81 FR 20587 - Partial Withdrawal of Proposed Application of Section 367 to a Section 351 Exchange Resulting From a Transaction Described in Section 304(a)(1); Partial Withdrawal of Proposed Guidance for Determining Stock Ownership
DEPARTMENT OF THE TREASURY
Internal Revenue Service Federal Register Volume 81, Issue 68 (April 8, 2016)
Internal Revenue Service
Federal Register Volume 81, Issue 68 (April 8, 2016)
| Page Range | 20587-20588 | |
| FR Document | 2016-07295 |
[Federal Register Volume 81, Number 68 (Friday, April 8, 2016)] [Proposed Rules] [Pages 20587-20588] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-07295] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-135734-14] RIN 1545-BL00; RIN 1545-BN30 Partial Withdrawal of Proposed Application of Section 367 to a Section 351 Exchange Resulting From a Transaction Described in Section 304(a)(1); Partial Withdrawal of Proposed Guidance for Determining Stock Ownership AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Partial withdrawal of notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: This document withdraws portions of a notice of proposed rulemaking published in the Federal Register on February 11, 2009. The withdrawn portions relate to the application of section 367(b) to transactions described in section 304(a)(1). This document also withdraws portions of a notice of proposed rulemaking published in the Federal Register on January 17, 2014. The withdrawn portions relate to the identification of certain stock of a foreign corporation that is disregarded in calculating ownership of the foreign corporation for purposes of determining whether it is a surrogate foreign corporation for purposes of section 7874. DATES: As of April 8, 2016, portions of proposed rules (REG-147636-08 and REG-121534-12) published in the Federal Register on February 11, 2009 (74 FR 6840) and January 17, 2014 (79 FR 3145) are withdrawn. FOR FURTHER INFORMATION CONTACT: Shane M. McCarrick or David A. Levine, (202) 317-6937. SUPPLEMENTARY INFORMATION: Background On February 11, 2009, the Department of Treasury (Treasury Department) and the IRS published in the Federal Register proposed regulations (REG-147636-08, 74 FR 6840), including Sec. 1.367(b)-4(e), (f), and (g), which provide guidance on the application of section 367(b) to transactions described in section 304(a)(1). The regulations were proposed by cross-reference to temporary regulations in Sec. 1.367(b)-4T in the same issue of the Federal Register (T.D. 9444, 74 FR 6824). This document withdraws these proposed regulations because the rules in the proposed regulations do not reflect current law. See Notice 2012-15, 2012-9 I.R.B. 424 (revising the approach under the proposed regulations regarding the interaction of sections 367 and 304 and providing that section 367(a) and (b) apply fully to certain transctions described in section 304(a)(1)). In the Rules and Regulations section of this issue of the Federal Register, the Treasury Department and the IRS are issuing additional temporary regulations in Sec. 1.367(b)-4T(e), (f), and (g), as well as (h), that, in the case of certain exchanges, generally require an inclusion of amounts in income as a deemed dividend or recognition of realized gain that is not otherwise recognized, or both. Accordingly, the Treasury Department and the IRS are issuing a notice of proposed rulemaking in the Proposed Rules section of this issue of the Federal Register that proposes new rules in Sec. 1.367(b)-4T by cross-reference to the temporary regulations. On January 17, 2014, the Treasury Department and the IRS published in the Federal Register proposed regulations (REG-121534-12, 79 FR 3145), including in Sec. 1.7874-4, that provide that certain stock of a foreign corporation is disregarded in calculating ownership of the foreign corporation for purposes of determining whether it is a surrogate foreign corporation for purposes of section 7874. The regulations were proposed by cross-reference to temporary regulations in Sec. 1.7874-4T in the same issue of the Federal Register (T.D. 9654, 79 FR [[Page 20588]] 3094). In the Rules and Regulations section of this issue of the Federal Register, the Treasury Department and the IRS are amending certain of the temporary regulations in Sec. 1.7874-4T. Accordingly, the Treasury Department and the IRS are issuing a notice of proposed rulemaking in the Proposed Rules section of this issue of the Federal Register that proposes rules in Sec. 1.7874-4 by cross-reference to the amended temporary regulations. This document withdraws the previously proposed regulations that are replaced by the notice of proposed rulemaking in the Proposed Rules section of this issue of the Federal Register. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Partial Withdrawal of a Notice of Proposed Rulemaking Accordingly, under the authority of 26 U.S.C. 7805, Sec. 1.367(b)- 4(e), (f), and (g) of the notice of proposed rulemaking (REG-147636-08) published in the Federal Register on February 11, 2009 (74 FR 6840) are withdrawn. Also, under the authority of 26 U.S.C. 7805, Sec. 1.7874- 4(c)(1)(i), (c)(1)(ii)(B), (c)(2), (d)(1)(i), (d)(1)(ii), (h), (i)(6), (i)(7)(iii)(C), (i)(7)(iv), (j)(7), (j)(8), and (k)(1), as well as paragraph (ii) of Example 1, paragraph (ii) of Example 2, and Example 3 through Example 8 of Sec. 1.7874-4(j), of the notice of proposed rulemaking (REG-121534-12) published in the Federal Register on January 17, 2014 (79 FR 3145) are withdrawn. John Dalrymple, Deputy Commissioner for Services and Enforcement. [FR Doc. 2016-07295 Filed 4-4-16; 5:00 pm] BILLING CODE 4830-01-P
![Federal Register / Vol. 81, No. 68 / Friday, April 8, 2016 / Proposed Rules 20587
and electric power contracts in question We have proposed that certain electric DATES: As of April 8, 2016, portions of
that should be reflected in the proposed power and natural gas contracts should not proposed rules (REG–147636–08 and
guidance? If so, why and how? be considered ‘‘swaps’’ under the Commodity REG–121534–12) published in the
7. Does the proposed guidance Exchange Act. We have done so because we Federal Register on February 11, 2009
provide sufficient clarity that it does not believe they are examples of customary
commercial arrangements as described in the
(74 FR 6840) and January 17, 2014 (79
supersede or modify the CFTC OGC final rule defining the term ‘‘swap.’’ FR 3145) are withdrawn.
FAQ referenced in footnote 34? Is there For example, these contracts are entered FOR FURTHER INFORMATION CONTACT:
any potential overlap between the into to assure availability of a commodity, Shane M. McCarrick or David A. Levine,
proposed guidance and the CFTC OGC not to hedge against risks arising from a (202) 317–6937.
FAQ that should be further clarified? If future change in price of that commodity or
SUPPLEMENTARY INFORMATION:
so, what elements of the proposed for speculative, or investment purposes. They
guidance should be clarified to indicate are typically entered into in response to Background
that the proposed guidance does not regulatory requirements, the need to
maintain reliable energy supplies, and On February 11, 2009, the Department
supersede or modify the CFTC OGC of Treasury (Treasury Department) and
FAQ? practical considerations of storage or
transport. All of these factors are consistent the IRS published in the Federal
8. With respect to natural gas peaking
with what has been set forth in previous Register proposed regulations (REG–
contracts, are there natural gas providers commission guidance. 147636–08, 74 FR 6840), including
other than LDCs, such as Intrastate and Today’s proposed guidance is an important § 1.367(b)–4(e), (f), and (g), which
Interstate Natural Gas Pipelines (as complement to our final rule regarding Trade provide guidance on the application of
those terms are defined by the Energy Options, which will reduce burdens on end-
Information Administration),40 which section 367(b) to transactions described
users and allow them to better address
are subject to regulatory obligations to commercial risk. I thank my fellow in section 304(a)(1). The regulations
prioritize and serve residential demand Commissioners Bowen and Giancarlo for were proposed by cross-reference to
for natural gas, such that the providers joining me in unanimously approving this temporary regulations in § 1.367(b)–4T
are obligated to curtail service to electric proposal as well as that final rule. in the same issue of the Federal Register
utilities under certain circumstances? If [FR Doc. 2016–08076 Filed 4–7–16; 8:45 am] (T.D. 9444, 74 FR 6824). This document
so, please explain. BILLING CODE 6351–01–P;8011–01–P withdraws these proposed regulations
because the rules in the proposed
By the Securities and Exchange regulations do not reflect current law.
