Latest news with #CyberSecurity
Daily Mail
14 hours ago
- Daily Mail
Experts issue urgent warning to Amazon shoppers over Airbnb gift card scam
Cyber security experts have issued a warning to Amazon users about a rising scam involving Airbnb gift cards, expected to increase over the summer. Criminals are impersonating friends and family using email 'spoofing' techniques to trick victims into buying gift cards on Amazon and sending them to scammers. Victims believe they're helping a loved one, only to later discover that the request was fake. Louise Hogood recently lost £350 in the scam after receiving what appeared to be an email from her elderly uncle. She said: 'I received an email which appeared to be from my elderly uncle, and it was his correct email address, so I didn't question whether it was him or not.' 'In the email, he asked for help with buying an Airbnb gift voucher on Amazon for his friend's daughter's birthday - which was that day - but he couldn't speak over the phone as he had laryngitis. He is so thoughtful, so it seemed like a legitimate email.' Louise didn't notice that during the back-and-forth, the scammer had changed the reply email address, and though it still contained her uncle's name, the domain was different. After sending the gift card, Louise received another message asking for a second round of funds, claiming the first wasn't enough for the accommodation her uncle's friend had decided on. To reassure her, the scammer sent a fake screenshot of a Lloyds Bank transfer that was supposed to show her uncle sending the money back to her. Louise said: 'That's when I knew it was a scam, it was a really bad Photoshop job with different fonts on it and weird colours.' Despite acting quickly and contacting Amazon, Airbnb and her bank, Louise was told there was nothing they could do. Amazon said the gift card had already been redeemed, and Airbnb said they had no record of the email it was sent to. She said: 'Amazon told me they couldn't do anything about it because the gift card had been sent to the receiver, and that I had to speak to Airbnb with it being a third-party supplier. 'When I phoned Airbnb, they looked for the user under the email address the gift card had been sent to. But as they couldn't find anyone on the platform, they said they couldn't do anything more. 'They did say if I could get a PIN number for the gift card, they could try and cancel it. So, I requested this from Amazon and spoke to Airbnb again.' When Louise tried again with more information, including the card's PIN, she was told Airbnb could not track it, as their gift cards are managed by a third party. She said: 'They told me that regardless of the PIN number, ID or any other information I provided, they couldn't do anything because their gift cards are handled by another company and therefore, they had no way of tracking it. 'As a final port of call I phoned Amazon again. They tried to resend a gift card to my email address, as it would then cancel the original one, but the scammer had already redeemed it.' Louise added: 'I couldn't believe that two of the biggest tech companies in the world, couldn't trace a gift card that had been acquired under a scam.' Cyber expert Sarah Knowles from Shift Key Cyber said scammers are getting more advanced, using AI to mimic writing styles, making it harder to spot fake messages. She said: 'Fraudsters are now taking advantage of the website's third-party suppliers and targeting their customers too. 'In this instance, a scammer is likely to have used an AI programme to replicate how Louise's elderly uncle tends to write his emails, so it sounds even more convincing.' 'It is not a coincidence that there is no way to track the Airbnb gift cards through Amazon or Airbnb, that is one of the main reasons for the scammers to carry out the attack. With summer holidays approaching, she advised Amazon shoppers and account holders on similar platforms to be extra cautious. Experts urge people never to buy gift cards based on email or text requests without confirming directly with the person. Suspected scams should be reported to your bank and Action Fraud immediately. It comes as tourists have been urged to be on their guard for a scam that preys on users – and could see them lose thousands. With the school holidays just around the corner, many Brits will have booked a summer getaway. But experts have warned that scammers using the platform are targeting holidaymakers by sending false messages and emails from hotel accounts.
