Bulletin No. 1996–37

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September 9, 1996

HIGHLIGHTS

OF THIS ISSUE

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be relied

upon as authoritative interpretations.

SPECIAL ANNOUNCEMENT

Announcement 96–89, page 22.

The location of the public hearing on proposed regulations

PS–39–93, relating to deductions available upon demolition

of a building, is changed.

INCOME TAX

T.D. 8681, page 17.

Final regulations under section 7503 of the Code relate to

the time for performance of acts when the last day for

performance falls on a Saturday, Sunday, or legal holiday.

T.D. 8682, page 4.

REG–209827–96, page 19.

Temporary and proposed regulations under section 367 of

the Code amend the final regulations relating to section

355 distributions of stock and securities by domestic

corporations to foreign persons.

EXEMPT ORGANIZATIONS

Announcement 96–87, page 21.

A list is provided of organizations that no longer qualify as

Finding Lists begin on page 25.

organizations to which contributions are deductible under

section 170 of the Code.

Announcement 96–91, page 23.

A list is given of organizations now classified as private

foundations.

ESTATE TAX

Announcement 96–90, page 22.

T.D. 8644, 1996–7 I.R.B. 16, relating to generationskipping transfer tax, is corrected.

EXCISE TAX

Announcement 96–85, page 20.

The Small Business Job Protection Act of 1996 makes

changes to federal excise taxes.

ADMINISTRATIVE

Announcement 96–86, page 21.

T.D. 8664, 1996–20 I.R.B. 7, regarding the reporting on

Form 1042S of certain U.S. bank account deposit interest

paid to an individual who is a nonresident alien of the

United States and a resident of Canada, is corrected.

Mission of the Service

The purpose of the Internal Revenue Service is to

collect the proper amount of tax revenue at the least

cost; serve the public by continually improving the

quality of our products and services; and perform in a

manner warranting the highest degree of public

confidence in our integrity, efficiency and fairness.

Statement of Principles

of Internal Revenue

Tax Administration

The Service also has the responsibility of applying

and administering the law in a reasonable,

practical manner. Issues should only be raised by

examining of ficers when they have merit, never

arbitrarily or for trading purposes. At the same

time, the examining officer should never hesitate

to raise a meritorious issue. It is also important

that care be exercised not to raise an issue or to

ask a court to adopt a position inconsistent with

an established Service position.

The function of the Internal Revenue Service is to

administer the Internal Revenue Code. Tax policy

for raising revenue is determined by Congress.

With this in mind, it is the duty of the Service to

carry out that policy by correctly applying the laws

enacted by Congress; to determine the reasonable

meaning of various Code provisions in light of the

Congressional purpose in enacting them; and to

perform this work in a fair and impartial manner,

with neither a government nor a taxpayer point of view.

Administration should be both reasonable and

vigorous. It should be conducted with as little

delay as possible and with great cour tesy and

considerateness. It should never try to overreach,

and should be reasonable within the bounds of law

and sound administration. It should, however, be

vigorous in requiring compliance with law and it

should be relentless in its attack on unreal tax

devices and fraud.

At the heart of administration is interpretation of the

Code. It is the responsibility of each person in the

Service, charged with the duty of interpreting the

law, to try to find the true meaning of the statutory

provision and not to adopt a strained construction in

the belief that he or she is ‘‘protecting the revenue.’’

The revenue is properly protected only when we ascertain and apply the true meaning of the statute.

Introduction

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for

announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation,

court decisions, and other items of general interest. It is

published weekly and may be obtained from the Superintendent of Documents on a subscription basis. Bulletin

contents of a permanent nature are consolidated semiannually into Cumulative Bulletins, which are sold on a

single-copy basis.

court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are

cautioned against reaching the same conclusions in

other cases unless the facts and circumstances are

substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on

provisions of the Internal Revenue Code of 1986.

It is the policy of the Service to publish in the Bulletin all

substantive rulings necessary to promote a uniform

application of the tax laws, including all rulings that

supersede, revoke, modify, or amend any of those

previously published in the Bulletin. All published rulings

apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management

are not published; however, statements of internal

practices and procedures that affect the rights and

duties of taxpayers are published.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows:

Subpart A, Tax Conventions, and Subpart B, Legislation

and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to

these subjects are contained in the other Parts and

Subparts. Also included in this part are Bank Secrecy

Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the

Treasury’s Office of the Assistant Secretary (Enforcement).

Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts

stated in the revenue ruling. In those based on positions

taken in rulings to taxpayers or technical advice to

Service field offices, identifying details and information

of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory

requirements.

Part IV.—Items of General Interest.

With the exception of the Notice of Proposed Rulemaking and the disbarment and suspension list included in

this part, none of these announcements are consolidated in the Cumulative Bulletins.

Rulings and procedures reported in the Bulletin do not

have the force and effect of Treasury Department

Regulations, but they may be used as precedents.

Unpublished rulings will not be relied on, used, or cited

as precedents by Service personnel in the disposition of

other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations,

The first Bulletin for each month includes an index for

the matters published during the preceding month.

These monthly indexes are cumulated on a quarterly and

semiannual basis, and are published in the first Bulletin

of the succeeding quarterly and semi-annual period,

respectively.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, D.C. 20402.

Part I. Rulings and Decision Under the Internal Revenue Code of 1986

Section 367.—Foreign

Corporations

AGENCY: Internal Revenue Service

(IRS), Treasury.

unless the collection of information displays a valid control number.

For further information concerning

this collection of information, and where

to submit comments on the collection of

information and the accuracy of the

estimated burden, and suggestions for

reducing this burden, please refer to the

preamble to * * * REG–209827–96,

page 19, this Bulletin.

Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any internal revenue law. Generally, tax returns

and tax return information are confidential, as required by 26 U.S.C. 6103.

ACTION: Temporary regulations.

Background

SUMMARY: These temporary regulations amend the Income Tax Regulations

relating to the distribution of stock and

securities under section 355 of the Internal Revenue Code of 1986 by a domestic corporation to a person that is not a

United States person. These regulations

are necessary to implement section

367(e)(1) as added by the Tax Reform

Act of 1986. The text of these regulations also serves as the text of * * *

REG–209827–96, page 19, this Bulletin.

On January 16, 1990, temporary regulations under section 367(e)(1) and

367(e)(2) were published in the Federal

1990–1 C.B. 80]). A cross-referenced

Notice of Proposed Rulemaking was

published on that same date (55 FR

1472 [IA–012–90, 1990–1 C.B. 678]).

These regulations were proposed to

implement section 367(e) of the Internal

Revenue Code of 1986 (Code), as revised by sections 631(d)(1) and 1810(g)

of the Tax Reform Act of 1986 (100

Stat. 2085, 2272, Public Law 99–514

[1986–3 C.B. (Vol. 1) 1, 189, 745]). On

January 15, 1993, final regulations under section 367(e)(1) were published in

the Federal Register.

26 CFR 1.367(e)–1T: Treatment of section 355

distributions by U.S. corporations to foreign persons.

T.D. 8682

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

Treatment of Section 355

Distributions By U.S. Corporations

to Foreign Persons

EFFECTIVE DATE: These regulations

are effective September 13, 1996.

FOR FURTHER INFORMATION CONTACT: Philip L. Tretiak at (202) 622–

3860 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

These regulations are being issued

without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this

reason, the collection of information

contained in these regulations has been

reviewed and, pending receipt and

evaluation of public comments, approved by the Office of Management

and Budget under control number 1545–

1487. Responses to this collection of

information are required in order for a

U.S. corporation that distributes domestic stock or securities to a foreign

person to qualify for an exception to the

general rule of taxation provided by the

regulations under section 367(e)(1).

An agency may not conduct or sponsor, and a person is not required to

respond to, a collection of information

Need for Temporary Regulations

Under the current regulations, in certain circumstances the gain recognition

exception may be dependent on the

form rather than the substance of a

taxpayer’s transaction. As a result, certain taxpayers may be subject to strict

restrictions under this exception, while

other taxpayers arguably may avoid the

restrictions by structuring their transactions in a different fashion (even though

the substance of the transactions is similar). Based on these considerations, it is

determined that immediate regulatory

guidance will ensure the efficient administration of the tax laws and that it

would be impracticable and contrary to

the public interest to issue this Treasury

decision with prior notice under section

553(b).

poration (Distributing) does not recognize gain or loss on the distribution of

the stock or securities of a controlled

corporation (Controlled) to Distributing’s shareholder or shareholders

(Distributee(s)). However, section

367(e)(1) provides that, in the case of

any distribution described in section 355

(or so much of section 356 as relates to

section 355) by a domestic corporation

to a Distributee who is not a United

States person (an outbound section 355

distribution), to the extent provided in

regulations, gain shall be recognized

under principles similar to the principles

of section 367.

The existing regulations under section

367(e)(1) provide different tax treatment

to Distributing in an outbound section

355 distribution depending upon whether

Controlled is a foreign corporation or a

domestic corporation. If Controlled is a

foreign corporation, an outbound section

355 distribution by Distributing is taxable, with no exceptions. If Controlled is

a domestic corporation, however, the

existing regulations provide that the distribution is taxable, but permit three

exceptions: (i) a FIRPTA exception in

cases where both Distributing and Controlled are U.S. real property holding

corporations (as defined in section

897(c)(2)) at the time of the distribution,

(ii) a publicly traded exception in certain

cases where Distributing is publicly

traded in the United States at the time of

the distribution, and (iii) a gain recognition agreement (GRA) exception described in detail below.

The new temporary regulations retain

the general framework of the existing

regulations by permitting no exceptions

in the case of an outbound section 355

distribution of foreign stock and the

same three exceptions in the case of an

outbound section 355 distribution of

domestic stock. However, the new temporary regulations substantially modify

the GRA exception.

The temporary regulations retain

many of the provisions from the existing

regulations. However, the IRS and Treasury have decided to reissue all of the

regulations under section 367(e)(1) as

temporary regulations to obtain a uniform set of regulations.

Explanation of Provisions

GRA exception under the existing regulations

Section 355 provides that, if certain

requirements are met, a distributing cor-

The GRA exception in the existing

regulations contains a number of spe-

cific requirements, all of which must be

satisfied for the distributing corporation

to defer taxation under the exception.

In general, if Distributee is a resident

of a country that has an income tax

treaty with the United States and meets

certain other requirements, Distributing

can defer its gain by entering into a

GRA. Under the GRA, if a (foreign)

Distributee sells all or a portion of the

stock of either Distributing or Controlled within 60 months after the close

of the taxable year in which the distribution occurs, Distributing agrees to

amend its return and include the deferred gain in income based upon the

proportion of the stock that is sold by

Distributee. Thus, for example, if

Distributee sells 10 percent of its stock

of Distributing or Controlled, Distributing is required to amend its return to

include 10 percent of the deferred gain.

There is no special rule (i.e., no full

trigger of the deferred gain) if Distributee sells a substantial amount of its

stock of either company. In addition,

there is no special rule that triggers gain

in the case of a nonrecognition transaction (such as the issuance of additional

stock by either Distributing or Controlled to third parties through a public

offering) that results in a substantial

reduction of the percentage of stock

owned by Distributee(s).

The existing regulations generally

provide that the GRA will not be triggered if Distributee transfers the stock

of either Distributing or Controlled in

certain nonrecognition transactions (permitted transactions). The transfer of the

stock of either company in a (second)

section 355 distribution, however, is not

permitted.