Commission.
DEPARTMENT OF THE TREASURY See Notice 2012–15, 2012–9 I.R.B. 424
Dated: April 4, 2016. (revising the approach under the
Brent J. Fields, Internal Revenue Service proposed regulations regarding the
Secretary. interaction of sections 367 and 304 and
Issued in Washington, DC, on April 4, 26 CFR Part 1 providing that section 367(a) and (b)
2016, by the Commodity Futures Trading apply fully to certain transctions
Commission. [REG–135734–14]
described in section 304(a)(1)). In the
Christopher J. Kirkpatrick, RIN 1545–BL00; RIN 1545–BN30 Rules and Regulations section of this
Secretary of the Commission. issue of the Federal Register, the
Partial Withdrawal of Proposed Treasury Department and the IRS are
Commodity Futures Trading Application of Section 367 to a Section
Commission (CFTC) Appendices to issuing additional temporary regulations
351 Exchange Resulting From a in § 1.367(b)–4T(e), (f), and (g), as well
Certain Natural Gas and Electric Power Transaction Described in Section
Contracts—Commission Voting as (h), that, in the case of certain
304(a)(1); Partial Withdrawal of exchanges, generally require an
Summary and Chairman’s Statement Proposed Guidance for Determining inclusion of amounts in income as a
Appendix 1—Commodity Futures Stock Ownership deemed dividend or recognition of
Trading Commission Voting Summary realized gain that is not otherwise
AGENCY: Internal Revenue Service (IRS),
On this matter, Chairman Massad and Treasury. recognized, or both. Accordingly, the
Commissioners Bowen and Giancarlo voted Treasury Department and the IRS are
ACTION: Partial withdrawal of notice of
in the affirmative. No Commissioner voted in issuing a notice of proposed rulemaking
the negative. proposed rulemaking.
in the Proposed Rules section of this
Appendix 2—Statement of CFTC SUMMARY: This document withdraws issue of the Federal Register that
Chairman Timothy G. Massad portions of a notice of proposed proposes new rules in § 1.367(b)–4T by
rulemaking published in the Federal cross-reference to the temporary
Today, the CFTC and the Securities and
Exchange Commission (SEC), have jointly Register on February 11, 2009. The regulations.
proposed guidance relating to the appropriate withdrawn portions relate to the On January 17, 2014, the Treasury
treatment of certain peaking supply and application of section 367(b) to Department and the IRS published in
capacity contracts. We are issuing this transactions described in section the Federal Register proposed
guidance after considering the useful input 304(a)(1). This document also regulations (REG–121534–12, 79 FR
we have received from market participants withdraws portions of a notice of 3145), including in § 1.7874–4, that
expressing concern about this issue. I support proposed rulemaking published in the provide that certain stock of a foreign
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS
this proposal, as it will properly clarify the
treatment of contracts used by many
Federal Register on January 17, 2014. corporation is disregarded in calculating
businesses with respect to the supply and The withdrawn portions relate to the ownership of the foreign corporation for
delivery of electric power and natural gas. identification of certain stock of a purposes of determining whether it is a
foreign corporation that is disregarded surrogate foreign corporation for
40 See Distribution of Natural Gas: The Final Step in calculating ownership of the foreign purposes of section 7874. The
in the Transmission Process, Energy Information corporation for purposes of determining regulations were proposed by cross-
Administration, Office of Oil and Gas, June 2008, whether it is a surrogate foreign reference to temporary regulations in
available at https://www.eia.gov/pub/oil_gas/