Globe and Mail
4 days ago
- Business
- Globe and Mail
SSL Certificate Market Forecast Predicts Significant CAGR Growth of 12% by 2032
"SSL Certificate Market " Booming E-Commerce to Steer Global Market Past USD 518.4 Million by 2032 at 12% CAGR – Coherent Market Insights SSL Certificate Market is estimated to be valued at USD 234.5 Mn in 2025 and is expected to reach USD 518.4 Mn in 2032, exhibiting a compound annual growth rate (CAGR) of 12% from 2025 to 2032. The SSL certificate market has become a vital part of the modern digital ecosystem, serving a key role in securing online communications and fostering trust between users and websites. SSL certificates use cryptographic protocols to encrypt data exchanged between a user's browser and a website's server, protecting sensitive information like personal data, passwords, and payment details. As cyber threats and data breaches continue to rise, businesses and website owners are increasingly acknowledging the importance of SSL certificates in safeguarding online interactions and enhancing their credibility. Request Sample Pages: Global SSL Certificate Market Key Takeaways According to Coherent Market Insights (CMI), the global SSL certificate market size is projected to increase at a CAGR of 12%, reaching USD 234.5 Mn in 2025 and USD 518.4 Mn by 2032. By organization size, small and medium enterprises (SMEs) segment is set to account for nearly three-fifths of the global SSL certificate market share in 2025. North America is anticipated to maintain its monopoly, accounting for one-third of the global SSL certificate market revenue share in 2025. As per CMI's new SSL certificate market analysis, Asia Pacific is expected to register fastest growth during the projection period. Europe is slated to remain the second-largest market for SSL certificates, accounting for a 22.5% share of the global industry by 2025. Growing Cybersecurity Concerns Driving Market Growth Coherent Market Insights' latest SSL certificate market research report highlights major factors driving industry growth. One such prominent growth driver is the increasing concerns over cyberattacks. In recent times, there has been an alarming rise in data breaches and cyberattacks globally. According to the Digital Watch Observatory, cyberattacks increased by 47% worldwide in the first quarter of 2025, with organizations experiencing an average of 1,925 attacks per week. The surge in cyberattacks is prompting businesses to adopt SSL certificates to protect sensitive information and build users' trust. This, in turn, is expected to boost growth of the SSL certificate market during the forecast period. Widespread Adoption of Free SSL Certificates Negatively Impacting Market The future SSL certificate market outlook appears promising. However, increasing adoption of free SSL certificates could somewhat constrain market expansion over the forecast period. There is a growing adoption of free SSL certificates offered by companies like Let's Encrypt. This reduced overall market revenue potential for paid SSL certificate vendors, and the trend may continue in the coming years. Expanding E-Commerce Sector Creating Lucrative Growth Opportunities The rapid growth of online shopping and digital payment systems worldwide is increasing need for secure digital infrastructure. This trend is driving demand for SSL certificates as they play a crucial role in encrypting data, protecting customer information, and ensuring compliance with standards like PCI DSS. As a result, SSL certificate companies are witnessing growing opportunities in the e-commerce space. Impact of AI on the SSL Certificate Market Artificial intelligence (AI) is gradually beginning to influence the SSL certificate industry. This advanced technology enhances security management and certificate lifecycle automation. AI-driven tools have the potential to detect vulnerabilities, automate renewal and deployment of certificates, and proactively respond to cyber threats in real-time. This leads to reduced human error, improved compliance, and stronger data protection. As cyberattacks become more sophisticated, businesses are increasingly relying on AI to maintain secure online communications. This is expected to drive demand for robust and intelligent SSL certificate solutions. Emerging SSL Certificate Market Trends Rising adoption of cloud services is a key growth-shaping trend in the SSL certificate market. Today, more and more businesses are transitioning to cloud environments, prompting them to secure cloud applications with SSL certificates. Increasing penetration of connected devices is heightening the need for encrypted connections and digital identity verification. This will likely play a key role in boosting the SSL certificate market value during the forecast period. Implementation of strict regulations, such as GDPR and PCI-DSS, necessitates data encryption and secure communication. This is expected to increase adoption of SSL certificates across industries, leading to revenue growth. Rapid digital transformation is another prominent trend in the SSL certificate industry. Industries like BFSI, healthcare, and government are undergoing digital shifts, necessitating secure data exchanges, which fuel SSL certificate adoption. There is also a growing trend towards automated certificate management. Organizations are increasingly turning to automation tools and platforms to streamline the issuance, renewal, deployment, and overall lifecycle management of SSL certificates. Analyst's View 'The global SSL certificate industry is poised for rapid expansion, owing to increasing cybersecurity concerns, rapid growth of e-commerce and online transactions, implementation of stringent compliance regulations, and growing demand for secure digital communication across industries,' said Ankur Rai, a senior analyst at CMI. Competitor Insights Key companies in the SSL certificate market report: - GlobalSign - DigiCert, Inc. - Entrust Datacard - Sectigo Limited - GoDaddy Inc. - GeoTrust - Thawte - RapidSSL - Symantec (now part of DigiCert) - Network Solutions - IdenTrust - Let's Encrypt - Buypass AS - Trustwave Holdings Buy this Complete Business Research Report: Key Developments In January 2025, Sectigo acquired the public certificate business of Entrust. This acquisition is intended to significantly expand the company's enterprise business and reinforce its position as a leader in delivering trusted digital security solutions. In January 2024, HID Global announced acquisition of SSL certificate specialist ZeroSSL. This strategic move aims to broaden HID's PKI and IoT portfolio and offer businesses and individuals a simple, cost‑effective solution for automated website security. About Us: Coherent Market Insights leads into data and analytics, audience measurement, consumer behaviors, and market trend analysis. From shorter dispatch to in-depth insights, CMI has exceled in offering research, analytics, and consumer-focused shifts for nearly a decade. With cutting-edge syndicated tools and custom-made research services, we empower businesses to move in the direction of growth. We are multifunctional in our work scope and have 450+ seasoned consultants, analysts, and researchers across 26+ industries spread out in 32+ countries.
