Rev. Proc. 87-39, and Rev. Proc. 87-61 are superseded.

SEC. 6. EFFECTIVE DATE

This revenue procedure applies to all ruling requests on file in the National Office on February 27, 1989, and to all requests received thereafter.