natural_gas/feature_articles/2008/ldc2008/ corporation for purposes of section § 1.7874–4T in the same issue of the
ldc2008.pdf. 7874. Federal Register (T.D. 9654, 79 FR
VerDate Sep<11>2014 18:31 Apr 07, 2016 Jkt 238001 PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 E:\FR\FM\08APP1.SGM 08APP1](https://thefederalregister.org/doc/81_FR_20655/page/1.svg)
![20588 Federal Register / Vol. 81, No. 68 / Friday, April 8, 2016 / Proposed Rules
3094). In the Rules and Regulations to avoid the purposes of sections 7874 of Executive Order 12866, as
section of this issue of the Federal and 367 of the Internal Revenue Code supplemented and reaffirmed by
Register, the Treasury Department and (the Code) and certain post-inversion Executive Order 13563. Therefore, a
the IRS are amending certain of the tax avoidance transactions in the Rules regulatory assessment is not required. It
temporary regulations in § 1.7874–4T. and Regulations section of this issue of has also been determined that section
Accordingly, the Treasury Department the Federal Register. The temporary 553(b) of the Administrative Procedure
and the IRS are issuing a notice of regulations affect certain domestic Act (5 U.S.C. Chapter 5) does not apply
proposed rulemaking in the Proposed corporations and domestic partnerships to these regulations, and because the
Rules section of this issue of the Federal whose assets are directly or indirectly regulations do not impose a collection
Register that proposes rules in § 1.7874– acquired by a foreign corporation and of information on small entities, the
4 by cross-reference to the amended certain persons related to such domestic Regulatory Flexibility Act (5 U.S.C.
temporary regulations. This document corporations and domestic partnerships. chapter 6) does not apply. Pursuant to
withdraws the previously proposed The text of the temporary regulations section 7805(f), this notice of proposed
regulations that are replaced by the also serves as the text of these proposed rulemaking has been submitted to the
notice of proposed rulemaking in the regulations. Chief Counsel of Advocacy of the Small
Proposed Rules section of this issue of DATES: Written or electronic comments Business Administration for comment
the Federal Register. and requests for a public hearing must on its impact on small business.
List of Subjects in 26 CFR Part 1 be received by July 7, 2016. Comments and Requests for Public
ADDRESSES: Send submissions to: Hearing
Income taxes, Reporting and CC:PA:LPD:PR (REG–135734–14), room
recordkeeping requirements. Before these proposed regulations are
5203, Internal Revenue Service, P.O.
adopted as final regulations,
Partial Withdrawal of a Notice of Box 7604, Ben Franklin Station,
consideration will be given to any
Proposed Rulemaking Washington, DC 20224. Submissions
comments that are submitted timely to
may be hand-delivered Monday through
Accordingly, under the authority of the IRS as prescribed in this preamble
Friday between the hours of 8 a.m. and
26 U.S.C. 7805, § 1.367(b)–4(e), (f), and under the ADDRESSES heading. Treasury
4 p.m. to CC:PA:LPD:PR (REG–135734–
(g) of the notice of proposed rulemaking and the IRS request comments on all
14), Courier’s Desk, Internal Revenue
(REG–147636–08) published in the aspects of the proposed rules. All
Service, 1111 Constitution Avenue NW.,
Federal Register on February 11, 2009 comments will be available at
Washington, DC 20224, or sent
(74 FR 6840) are withdrawn. Also, www.regulations.gov or upon request. A
electronically via the Federal
under the authority of 26 U.S.C. 7805, public hearing will be scheduled if
eRulemaking Portal at http://
§ 1.7874–4(c)(1)(i), (c)(1)(ii)(B), (c)(2), requested in writing by any person that
www.regulations.gov (IRS REG–135734–
(d)(1)(i), (d)(1)(ii), (h), (i)(6), (i)(7)(iii)(C), timely submits electronic or written
14).
(i)(7)(iv), (j)(7), (j)(8), and (k)(1), as well comments. If a public hearing is
as paragraph (ii) of Example 1, FOR FURTHER INFORMATION CONTACT: scheduled, notice of the date, time, and
paragraph (ii) of Example 2, and Concerning the proposed regulations place for the public hearing will be
Example 3 through Example 8 of under sections 304, 367, and 7874, published in the Federal Register.
§ 1.7874–4(j), of the notice of proposed Shane M. McCarrick or David A. Levine,
(202) 317–6937; concerning the Drafting Information
rulemaking (REG–121534–12) published
in the Federal Register on January 17, proposed regulations under sections 956 The principal authors of these
2014 (79 FR 3145) are withdrawn. and 7701(l), Rose E. Jenkins, (202) 317– proposed regulations are Rose E.
6934 (not toll-free numbers); concerning Jenkins, David A. Levine, and Shane M.
John Dalrymple, submissions of comments or requests for McCarrick of the Office of Associate
Deputy Commissioner for Services and a public hearing, Regina Johnson, (202) Chief Counsel (International). However,
Enforcement. 317–5177 (not toll-free numbers). other personnel from the Treasury
[FR Doc. 2016–07295 Filed 4–4–16; 5:00 pm] SUPPLEMENTARY INFORMATION: Department and the IRS participated in
BILLING CODE 4830–01–P their development.
Background
The temporary regulations in the List of Subjects in 26 CFR Part 1
DEPARTMENT OF THE TREASURY Rules and Regulations section of this Income taxes, Reporting and
issue of the Federal Register contain recordkeeping requirements.
Internal Revenue Service regulations under sections 304, 367,
Proposed Amendments to the
954, 956, 7701(l), and 7874 of the
26 CFR Part 1 Regulations
Internal Revenue Code (Code) that
[REG–135734–14] address transactions that are structured Accordingly, 26 CFR part 1 is
to avoid the purposes of sections 7874 proposed to be amended as follows:
RIN 1545–BM45
and 367 of the Internal Revenue Code
(the Code) and certain post-inversion PART 1—INCOME TAXES
Inversions and Related Transactions
tax avoidance transactions. The text of ■ Paragraph 1. The authority citation
AGENCY: Internal Revenue Service (IRS), the temporary regulations also serves as
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS
for part 1 is amended by adding and
Treasury. the text of the proposed regulations revising entries in numerical order to
ACTION: Notice of proposed rulemaking herein. The preamble to the temporary read in part as follows:
by cross-reference to temporary regulations explains the temporary
Authority: 26 U.S.C. 7805 * * *
regulation. regulations and the corresponding Section 1.304–7 also issued under 26
proposed regulations. U.S.C. 304(b)(5)(C).
SUMMARY: The Department of Treasury Section 1.367(b)–4 also issued under 26
(Treasury Department) and the IRS are Special Analyses
U.S.C. 367(a), 367(b), and 954(c)(6)(A).
issuing temporary regulations that Certain IRS regulations, including this Section 1.956–2 also issued under 26
address transactions that are structured one, are exempt from the requirements U.S.C. 956(d) and 956(e).
VerDate Sep<11>2014 18:31 Apr 07, 2016 Jkt 238001 PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 E:\FR\FM\08APP1.SGM 08APP1](https://thefederalregister.org/doc/81_FR_20655/page/2.svg)
Document Created: 2018-02-07 13:49:49
Document Modified: 2018-02-07 13:49:49
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Partial withdrawal of notice of proposed rulemaking. | |
| Dates | As of April 8, 2016, portions of proposed rules (REG-147636-08 and REG-121534-12) published in the Federal Register on February 11, 2009 (74 FR 6840) and January 17, 2014 (79 FR 3145) are withdrawn. | |
| Contact | Shane M. McCarrick or David A. Levine, (202) 317-6937. | |
| FR Citation | 81 FR 20587 | |
| RIN Number | 1545-BL00 and 1545-BN30 | |
| CFR Associated | Income Taxes and Reporting and Recordkeeping Requirements |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR