Section of Taxation Publications
  VOL. 55
NO. 1
FALL 2001
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
 The Taxation of Space, Ocean, and Communications Income Under the Proposed Treasury Regulations
Jeffrey P. Cowan, Jr.

Senior Tax Specialist, KPMG LLP, Washington, D.C.; B.A., University of California Los Angeles, 1992; J.D., University of Georgia School of Law, 1999; LL.M. in Taxation 2001, Georgetown University Law Center. The author would like to thank Leonard Terr for his inspiration and helpful comments on earlier drafts of this paper during a LL.M. seminar he taught at Georgetown University Law Center on international tax policy. The author would also like to thank Stephen Bates of KPMG LLP for his comments and our discussions on this topic.


On January 17, 2001, in the waning days of the Clinton Administration, the Department of Treasury and the Service issued regulations1 on the taxation of income from space, ocean, and telecommunications activities. While only issued in a proposed form, they are nonetheless a significant first step in providing guidance in the complex and evolving satellite and telecommunications sectors.

The Proposed Regulations address sections 863(d) and (e) of the Code. These subsections were added to the Code by the Tax Reform Act of 1986.

Section 863(d) provides rules for determining the source of space and ocean income. Section 863(e) provides rules for determining the source of international communications income.

This paper provides an overview of the satellite and telecommunications industries, describes the applicable statutory provisions, and examines the relevant legislative history. Further, it analyzes in detail the Proposed Regulations. Finally, it explores policy issues relating to the Proposed Regulations. Throughout the paper, special emphasis will be given to subpart F, foreign tax credit issues, and the impact of regulations on global tax policy.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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