[Code of Federal Regulations]
[Title 26, Volume 10]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.936-7T]

[Page 181]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.936-7T  Manner of making election under section 936(h)(5); 

special election for export sales; revocation of election under 
section 936(a) (temporary).

    (a) [Reserved]. For further guidance, see Sec. 1.936-7 (a).
    (b) Manner of making election.
    Q. 1: How does a possessions corporation make an election to use the 
cost sharing method or profit split method?
    A.1: A possessions corporation makes an election to use the cost 
sharing or profit split method by filing Form 5712-A (``Election and 
Verification of the Cost Sharing or Profit Split Method Under Section 
936(h)(5)'') and attaching it to its tax return. Form 5712-A must be 
filed on or before the due date (including extensions) of the tax return 
of the possessions corporation for its first taxable year beginning 
after December 31, 1982. The electing corporation must set forth on the 
form the name and the taxpayer identification number or address of all 
members of the affiliated group (including foreign affiliates not 
required to file a U.S. tax return). All members of the affiliated group 
must consent to the election. For elections filed with respect to 
taxable years beginning before January 1, 2003, an authorized officer of 
the electing corporation must sign the statement of election and must 
declare that he has received a signed statement of consent from an 
authorized officer, director, or other appropriate official of each 
member of the affiliated group. Elections filed for taxable years 
beginning after December 31, 2002, will incorporate a declaration by the 
electing corporation that it has received a signed consent from an 
authorized officer, director, or other appropriate official of each 
member of the affiliated group and will be verified by signing the 
return. The election is not valid for a taxable year unless all 
affiliates consent. A failure to obtain an affiliate's written consent 
will not invalidate the election out if the possessions corporation made 
a good faith effort to obtain all the necessary consents or the failure 
to obtain the missing consent was inadvertent. Subsequently created or 
acquired affiliates are bound by the election. If an election out is 
revoked under section 936(h)(5)(F)(iii), a new election out with respect 
to that product area cannot be made without the consent of the 
Commissioner. The possessions corporation shall file an amended Form 
5712-A with its timely filed income tax return to reflect any changes in 
the names or number of the members of the affiliated group for any 
taxable year after the first taxable year to which the election out 
applies. By consenting to the election out, all affiliates agree to 
provide information necessary to compute the cost sharing payment under 
the cost sharing method or combined taxable income under the profit 
split method, and failure to provide such information shall be treated 
as a request to revoke the election out under section 936(h)(5)(F)(iii).
    Q. & A. 2 through 8 [Reserved]. For further guidance, see Sec. 
1.936-7(b), Q. & A. 2 through 8.
    (c) and (d) [Reserved]. For further guidance, see Sec. 1.936-7(c) 
and (d).

[T.D. 9100, 68 FR 70705, Dec. 19, 2003]