[Code of Federal Regulations]
[Title 26, Volume 9]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.863-0]

[Page 262]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.863-0  Table of contents.

    This section lists captions contained in Secs. 1.863-1, 1.863-2, and 
1.863-3.

                Sec. 1.863-1 Allocation of gross income.

    (a) In general.

    (b) Natural resources.

    (1) In general.

    (2) Additional production prior to export terminal.

    (3) Definitions.

    (i) Production activity.

    (ii) Additional production activities.

    (iii) Export terminal.

    (4) Determination of fair market value.

    (5) Determination of gross income.

    (6) Tax return disclosure.

    (7) Examples.
    (c) Determination of taxable income.
    (e) Effective dates.

      Sec. 1.863-2 Allocation and apportionment of taxable income.

    (a) Determination of taxable income.
    (b) Determination of source of taxable income.
    (c) Effective dates.

 Sec. 1.863-3 Allocation and apportionment of income from certain sales 
                              of inventory.

    (a) In general.
    (1) Scope.
    (2) Special rules.
    (b) Methods to determine income attributable to production activity 
and sales activity.
    (1) 50/50 method.
    (i) Determination of gross income.
    (ii) Example.
    (2) IFP method.
    (i) Establishing an IFP.
    (ii) Applying the IFP method.
    (iii) Determination of gross income.
    (iv) Examples.
    (3) Books and records method.
    (c) Determination of the source of gross income from production 
activity and sales activity.
    (1) Income attributable to production activity.
    (i) Production only within the United States or only within foreign 
countries.
    (A) Source of income.
    (B) Definition of production assets.
    (C) Location of production assets.
    (ii) Production both within the United States and within foreign 
countries.
    (A) Source of income.
    (B) Adjusted basis of production assets.
    (iii) Anti-abuse rule.
    (iv) Examples.
    (2) Income attributable to sales activity.
    (d) Determination of source of taxable income.
    (e) Election and reporting rules.
    (1) Elections under paragraph (b) of this section.
    (2) Disclosure on tax return.
    (f) Income partly from sources within a possession of the United 
States.
    (g) Special rules for partnerships.
    (h) Effective dates.

[T.D. 8687, 61 FR 60545, Nov. 29, 1996]