IRS issues final rules on taxing foreign vessel operations

IRS issues final rules on taxing foreign vessel operations       The Internal Revenue Service published Tuesday its final regulations relating to income derived from foreign corporations from the international operation of ships or aircraft.
      In general, the rules provide “that a foreign corporation organized in a qualified foreign country and engaged in international operation of ships or aircraft may exclude qualified income from gross income for purposes of U.S. federal income taxation, provided — and there is always a ‘provided’ in IRS regulations — that the corporation can satisfy certain ownership and related documentation requirements,” said Dennis Bryant, an admiralty attorney in Washington, D.C.
   The rules also describe the information that a foreign corporation must include on its U.S. federal income tax return in order to claim an exclusion.
   “This regulation is important because it potentially impacts all foreign corporations engaged in the international operation of ships or aircraft that call in the U.S.,” Bryant explained.
   The new IRS rules apply to taxable years of foreign corporations beginning 30 days or more after Aug. 26.