Common use of Result Clause in Contracts

Result. (A) Pursuant to § 1.1503(d)– 1(b)(4)(ii), P’s interest in DE1X, and P’s indi- rect ownership of a portion of the Country X operations carried on by PRSZ, are combined and treated as a single separate unit (Coun- try X separate unit). Pursuant to § 1.1503(d)– 5(c)(4)(ii)(A), for purposes of determining P’s items of income, gain, deduction, and loss at- tributable to the Country X separate unit, the items of P are first attributed to each separate unit that composes the Country X separate unit. (B) Pursuant to § 1.1503(d)–5(c)(2)(i), the principles of section 864(c)(2), (c)(4), and (c)(5) (as set forth in § 1.864–4(c) and §§ 1.864–5 through 1.864–7), apply for purposes of deter- mining P’s items of income, gain, deduction (other than interest expense), and loss that are attributable to P’s indirect interest in the Country X operations carried on by PRSZ. For purposes of determining P’s inter- est expense that is attributable to P’s indi- rect interest in the Country X operations carried on by PRSZ, the principles of § 1.882– 5, as modified under § 1.1503(d)–5(c)(2)(ii), shall apply. For purposes of applying these rules, P is treated as a foreign corporation, the Country X operations carried on by PRSZ are treated as a trade or business within the United States, and the assets of P (including its share of the PRSZ assets, other than those of the Country X operations) are treat- ed as assets that are not U.S. assets. In addi- tion, because P carries on its share of the Country X operations through DE1X, a hy- brid entity, § 1.1503(d)–5(c)(4)(i)(A) provides that only the items attributable to P’s inter- est in DE1X, and only the assets, liabilities, and activities of P’s interest in DE1X, are taken into account for purposes of this de- termination. (C) TET is a transparent entity as defined in § 1.1503(d)–1(b)(16) because it is not taxable as an association for Federal tax purposes, is not subject to income tax in a foreign coun- try as a corporation (or otherwise at the en- tity level) either on its worldwide income or on a residence basis, and is not treated as a pass-through entity under the laws of Coun- try X (the applicable foreign country). TET is not a pass-through entity under the laws of Country X because a Country X holder of an interest in TET does not take into account on a current basis the interest holder’s share of items of income, gain, deduction, and loss of TET. For purposes of determining P’s items of income, gain, deduction, and loss that are attributable to P’s interest in TET, only those items of P that are reflected on the books and records of TET, as adjusted to conform to U.S. tax principles, are taken into account. § 1.1503(d)–5(c)(3)(i). Because the interest in TET is not a separate unit, a loss attributable to such interest is not a dual consolidated loss and is not subject to section 1503(d) and these regulations. Items must nevertheless be attributed to the inter- ests in TET. For example, such attribution is required for purposes of calculating the in- come or dual consolidated loss attributable to the Country X separate unit, and for pur- poses of applying the domestic use limita- tion under § 1.1503(d)–4(b) to a dual xxxxxxx- dated loss attributable to the Country X sep- arate unit. (D) For purposes of determining P’s items of income, gain, deduction, and loss that are attributable to P’s interest in DE1X, only those items of P that are reflected on the books and records of DE1X, as adjusted to conform to U.S. tax principles, are taken into account. § 1.1503(d)–5(c)(3)(i). For this purpose, DE1X’s distributive share of the items of income, gain, deduction, and loss that are reflected on the books and records of PRSZ, as adjusted to conform to U.S. tax principles, are treated as being reflected on the books and records of DE1X, except to the extent such items are taken into account by the Country X operations of PRSZ. See § 1.1503(d)–5(c)(3)(ii) and (4)(i)(B). Because TET is a transparent entity, the items reflected on its books and records are not treated as being reflected on the books and records of DE1X. (E) Pursuant to § 1.1503(d)–5(c)(4)(ii)(B), the combined Country X separate unit of P cal- culates its income or dual consolidated loss by taking into account all the items of in- come, gain, deduction, and loss that were separately attributable to P’s interest in DE1X and the Country X operations of PRSZ owned indirectly by P. Example 27. Sale of separate unit by another separate unit. (i) Facts. P owns DE3Y which, in turn, owns DE1X. DE3Y also owns other as- sets that do not constitute a foreign branch separate unit. DE1X owns FBX. Pursuant to § 1.1503(d)–1(b)(4)(ii), P’s indirect interests in DE1X and FBX are combined and treated as one Country X separate unit (Country X sep- arate unit). DE3Y sells its interest in DE1X at the end of year 1 to an unrelated foreign per- son for cash. The sale results in an ordinary loss of $30x. Items of income, gain, deduc- tion, and loss derived from the assets that gave rise to the $30x loss would be attrib- utable to the Country X separate unit under § 1.1503(d)–5(c) through (e). Without regard to the sale of DE1X, no items of income, gain, deduction, and loss are attributable to P’s Country X separate unit in year 1.