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Modifications to Treatment of Aircraft and Vessel Leasing Income

The Internal Revenue Service issued final regulations (the Final Regulations) addressing certain implications of leasing aircraft or vessels in foreign commerce. The Final Regulations apply to United States shareholders of controlled foreign corporations that derive income from the leasing of aircraft or vessels in foreign commerce, foreign corporations that are transferees of leased property, and also apply indirectly to foreign persons in connection with their qualification for benefits under an income tax treaty as a result of the active conduct of a trade or business.

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