In the case of a permitted transaction,

the existing regulations provide special

successor-in-interest rules under which

the deferred gain generally will be taxable unless Distributee maintains a direct or indirect 80 percent interest in the

stock of Distributing and Controlled that

it owned immediately after the distribution. For example, if Distributing distributed the stock of Controlled in an

outbound section 355 distribution that

qualified for the GRA exception and,

within the term of the GRA, Distributee

then contributed the stock of Distributing to a new company (Newco) in a

section 351 exchange and received 100

percent of Newco, the successor-ininterest rules apply. Thus, Distributee

generally would be required to maintain

an 80 percent indirect interest in Distributing. Under these rules, (i) Distributee’s

sale of up to 20 percent of the stock of

Newco, or (ii) Newco’s sale of up to 20

percent of the stock of Distributing

would result in a corresponding trigger

of the deferred gain. The issuance of

new stock by Newco or Distributing of

up to 20 percent to unrelated persons,

however, would not result in any trigger

of the GRA. If, however, Newco (or

Distributing) issued more than 20 percent of its stock to unrelated persons (or

any other nonrecognition transaction reduced Distributee’s indirect interest in

Distributing to below 80 percent as a

result of a nonrecognition transaction),

the entire gain would be triggered.

Reasons for change/overview of temporary regulations

The treatment of non pro rata outbound section 355 distributions is not

adequately addressed in the existing

regulations. For example, assume that a

foreign parent (FP) owns all of the stock

of Distributing, a domestic corporation,

which, in turn, owns all of the stock of

Controlled, also a domestic corporation.

Assume that the distribution of Controlled by Distributing to FP qualifies

for the GRA exception. If FP then

contributes all of the stock of Distributing to a newly-formed foreign corporation (Newco), the successor rules would

apply, and FP would be required to

maintain a direct or indirect 80 percent

interest in Distributing.

The outcome under the existing regulations arguably is substantially different, however, if the corporations structured the distribution as a non pro rata

distribution. For example, assume that

FP first forms Newco and transfers to

Newco a percentage of the Distributing

stock (the percentage equal to the value

of Distributing (without the Controlled

stock) divided by the combined value of

Distributing and Controlled) in an exchange under section 351. Distributing

then distributes the stock of Controlled

to FP in exchange for FP’s stock of

Distributing (a non pro rata section 355

distribution). After the distribution, FP

owns all of the stock of Controlled and

all of the stock of Newco; Newco owns

all of the stock of Distributing. Under

the existing regulations, FP is a

Distributee. However, because FP has

no direct interest in Distributing after

the distribution, the regulations effectively treat FP as a Distributee only with

respect to Controlled. Moreover, because

Newco does not actually receive stock

of Controlled in the distribution (even

though its percentage ownership interest

in Distributing increases as a result of

the distribution), it is arguably not a

Distributee with respect to the Distributing stock. As a result, because the

taxpayer structures the transaction in

this manner (rather than a section 355

distribution followed by a section 351

exchange as in the first hypothetical), if

the steps of the transaction are respected

and in the absence of the application of

other sections of the Code, Distributing

could take the position that there are no

restrictions in the existing regulations

with respect to (i) the sale by FP of

Newco stock, or (ii) the sale by Newco

of Distributing stock.

To remedy this potential disparity in

treatment between pro rata and non pro

rata distributions, the temporary regulations expand the definition of

Distributee in the GRA exception (referred to as Foreign Distributee under

such exception) to include all persons

that were shareholders of Distributing

immediately prior to the distribution.

Thus, for example, in the second hypothetical above, Newco and FP would

both be Foreign Distributees. Provided

that nonrecognition treatment is claimed

under the GRA exception with respect

to Newco and FP (referred to as Qualified Foreign Distributees in the case of

Foreign Distributees for which nonrecognition may be claimed), the GRA

would be triggered by either (i) the sale

by FP of Newco stock, or (ii) the sale

by Newco of Distributing stock.

Second, even in the case of pro rata

distributions, the IRS and Treasury believe that the results obtained under the

existing regulations are too dependent

upon the form of the transaction. This is

principally because taxpayers could be

subject to the stricter successor-ininterest rules if their transactions were

structured in a particular way, but might

be subject to the more liberal distributee

rules if the order of the steps of the

particular transaction are reversed.

In the preamble to the existing regulations, the IRS and Treasury stated that

the successor-in-interest rules were ‘‘designed to provide taxpayers with flexibility to restructure their operations,

without imposing undue administrative

burdens on the Service.’’ The IRS solicited taxpayer comments on the scope of

these rules. A number of commentators

have stated that the rules are overly

restrictive.

The temporary regulations harmonize

the treatment of the distributee and

successor-in-interest rules in order to

minimize the importance of the form of

a particular transaction. In addition, as

discussed below, the temporary regulations liberalize the strict successor rules

by replacing the 80-percent threshold

(computed on an individual Distributee

basis) with a 50-percent threshold (computed with reference to all Qualified

Foreign Distributees as a group).

The temporary regulations follow the

existing regulations by providing that a

sale by a Qualified Foreign Distributee

of the stock of either Controlled or

Distributing triggers gain in the same

proportion as the percentage of stock

that is sold. However, the temporary

regulations provide that a sale by Qualified Foreign Distributee(s) of either Distributing or Controlled that results in

a substantial transformation results in

a trigger of the full amount of the

deferred gain. A substantial transformation is defined as a greater than 50percent (direct or indirect) reduction, on

an aggregate basis, in either the total

voting power or the total value of the

stock of Controlled or Distributing held

by Qualified Foreign Distributee(s) immediately after the distribution. The new

temporary regulations also provide that

a nonrecognition transaction that results

in a substantial transformation (such as

the issuance of stock by Distributing or

Controlled in a public offering) generally causes a trigger of the full amount

of the deferred gain. No gain will be

triggered if a nonrecognition transaction

does not result in a substantial transformation.

The temporary regulations also expand the types of post-distribution nonrecognition transactions that are permitted transactions to include section 355

distributions. A post-distribution section

355 transaction may qualify for nonrecognition treatment if the foreign

distributee (referred to as a Substitute

Distributee) that receives stock of Distributing and/or Controlled qualifies as a

Qualified Foreign Distributee. In such

case, the Substitute Distributee will replace the initial Qualified Foreign

Distributee as the person whose ownership interest is considered for purposes

of determining whether a disposition or

substantial transformation has occurred

(on a cumulative, aggregate basis) with

respect to such stock.

In addition, the temporary regulations

provide that foreign persons that owned

stock or securities of Distributing within

two years prior to the distribution and

that own (directly, indirectly, or constructively) 50 percent or more of the

stock of Distributing or Controlled immediately after the distribution will also

be considered Foreign Distributees.

Thus, for example, if F1, a foreign

corporation, transfers the stock of US1

to F2 in exchange for all of the stock of

F2 in a section 351 exchange and,

within two years after the transfer, US1

distributes all of the stock of US2, its

wholly owned subsidiary, to F2 in a

section 355 exchange, F1 is also treated

as a Foreign Distributee under this rule.

(F1 would have been treated as a Foreign Distributee without the operation of

this rule if the section 355 distribution

occurred prior to the section 351 exchange.)

The IRS and the Treasury also believe

that certain procedural aspects of the

GRA exception need modification. The

temporary regulations enhance reporting

and security requirements, extend the

term of the GRA from 5 to 10 years,

and delete other requirements that are

believed to be unnecessary in light of

the modifications herein.

To address the security concerns of

the IRS resulting from the liberalization

of the successor-in-interest rules and the

expansion of permissible post-distribution nonrecognition transactions to include section 355 distributions, the assets of Distributing are more closely

monitored to insure that such corporation has sufficient funds to pay a potential tax on the deferred gain. In addition,

Controlled must agree to be secondarily

liable (after Distributing) for the tax on

the deferred gain.

Moreover, the new temporary regulations extend the term of the GRA from

5 to 10 years in order to conform the

GRA term under section 367(e)(1) to the

GRA term under section 367(a). Under

section 367(a), the GRA term in the

case of outbound stock transfers is 10

years when U.S. transferors own at least

50 percent of the stock of a foreign

transferee company. See § 1.367(a)–

3T(c)(3) and Notice 87–85 (1987–2

C.B. 395). The IRS and Treasury believe that the GRA term under section

367(e)(1) should be no less than the

term under section 367(a) when U.S.

transferors control the transferee because, once the GRA under section

367(e)(1) expires, the sale of Distributing or Controlled stock by a Qualified

Foreign Distributee likely will not be

subject to Federal income taxation. In

contrast, under section 367(a), even if

the GRA lapses, an amount approximating the deferred gain likely will be

subject to Federal income taxation if the

U.S. transferor later sells the stock of

the transferee foreign corporation.

Finally, the IRS and Treasury believe

that section 367(e)(1) distributions

should be subject to some form of

section 6038B reporting, as are transfers

described under sections 367(a) and

367(d). Thus, the temporary regulations

extend limited section 6038B reporting

to section 367(e)(1) transactions. The

reporting requirements under section

6038B will be deemed satisfied in the

case of a taxpayer that qualifies for one

of the three exceptions to taxation under

the regulations if the taxpayer complies

with the applicable reporting requirements relating to the relevant exception.

This change is also intended to extend

the statute of limitations under section

6501(c)(8) in cases where distributing

corporations do not properly report their

outbound section 355 distributions.

Separately, the temporary regulations

provide new notice and reporting rules

in cases where Distributing qualifies for

either the FIRPTA or publicly traded

exception.

Specific changes to GRA exception in

temporary regulations

The specific requirements of the GRA

exception, as amended, are as follows:

(A) Ten or fewer qualified foreign

distributees

The existing regulations provide that

Distributing is permitted to claim nonrecognition with respect to 10 or fewer

individual or corporate foreign distributees. A ruling is required in the case

of a foreign distributee that holds its

interest in Distributing through a partnership, trust, or estate (whether foreign

or domestic). This requirement is unchanged in the temporary regulations.

(B) Active trade or business

The existing regulations provide that,

if Distributee is a foreign corporation, it

must be engaged in an active trade or

business. This requirement is removed

in the temporary regulations.

The existing regulations provide that,

immediately after the distribution, the

value of Distributing must be at least

equal to the value of the distributed

stock and securities. This requirement is

waived by the existing regulations if

Distributing and Controlled are members

of the same consolidated group at the

time of the distribution. This requirement is revised in the temporary regulations to provide that the value of Distributing (the value of its assets less all

of its liabilities) must be at least equal

to the amount of the deferred gain on all

testing dates during the GRA period.

(Alternatively, Distributing may satisfy

this test using the adjusted basis of its

assets instead of fair market value.) A

testing date is the last day of each

taxable year of Distributing and any day

in which Distributing distributes money

or property to its shareholders (regardless of whether such distribution is

treated as a dividend). The waiver in the

existing regulations if Distributing and

Controlled are members of the same

consolidated group is eliminated in the

temporary regulations.

(D) Treaty residence

The existing regulations provide that

all Distributees are required to be residents of a country that maintains a

comprehensive income tax treaty with

the United States that contains an exchange of information provision. This

requirement is not changed in the temporary regulations.

(E) Continuity of interest rule

The existing regulations provide that

the Distributee is required to continue to

own, for a 60-month period, all of the

stock of Distributing and Controlled that

it owns at the time of the distribution.

This requirement is maintained, but the

period is increased to 120 months.

(F) Distributing must remain in

existence

The existing regulations provide that

Distributing cannot go out of existence

pursuant to the distribution. This requirement is maintained in the temporary regulations.

