82 FR 5476 - Rules Regarding Inversions and Related Transactions; Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 82, Issue 11 (January 18, 2017)

In the Rules and Regulations section of this issue of the Federal Register, the Department of the Treasury (Treasury Department) and the IRS are amending portions of temporary regulations that address certain transactions that are structured to avoid the purposes of section 7874 of the Internal Revenue Code (Code). The temporary regulations affect certain domestic corporations and domestic partnerships whose assets are directly or indirectly acquired by a foreign corporation and certain persons related to such domestic corporations and domestic partnerships. The text of the temporary regulations in the Rules and Regulations section of this issue of the Federal Register also serves as the text of these proposed regulations.

[Federal Register Volume 82, Number 11 (Wednesday, January 18, 2017)]
[Proposed Rules]
[Pages 5476-5477]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-00637]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-135734-14]
RIN 1545-BM45


Rules Regarding Inversions and Related Transactions; Notice of 
Proposed Rulemaking by Cross-Reference to Temporary Regulations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

-----------------------------------------------------------------------

SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the Department of the Treasury (Treasury Department) 
and the IRS are amending portions of temporary regulations that address 
certain transactions that are structured to avoid the purposes of 
section 7874 of the Internal Revenue Code (Code). The temporary 
regulations affect certain domestic corporations and domestic 
partnerships whose assets are directly or indirectly acquired by a 
foreign corporation and certain persons related to such domestic 
corporations and domestic partnerships. The text of the temporary 
regulations in the Rules and Regulations section of this issue of the 
Federal Register also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by April 18, 2017.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-135734-14), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20224. Submissions

[[Page 5477]]

may be hand-delivered Monday through Friday between the hours of 8 a.m. 
and 4 p.m. to CC:PA:LPD:PR (REG-135734-14), Courier's Desk, Internal 
Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20224, or 
sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-135734-14).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Joshua G. Rabon (202) 317-6937; concerning submissions of comments or 
requests for a public hearing, Regina Johnson, (202) 317-5177 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    The temporary regulations in the Rules and Regulations section of 
this issue of the Federal Register amend portions of the regulations 
under section 7874 of the Code concerning the de minimis exceptions to 
the general rules of Sec. Sec.  1.7874-7T (disregard of certain stock 
attributable to passive assets) and 1.7874-10T (disregard of certain 
distributions). The text of those temporary regulations also serves as 
the text of the proposed regulations herein. The preamble to those 
temporary regulations, which is also the preamble to certain final 
regulations under section 7874, explains the temporary regulations, the 
corresponding proposed regulations, and the final regulations.

Special Analyses

    Certain IRS regulations, including these, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory assessment is not 
required. Because the regulations do not impose a collection of 
information on small entities, the Regulatory Flexibility Act (5 U.S.C. 
chapter 6) does not apply. Pursuant to section 7805(f), this notice of 
proposed rulemaking has been submitted to the Chief Counsel of Advocacy 
of the Small Business Administration for comment on its impact on small 
business.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any 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 electronic or 
written 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 author of these proposed regulations is Joshua G. 
Rabon of the Office of Associate Chief Counsel (International). 
However, other personnel from the Treasury Department and the IRS 
participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

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

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding 
entries to read in part as follows:

    Authority:  26 U.S.C. 7805 * * *
    Section 1.7874-7 also issued under 26 U.S.C. 7874(c)(6) and 
7874(g).
* * * * *
    Section 1.7874-10 also issued under 26 U.S.C. 7874(c)(4) and 
7874(g).
* * * * *
0
Par. 2. Section 1.7874-7 is added to read as follows.


Sec.  1.7874-7  Disregard of certain stock attributable to passive 
assets.

    (a) through (c)(1) [Reserved]
    (2) [The text of proposed Sec.  1.7874-7(c)(2) is the same as the 
text of Sec.  1.7874-7T(c)(2) as revised elsewhere in this issue of the 
Federal Register.]
    (d) through (g) [Reserved]
    (h) [The text of proposed Sec.  1.7874-7(h) is the same as the text 
of Sec.  1.7874-7T(h) as revised elsewhere in this issue of the Federal 
Register.]
0
Par. 3. Section 1.7874-10 is added to read as follows:


Sec.  1.7874-10  Disregard of certain distributions.

    (a) through (d)(1) [Reserved]
    (2) [The text of proposed Sec.  1.7874-10(d)(2) is the same as the 
text of Sec.  1.7874-10T(d)(2) as revised elsewhere in this issue of 
the Federal Register.]
    (e) through (h) [Reserved]
    (i) [The text of proposed Sec.  1.7874-10(i) is the same as the 
text of Sec.  1.7874-10T(i) as revised elsewhere in this issue of the 
Federal Register.]

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2017-00637 Filed 1-13-17; 4:15 pm]
 BILLING CODE 4830-01-P