Result Sample Clauses

Result. The term of the Agreement is not extended, and expires on the third anniversary of the Commencement Date. Example 3:

Result. The $50x dividend is reflected on the books and records of DE3Y and, therefore, is attributable to P’s interest in DE3Y pursu- ant to § 1.1503(d)–5(c)(3)(i). In addition, the $25x section 78 gross-up is attributable to P’s interest in DE3Y pursuant to § 1.1503(d)– 5(c)(4)(iv). The distribution of $50x from DE3Y to DE1X is generally disregarded for U.S. tax purposes and, therefore, does not give rise to an item that is taken into account for pur- poses of calculating income or a dual con- solidated loss. This is the case even though the item would be reflected on the books and records of DE1X. In addition, pursuant to § 1.1503(d)–5(c)(1)(iii), each separate unit must calculate its own income or dual ▇▇▇▇▇▇▇- dated loss, and each item of income, gain, de- duction, and loss must be taken into account only once. As a result, the dual consolidated loss of $75x attributable to P’s Country X separate unit in year 1 is not reduced by the amount of dividend income attributable to P’s indirect interest in DE3Y. Example 25. Items reflected on books and records of a combined separate unit. (i) Facts. P owns DE1X which, in turn, owns FBX. P’s in- terest in DE1X and its indirect interest in FBX are combined and treated as a single separate unit (Country X separate unit) pur- suant to § 1.1503(d)–1(b)(4)(ii). The following items are reflected on the books and records of DE1X in year 1: Sales, depreciation ex- pense, a political contribution, royalty ex- pense paid to P, repairs and maintenance ex- pense paid to a third party, and Country X income tax expense. The amount of sales under U.S. tax principles equals the amount of sales reported for accounting purposes. The depreciation expense is calculated on a straight-line basis over the useful life of the asset for accounting purposes, but is subject to accelerated depreciation for U.S. tax pur- poses. In addition, the repairs and mainte- ▇▇▇▇▇ expense, which is deducted when paid for accounting purposes, is properly capital- ized and amortized over five years for U.S. tax purposes. Finally, P elects to claim as a credit under section 901 the Country X in- come tax expense that was paid in year 1.

Result. (A) As a result of FSX’s assump- tion of the FBX liabilities, including the ac- crued salary expense, a portion of the dual consolidated loss is available for a foreign use in year 2. This is the case because the de- duction that was taken into account in year 1 in computing the dual consolidated loss under U.S. tax principles will, under Country X tax law, be taken into account and will be available to offset the income of FSX, a for- eign corporation, in year 2. However, because this item of expense is made available solely as a result of the assumption of a liability of FBX, and such liability was incurred in the ordinary course of FBX’s trade or business, there will not be a foreign use of the year 1 dual consolidated loss pursuant to § 1.1503(d)– 3(c)(7). (B) The transfer of all the assets of FBX to FSX is a triggering event under § 1.1503(d)– 6(e)(1)(iv), unless P can rebut the triggering event under § 1.1503(d)–6(e)(2). For purposes of determining whether, under § 1.1503(d)– 6(e)(2)(ii), the transfer of assets resulted in a carryover under foreign law of FBX’s losses, expenses, or deductions, the exception to for- eign use for the assumption of liabilities is taken into account. However, the other ex- ceptions to foreign use do not apply for this purpose (or for purposes of demonstrating that no foreign use of a dual consolidated loss can occur in any other year under § 1.1503(d)–6(c), (e)(2)(i) or (j)(2)). See § 1. 1503(d)–3(c)(1). Provided the other require- ments of § 1.1503(d)–6(e)(2)(ii) and (iii) are sat- isfied, P may be able to rebut the occurrence of a triggering event upon the transfer of FBX’s assets to FSX.

Result. The year 1 $25x net loss attrib- utable to P’s interest in the Country X sepa- rate unit constitutes a dual consolidated loss. In addition, even though DE1X has posi- tive income in year 1 for Country X tax pur- poses, P cannot demonstrate that there is no possibility of foreign use with respect to the Country X separate unit’s dual consolidated loss as provided under § 1.1503(d)–6(c)(1)(i). P cannot make such a demonstration because the depreciation expense, an item composing the year 1 dual consolidated loss, is deduct- ible (in a later year) for Country X tax pur- poses and, therefore, may be available to off- set or reduce income for Country X purposes that would constitute a foreign use. For ex- ample, if DE1X elected to be classified as a corporation pursuant to § 301.7701–3(c) of this chapter effective as of the end of year 1, and the deferred depreciation expense were avail- able for Country X tax purposes to offset year 2 income of DE1X, an entity treated as a foreign corporation in year 2 for U.S. tax purposes, there would be a foreign use.

Result. (A) Under § 1.1503(d)–6(f)(2)(ii)(B), the acquisition by T of the P consolidated group is not an event described in § 1.1503(d)– 6(e)(1)(ii) requiring the recapture of the year 1 dual consolidated loss of DRCX (and the payment of an interest charge), provided that the T consolidated group files a new do- mestic use agreement described in § 1.1503(d)– 6(f)(2)(iii)(A). If a new domestic use agree- ment is filed, then pursuant to § 1.1503(d)– 6(j)(1)(ii), the domestic use agreement filed by the P consolidated group with respect to the year 1 dual consolidated loss of DRCX is terminated and has no further effect.

Result. In general, under section 381, P would succeed to, and be permitted to use, DRCX’s net operating loss carryover. How- ever, § 1.1503(d)–4(d)(1)(i) prohibits the dual consolidated loss of DRCX from carrying over to P. Therefore, DRCX’s year 1 net operating loss carryover is eliminated. Example 21. Dual consolidated loss limitation applied to a separate unit transferred in a sec- tion 381 transaction. (i) Facts. S owns DE1X which, in turn, owns FBX. S’s interest in DE1X and its indirect interest in FBX are combined and treated as a single separate unit (Country X separate unit) pursuant to § 1.1503(d)–1(b)(4)(ii). In year 1, a dual ▇▇▇▇▇▇▇- dated loss is attributable to the Country X separate unit, and P does not make a domes- tic use election with respect to such loss. Under § 1.1503(d)–4(b), the year 1 dual ▇▇▇▇▇▇▇- dated loss attributable to the Country X sep- arate unit may not be used to offset the in- come of P or S (other than income attrib- utable to the Country X separate unit, sub- ject to the application of § 1.1503(d)–4(c)) on the group’s consolidated U.S. income tax re- turn (nor may it be used to offset the income of any other domestic affiliates). At the be- ginning of year 2, S transfers its entire inter- est in DE1X, and thus its entire indirect in- terest in FBX, to FSX in a transaction de- scribed in section 381.

Result. (A) P must compute its taxable income for year 1 without taking into ac- count the $50x dual consolidated loss, pursu- ant to § 1.1503(d)–4(c)(2). Such amount con- sists of a pro rata portion of the expenses that were taken into account in calculating the year 1 dual consolidated loss. Thus, the items of the dual consolidated loss that are not taken into account by P in computing its taxable income are as follows: $25x of ▇▇▇- ary expense ($75x/$150x × $50x); $16.67x of re- search and experimental expense ($50x/$150x × $50x); and $8.33x of interest expense ($25x/ $150x × $50x). The remaining amounts of each of these items, together with the $100x of sales income, are taken into account by P in computing its taxable income for year 1 as follows: $50x of salary expense ($75x ¥ $25x);

Result. In year 2, under the laws of Country X, the $100x of year 1 loss, which in- cludes the $80x dual consolidated loss attrib- utable to P’s Country X separate unit, is made available to offset income of HPSX. Such income is attributable to P’s interest in HPSX, which is a separate unit. Such in- come also is income of FSZ, a foreign cor- poration that is an owner of an interest in HPSX, which is not a separate unit. However, pursuant to § 1.1503(d)–3(c)(4), there is no for- eign use of the year 1 dual consolidated loss in year 2. This is the case because P’s inter- est in HPSX as of the end of year 1 has not been reduced by more than a de minimis amount, and the portion of the $80x dual con- solidated loss was made available for a for- eign use in year 2 solely as a result of FSZ’s ownership in HPSX and the allocation or carry forward of the dual consolidated loss as a result of such ownership.

Result. As a result of the transfer of as- sets from P to FSX, a portion of the year 1 dual consolidated loss is available for a for- eign use. This is the case because a portion of the basis in FBX’s assets, which gave rise to depreciation deductions that were taken into account in computing the year 1 dual consolidated loss, will give rise to a depre- ciation deduction under Country X laws that will be available, under U.S. tax principles, to offset the income of FSX, a foreign cor- poration, in year 2. However, the aggregate adjusted basis of all the assets transferred by P to FSX, within the 12-month period ending at the end of year 2, is less than 10 percent of the aggregate adjusted basis of all of FBX’s assets at the beginning of such 12- month period. Moreover, the aggregate ad- justed basis of the assets transferred by P to FSX at any time during the certification pe- riod is less than 30 percent of the aggregate adjusted basis of FBX’s assets held at the end of year 1. In addition, the item of deduction giving rise to the foreign use is being made available solely as a result of the adjusted basis of the transferred assets being deter- mined in whole, or in part, by reference to the adjusted basis of such transferred assets in the hands of FBX. As a result, this transfer will not result in a foreign use pursuant to § 1.1503(d)–3(c)(6).