(G) GRA

The existing regulations provide that

Distributing is required to enter into a

5-year GRA and receive annual certifications from Distributees, stating that

they continue to own the stock that they

held immediately after the distribution.

The temporary regulations increase the

GRA term to 10 years.

(H) Annual certifications

The existing regulations provide that

Distributees must provide their certifications directly to Distributing. Under the

temporary regulations, Controlled also

must provide an annual statement to

Distributing, containing information regarding whether any of its Qualified

Foreign Distributees have disposed of

their stock in Controlled during the

relevant taxable year.

Special Analyses

It has been determined that this temporary regulation is not a significant

regulatory action as defined in EO

12866. Therefore, a regulatory assessment is not required. It is hereby certified that this regulation does not have a

significant impact on a substantial number of small entities. This certification is

based on the fact that the number of

corporations that distribute stock or securities to foreign persons in transactions that qualify under section 355, and

thus become subject to the collection of

information contained in these regulations, is estimated to be only 260 per

year. Moreover, because these regulations will primarily affect large multinational corporations with foreign shareholders, it is estimated that out of the

260 annual transactions subject to reporting, very few, if any, will involve

small entities. Therefore, the regulations

do not significantly alter the reporting or

recordkeeping duties of small entities.

Thus, a Regulatory Flexibility Analysis

under the Regulatory Flexibility Act (5

U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Internal

Revenue Code, a copy of these temporary regulations will be submitted to the

Chief Counsel for Advocacy of the

Small Business Administration for comment on their impact on small business.

Drafting Information

The principal author of these regulations is Philip L. Tretiak of the Office of

Associate Chief Counsel (International),

within the Office of Chief Counsel, IRS.

However, other personnel from the IRS

and Treasury Department participated in

their development.

26 CFR Part 602

Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 1 and 602

are amended as follows:

Part 1—INCOME TAXES

Paragraph 1. The authority citation for

part 1 is amended by removing the entry

for section 1.367(e)–1 and adding an

entry in numerical order to read as

follows:

Authority: 26 U.S.C. 7805 * * *

Section 1.367(e)–1T also issued under

26 U.S.C. 367(e)(1) * * *

Par. 2. Sections 1.367(e)–0 and

1.367(e)–1 are removed.

Par. 3. Sections 1.367(e)–0T and

1.367(e)–1T are added to read as follows:

§ 1.367(e)–0T Treatment of section 355

distributions by U.S. corporations to

foreign persons; table of contents.

This section lists captioned paragraphs contained in § 1.367(e)–1T.

§ 1.367(e)–1T Treatment of section 355

distributions by U.S. corporations to

foreign persons.

(a) Purpose and scope.

(b) Recognition of gain required.

(1) In general.

(2) Computation of gain of the distributing corporation.

(3) Treatment of foreign distributee.

(4) Nonapplication of section 367(a)

principles that provide for exceptions to

gain recognition.

(5) Partnerships, trusts, and estates.

(i) In general.

(ii) Written statement.

(6) Anti-abuse rule.

(1) Distribution by a U.S. real property holding corporation of stock in a

second U.S. real property holding corporation.

(2) Distribution by a publicly traded

corporation.

(i) Conditions for nonrecognition.

(ii) Recognition of gain if foreign

distributee owns 5 percent of distributing corporation.

(iii) Reporting requirements.

(iv) Timely filed return.

(v) Relation to other nonrecognition

provisions.

(3) Distribution of certain domestic

stock to 10 or fewer qualified foreign

distributees.

(i) In general.

(ii) Conditions for nonrecognition.

(iii) Agreement to recognize gain.

(iv) Waiver of period of limitation.

(v) Annual certifications and other

reporting requirements.

(vi) Special rule for nonrecognition

transactions.

(vii) Recognition of gain.

(viii) Failure to comply.

(d) Other consequences.

(1) Exchange under section 897(e)(1).

(2) Dividend treatment under section

1248.

(3) Distribution of stock of a passive

foreign investment company. [Reserved]

(4) Reporting under section 6038B.

(e) Examples.

(f) Effective date.

§ 1.367(e)–1T Treatment of section 355

distributions by U.S. corporations to

foreign persons (temporary).

(a) Purpose and scope. This section

provides rules concerning the recognition of gain by a domestic corporation

on a distribution that qualifies for nonrecognition under section 355 of stock

or securities of a domestic or foreign

corporation to a person who is not a

U.S. person. Paragraph (b) of this section states as a general rule that gain

recognition is required on the distribution. Paragraph (c) of this section provides exceptions to the gain recognition

rule for certain distributions of stock or

securities of a domestic corporation.

Paragraph (d) of this section refers to

other consequences of distributions described in this section. Paragraph (e) of

this section provides examples of these

rules. Finally, paragraph (f) of this section specifies the effective date of this

section.

(b) Recognition of gain required—(1)

In general. (i) If a domestic corporation

(distributing corporation) makes a distribution that qualifies for nonrecognition

under section 355 of stock or securities

of a domestic or foreign corporation

(controlled corporation) to a person who

is not a qualified U.S. person, then,

except as provided in paragraph (c) of

this section, the distributing corporation

shall recognize gain (but not loss) on

the distribution under section 367(e)(1).

No gain is required to be recognized

under this section with respect to a

distribution to a qualified U.S. person of

stock or securities that qualifies for

nonrecognition under section 355. For

purposes of this section, a qualified U.S.

person is—

(A) A citizen or resident of the

United States; and

(B) A domestic corporation.

(ii) In the case of stock or securities

owned through a partnership, trust, or

estate, see paragraph (b)(5) of this section.

(2) Computation of gain of the distributing corporation. The gain recognized by the distributing corporation

under paragraph (b)(1) of this section

shall be equal to the excess of the fair

market value of the stock or securities

distributed to persons who are not qualified U.S. persons (determined as of the

time of the distribution) over the distributing corporation’s adjusted basis in the

stock or securities distributed to such

distributees. For purposes of the preceding sentence, the distributing corporation’s adjusted basis in each unit of each

class of stock or securities distributed to

a distributee shall be equal to the distributing corporation’s total adjusted basis in all of the units of the respective

class of stock or securities owned immediately before the distribution, divided

by the total number of units of the class

of stock or securities owned immediately before the distribution.

(3) Treatment of distributee. If the

distribution otherwise qualifies for nonrecognition under section 355, each

distributee shall be considered to have

received stock or securities in a distribution qualifying for nonrecognition under

section 355, even though the distributing

corporation may recognize gain on the

distribution under this section. Thus, the

distributee shall not be considered to

have received a distribution described in

section 301 or a distribution in an

exchange described in section 302(b)

upon the receipt of the stock or securities of the controlled corporation. Except

where section 897(e)(1) and the regulations thereunder cause gain to be recognized by the distributee, the basis of the

distributed domestic or foreign corporation stock in the hands of the foreign

distributee shall be the basis of the

distributed stock determined under section 358 without any increase for any

gain recognized by the domestic corporation on the distribution.

(4) Nonapplication of section 367(a)

principles that provide for exceptions to

gain recognition. Paragraph (b)(1) of

this section requires recognition of gain

notwithstanding the application of any

principles contained in section 367(a) or

the regulations thereunder. The only exceptions to paragraph (b)(1) of this

section are contained in paragraph (c) of

this section. None of these exceptions

applies to distributions of stock or securities of a foreign corporation.

(5) Partnerships, trusts, and estates—

(i) In general. For purposes of this

section, stock or securities owned by or

for a partnership (whether foreign or

domestic) shall be considered to be

owned proportionately by its partners. In

applying this principle, the proportionate

share of the stock or securities of the

distributing corporation considered to be

owned by a partner of the partnership at

the time of the distribution shall equal

the partner’s distributive share of gain

that would be realized by the partnership from a sale of stock of the distributing corporation immediately before the

distribution (without regard to whether,

under the particular facts, any gain

would actually be realized on the sale

for U.S. tax purposes), determined under

the rules and principles of sections 701

through 761 and the regulations thereunder. For purposes of this section, stock

or securities owned by or for a trust or

estate (whether foreign or domestic)

shall be considered to be owned proportionately by the persons who would be

treated as owning such stock or securities under sections 318(a)(2)(A) and (B).

In applying section 318(a)(2)(B), if a

trust includes interests that are not

actuarially ascertainable and a principal

purpose of the inclusion of the interests

is the avoidance of section 367(e)(1), all

such interests shall be considered to be

owned by foreign persons. In a case

where an interest holder in a partnership, trust, or estate that owns stock of

the distributing corporation is itself a

partnership, trust, or estate, the rules of

this paragraph (b)(5) apply to individuals or corporations that own (direct or

indirect) interests in the upper-tier partnership, trust or estate.

(ii) Written statement. If, prior to the

date on which the distributing corporation must file its income tax return for

the year of the distribution, the corporation obtains a written statement, signed

under penalties of perjury by an interest

holder in a partnership, trust, or estate

that receives a distribution described in

paragraph (b)(1) of this section from the

corporation, which statement certifies

that the interest holder is a qualified

U.S. person (as defined in paragraph

(b)(1)(i) of this section), no liability

shall be imposed under paragraph (b)(1)

of this section with respect to the distribution to the partnership, trust, or estate

to the extent of the interest holder’s

interest in the partnership, trust, or estate, unless the distributing corporation

knows or has reason to know that the

statement is false, or it is subsequently

determined that the interest holder, in

fact, was not a qualified U.S. person at

the time of the distribution. The written

statement must set forth the amount of

the interest holder’s proportionate interest in the partnership, trust, or estate as

determined under paragraph (b)(5)(i) of

this section and must set forth the

amount of such entity’s proportionate

interest in the distributing and controlled

corporation, as well as the interest holder’s name, taxpayer identification number, home address (in the case of an

individual) or office address and place

of incorporation (in the case of a corporation). The written statement must be

retained by the distributing corporation

with its books and records for a period

of three calendar years following the

close of the last calendar year in which

the corporation relied upon the statement.

(6) Anti-abuse rule. If a domestic

corporation is directly or indirectly

formed or availed of by one or more

foreign persons to hold the stock of a

second domestic corporation for a principal purpose of avoiding the application

of section 367(e)(1) and the requirements of this section, any distribution of

stock or securities to which section 355

applies by such second domestic corporation shall be treated for Federal income tax purposes as a distribution to

such foreign person or persons, followed

by a transfer of the stock or securities to

the first domestic corporation. The

qualification of the distribution to the

foreign person for an exception to the

general gain recognition rule of paragraph (b)(1) of this section, and the

consequences of the transfer to the first

domestic corporation under this section,

shall be determined in accordance with

all of the facts and circumstances.

corporation of stock in a second U.S.

real property holding corporation. Gain

shall not be recognized under paragraph

(b) of this section by a domestic corporation making a distribution that qualifies for nonrecognition under section

355 of stock or securities of a domestic

controlled corporation to a person who

is not a qualified U.S. person (as defined in paragraph (b)(1)(i) of this section) if the conditions specified in paragraphs (c)(1)(i) and (ii) of this section

are both satisfied:

(i) Immediately after the distribution,

both the distributing and controlled corporations are U.S. real property holding

corporations (as defined in section

897(c)(2)). For the treatment of the

distribution under section 897, see section 897(e)(l) and the regulations thereunder.

(ii) The distributing corporation attaches to its timely filed Federal income

tax return for the taxable year in which

the distribution occurs a statement titled

‘‘Section 367(e)(1) – Reporting of Section 355 Distribution by U.S. Real Property Holding Corporation’’, signed under

penalties of perjury by an officer of the

corporation, disclosing the following information—

(A) A statement that the distribution

is one to which paragraph (c)(1) of this

section applies; and

(B) A description of the transaction

in which one U.S. real property holding

corporation distributes the stock of another U.S. real property holding corporation in a transaction that is described

under section 355.

(iii) For purposes of this paragraph

(c)(1), an income tax return (including

an amended return) will be considered a

timely filed Federal income tax return if

it is filed prior to the time that the

Internal Revenue Service discovers that

the reporting requirements of this paragraph have not been satisfied.

(2) Distribution by a publicly traded

corporation— (i) Conditions for nonrecognition. Except as provided by paragraph (c)(2)(ii) of this section, gain shall

not be recognized under paragraph (b)

of this section by a domestic corporation

making a distribution that qualifies for

nonrecognition under section 355 of

stock or securities of a domestic controlled corporation to a person who is

not a qualified U.S. person (as defined

in paragraph (b)(1)(i) of this section) if

both of the following conditions are

satisfied:

(A) Stock of the domestic controlled

corporation with a value of more than

80 percent of the outstanding stock of

the corporation is distributed with respect to one or more classes of the

outstanding stock of the distributing corporation that are regularly traded on an

established securities market, as defined

in § 1.897–1(m)(1) and (3), located in

the United States. Stock is considered to

be regularly traded if it is regularly

quoted by brokers or dealers making a

market in such interests. A broker or

dealer is considered to make a market

only if the broker or dealer holds himself out to buy or sell interests in the

stock at the quoted price.

(B) The distributing corporation satisfies the reporting requirements contained

in paragraph (c)(2)(iii) of this section.

(ii) Recognition of gain if distributee

owns 5 percent of distributing corporation. If, at the time of the distribution,

the distributing corporation knows or

has reason to know that any distributee

who is not a qualified U.S. person (as

defined in paragraph (b)(1)(i) of this

section) owns, directly, indirectly, or

constructively (using the rules of sections 897(c)(3) and (c)(6)(C), but subject

to the rules of paragraph (b)(5) of this

section), more than 5 percent (by value)

of a class of stock or securities of the

distributing corporation with respect to

which the stock or securities of the

controlled corporation is distributed (a

5-percent shareholder), the distributing

corporation will qualify for nonrecognition under paragraph (c)(2)(i) of this

section if, with respect to such 5-percent

shareholder, either—

(A) The distribution qualifies for

nonrecognition under paragraph (c)(3) of

this section; or

(B) The distributing corporation recognizes gain (but not loss) on the distribution under paragraph (b) of this section.

(iii) Reporting Requirements. To

qualify for nonrecognition treatment under paragraph (c)(2)(i) of this section,

the distributing corporation must attach

to its timely filed Federal income tax

return, for the taxable year in which the

distribution occurs a statement titled

‘‘Section 367(e)(1) – Reporting of Section 355 Distribution by U.S. Publicly

Traded Corporation to Foreign Persons,’’

signed under penalties of perjury by an

officer of the corporation, disclosing the

following information:

(A) A statement that the distribution

is one to which paragraph (c)(2) of this

section applies.

(B) A description of the transaction

in which the distributing corporation

that is publicly traded on a U.S. securities market distributed stock or securities of a domestic controlled corporation.

which the stock of the distributing corporation is publicly traded.

(D) A statement that, at the time of

the distribution, either—

(1) The distributing corporation does

not know or have reason to know that

any distributee who is not a qualified

U.S. shareholder (as defined in paragraph (b)(1)(i) of this section) is a

5-percent shareholder; or

(2) The distributing corporation

knows or has reason to know that one

or more distributees who are not qualified U.S. persons are 5-percent shareholders, and, that with respect to each

such 5-percent shareholder, either—

(i) Gain will not be recognized because the requirements of paragraph

(c)(3) of this section are satisfied; or

(ii) Gain (but not loss) will be recognized in accordance with paragraph (b)

of this section.

(iv) Timely filed return. For purposes

of this paragraph (c)(2), an income tax

return (including an amended return)

will be considered a timely filed Federal

income tax return if it was received

prior to the time that the Internal Revenue Service discovers that the reporting

requirements of this paragraph (c)(2)

have not been satisfied.

(v) Relation to other nonrecognition

provisions. If the distribution of the

stock and securities of the controlled

corporation also qualifies for nonrecognition under paragraph (c)(1) of this

section, the distributing corporation shall

be entitled to nonrecognition under paragraph (c)(1) of this section and not this

paragraph (c)(2).

(3) Distribution of certain domestic

stock to 10 or fewer qualified foreign

distributees—(i) In general. (A) Gain

shall not be recognized under paragraph

(b) of this section by a domestic corporation making a distribution that qualifies for nonrecognition under section

355 of stock or securities of a domestic

controlled corporation with respect to a

foreign distributee (defined in paragraph

(c)(3)(i)(B) of this section) that is a

qualified foreign distributee (defined in

paragraph (c)(3)(i)(C) of this section),

provided that each of the conditions

contained in paragraph (c)(3)(ii) of this

section is satisfied. If one or more

foreign distributees are not treated as

qualified foreign distributees, the distributing corporation shall recognize a percentage of the gain realized on the

distribution, equal to the percentage of

its stock owned immediately before the

distribution, directly or indirectly, by

foreign distributees who are not qualified foreign distributees. See paragraph

(b)(5) of this section for rules regarding

the ownership of stock held by a partnership, trust, or estate.

(B) For purposes of this paragraph

(c)(3), the term foreign distributee is

any person who is not a qualified U.S.

person (as defined in paragraph (b)(1)(i)

of this section) if such person—

(1) Owned stock or securities of the

distributing corporation immediately

prior to the distribution;

(2) Owned stock or securities of the

distributing corporation within two years

prior to the distribution and directly,

indirectly, or constructively (using the

rules of section 318) owns 50 percent or

more of either the total voting power or

the total value of the stock of the

distributing or controlled corporation

immediately after the distribution; or

(3) Is a transferee or substitute

distributee, as defined in paragraph

(c)(3)(vi)(C) or (D) of this section.

(c)(3)(i)(D) of this section, the term

qualified foreign distributee is a foreign

distributee that, during the entire period

for which the agreement to recognize

gain (described in paragraph (c)(3)(iii)

of this section) is in effect with respect

to the distributee, is either an individual

or a corporation (as defined in section

7701(a)(3)), resident of a foreign country that maintains a comprehensive income tax treaty with the United States

which contains an information exchange

provision. However, no more than ten

foreign distributees in total may be

current or former qualified foreign

distributees (including any transferee or

substitute distributees as defined in paragraph (c)(3)(vi)(C) or (D) of this section) during the entire term of the gain

recognition agreement. See, however,

paragraph (c)(3)(vi)(G) of this section

for special rules applicable to substitute

distributees.

(D) Unless the distributing corporation obtains a ruling from the Internal

Revenue Service to the contrary, no

foreign distributee shall be treated as a

qualified foreign distributee if it holds

its interest in the distributing corporation

through a partnership, trust or estate,

characterized as such under the taxation

laws of the United States or any entity

that is treated as fiscally transparent

under the taxation laws of the foreign

country in which it is a resident if such

country maintains a comprehensive income tax treaty with the United States

which contains an information exchange

provision.

(ii) Conditions for nonrecognition. A

distribution of stock or securities described in paragraph (c)(3)(i) of this

section to a qualified foreign distributee

shall not result in the recognition of

gain if each of the following conditions

is satisfied:

(A) If more than ten foreign

distributees, at any time during the entire term of the gain recognition agreement, are eligible to be qualified foreign

distributees, the distributing corporation

shall designate the foreign distributees

to be considered qualified foreign

distributees for which nonrecognition is

claimed under this paragraph (c)(3).

(B) Immediately after the distribution

and on each testing date beginning after

the distribution and during the period

that the agreement to recognize gain

(described in paragraph (c)(3)(iii) of this

section) is in effect, the value of the

distributing corporation (that is, the fair

market value of the assets of the distributing corporation, less all liabilities of

the distributing corporation) must exceed the amount of gain that the distributing corporation realized, but did not

recognize (on or after the distribution)

under this paragraph (c)(3), as a consequence of the distribution with respect

to qualified foreign distributees. This

requirement will be deemed satisfied for

any testing date upon which the adjusted

basis of the distributing corporation’s

assets, less all liabilities of the distributing corporation, exceeds the amount of

the deferred gain. A testing date is—

(1) The last day of any taxable year

of the distributing corporation during

which the agreement to recognize gain

is in effect; and

(2) Any date upon which the distributing corporation distributes property to

its shareholders under section 301(a).

120-month period following the end of

the taxable year of the distributing corporation in which the distribution was

made, except under the circumstances

and subject to the consequences prescribed in paragraphs (c)(3)(vi) and (vii)

of this section, all qualified foreign

distributees must continue to own, directly or indirectly, all of the stock and

securities of the distributing and controlled corporations that the qualified

foreign distributee owned, directly or

indirectly, immediately after the distribution (including any stock and securities

of the distributing or controlled corporation later acquired from the distributing

or controlled corporation for which the

distributee has a holding period determined under section 1223 by reference

to the stock or securities).

(D) The distribution of stock or securities described in paragraph (c)(3)(i) of

this section must not be a distribution

pursuant to which the distributing corporation goes out of existence.

(E) The distributing corporation must

file an agreement to recognize gain, and

the controlled corporation must agree to

be secondarily liable in the event that

the distributing corporation does not pay

the tax due upon a recognition event

described in paragraph (c)(3)(vii) of this

section. The agreement is described in

paragraph (c)(3)(iii) of this section and

filed by the distributing corporation with

its Federal income tax return for its

taxable year in which the distribution is

made.

(F) For each of the taxable years of

the distributing corporation, beginning

with the taxable year of the distribution

and ending with the taxable year that

includes the close of the 120-month

period following the end of the taxable

year of the distributing corporation in

which the distribution was made, all

qualified foreign distributees and the

controlled corporation must provide to

the distributing corporation the annual

certifications described in paragraph

(c)(3)(v) of this section, and the distributing corporation must file the certifications with its tax return.

(iii) Agreement to recognize gain.

The agreement to recognize gain required by this paragraph (c)(3)(iii) shall

be prepared by or on behalf of the

distributing corporation and signed under penalties of perjury by an authorized

officer of the distributing corporation.

An authorized officer of the controlled

corporation must also sign the agreement under penalties of perjury, agreeing to extend the statute of limitations

and accept liability for the tax in the

event that the distributing corporation

fails to pay the tax upon a recognition

event. The agreement provided by the

distributing corporation shall set forth

the following items, under the heading

‘‘GAIN RECOGNITION AGREEMENT

UNDER § 1.367(e)–1T(c)(3)(iii)’’, with

paragraphs labeled to correspond with

such items:

(A) A declaration that the distribution

is one to which paragraph (c)(3) of this

section applies.

(B) A description of each qualified

foreign distributee, which shall include

the qualified foreign distributee’s—

(1) Name;

(2) Address;

(3) Taxpayer identification number (if

any); and

(4) Residence and citizenship (in the

case of an individual) or place of incorporation and country of residence (in the

case of a qualified foreign distributee

that is a corporation for Federal income

tax purposes under section 7701(a)(3)).

securities of the distributing and controlled corporations owned (directly or

indirectly) by each qualified foreign

distributee, including—

(1) The number or amount of shares;

(2) The type of stock or securities;

(3) The fair market values of the

stock and securities of the controlled

corporation owned (directly or indirectly) by the qualified foreign

distributee(s), determined immediately

before and immediately after the distribution;

(4) The distributing corporation’s adjusted basis (immediately before the

distribution) in the stock and securities

of the controlled corporation distributed

to the qualified foreign distributees;

(5) The fair market value of the distributing corporation (fair market value

of its assets, less all liabilities of the

distributing corporation) immediately after the distribution. Such amount must

exceed the amount of gain that the

distributing corporation realized, but did

not recognize under this paragraph

(c)(3), on the distribution to qualified

foreign distributees. Alternatively, the

fair market value standard will be

deemed satisfied if the adjusted basis of

the assets of the distributing corporation,

less all liabilities of the distributing

corporation, exceeds the amount of the

deferred gain.

