80 FR 33451 - Partnership Transactions Involving Equity Interests of a Partner

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 80, Issue 113 (June 12, 2015)

In the Rules and Regulations section of this issue of the Federal Register, the IRS and the Treasury Department are issuing temporary regulations that prevent a corporate partner from using a partnership to avoid corporate level gain required to be recognized. These regulations affect partnerships and their partners. The text of the temporary regulations in this issue of the Federal Register also serves as the text of these proposed regulations.

[Federal Register Volume 80, Number 113 (Friday, June 12, 2015)]
[Proposed Rules]
[Pages 33451-33452]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-14403]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-149518-03]
RIN 1545-BM34


Partnership Transactions Involving Equity Interests of a Partner

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking and notice of 
proposed rulemaking by cross-reference to temporary regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS and the Treasury Department are issuing 
temporary regulations that prevent a corporate partner from using a 
partnership to avoid corporate level gain required to be recognized. 
These regulations affect partnerships and their partners. The text of 
the temporary regulations in this issue of the Federal Register also 
serves as the text of these proposed regulations.

DATES: Comments and requests for a public hearing must be received by 
September 10, 2015.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-149518-03), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,

[[Page 33452]]

Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
149518-03), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically, via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS REG-149518-03).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Kevin I. Babitz, (202) 317-6852; concerning submission of comments or 
to request a public hearing, Oluwafunmilayo Taylor at (202) 317-6901.

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to section 337(d). The temporary regulations set forth 
rules for applying section 337(d) to partnerships and S corporations. 
The text of the temporary regulations also serves as the text of these 
proposed regulations. The preamble to the temporary regulations 
explains the temporary regulations and these proposed regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866, as supplemented by Executive Order 13563. Therefore, a 
regulatory assessment is not required. These proposed regulations do 
not impose a collection of information on small entities. Further, 
pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is 
hereby certified that these proposed regulations would not have a 
significant economic impact on a substantial number of small entities. 
This certification is based on the fact that these proposed regulations 
would primarily affect sophisticated ownership structures with 
interlocking ownership of corporations, partnerships and corporate 
stock. Additionally, these proposed regulations contain a number of de 
minimis provisions that render the regulations inapplicable to most 
small businesses. Accordingly, a regulatory flexibility analysis is not 
required. Pursuant to section 7805(f) of the Internal Revenue Code, 
these regulations have been submitted to the Chief Counsel for Advocacy 
of the Small Business Administration for comment on its impact on small 
business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to comments that are submitted timely to 
the IRS as prescribed in this preamble under the ADDRESSES heading. The 
Treasury Department and the IRS request comments on all aspects of the 
proposed rules. All comments will be available at www.regulations.gov 
or upon request. A public hearing will be scheduled if requested in 
writing by any person that timely submits written or electronic 
comments. If a public hearing is scheduled, notice of the date, time, 
and place for the public hearing will be published in the Federal 
Register.

Drafting Information

    The principal authors of these regulations are Joseph R. Worst and 
Kevin I. Babitz, Office of the Associate Chief Counsel (Passthroughs 
and Special Industries). However, other personnel from the IRS and the 
Treasury Department participated in their development.

Withdrawal of Notice of Proposed Rulemaking

    Accordingly, under the authority of 26 U.S.C. 7805, the notice of 
proposed rulemaking (PS-91-90; REG-208989-90) that was published in the 
Federal Register on December 15, 1992 (57 FR 59324), is withdrawn.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendment to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART I--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding an 
entry in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.337(d)-3 also issued under 26 U.S.C. 337(d). * * *

0
Par. 2. Section 1.337(d)-3 is added to read as follows:


Sec.  1.337(d)-3  Gain recognition upon certain partnership 
transactions involving a partner's stock.

    [The text of proposed Sec.  1.337(d)-3 is the same as the text of 
Sec.  1.337(d)-3T(a) through (i) published elsewhere in this issue of 
the Federal Register].
0
Par. 3. Section 1.732-1 is amended by revising paragraphs (c)(1) and 
(c)(5)(ii) to read as follows:


Sec.  1.732-1  Basis of distributed property other than money.

* * * * *
    (c)(1) [The text of proposed Sec.  1.732-1(c)(1) is the same as the 
text of Sec.  1.732-1T(c)(1) published elsewhere in this issue of the 
Federal Register].
* * * * *
    (5) * * *
    (ii) [The text of proposed Sec.  1.732-1(c)(5)(ii) is the same as 
the text of Sec.  1.732-1T(c)(5)(ii) published elsewhere in this issue 
of the Federal Register].
* * * * *

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2015-14403 Filed 6-11-15; 8:45 am]
 BILLING CODE 4830-01-P