Fox News
6 days ago
- Fox News
Landline identity theft leads to major bank fraud
Landline identity theft is an emerging threat that gives scammers backdoor access to your accounts. An outdated phone number, especially a forgotten landline, can help them bypass security and drain your savings. Here's how it happens and how to stop it. Sign up for my FREE CyberGuy ReportGet my best tech tips, urgent security alerts, and exclusive deals delivered straight to your inbox. Plus, you'll get instant access to my Ultimate Scam Survival Guide - free when you join my Richard from Reno, Nevada, shared a troubling story. His friend lost money to scammers because their old landline number was still linked to a bank account. It started with a credit alert asking whether the friend had opened a new card. They said no and thought the issue was resolved. But soon after, they couldn't access their bank or investment accounts. Despite having transaction alerts enabled, the money was already gone. The scammer didn't hack a password. Instead, they used a security loophole, an outdated landline still listed on file. "My friend had an old but active landline linked to their bank account," Richard said. "The thief convinced the phone company to port the number to a mobile device. Then they used it to intercept security codes and drain the account." The scammer requested a password reset. The bank sent a verification code to the old number, now controlled by the scammer. That code let them change the login, lock the victim out, and move the funds. Credit monitoring caught the new credit inquiry but failed to detect the fraud inside the existing accounts. By the time access was restored, the money had disappeared. This scam highlights how identity thieves evolve. They don't always need advanced tools. Sometimes, they just use the details you've forgotten. The attacker used number porting, a process meant to help people keep their number when switching carriers. It's legitimate, until scammers exploit it. In this case, the thief pretended to be the victim and asked the phone company to transfer the landline number to a mobile device. Once the number was active, they received calls and texts, including two-factor authentication (2FA) codes. Many people forget to update recovery settings after creating an account. But an outdated phone number or email can still receive security codes. If a scammer gains control of those recovery tools, your accounts are wide open. Even small gaps in your security settings can lead to big problems. These were the key vulnerabilities in this case: Scammers can hijack even inactive numbers through porting. If those numbers still connect to your bank or email, they become an easy target. Tools that monitor new credit accounts won't always detect unauthorized transactions in your existing bank or investment accounts. 2FA is helpful, but only when the linked phone number or email is secure. If a scammer controls that method, they can bypass your protections. You can't stop scammers from trying, but you can make it much harder for them to succeed. Use these steps to reduce your risk. 1. Audit your account recovery options: Check your recovery settings on every important account. Delete old phone numbers or backup emails. Keep only active, secure options on file. 2. Use an authenticator app: Authenticator apps like Google Authenticator, Authy, or Microsoft Authenticator generate one-time login codes on your device. This is safer than relying on text messages, which scammers can intercept. 3. Freeze number porting with your carrier: Contact your phone provider and ask about port-out protection. This feature blocks scammers from transferring your number without extra identity verification like a PIN or in-person request. 4. Remove your info from data broker sites: Scammers gather personal details like old numbers from public broker listings. Use a data removal service to erase this info from the web. Check out my top picks for data removal services and get a free scan to find out if your personal information is already out on the web by visiting Get a free scan to find out if your personal information is already out on the web: 5. Monitor your bank activity directly: Set up alerts through your bank for every transaction. Log in regularly, even if you haven't received any warnings, to catch fraud faster. 6. Use a password manager: A strong, unique password protects each account. A tool like a password manager creates and stores complex passwords for you. It also tracks password health and alerts you to possible breaches. Get more details about my best expert-reviewed Password Managers of 2025 at 7. Consider full identity theft protection: Even with strong passwords and 2FA, your personal info can still be exposed. An identity theft protection service offers dark web monitoring, account alerts, and some offer up to $1 million in identity theft insurance. See my tips and best picks on how to protect yourself from identity theft at Landline identity theft shows that forgotten account settings can turn into serious threats. Take a few minutes to review your recovery options. Switch to authenticator apps. Set up port-out protection. And don't rely on credit monitoring alone, it can't catch everything. These simple steps can help you stay ahead of evolving scams and protect your most important accounts. Have you experienced a similar scam or spotted a new tactic? Let us know by writing us at Sign up for my FREE CyberGuy ReportGet my best tech tips, urgent security alerts, and exclusive deals delivered straight to your inbox. Plus, you'll get instant access to my Ultimate Scam Survival Guide - free when you join my Copyright 2025 All rights reserved.
Globe and Mail
7 days ago
- Business
- Globe and Mail
F12.net Acquires AMTRA Solutions, Deepening Microsoft Cloud and AI Expertise for Canadian Mid-Market Businesses
EDMONTON and CALGARY, AB, July 15, 2025 /CNW/ - a leading Canadian Managed IT and Cyber Security provider, today announced the acquisition of AMTRA Solutions, a highly respected Microsoft technology partner with deep expertise in Microsoft Azure, Modern Work, and AI solutions.
Forbes
14-07-2025
- Business
- Forbes
Proposed Regs Clarify Source Of Income From Cloud Transactions
Cloud Computing Backup Cyber Security Fingerprint Identity Encryption Technology Published January 14, section 861 regs (T.D. 10022) classify transactions involving computer programs and include rules for digital content transfers and cloud transactions. Also published January 14, proposed regs (REG-107420-24) provide rules for determining the source of income from cross-border cloud transactions. This article covers both the final regs and the concurrently issued proposed regs. Final Regs Reg. section 1.861-19(a)-(f) is short and straightforward. It contains: Reg. section 1.861-19(a) describes the scope of the regs as providing rules for classifying cloud transactions (as defined in paragraph (b)). Paragraph (a) also clarifies that the rules apply for purposes of sections: The rules also apply for purposes of subchapter N of chapter 1, or sections 861-999 (tax based on income from sources within and outside the United States); chapter 3, or sections 1441-1464 (withholding tax on nonresident aliens and foreign corporations); and chapter 4, or sections 1471-1474 (taxes to enforce reporting on foreign accounts). Finally, to the extent a foreign person is involved, the rules apply for purposes of sections 842 (foreign companies operating an insurance business) and 845 (reinsurance agreements between related parties). They also apply to transfers to foreign trusts not covered by section 679. Reg. section 1.861-19(b) defines a cloud transaction as a transaction through which a person obtains on-demand network access to computer hardware, digital content (as defined in reg. section 1.861-18(a)(2)), or other similar resources. A cloud transaction does not include network access to downloadable digital content for storage and use on a person's computer or other electronic device. Reg. section 1.861-19(c) generally classifies a cloud transaction as the provision of services. Under subparagraph (c)(2), a transaction that has multiple elements, one or more of which would be a cloud transaction if considered separately, is classified entirely as a cloud transaction if the predominant character of the transaction as determined under reg. section 1.861-18(b)(3) is a cloud transaction, taking into account the overall transaction and the surrounding facts and circumstances. Reg. section 1.861-19(e)(1) provides that this section applies to tax years beginning on or after January 14, 2025. However, under subparagraph (e)(2), a taxpayer may apply this section to years beginning on or after August 14, 2019, and all subsequent years not described in subparagraph (e)(1) if: Reg. section 1.861-18 addresses the classification and source of gross income from digital content transactions and was amended in T.D. 10022. Reg. section 1.861-19(f) warns that a taxpayer may be required to change its method of accounting to comply with this section. If so, the taxpayer must obtain IRS consent as required by section 446(e) and reg. section 1.446-1(e) for voluntary changes in methods of accounting. Proposed Regs The proposed regs add a new paragraph (d) to reg. section 1.861-19 and redesignate paragraphs (d)-(f) as paragraphs (e)-(g). They also add two new examples 12 and 13 to redesignated paragraph (e). A slightly revised scope description in prop. reg. section 1.861-19(a) states that it provides rules for classifying and sourcing gross income from cloud transactions (as defined in reg. section 1.861-19(b)). The proposed regs cross-reference the same code sections as the final regs. Prop. reg. section 1.861-19(d)(1)-(9) provides: Under the general rule in prop. reg. section 1.861-19(d)(1), gross income from a cloud transaction is sourced as services income under section 861(a)(3) (U.S.-source services income) or section 862(a)(3) (foreign-source services income) based on where the service is performed. The place of performance is based on the: To determine U.S.-source gross income from a cloud transaction, the gross income is multiplied by a fraction. The numerator is the sum of the portion of the IP factor, personnel factor, and tangible property factor that is from sources within the United States as calculated in subdivisions (d)(2)(ii), (d)(3)(ii), and (d)(4)(ii). The denominator is the sum of the total IP factor, personnel factor, and tangible property factor as calculated in subdivisions (d)(2)(i), (d)(3)(i), and (d)(4)(i) (see Example 12). Any remaining gross income from the cloud transaction is gross income from sources outside the United States: U.S.-source gross income = transaction gross income * ((U.S.-source IP factor + U.S.-source personnel factor + U.S.-source tangible property factor) / (total IP factor + total personnel factor + total tangible property factor)) Prop. reg. section 1.861-19(d)(2)(i) defines the IP factor as the taxpayer's: R&E expenditures are defined in section 174(b) and are included in the IP factor regardless of whether and when the expenses are deductible. Amortization expense for the IP factor does not include amounts capitalized under section 174(a)(2)(A) and amortized under section 174(a)(2)(B). If the same cost or expense would be included by a taxpayer in the IP factor for more than one cloud transaction during a tax year, that cost or expense is allocated among each such cloud transaction based on the relative gross income earned from each cloud transaction. USA flag and contemporary glass architecture of Financial District, New York City, USA. Under subdivision (d)(2)(ii), the U.S.-source portion of the IP factor is determined with a formula based on the location of the taxpayer's R&E personnel: those employees whose primary function is to perform R&E activities associated with cloud transactions in the same product line. The formula calls for applying the principles of reg. section 1.861-4(b)(2)(ii)(E), which sources income from labor or personal services on a time basis. Under those principles, U.S.-source services income is the amount that bears the same relation to the individual's total compensation as the number of days the individual performs services within the United States bears to the total number of days the individual performs services. Similarly, under the proposed regs, the sum of the total compensation paid to the R&E personnel for services performed within the United States is divided by the sum of their total compensation. The resulting quotient is multiplied by the total IP factor described in subdivision (d)(2)(i). Prop. reg. section 1.861-19(d)(3)(i) defines the personnel factor as the sum of the total compensation paid to those employees of the taxpayer whose primary function is to directly contribute to the provision of the cloud transaction, excluding compensation amounts that are paid to R&E personnel described in subparagraph (d)(2). If, however, an employee's primary function is to directly contribute to multiple cloud transactions, then the employee's compensation is allocated among those transactions based on the relative amount of time the employee spends contributing to each transaction. If an employee contributes to multiple cloud transactions simultaneously, then that employee's compensation is allocated among those transactions based on the relative gross income earned from each one. Under subdivision (d)(3)(ii), the portion of the personnel factor described in subdivision (d)(3)(i) that is U.S. source is equal to the part paid for services performed in the United States, as determined using the principles of reg. section 1.861-4(b)(2)(ii)(E). Under subdivision (d)(3)(iii), personnel are considered to directly contribute to the provision of the cloud transaction to the extent they personally perform technical or operational activities for its provision, or to the extent they are managers who support or supervise the technical or operational personnel. Technical or operational activities consist of: Under subdivision (d)(3)(iv), personnel are not considered to directly contribute to the provision of the cloud transaction to the extent they carry out business strategy, leadership, legal or compliance, marketing, communications, sales, business development, finance, accounting, clerical, human resources, administrative duties, or similar functions. Prop. reg. section 1.861-19(d)(4) defines the tangible property factor as the sum of the depreciation expense for tangible property owned by the taxpayer and rental expense for tangible property leased by the taxpayer to the extent the owned or leased tangible property is directly used to provide the cloud transaction. If any depreciation or rental expense would be included in the tangible property factor for more than one cloud transaction during the tax year, that expense is allocated among the cloud transactions based on relative gross income earned from each one. Under subdivision (d)(4)(ii), the U.S.-source portion of the tangible property factor described in subdivision (d)(4)(i) is the part of the factor attributable to owned or leased property located within the United States. Under subdivision (d)(4)(iii), depreciation expense for a tax year is determined by dividing the adjusted depreciable basis (as defined in prop. reg. section 1.168(b)-1(a)(4)) of the tangible property by the applicable recovery period as though the alternative depreciation system in section 168(g)(2) applied for the entire period the property has been in service. This is done without regard to an election to expense depreciable property under section 179 and without regard to any additional first-year depreciation provision (for example, under section 168(k)). Prop. reg. section 1.861-19(d)(5) and (6) provide definitions of primary function and employee. An employee's primary function is the set of tasks to which the individual is assigned to spend the majority of working time. An employee is defined by cross-reference to reg. section 31.3121(d)-1(c). An aggregation rule in prop. reg. section 1.861-19(d)(7) allows a taxpayer to aggregate substantially similar cloud transactions unless it knows or has reason to know that doing so would materially distort the source of gross income from any cloud transaction. Prop. reg. section 1.861-19(d)(8) defines a product line as all products within the same corresponding index entry under a North American Industry Classification System code number. Once a taxpayer selects an index entry and code number for the first tax year to which this section applies, it must continue to use them in subsequent years. An exception applies if the taxpayer establishes to the satisfaction of the IRS that, because of changes in the facts, a change in the index entry and code number is appropriate. An antiabuse rule in prop. reg. section 1.861-19(d)(9) clarifies that the purpose of paragraph (d) is to attribute the source of the taxpayer's gross income from a cloud transaction to the location in which the cloud transaction is performed. Therefore, if the taxpayer enters into or structures transactions with a principal purpose of reducing its U.S. tax liability in a manner inconsistent with the purpose of paragraph (d), appropriate adjustments will be made so that the source of the taxpayer's gross income reflects the location in which the cloud transaction is performed. Prop. reg. section 1.861-19(e)(12) and (13) provide two examples that illustrate the operation of paragraph (d). Example 12. Example 12 illustrates how to source gross income from one cloud transaction. Domestic Corp A provides customers on-demand network access to Program Y in exchange for a monthly fee. All transactions with customers are substantially similar. Customers must be connected to the internet to access Program Y. Corp A has employees whose primary function (as determined under subparagraph (d)(5)) is to conduct R&E associated with developing new versions of Program Y and other products in the same product line (as determined under subparagraph (d)(8)). Corp A paid $160 in compensation to these employees, of which $80 was paid for services performed within the United States, as determined in accordance with the principles of reg. section 1.861-4(b)(2)(ii)(E). Besides employee compensation, Corp A spent an additional $200 on R&E costs associated with developing new versions of Program Y and other products in the same product line. Corp A did not take any amortization deductions for the IP used to provide Program Y. Corp A paid $400 in compensation to employees whose primary function was to directly contribute (as determined under subdivisions (d)(3)(iii) and (iv)) to Corp A's provision of Program Y to customers, of which $100 was paid for services performed in the United States, as determined in accordance with the principles of reg. section 1.861-4(b)(2)(ii)(E). None of these employees were R&E personnel (as defined in subdivision (d)(2)(ii)). Corp A hosts Program Y on servers it owns that are located both within and outside the United States. These servers are used only to host Program Y. Corp A deducted $140 for depreciation expense attributable to these servers, $80 of which was attributable to the servers located within the United States, and $60 of which was attributable to the servers located outside. These depreciation deductions are in accordance with section 168(g)(2). Corp A earned $800 in gross income from providing customers access to Program Y. Corp A does not know or have reason to know that any of the costs, functions, or assets are disproportionately allocated to certain transactions or to groups of transactions among all the transactions that generated the $800 of gross income. Under paragraph (b), each transaction between Corp A and a customer is a cloud transaction because Corp A provides on-demand network access to Program Y. Under subparagraph (c)(1), each cloud transaction is classified as the provision of services. Under subparagraph (d)(7), because all these transactions are substantially similar, and Corp A does not know or have reason to know that there is any disproportionate allocation of costs, functions, or assets among them, all of the transactions may be aggregated to apply paragraph (d). Under subparagraph (d)(1), the source of Corp A's $800 gross income from providing access to Program Y to customers is determined based on the IP factor described in subparagraph (d)(2), the personnel factor described in subparagraph (d)(3), and the tangible property factor described in subparagraph (d)(4). Under subparagraph (d)(2), the IP factor is $360 because Corp A paid $160 in compensation to employees whose primary function was to conduct R&E associated with developing new versions of Program Y and other products in the same product line and incurred $200 in other R&E costs associated with developing new versions of Program Y and other products in the same product line. Of the compensation, $80 out of $160, or 50 percent, is paid to employees for R&E services performed on Program Y and other products in the same product line in the United States. Corp A's total $360 IP factor is multiplied by the same quotient to determine that $180 is U.S. source under subdivision (d)(2)(ii). Under subparagraph (d)(3), the personnel factor is $400 because Corp A paid $400 in compensation to employees whose primary function was to directly contribute to the provision of Program Y to customers, and none of these employees were R&E personnel (as defined in subdivision (d)(2)(ii)). Under subdivision (d)(3)(ii), $100 of the personnel factor is U.S. source because Corp A paid $100 in compensation to employees for services performed in the United States that directly contributed to providing Program Y to customers. Under subparagraph (d)(4), the tangible property factor is equal to $140 because Corp A deducted $140 in depreciation expense for tangible property directly used to provide Program Y to customers under the method described in section 168(g)(2). Of the $140, $80 is U.S. source, and that portion of the $140 depreciation expense is attributable to tangible property located within the United States. The sum of the total factors is $900 ($900 = $360 IP factor + $400 personnel factor + $140 tangible property factor). The sum of these factors from U.S. sources is $360 ($360 = $180 IP factor + $100 personnel factor + $80 tangible property factor). Therefore, Corp A's $800 gross income from providing Program Y to customers for the tax year is multiplied by $360/$900 under subparagraph (d)(1) to determine that $320 is U.S. source. Under subparagraph (d)(1), the remaining $480 is from sources outside the United States. Example 13. Example 13 illustrates how to source gross income from multiple cloud transactions based on the relative gross income from the transactions. The facts are the same as in Example 12, except that Corp A also provides customers on-demand network access to software platform Z in exchange for a monthly fee, and Corp A hosts software platform Z on the same servers it uses to host Program Y (which generate higher depreciation expense than those in Example 12). All the transactions for software platform Z customers are substantially similar. Customers must be connected to the internet to access software platform Z. Corp A has employees whose primary function (as determined under subparagraph (d)(5)) is to conduct R&E associated with developing new versions of software platform Z and other products in the same product line. The software platform Z product line is not the same as the Program Y product line under the definition in subparagraph (d)(8). Corp A paid $200 in compensation to those employees, all of which was paid for services performed in the United States, as determined under reg. section 1.861-4(b)(2)(ii)(E). Corp A also has employees whose primary function, as determined under subparagraph (d)(5), is to conduct R&E associated with developing functionality for new versions of both Program Y and software platform Z. Corp A paid $100 in compensation to those employees, all of which was paid for services performed in the United States. Corp A did not have any other R&E costs associated with software platform Z. Corp A paid $100 in compensation to employees whose primary function was to directly contribute (as determined under subdivisions (d)(3)(iii) and (iv)) to Corp A's provision of software platform Z to customers, and that entire amount was paid for services performed in the United States. None of these employees were R&E personnel (as defined in subdivision (d)(2)(ii)). Corp A also paid $80 in compensation to employees whose primary function was to directly contribute (as determined under subdivisions (d)(3)(iii) and (iv)) to Corp A's provision of both Program Y and software platform Z to customers, and that entire amount was paid for services performed in the United States. These employees spent half their time contributing to software platform Z transactions and the other half contributing to Program Y transactions. None of these employees were R&E personnel (as defined in subdivision (d)(2)(ii)). Corp A hosts software platform Z on servers it owns that are located both within and outside the United States. These servers are used to host both Program Y and software platform Z. Corp A deducted $180 for depreciation expense attributable to these servers, $120 of which was attributable to the servers located within the United States, and $60 of which was attributable to the servers located outside. These depreciation deductions are in accordance with the rules of section 168(g)(2). Corp A earned $800 of gross income from providing customers access to software platform Z, so that the relative gross incomes of transactions provided by Program Y and platform Z are 50 percent. Corp A does not know or have reason to know that any of the costs, functions, or assets described in this paragraph are disproportionately allocated to