International Tax Institute, Inc.

Proposed regulations issued under section 892 this past November, and related proposed regulations issued under section 871(m) this January, set forth the first and very constructive set of guidance since 1988 on a number of vexing U.S. tax issues affecting foreign governments. Section 892, which provides exemption for certain limited categories of U.S. source financial income, once was a sleepy little provision relating primarily to one-off investments in the US by foreign governments or their controlled entities. Given the increasing prevalence of sovereign wealth fund and sovereign pension fund investments in the U.S. economy, our distinguished speakers will examine some of these vexing issues, including the "all or nothing" rule under which a controlled entity, but not the sovereign itself, can lose the benefits of section 892 completely as a result of realizing even a dime's worth of unrelated "commercial activity" income, and will discuss how they are addressed under the proposed regulations, as well as suggest areas where additional guidance might be appropriate. Speakers: Ronald A. Dabrowski, Deputy Associate Chief Counsel (International-Technical), Internal Revenue Service William McRae of Cleary Gottlieb Steen &Hamilton LLP Gordon Warnke of Dewey &LeBoeuf LLP