81 FR 76544 - Treatment of Related Person Factoring Income; Certain Investments in United States Property; and Stock Redemptions Through Related Corporations

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 213 (November 3, 2016)

This document withdraws portions of a notice of proposed rulemaking (INTL-49-86, subsequently converted to REG-209001-86) published in the Federal Register (53 FR 22186) on June 14, 1988, (the 1988 NPRM). The withdrawn portions relate to stock redemptions through related corporations, the application of section 956 to United States property indirectly held by a controlled foreign corporation (CFC), and certain related party factoring transactions, as well as the definition of the term ``obligation'' for purposes of section 956.

[Federal Register Volume 81, Number 213 (Thursday, November 3, 2016)]
[Proposed Rules]
[Pages 76544-76545]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26423]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-122387-16]
RIN 1545-BL86


Treatment of Related Person Factoring Income; Certain Investments 
in United States Property; and Stock Redemptions Through Related 
Corporations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Partial withdrawal of notice of proposed rulemaking.

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SUMMARY: This document withdraws portions of a notice of proposed 
rulemaking (INTL-49-86, subsequently converted to REG-209001-86) 
published in the Federal Register (53 FR 22186) on June 14, 1988, (the 
1988 NPRM). The withdrawn portions relate to stock redemptions through 
related corporations, the application of section 956 to United States 
property indirectly held by a controlled foreign corporation (CFC), and 
certain related party factoring transactions, as well as the definition 
of the term ``obligation'' for purposes of section 956.

DATES: Sections 1.304-4, 1.956-1(b)(4), 1.956-2(d)(2), and 1.956-
3(b)(2)(ii) of proposed rules published in the Federal Register on June 
14, 1988, are withdrawn as of November 3, 2016.

FOR FURTHER INFORMATION CONTACT: Rose E. Jenkins, (202) 317-6934 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    On June 14, 1988, the Department of Treasury (Treasury Department) 
and the IRS published in the Federal Register proposed regulations 
(INTL-49-86, subsequently converted to REG-209001-86, 53 FR 22186), 
including: (i) Proposed 1.304-4, which provides a special rule 
regarding the use of a related corporation to acquire for property the 
stock of another commonly owned corporation; (ii) proposed Sec.  1.956-
1(b)(4), which describes United States property indirectly held by a 
CFC

[[Page 76545]]

for purposes of section 956; (iii) proposed Sec.  1.956-2(d)(2), which 
sets forth the definition of ``obligation'' for purposes of section 
956; and (iv) proposed Sec.  1.956-3, which provides guidance on the 
treatment of certain trade or service receivables received in factoring 
transactions as United States property for purposes of section 956, 
including rules in proposed Sec.  1.956-3(b)(2)(ii) that address the 
acquisition of a trade or service receivable by a nominee or pass-
through entity. The regulations were proposed by cross-reference to 
temporary regulations in Sec. Sec.  1.304-4T, 1.956-1T(b)(4), 1.956-
2T(d), and 1.956-3T that were published in the same issue of the 
Federal Register (TD 8209, 53 FR 22163). This document withdraws 
certain of these proposed regulations because the rules in the proposed 
regulations are supplanted by final regulations or other proposed 
regulations.
    Specifically, in the Rules and Regulations section of this issue of 
the Federal Register, the Treasury Department and the IRS are issuing 
final regulations that contain rules in Sec.  1.956-1(b) concerning 
United States property indirectly held by a CFC for purposes of section 
956, and rules in Sec.  1.956-3(b)(2)(ii) concerning the acquisition by 
a nominee, pass-through entity, or related foreign corporation for 
purposes of the section 956 rules governing factoring transactions. The 
final regulations in Sec. Sec.  1.956-1(b) and 1.956-3(b)(2)(ii) were 
included in a notice of proposed rulemaking (REG-155164-09) published 
in the Federal Register on September 2, 2015 (80 FR 53058, as corrected 
at 80 FR 66485). Thus, the rules in proposed Sec. Sec.  1.956-1(b)(4) 
and 1.956-3(b)(2)(ii) provided in the 1988 NPRM are withdrawn. As 
described in the preamble to the final regulations published in the 
Rules and Regulations section of this issue of the Federal Register, 
the remainder of the rules in Sec.  1.956-3 proposed in the 1988 NPRM 
also are included in the final regulations, with minor modifications.
    Additionally, on December 30, 2009, the Treasury Department and the 
IRS published in the Federal Register proposed regulations (74 FR 
69043), which contain in proposed Sec.  1.304-4 special rules regarding 
the use of related corporations to avoid the application of section 304 
that supplant the rules set forth in the 1988 NPRM. On December 26, 
2012, final regulations including Sec.  1.304-4 as proposed in 2009 
were published in the Federal Register (TD 9606, 77 FR 75844). 
Accordingly, the rule in the 1988 NPRM that addresses section 304 is 
withdrawn.
    Furthermore, on April 8, 2016, the Treasury Department and the IRS 
published in the Federal Register proposed regulations (81 FR 20588), 
which contain in proposed Sec.  1.956-2(d) a definition of obligation 
for purposes of section 956, as well as several exceptions from the 
definition, including those set forth in the 1988 NPRM. Accordingly, 
the rule in the 1988 NPRM that addresses the definition of obligation 
is withdrawn.

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. Sec.  
1.304-4, 1.956-1(b)(4), 1.956-2(d)(2), and 1.956-3(b)(2)(ii) of the 
notice of proposed rulemaking (INTL-49-86) published in the Federal 
Register on June 14, 1988, (53 FR 22186) are withdrawn.

John M. Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-26423 Filed 11-2-16; 8:45 am]
 BILLING CODE 4830-01-P