The Internal Revenue Service is proposing temporary regulations on foreign base company sales income.

The regulations apply to cases in which personal property sold by a controlled foreign corporation is manufactured, produced or constructed according to a contract manufacturing arrangement or by one or more branches of the CFC.

The temporary regulations, according to the IRS, will modify the foreign base company sales income regulations to address current business structures and practices, particularly the growing importance of contract manufacturing and other manufacturing arrangements. The temporary regulations, in general, will affect CFCs and their United States shareholders. 

The IRS plans to hold a public hearing on the regulations on April 20 at its offices in Washington, D.C.

The agency is soliciting comments, which must be received by March 30, 2009.

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