certain transactions or groups of transactions among all the transactions that generated $800 of gross income. Under paragraph (b), each transaction between Corp A and a customer for software platform Z is a cloud transaction because Corp A provides on-demand network access to software platform Z. Under subparagraph (c)(1), each cloud transaction is classified as the provision of services. Under subparagraph (d)(7), because all these software platform Z transactions are substantially similar and Corp A does not know or have reason to know that there is any disproportionate allocation of costs, functions, or assets among them, all of the software platform Z transactions may be aggregated to apply paragraph (d). Under subparagraph (d)(1), the source of Corp A's $800 gross income from providing access to software platform Z is determined based on the IP factor, the personnel factor, and the tangible property factor. Under subparagraph (d)(2), the IP factor is $250. Corp A paid $200 in compensation to employees whose primary function was to conduct R&E associated with developing new versions of software platform Z and other products in the same product line. Corp A also paid $100 in compensation to employees whose primary function was to conduct R&E developing functionality for new versions of both Program Y and software platform Z. Of the $100, Corp A allocates $50 to software platform Z and $50 to Program Y based on Corp A's relative gross income from Program Y and software platform Z transactions in the tax year. All the $250 compensation is paid to employees for R&E services performed in the United States for software platform Z and other products in the same product line. Corp A's $250 IP factor is multiplied by the same quotient to determine that $250 is U.S. source under subdivision (d)(2)(ii). Under subparagraph (d)(3), the personnel factor is $140. Corp A paid $100 in compensation to employees whose primary function was to directly contribute to the provision of software platform Z to customers, and none of these employees were R&E personnel (as defined in subdivision (d)(2)(ii)). Corp A also paid $80 in compensation to employees whose primary function was to directly contribute to the provision of both Program Y and software platform Z (and none of these employees were R&E personnel). Corp A allocated $40 to software platform Z and $40 to Program Y based on the relative amount of time these employees spent contributing to Program Y and software platform Z transactions in the tax year. All the $140 compensation is paid to employees for services performed in the United States that directly contributed to the provision of software platform Z to customers. Under subparagraph (d)(4), the tangible property factor is $90. Corp A deducted $180 in depreciation expense for tangible property directly used to provide both Program Y and software platform Z transactions under the method described in section 168(g)(2), of which $120 is from sources within the United States because it is attributable to tangible property located within the United States. Based on Corp A's relative gross income from Program Y and software platform Z transactions in the tax year, Corp A reasonably allocates $90 to software platform Z, of which $60 is U.S. source, and $90 to Program Y, of which $60 is U.S. source. The sum of the total factors is $480 ($480 = $250 IP factor + $140 personnel factor + $90 tangible property factor). The sum of these factors from sources within the United States is $450 ($450 = $250 IP factor + $140 personnel factor + $60 tangible property factor). Therefore, Corp A's $800 of gross income from providing software platform Z to customers for the tax year is multiplied by the quotient of $450/$480 under subparagraph (d)(1) to determine that $750 is U.S. source. Under subparagraph (d)(1), the remaining $50 is from sources outside the United States. The application dates in prop. reg. section 1.861-19(f) are identical to those in reg. section 1.861-19(e), except that they carve out paragraph (d) and the new examples. Under prop. reg. section 1.861-19(f), this section applies to tax years beginning on or after January 14. However, paragraph (d) and subparagraphs (e)(12) and (13) apply to tax years beginning on or after the date those rules are published as final in the Federal Register. Under subdivisions (f)(2)(i)-(iv), except for paragraph (d) and subparagraphs (e)(12) and (13), a taxpayer may apply this section to tax years beginning on or after August 14, 2019, and all subsequent years not described in subparagraph (f)(1) if four conditions are met. These are the same conditions as those in reg. section 1.861-19(e). WASHINGTON, D.C. - APRIL 22, 2018: A statue of Albert Gallatin, a former U.S. Secretary of the ... More Treasury, stands in front of The Treasury Building in Washington, D.C. The National Historic Landmark building is the headquarters of the United States Department of the Treasury. (Photo by) Preamble The proposed regs' preamble provides a list of six topics on which Treasury and the IRS request comments:
