Two weeks ago the IRS published the following Private Letter Rulings relating to international taxation.
PLR 201310016 -US Parent is the common parent of an affiliated group. US Parent is a wholly-owned subsidiary of Foreign Parent, which is a publicly-traded Country Z entity. US Parent owns all of the issued and outstanding stock of Subsidiary 1. Subsidiary 1 owns all of the issued and outstanding stock of Subsidiary 2.
In order for Subsidiary 2 to perform certain contracts, it needs security clearances. Because of the indirect foreign ownership of stock in Subsidiary 2, Subsidiary 2 must be effectively insulated from foreign ownership, control, or influence in order to maintain those clearances. To create a security measure designed to insulate Subsidiary 2 from any foreign control or influence that might arise from Foreign Parent’s indirect ownership of stock in Subsidiary 2, Foreign Parent, US Parent, Subsidiary 1, and Subsidiary 2 became parties to a Special Security Agreement (“SSA”). Under the SSA, the management of Subsidiary 2 must be conducted by a board of directors that is constituted in accordance with, and whose powers are defined by, certain requirements (described below) related to national security. These requirements do not impact Subsidiary 1’s economic interest in, and rights with respect to, Subsidiary 2.
The SSA does not prevent Subsidiary 2 from being a member of the affiliated group (within the meaning of section 1504(a)) of which US Parent is the common parent or prevent Subsidiary 2 from joining in the filing of a consolidated federal income tax return (within the meaning of sections 1501 and 1502 and the regulations thereunder) with such affiliated group.
PLR 201310018 - Late IC DISC election. Form 4876-A, Code §992(b)(1)(A).