Frequently Asked Questions
Who is eligible for the Separate and Identifiable Operations Demonstration?
Available to taxpayers with international operations in countries on the Secretary's boycott list who can prove specific transactions did not involve boycott cooperation.
How does the Separate and Identifiable Operations Demonstration work?
Taxpayers can avoid the loss of foreign tax credits and other tax benefits by clearly demonstrating that specific business operations are separate and identifiable from those involving international boycott participation.
What law authorizes the Separate and Identifiable Operations Demonstration?
The Separate and Identifiable Operations Demonstration is authorized under IRC §999 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §999
Source: Internal Revenue Code, Title 26, United States Code
§ 999. Reports by taxpayers; determinations(a) International boycott reports by taxpayers(1) Report requiredIf any person, or a member of a controlled group (within the meaning of section 993(a)(3)) which includes that person, has operations in, or related to—(A) a country (or with the government, a company, or a national of a country) which is on the list maintained by the Secretary under paragraph (3), or
(B) any other country (or with the government, a company, or a national of that country) in which such person or such member had operations during the taxable year if such person (or, if such person is a foreign corporation, any United States shareholder of that corporation) knows or has reason to know that participation in or co-operation with an international boycott is required as a condition of doing business within such country or with such government, company, or national,
that person or shareholder (within the meaning of section 951(b)) shall report such operations to the Secretary at such time and in such manner as the Secretary prescribes, except that in the case of a foreign corporation such report shall be required only of a United States shareholder (within the meaning of such section) of such corporation.
(2) Participation and cooperation; request thereforA taxpayer shall report whether he, a foreign corporation of which he is a United States shareholder, or any member of a controlled group which includes the taxpayer or such foreign corporation has participated in or cooperated with an international boycott at any time during the taxable year, or has been requested to participate in or cooperate with such a boycott, and, if so, the nature of any operation in connection with which there was participation in or cooperation with such boycott (or there was a request to participate or cooperate).
(3) List to be maintainedThe Secretary shall maintain and publish not less frequently than quarterly a current list of countries which require or may require participation in or cooperation with an international boycott (within the meaning of subsection (b)(3)).
(b) Participation in or cooperation with an international boycott(1) General ruleIf the person or a member of a controlled group (within the meaning of section 993(a)(3)) which includes the person participates in or cooperates with an international boycott in the taxable year, all operations of the taxpayer or such group in that country and in any other country which requires participation in or cooperation with the boycott as a condition of doing business within that country, or with the government, a company, or a national of that country, shall be treated as operations in connection with which such participation or cooperation occurred, except to the extent that the person can clearly demonstrate that a particular operation is a clearly separate and identifiable operation in connection with which there was no participation in or cooperation with an international boycott.
Showing first 3,000 characters of full section text.