(6) For each applicable valuation, a

summary of the method (including appraisals, if any) used for determining the

fair market values required by this paragraph (c)(3)(iii).

(D) The distributing corporation’s

agreement to recognize gain in accordance with paragraph (c)(3)(vii) of this

section.

(E) The controlled corporation’s

agreement to be secondarily liable for

the distributing corporation’s tax liability, pursuant to the gain recognition

agreement described in this paragraph

(c)(3)(iii).

(F) A waiver of the period of limitations by both the distributing and controlled corporation as described in paragraph (c)(3)(iv) of this section.

(G) An attached statement from each

qualified foreign distributee declaring

that the qualified foreign distributee will

provide to the distributing corporation

the annual certifications described in

paragraph (c)(3)(v)(A) of this section for

each of the taxable years of the distributing corporation, beginning with the

taxable year of the distribution and

ending with the taxable year that includes the close of the 120-month period following the taxable year of the

distributing corporation in which the

distribution was made. The attached

statements shall be signed under penalties of perjury by an authorized officer

in the case of any qualified foreign

distributee that is a corporation for Federal income tax purposes or by the

individual in the case of a qualified

foreign distributee that is an individual.

(H) An attached statement from the

controlled corporation declaring that it

will provide to the distributing corporation the annual certifications described

in paragraph (c)(3)(v)(B) of this section.

(I) An agreement by the distributing

corporation to attach to its tax returns

the annual certifications of the qualified

foreign distributees and the controlled

corporation described in paragraphs

(c)(3)(v)(A) and (B) of this section,

respectively, and to meet any other

reporting requirement in accordance

with paragraph (c)(3)(v) of this section.

(iv) Waiver of period of limitation.

The distributing corporation and the

controlled corporation must file, with

the gain recognition agreement described in paragraph (c)(3)(iii) of this

section, a waiver of the period of limitation on the assessment of tax upon the

gain realized on the distribution to the

qualified foreign distributee(s). The

waiver shall be executed on Form 8838,

substitute form, or such other form as

may be prescribed by the Commissioner

for this purpose and shall extend the

period for assessment of such tax to a

date not earlier than the close of the

thirteenth full year following the taxable

year that includes the distribution. A

properly executed Form 8838, substitute

form, or such other form authorized by

this paragraph (c)(3)(iv) shall be deemed

to be consented to and signed by a

Service Center Director or the Assistant

Commissioner (International) for purposes of § 301.6501(c)– 1(d) of this

chapter.

(v) Annual certifications and other

reporting requirements. For each of the

taxable years of the distributing corporation, beginning with the taxable year of

the distribution and ending with the

taxable year that includes the close of

the 120-month period following the end

of the taxable year of the distributing

corporation in which the distribution

was made, the distributing corporation

must file with its Federal income tax

return the annual certifications for that

year described in this paragraph

(c)(3)(v).

(A) Each current qualified foreign

distributee must provide to the distributing corporation an annual certification,

signed under penalties of perjury by an

authorized officer of the qualified foreign distributee that is a corporation or

by the qualified foreign distributee that

is an individual (as the case may be).

Each annual certification must identify

the distribution with respect to which it

is given by setting forth the date and a

summary description of the distribution.

In the annual certification, the qualified

foreign distributee must declare that—

(1) The qualified foreign distributee

continues

satisfy

paragraph

(c)(3)(i)(C) of this section; and

(2) The qualified foreign distributee

continues to own, directly or indirectly,

without interruption, the stock and securities of the distributing and controlled

corporations (except to the extent the

stock or securities have been disposed

of in a transfer described in paragraph

(c)(3)(vi) of this section).

(B) The controlled corporation must

provide a certification to the distributing

corporation, signed under penalties of

perjury by an authorized officer of the

corporation, that lists each current qualified foreign distributee holding (directly

or indirectly) stock of the controlled

corporation and its direct or indirect

ownership interest in the controlled corporation at both the first day and the

last day of the taxable year for which

the distributing corporation files its Federal income tax return, and certifies the

accuracy of that list.

attach to the annual certifications described in paragraphs (c)(3)(v)(A) and

(B) of this section, a statement signed

under penalties of perjury by an authorized officer of the corporation, in which

the corporation declares that, to the best

of its knowledge, the annual certifications are true.

(D) The distributing corporation must

also attach to the annual certifications a

separate statement indicating—

(1) The names and addresses of each

current and each former qualified foreign distributee;

(2) The percentage of direct or indirect ownership that the qualified foreign

distributees retain in the distributing

corporation at year-end; and

(3) A certification that the value of

the distributing corporation (or the adjusted basis of its assets), less all of the

liabilities of the distributing corporation

on all testing dates, exceeded the

amount of the gain deferred as of the

testing date.

(vi) Special rule for nonrecognition

transactions. (A) Gain shall not be recognized under paragraph (c)(3)(vii) of

this section if the distributing or controlled corporation is acquired by a

successor-in-interest (described in paragraph (c)(3)(vi)(B) of this section), or

upon a direct or indirect disposition by a

qualified foreign distributee of stock or

securities of a distributing or controlled

corporation (or a successor-in-interest)

that is subject to a gain recognition

agreement described in paragraph

(c)(3)(iii) of this section, if the requirements of this paragraph (c)(3)(vi) are

satisfied and the disposition consists of

a transfer described in section 332, 337,

351, 354, 355, 356, or 361 that does not

result in a substantial transformation (as

defined in paragraph (c)(3)(vii)(B) of

this section). For special rules regarding

transfers described in section 355, see

paragraph (c)(3)(vi)(G) of this section.

(B) For purposes of this section, the

term successor- in-interest refers to any

domestic corporation that acquires the

assets of the distributing or controlled

corporation in a transaction described in

section 381(a) to which this paragraph

(c)(3)(vi) applies.

term transferee distributee refers to:

(1) Any corporation whose stock or

securities are exchanged for the stock or

securities of the distributing or controlled corporation (or a successor-ininterest), or of another transferee

distributee, in a transaction described in

section 351, 354, or sections 361 and

381(a)(2), to which this paragraph

(c)(3)(vi) applies.

(2) Any corporation that acquires the

assets of any qualified foreign

distributee, transferee distributee or substitute distributee in a transaction described in section 381(a).

(D) For purposes of this section, the

term substitute distributee refers to any

person that acquires the stock or securities of the distributing or controlled

corporation (or a successor-in-interest),

or of a qualified foreign distributee, in a

section 355 distribution.

(E) Gain shall not be recognized under paragraph (c)(3)(vii) of this section

in a transaction involving a transfer of

the assets of the distributing or controlled corporation to a successor-ininterest, only if the following information and agreements are included with

the first annual certification thereafter

filed under paragraph (c)(3)(v) of this

section:

(1) A description of the transaction

(including a statement of applicable Internal Revenue Code provisions, and a

description of stock or securities transferred, exchanged, or received in the

transaction).

(2) A description of the successor-ininterest (including the name, address,

taxpayer identification number, and

place of incorporation of the successor

in interest).

(3) An agreement of the successor-ininterest, signed under penalties of perjury by an authorized officer of the

successor-in-interest corporation, to succeed to all of the responsibilities and

duties of the distributing corporation or

the controlled corporation (as the case

may be) under this paragraph (c)(3) as if

the successor-in-interest were the distributing or controlled corporation.

(F) Gain shall not be recognized under paragraph (c)(3)(vii) of this section

in a transaction described in paragraph

(c)(3)(vi)(A) of this section in which a

qualified foreign distributee, directly or

indirectly, disposes of, and a transferee

distributee acquires, stock or securities

of the distributing or controlled corporation (or a successor-in-interest), or another transferee distributee, only if the

transferee distributee is either a qualified

U.S. person or qualifies as a qualified

foreign distributee under this paragraph

(c)(3) and the following information and

agreements are included with the first

annual certification thereafter filed under

paragraph (c)(3)(v) of this section:

(1) A description of the transaction

(including a statement of applicable Internal Revenue Code provisions, and a

description of the stock or securities of

the distributing or controlled corporation

(or a successor-in- interest) owned, directly or indirectly, by qualified foreign

distributees immediately after the transaction).

(2) An agreement of the distributing

corporation and the controlled corporation (amending the agreement described

in paragraph (c)(3)(iii) of this section),

signed under penalties of perjury by an

authorized officer of the corporation, to

recognize gain (in the case of the distributing corporation) and to be secondarily liable (in the case of the controlled

corporation) in accordance with the provisions of this paragraph (c)(3) upon the

occurrence of a disposition, directly or

indirectly, by the foreign transferee

distributee of any stock or securities of

the distributing or controlled corporation

(or a successor-in- interest) (other than a

disposition that itself satisfies the requirements of this paragraph (c)(3)(vi)).

(3) An agreement of each foreign

transferee distributee, signed under penalties of perjury by the individual or an

authorized officer of the corporation, to

comply with all of the responsibilities,

qualifications and duties of a qualified

foreign distributee under this paragraph

(c)(3), with respect to the stock or

securities of the distributing or controlled corporation (or a successor- ininterest) owned, directly or indirectly, by

the transferee distributee.

(G) Gain shall not be recognized under paragraph (c)(3)(vii) of this section

in the case of a section 355 distribution

by a qualified foreign distributee of

stock or securities of the distributing or

controlled corporation (or a successorin-interest), or of another qualified foreign distributee. The qualified foreign

distributee that distributed the stock or

securities is no longer required to comply with the rules of this section applicable to qualified foreign distributees,

provided such person no longer has any

interest, directly or indirectly, in the

distributing and controlled corporation.

Thus, for example, such person is not

counted as a qualified foreign distributee

for purposes of limiting gain recognition

to 10 or fewer foreign distributees. In

order for this provision to apply, the

substitute distributee must either be a

qualified U.S. person or satisfy the

requirements applicable to qualified foreign distributees contained in this paragraph (c)(3) and must include with the

first annual certification thereafter filed

under paragraph (c)(3)(v) of this section

the following information and agreements:

(1) A description of the transaction

(including a statement of applicable Internal Revenue Code sections, and a

description of the stock or securities

distributed in the transaction).

(2) An agreement of the distributing

corporation and the controlled corporation (amending the agreement described

in paragraph (c)(3)(iii) of this section),

signed under penalties of perjury by an

authorized officer of the corporation, to

recognize gain (in the case of the distributing corporation) and to be secondarily liable (in the case of the controlled

corporation) in accordance with the provisions of this paragraph (c)(3) upon the

occurrence of a disposition, directly or

indirectly, by a foreign substitute

distributee of any stock or securities

received by the substitute distributee in

the transaction.

(3) An agreement of each foreign

substitute distributee, signed under penalties of perjury by the individual or

authorized officer of the corporation, to

succeed to all of the responsibilities,

qualifications and duties of a qualified

foreign distributee under this paragraph

(c)(3), with respect to the stock or

securities of the distributing or controlled corporation (or a successor- ininterest) received by such substitute

distributee.

(vii) Recognition of gain. (A) (1) The

distributing corporation must file, within

90 days of a transaction described in

this paragraph (c)(3)(vii)(A), an

amended return for the year of the

distribution and recognize gain realized

but not recognized upon such distribution, if, prior to the close of the 120month period following the end of the

taxable year of the distributing corporation in which the distribution was made,

either—

(i) A qualified foreign distributee

sells (or otherwise disposes of) the stock

or securities of the distributing or controlled corporation that the qualified

foreign distributee owned (directly or

indirectly) (other than pursuant to a

transfer described in paragraph (c)(3)(vi)

of this section); or

(ii) Any other transaction (e.g., a

public offering or reorganization) results

in a substantial transformation (as defined in paragraph (c)(3)(vii)(B) of this

section) in either the distributing or

controlled corporation (or both).

(2) For purposes of this paragraph

(c)(3)(vii)(A), a disposition includes, but

is not limited to, any disposition treated

as a sale or exchange under this subtitle

(e.g., section 301(c)(3)(A), 302(a),

351(b) or 356(a)(1)). For the computation of gain in the case of a sale (or

similar disposition), see paragraph

(c)(3)(vii)(C) of this section. For the

computation of gain in the case of other

transactions,

see

paragraphs

(c)(3)(vii)(D) and (F) of this section. For

special rules regarding substitute

distributees, see paragraph (c)(3)(vii)(E)

of this section.

(B) A transaction is treated as a substantial transformation if, as a result of

such transaction, the qualified foreign

distributees, transferee distributees and

substitute distributees own, in the aggregate, less than 50 percent of either the

total voting power or the total value of

the stock of the distributing or the

controlled corporation, directly or indirectly, that the qualified foreign

distributees owned immediately after the

distribution.

disposition), directly or indirectly, by a

qualified foreign distributee of the stock

or securities of the distributing or controlled corporation (or a successor-ininterest) that does not result in a substantial transformation, the distributing

corporation shall be required to recognize a proportionate amount of the gain

realized but not recognized under this

paragraph (c)(3), equal to the percentage

of stock of the distributing or controlled

corporation, as the case may be, sold (or

otherwise disposed of), directly or indirectly, by the qualified foreign

distributee. However, if the sale (or

other disposition) of stock or securities

by a qualified foreign distributee results

in a substantial transformation, the distributing corporation (or its successor-ininterest) must recognize the entire deferred gain that has not already been

recognized under paragraph (c)(3)(vii)

of this section.

(D) In the case of a nonrecognition

transaction that results in a substantial

transformation, the distributing corporation must recognize the entire deferred

gain that has not already been recognized under paragraph (c)(3)(vii) of this

section. If a nonrecognition transaction

does not result in a substantial transformation, the distributing corporation does

not recognize any gain provided that the

requirements of paragraph (c)(3)(vi) of

this section are satisfied.

(E) A sale (or other disposition), directly or indirectly, by a substitute

distributee, of all or a portion of the

stock or securities of the distributing or

controlled corporation (or a successorin-interest) that the substitute distributee

received in the section 355 distribution

shall be treated as a disposition of such

stock or securities by a qualified foreign

distributee (in accordance with paragraph (c)(3)(vii)(C) of this section) for

purposes of computing gain under this

paragraph (c)(3)(vii).

(F) Other transactions or events shall

trigger gain under this paragraph

(c)(3)(vii) as follows:

(1) If a qualified foreign distributee

ceases to satisfy the requirements for a

qualified foreign distributee contained in

paragraph (c)(3)(i)(C) of this section (or

any other specified requirements in

paragraph (c)(3) of this section), the

qualified foreign distributee shall be

treated as if it sold all of the stock and

securities that it owned, directly or indirectly, in the distributing and controlled

corporation (or a successor-in-interest),

on the date that such person ceased to

meet the requirements.

(2) If a substitute distributee ceases

to satisfy the requirements for a qualified foreign distributee contained in

paragraph (c)(3)(i)(C) of this section (or

any other specified requirements in

paragraph (c)(3) of this section), the

substitute distributee shall be treated as

if it sold all of the stock and securities

of the distributing or controlled corporation (or a successor-in-interest) that it

received in the distribution, on the date

that it ceased to meet the requirements.

(3) If the distributing corporation (or

a successor- in-interest) fails to satisfy

the requirement contained in paragraph

(c)(3)(ii)(B) of this section on any testing date during which the agreement to

recognize gain is in effect, such failure

will be treated as if a substantial transformation has occurred on such date.

(4) If either the distributing or controlled corporation (or a successor-ininterest) is acquired in a section 381(a)

exchange and the acquirer is not a

successor- in-interest that satisfies the

requirements of paragraph (c)(3)(vi)(E),

such acquisition will be treated as if a

substantial transformation has occurred

on the date of the acquisition.

(G) A qualified foreign distributee

that sells (or otherwise disposes of) all

of its interest, directly or indirectly, in

the distributing and controlled corporation ceases thereafter to be a qualified

foreign distributee. In addition, where

one qualified foreign distributee owns

all of the stock of another qualified

foreign distributee, and both persons

have identical direct or indirect interests

in the distributing or controlled corporation, the direct or indirect sale (or other

disposition) by one qualified foreign

distributee of all of its interest in the

distributing or controlled corporation

(under paragraph (c)(3)(vii) of this section) will terminate the qualified foreign

distributee status for the second qualified foreign distributee. The principles

of this paragraph (c)(3)(vii) shall generally be applied so that any gain relating

to the same stock of the distributing or

controlled corporation by more than one

person is not taxed more than once

under this paragraph (c)(3)(vii). In any

event, gain recognized pursuant to this

paragraph (c)(3)(vii), on a cumulative

basis, shall not exceed the amount of

gain that the distributing corporation

would have recognized under section

367(e)(1) if its initial distribution of the

stock or securities of the controlled

corporation was fully taxable under

paragraph (b) of this section.

(H) If additional tax is required to be

paid by the distributing corporation (or a

successor-in-interest) for the year of the

distribution, interest must be paid by the

distributing corporation (or the controlled corporation if the distributing

corporation fails to pay the tax due) on

that amount at the rates determined

under section 6621(a)(2) with respect to

the period between the date that was

prescribed for filing the distributing corporation’s original income tax return for

the year of the distribution and the date

on which the additional tax for that year

is paid.

(I) Net operating losses, capital

losses, or credits against tax that were

available in the year of the distribution

and that are unused (whether or not they

have expired since the distribution) at

the time of gain recognition described in

this paragraph (c)(3)(vii) may be applied

(respectively) by the distributing corporation against any gain recognized or tax

owed by reason of this provision, but no

other adjustments shall be made with

respect to any other items of income or

deduction in the year of distribution or

other years.

(viii) Failure to comply. (A) Except

as otherwise provided in paragraph

(c)(3)(viii)(B) of this section, if the

distributing corporation or the controlled

corporation fails to comply in any material respect with the requirements of this

paragraph (c)(3) or with the terms of an

agreement submitted pursuant hereto, or

if the distributing corporation knows or

has reason to know of any failure of

another person to so comply, the distributing corporation shall treat the initial

distribution of the stock or securities of

the controlled corporation as a taxable

exchange in the year of the distribution.

In such event, the period for assessment

of tax shall be extended until three years

after the date on which the Internal

Revenue Service receives actual notice

of such failure to comply.

(B) If a person fails to comply in any

material respect with the requirements

of this paragraph or with the terms of an

agreement submitted pursuant thereto,

the provisions of paragraph (c)(3)(viii)(A) of this section shall not apply if the

person is able to show that such failure

was due to reasonable cause and not

willful neglect, provided that the person

achieves compliance as soon as the

person becomes aware of the failure.

Whether a failure to materially comply

was due to reasonable cause shall be

determined by the district director under

all the facts and circumstances.

(d) Other consequences—(1) Exchange under section 897(e)(1). With

respect to the treatment under section

897(e)(1) of a foreign distributee on the

receipt of stock or securities of a domestic or foreign corporation where the

foreign distributee’s interest in the distributing domestic corporation is a

United States real property interest, see

section 897(e)(1) and the regulations

thereunder.

(2) Dividend treatment under section

1248. With respect to the treatment as a

dividend of a portion of the gain recognized by the domestic corporation on

the distribution of the stock of certain

foreign corporations, see sections

1248(a) and (f) and the regulations

thereunder.

(3) Distribution of stock of a passive

foreign investment company. [Reserved]

(4) Reporting under section 6038B.

Notice shall be required under section

6038B with respect to a distribution

described in this section. See

§ 1.6038B–1T(e).

(e) Examples. The rules of paragraphs

(b), (c), and (d) of this section are

illustrated by the examples below. In all

examples, assume that all foreign companies are treated as corporations for

Federal income tax purposes and are not

treated as fiscally transparent under the

taxation laws of the relevant foreign

country.

Example 1. (i) FC, a Country Z company, owns

all of the outstanding stock of DC1, a domestic

corporation. DC1 owns all of the outstanding

stock of DC2, another domestic corporation. The

fair market value of the DC1 stock is 300x, and

FC has a 100x basis in the DC1 stock. The fair

market value of the DC2 stock is 180x, and DC1

has a 80x basis in the DC2 stock. Neither DC1

nor DC2 is a U.S. real property holding corporation. Country Z does not maintain an income tax

treaty with the United States.

(ii) In a transaction qualifying for nonrecognition under section 355, DC1 distributes all of the

stock of DC2 to FC. After the distribution, the

DC1 stock has a fair market value of 120x.

(iii) Under paragraphs (b)(1) and (2) of this

section, DC1 recognizes gain of 100x, which is

the difference between the fair market value

(180x) and the adjusted basis (80x) of the stock

distributed. Under paragraph (d)(1) of this section

and section 358, FC takes a basis of 40x in the

DC1 stock, and a basis of 60x in the DC2 stock.

Example 2. (i) C, a citizen and resident of

Country F, owns all of the stock of DC1, a

domestic corporation. DC1, in turn, owns all of

the stock of DC2, also a domestic corporation.

The fair market value of the DC1 stock is 500x,

and C has a 100x basis in the DC1 stock. The

DC2 stock has a fair market value of 200x, and

DC1 has a 180x basis in the DC2 stock.

(ii) In a transaction qualifying for nonrecognition under section 355, DC1 distributes to C all of

the stock of DC2. DC1 and DC2 are U.S. real

property holding corporations immediately after

the distribution. After the distribution, the DC1

stock has a fair market value of 300x.

(iii) Under paragraph (c)(1) of this section,

provided that DC1 complies with the reporting

requirements contained in paragraph (c)(1)(ii) of

this section, DC1 does not recognize gain on the

distribution of the DC2 stock because DC1 and

DC2 are U.S. real property holding corporations

immediately after the distribution.

(iv) Under section 897(e) and the regulations

thereunder, C is considered to have exchanged

DC1 stock with a fair market value of 200x and

an adjusted basis of 40x for DC2 stock with a fair

market value of 200x. Because DC2 is a U.S. real

property holding corporation, and its stock is a

U.S. real property interest, C does not recognize

any gain under section 897(e) on the distribution.

C takes a basis of 40x in the DC2 stock, and its

basis in the DC1 stock is reduced to 60x pursuant

to section 358.

Example 3. (i) All of the outstanding common

stock of DC, a domestic corporation that is not a

U.S. real property holding corporation, is regularly

traded on an established securities market located

in the United States. None of the foreign shareholders of DC (directly, indirectly, or constructively) owns more than five percent of the common stock of DC. DC owns all of the stock of

DS, a domestic corporation. The stock of DS has

appreciated in the hands of DC.

(ii) In a transaction qualifying for nonrecognition under section 355, DC distributes all of the

stock of DS to the common shareholders of DC.

(iii) Under paragraph (c)(2) of this section, DC

does not recognize gain on the distribution of the

DS stock to any foreign distributee, provided that

DC complies with the reporting requirements

contained in paragraph (c)(2)(iii) of this section.

Each shareholder’s basis in the DC and DS stock

is determined pursuant to section 358.

Example 4. (i) FC, a company resident in

Country X, owns all of the stock of DC1, a

domestic corporation. DC1, in turn, owns all of

the stock of DC2, a domestic corporation. The fair

market value of the DC1 stock is 1,000x, and FC

has a basis in the DC1 stock of 800x. The DC2

stock has a fair market value of 500x at the time

of the distribution, and DC1 has a 100x basis in

the DC2 stock. Neither DC1 nor DC2 is a U.S.

real property holding corporation. Country X

maintains an income tax treaty with the United

States that includes an information exchange provision.

(ii) In a transaction qualifying for nonrecognition under section 355, DC1 distributes to FC all

of the stock of DC2. Immediately after the

distribution, the DC1 stock has a fair market value

of 500x. Thus, the value of DC1 exceeds 400x,

the amount of the deferred gain on the distribution.

(iii) Under paragraph (c)(3) of this section,

DC1 will not recognize gain on the distribution of

the DC2 stock to (foreign distributee) FC if FC is

a qualified foreign distributee (as described in

paragraph (c)(3)(i)(C) of this section) and DC1

enters into a gain recognition agreement (in which

DC2 agrees to be secondarily liable), as described

in paragraph (c)(3)(iii) of this section, and DC1,

DC2 and FC otherwise comply with all of the

provisions of paragraph (c)(3) of this section.

Pursuant to section 358, FC will take a 400x basis

in the DC2 stock and FC’s basis in the DC1 stock

will be reduced to 400x.

Example 5. (i) Assume the same facts as in

Example 4. In addition, two years after DC1’s

distribution of DC2 stock to FC, FC sells 25

percent of the DC2 stock to Y, an unrelated

corporation. One year later, FC sells an additional

30 percent of its DC2 stock to Z, another

unrelated corporation.

(ii) Under paragraph (c)(3)(vii) of this section,

upon FC’s sale of 25 percent of its DC2 stock,

DC1 is required to file an amended return for the

year in which the DC2 stock was distributed to

FC, and recognize 100x of gain, which represents

25 percent of the gain realized but not recognized

on the distribution.

(iii) Upon FC’s second sale of 30 percent of its

DC1 stock, DC1 is required to file another

amended return for the year of the distribution and

recognize the balance of the deferred gain, or

300x, because such sale results in a substantial

transformation (within the meaning of paragraph

(c)(3)(vii)(B) of this section).

Example 6. (i) Assume the same facts as in

Example 5, except that FC did not sell an

additional 30 percent of its DC2 stock. Instead,

DC2 issued additional stock in a public offering

that reduced FC’s interest in DC2 to less than 50

percent.

(ii) The public offering caused a substantial

transformation because, as a result of the public

offering, the interest of FC in DC2 was reduced to

less than 50 percent of the amount of stock that

FC owned in DC2 immediately after the distribution. Thus, the result is the same as in Example 5.

Example 7. (i) Assume the same facts as in

Example 4 In addition, one year after DC1’s

distribution of DC2 stock to FC, FC transfers all

of the DC2 stock to FS, a company resident in

Country X, in exchange for all of the FS stock, in

a transaction described in section 351.

(ii) FS is described as a transferee distributee

under paragraph (c)(3)(vi)(C) of this section. The

transfer by FC of DC2 stock to FS is a nonrecognition transaction under paragraph (c)(3)(vi) of this

section provided all of the requirements in paragraph (c)(3)(vi)(F) of this section are satisfied. (FS

is counted, together with FC, for purposes of

limiting nonrecognition treatment to up to ten

qualified foreign distributees during the time that

the gain recognition agreement is in effect.) DC1

will not recognize gain under the gain recognition

agreement upon FC’s transfer of the stock of DC2

to FS if DC1 enters into a new agreement,

agreeing to recognize gain if FS sells DC2 stock,

and the provisions of paragraph (c)(3)(vi) of this

section are satisfied. A sale by FC of FS stock

would be treated as a recognition event under

paragraph (c)(3)(vii) because such sale would

constitute an indirect disposition by FC of the

DC2 stock.

Example 8. (i) Pl, an entity treated as a

partnership for Federal income tax purposes, owns

all of the outstanding stock of DC1, a domestic

corporation. DC1 owns all of the outstanding

stock of DC2, another domestic corporation. The

fair market value of the DC1 stock is 900x and Pl

has an 900x basis in the DC1 stock. The fair

market value of the DC2 stock is 600x and DC1

has a 400x basis in the DC2 stock. Neither DC1

nor DC2 is a U.S. real property holding corporation.

(ii) FC, a company resident in country X, and

USP, a U.S. corporation, are the sole partners of

Pl. Under the rules and principles of sections 701

through 761, FC is entitled to a 60 percent, and

USP is entitled to a 40 percent, distributive share

of each item of Pl income and loss. Country X

maintains an income tax treaty with the United

States that includes an information exchange provision.

(iii) In a distribution qualifying for nonrecognition under section 355, DC1 distributes all of the

stock of DC2 to P1. Paragraph (b)(5)(i) of this

section provides that stock owned by a partnership

is considered to be owned proportionately by its

partners. Under paragraph (b)(5)(ii) of this section,

if USP certifies to DC1 that it is a qualified U.S.

person (and DC1 does not know or have reason to

know that the certification is false), no Federal

income tax shall be imposed with respect to the

distribution by DC1 of DC2 to P1, to the extent of

USP’s 40 percent interest in P1.

(iv) Paragraph (c)(3)(i)(D) of this section provides that no foreign distributee may be treated as

a qualified foreign distributee with respect to stock

of the distributing corporation owned through a

partnership, unless the distributing corporation

receives a ruling from the Internal Revenue Service to the contrary. Thus, DC1 may not avoid

recognition of the remaining 60 percent of the

realized gain (relating to the interest of P1 owned

by FC) by entering into a gain recognition agreement pursuant to paragraph (c)(3) of this section,

unless DC1 obtains a ruling to the contrary.

Example 9. (i) DC1, a domestic corporation,

owns all of the stock of DC2, also a domestic

corporation. The stock of DC1 is owned equally

by three shareholders: A, a domestic corporation,

B, a U.S. citizen, and FB, a Country Y company.

(ii) A short time before DC1 adopted a plan to

distribute the stock of DC2 to its shareholders, but

after the board of directors of DC1 began contemplating the distribution, FB formed Newco, a

domestic corporation, and contributed its DC1

stock to Newco in a transaction qualifying for

nonrecognition under section 351. A valid business

purpose existed for FB’s transfer of the DC1 stock

to Newco, but this purpose would have been

fulfilled irrespective of whether FB transferred the

DC1 stock to Newco before the distribution of

DC2, or after the distribution of DC2 (in which

case FB would have transferred the stock of DC1

and DC2 to Newco).

(iii) Pursuant to paragraph (b)(6) of this section,

the District Director may determine that FB

formed Newco for a principal purpose of avoiding

section 367(e)(1). In such case, for Federal income

tax purposes, FB will be treated as having received the stock of DC2 in a section 355 distribution, and then as having transferred the stock to

Newco in a section 351 transaction.

(iv) If B was not a shareholder of DC1 so that

A and FB were equal (50 percent) shareholders,

FB would be treated as a foreign distributee within

the meaning of paragraph (c)(3)(i)(B) of this

section without the application of paragraph (b)(6)

of this section. In such case, DC1 would recognize

50 percent of the gain realized on the distribution

of the DC2 stock, unless FB was a qualified

foreign distributee within the meaning of paragraph (c)(3)(i) of this section and the conditions

under paragraph (c)(3)(ii) of this section were

satisfied.

Example 10. (i) DC1, a domestic corporation,

owns all of the stock of DC2, also a domestic

corporation. The stock of DC1 is owned by FP, a

company resident in Country X. Country X maintains in income tax treaty with the United States

that includes an information exchange provision.

The DC2 stock has a fair market value of 500x at

the time of the distribution, and DC1 has a basis

of 100x in the DC2 stock. The stock of DC1 has a

value of 500x (excluding DC1’s investment in

DC2). Neither DC1 nor DC2 is a U.S. real

property holding corporation.

(ii) FP forms a holding company resident in

Country X, Newco, and transfers 50 percent of its

DC1 stock to Newco in an exchange described in

section 351. Immediately after those transactions,

DC1 distributes all of its DC2 stock to FP in

exchange for FP’s stock of DC1 in a transaction

described in section 355. Thus, after the non pro

rata distribution, FP owns all of the stock of DC2,

and FP also owns all of the stock of Newco,

which, in turn, owns all of the stock of DC1.

(iii) Newco and FP are foreign distributees

(under paragraph (c)(3)(i)(B)(1) of this section)

because they owned stock of DC1 immediately

prior to the distribution. Assuming that all of the

requirements of the gain recognition agreement

exception under paragraph (c)(3) of this section

are satisfied (so that both FP and Newco are

qualified foreign distributees under paragraph

(c)(3)(i)(C) of this section), DC1 will not be

immediately taxable on the 400x gain realized on

the distribution of the stock of DC2. Gain will be

triggered under the gain recognition agreement

under paragraph (c)(3)(vii) of this section if FP

sells stock of Newco (because such sale would be

an indirect disposition by FP of the stock of DC1),

if Newco sells stock of DC1, or if FP sells stock

of DC2.

Example 11. (i) Assume the same facts as in

Example 10, except that Newco is a company

resident of Country Z, and Country Z does not

maintain an income tax treaty with the United

States that includes an information exchange provision.

(ii) DC1 may still enter into a gain recognition

agreement under paragraph (c)(3) of this section.

Both FP and Newco are foreign distributees, but

Newco is not a qualified foreign distributee. Thus,

DC1 must recognize 50 percent, or 200x, of the

400x deferred gain on the distribution of DC2

stock. Such (50 percent) portion equals the percentage of the DC1 stock owned by foreign

distributees that are not qualified foreign

distributees (the 50 percent of the stock owned by

Newco). DC1 may defer 50 percent of the gain,

with respect to the portion of its stock owned by

FP, a qualified foreign distributee, provided that it

meets the requirements of paragraph (c)(3) of this

section.

Example 12. (i) FC, a company resident in

Country X, owns all of the stock of DC1, a

domestic corporation (and has owned DC1 for

many years). Country X maintains an income tax

treaty with the United States that includes an

information exchange provision. DC1, in turn,

owns all of the stock of DC2, a domestic corporation. DC1 has a basis of 200x in the DC2 stock,

and the DC2 stock has a value of 500x. Immediately after the distribution of DC2 described

below, DC1 has a value of more than 300x.

(ii) DC1 distributes all of the stock of DC2 to

FC (a qualified foreign distributee) in a transaction

described under section 355, and satisfies all of

the requirements of paragraph (c)(3) of this section

to qualify for an exception to the general rule of

taxation under section 367(e)(1). Two years after

the initial distribution, FC distributes all of the

stock of DC2 to its sole shareholder, FP, a resident

of Country X, in a transaction described under

section 355.

(iii) Under paragraph (c)(3)(vi)(D) of this section, FP is a substitute distributee with respect to

the DC2 stock. Provided that the requirements of

paragraph (c)(3)(vi)(G) of this section are satisfied, FP replaces FC as a qualified foreign

distributee with respect to the DC2 stock (although

FC is still a qualified foreign distributee with

respect to the DC1 stock). FC is no longer

required to maintain an interest in DC2 for

purposes of determining whether a substantial

transformation occurs. Thus, a sale by FP of the

stock of FC would not trigger gain under paragraph (c)(3)(vii) of this section.

Example 13. (i) DC1, a domestic corporation,

owns all of the stock of DC2, also a domestic

corporation. The stock of DC1 is owned by two

shareholders: FP and FX. FP, a company resident

in Country Z, owns 25 percent of the stock of

DC1. FX, a company resident in Country X, owns

75 percent of the stock of DC1. Country X

maintains an income tax treaty with the United

States that includes an information exchange provision; Country Z does not. The fair market value

of DC2 is 500x and DC1 has a basis of 100x in

the DC2 stock. Immediately after the distribution

described below, DC1 has a value in excess of

400x.

(ii) FP formed FS, a company resident in

Country X, and transferred its 25 percent interest

in DC1 to FS in exchange for all of the stock of

FS in an exchange described in section 351.

Within two years of the exchange, DC1 distributed

all of the stock of DC2 to its shareholders.

(iii) Under paragraph (c)(3) of this section,

DC1 may defer a portion of its gain realized on

the distribution of DC2. DC1 must immediately

recognize 25 percent of the realized gain, or 100x,

because FP, a 25 percent (indirect) shareholder is a

foreign distributee (within the meaning of paragraph (c)(3)(i)(B) of this section), but may not be

treated as a qualified foreign distributee (within

the meaning of paragraph (c)(3)(i)(C) of this

section). DC1 may defer 75 percent of its realized

gain if FX is a qualified foreign distributee and

DC1 enters into a gain recognition agreement (in

which DC2 agrees to be secondarily liable), and

the provisions of paragraph (c)(3) of this section

are otherwise met. DC1 need not include FS as a

qualified foreign distributee because FP and FS

had identical 25 percent ownership interests in

DC1, and DC1 is taxable with respect to such 25

percent interest. Thus, under paragraph

(c)(3)(vii)(G) of this section, a sale by FS of its

DC1 or DC2 stock will not result in an additional

trigger of the gain recognition agreement under

paragraph (c)(3)(vii) of this section.

(iv) If FP was instead a resident of Country X,

DC1 could defer its entire realized gain if both FP

and FS were qualified foreign distributees. In such

case, DC1 would have three qualified foreign

distributees. (DC1 is limited to ten qualified

foreign distributees, including transferee and substitute distributees during the term of the gain

recognition agreement.) If FS sold its entire interest in either DC1 or DC2, DC1 would be required

to amend its Federal income tax return for the

year of the transfer and include 100x in income.

In such case, neither FP nor FS would be

considered a qualified foreign distributee immediately after the sale (and, as a result, FP’s sale of

its FS stock would not trigger additional gain

under paragraph (c)(3)(vii)(G) of this section). The

result would be the same if FP sold all of the

stock of FS (as such sale is an indirect disposition

by FP of all its stock of DC1 and DC2). (In such

case, the sale by FS of its stock of DC1 or DC2

would not trigger additional gain under paragraph

(c)(3)(vii)(G) of this section.)

(f) Effective date. This section shall

be effective with respect to distributions

occurring on or after September 13,

1996. However, taxpayers may elect to

apply the rules of this section with

respect to distributions occurring on or

after December 31, 1995.

Par. 4. Section 1.6038B–1T is

amended by revising the second sentence of paragraph (b)(2)(i) and adding

the text of paragraph (e) to read as

follows:

§ 1.6038B–1T Reporting of transfers

described in section 367 (temporary).

(b) * * *

(2) * * * (i) * * * For special reporting rules applicable to transfers described under section 367(e)(1), see

paragraph (e) of this section; no reporting is required for transfers described in

section 367(e)(2). * * *

(e) * * * (1) In general. If a domestic

corporation (distributing corporation)

makes a distribution described in section

367(e)(1), the distributing corporation

must comply with the reporting requirements under this paragraph (e)(1). Form

926 and other requirements described in

this section need not be met by the

distributing corporation in the case of a

distribution described in section

367(e)(1).

(2) Reporting requirements if transaction is taxable under section 367(e)(1).

If the distribution is taxable to the

distributing corporation under section

367(e)(1) and the regulations thereunder,

the distributing corporation must attach

to its Federal income tax return for the

taxable year that includes the date of the

transfer a statement titled ‘‘Section

367(e)(1) Reporting—Compliance With

Section 6038B’’, signed under penalties

of perjury by an officer of the corporation, disclosing the following information:

(i) A description of the transaction in

which the U.S. distributing corporation

distributed stock or securities of a controlled corporation (whether domestic or

foreign) to one or more foreign

distributees.

(ii) The basis and fair market value

of the stock and securities that were

distributed by the distributing corporation in the transaction.

(3) Reporting requirements if transaction qualifies for an exception to section

367(e)(1). If the distributing corporation

qualifies for an exception under

§ 1.367(e)– 1T(c)(1), the requirements

of section 6038B are satisfied if the

distributing corporation complies with

the reporting requirements contained in

§ 1.367(e)–1T(c)(1)(ii). If the distributing corporation qualifies for an exception under § 1.367(e)–1T(c)(2), the requirements of section 6038B are

satisfied if the distributing corporation

complies with the reporting requirements contained in § 1.367(e)–

1T(c)(2)(iii). If the distributing corporation qualifies for an exception under

§ 1.367(e)–1T(c)(3), the requirements of

section 6038B are satisfied if the distributing corporation complies with the reporting requirements contained in

§ 1.367(e)–1T(c)(3).

PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK

REDUCTION ACT

Par. 5. The authority for citation for

part 602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 6. In § 602.101, paragraph (c) is

amended by removing the entry for

‘‘1.367(e)–1’’ and adding an entry in

numerical order to read as follows:

§ 602.101 OMB Control numbers.

CFR part or section

where identified and

described

Current OMB

control No.

1.367(e)–1T

1545–1487

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved August 7, 1996.

Donald C. Lubick,

Assistant Secretary of the Treasury.

(Filed by the Office of the Federal Register on

August 9, 1996, 12:19 p.m., and published in the

issue of the Federal Register for August 14, 1996,

61 F.R. 42165).

Section 7503.—Time for

Performance of Acts Where Last

Day Falls on Saturday, Sunday, or

Legal Holiday

26 CFR 301.7503–1: Time for performance of acts

whee last day falls on Satufday, Sunday, or legal

holiday.

T.D. 8681

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

Time for Performance of Acts

Where Last Day Falls on Saturday,

Sunday, or Legal Holiday

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains

final regulations relating to the time for

performance of acts by taxpayers and by

the Commissioner, a district director, or

the director of a regional service center,

when the last day for performance falls

on a Saturday, Sunday, or legal holiday.

In particular, these regulations replace

the list of legal holidays with a citation

to the District of Columbia law that is

the source of the list.

EFFECTIVE DATE: These regulations

are effective Wednesday, August 14,

1996.

FOR FURTHER INFORMATION CONTACT: Judith A. Lintz (202) 622–6232

(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On September 25, 1995, the IRS

published in the Federal Register (60

FR 49356) a notice of proposed

rulemaking (IA–36–91 [1995–2 C.B.

470]) relating to the time for performance of acts when the last day for

performance falls on a Saturday, Sunday, or legal holiday. When the last day

for performance of an act by a taxpayer

or an employee or administrator of the

IRS falls on a Saturday, Sunday, or legal

holiday, section 7503 of the Internal

Revenue Code (Code) extends the time

for performing the act. Under the extension, the act must be performed by the

next day that is not a Saturday, Sunday,

or legal holiday. The current regulations

explain and supplement section 7503.

This document contains final regulations

that simplify and update the current

regulations. In particular, the final regulations replace the list of holidays,

which are determined by reference to

the law in the District of Columbia, with

a citation to that law.

The IRS received oral and written

comments on the notice of proposed

rulemaking. No public hearing was held

or requested. After consideration of the

comments, which are addressed below,

the proposed regulations under section

7503 are adopted as published in the

notice.

Explanation of Provisions and Summary

of Comments

In response to the notice of proposed

rulemaking for the regulations under

section 7503, three categories of com-

ments were received. First, there was

some concern that replacing the list of

legal holidays with a citation to the law

in the District of Columbia would mean

the list of holidays would no longer be

accessible. It was suggested that the IRS

annually publish the holidays by announcement or some other method. The

final regulations do not retain the list of

holidays because such a list requires

regulatory revision whenever a change

in the law occurs with respect to the

holidays. However, a tax calendar that

lists the legal holidays is annually made

available through IRS Publication 509.

This free publication can be obtained by

calling the toll free telephone number

1–800–TAX–FORM

(1–800–829–

3676), or by contacting an IRS Forms

Distribution Center.

Second, it was requested that the IRS

address the impact of a federal government shutdown on the time for performance of acts when the last day for

performance is a day when the government is closed. Section 7503 of the

Code is limited to extending the time

for performance of acts when the last

day for performance falls on a Saturday,

Sunday, or legal holiday. Therefore, the

regulations for section 7503 are not

appropriate for clarifying the effect of a

federal government shutdown on the

time allowed for performance of an act.

Third and last, it was requested that

the regulations outline the kinds of acts

to which the extension of time provided

under section 7503 applies. The final

regulations do not include this information. The purpose of the current regulatory project is to replace the list of

holidays and revise other outdated material in the regulations. Outlining the

kinds of acts to which section 7503

applies is not within the scope of the

current project.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in EO 12866.

Therefore, a regulatory assessment is not

required. It also has been determined

that section 553(b) of the Administrative

Procedure Act (5 U.S.C. chapter 5) and

the Regulatory Flexibility Act (5 U.S.C.

chapter 6) do not apply to these regulations, and, therefore, a Regulatory Flexibility Analysis is not required. Pursuant

to section 7805(f) of the Internal Revenue Code, the notice of proposed

rulemaking preceding these regulations

was submitted to the Chief Counsel for

Advocacy of the Small Business Administration for comment on its impact on

small business.

Drafting Information

The principal author of these regulations is Judith A. Lintz, Office of Assistant Chief Counsel (Income Tax & Accounting), Internal Revenue Service.

However, other personnel from the IRS

and Treasury Department participated in

their development.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 301 is

amended as follows:

PART 301—PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for

part 301 continues to read in part as

follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 301.7503–1 is

amended as follows:

1. In the fourth sentence of paragraph

(a), the language ‘‘Thursday, November

22, 1956 (Thanksgiving Day), the suit

will be timely if filed on Friday, November 23, 1956, in the Court of

Claims’’ is removed and the language

‘‘Thursday, November 23, 1995

(Thanksgiving Day), the suit will be

timely if filed on Friday, November 24,

1995, in the Court of Federal Claims’’ is

added in its place.

2. Paragraph (b) is revised as set

forth below.

3. Paragraph (c) is removed.

The revision reads as follows:

§ 301.7503–1 Time for performance of

acts where last day falls on Saturday,

Sunday, or legal holiday.

(b) Legal holidays. For the purpose of

section 7503, the term legal holiday

includes the legal holidays in the District of Columbia as found in D.C. Code

Ann. 28–2701. In the case of any return,

statement, or other document required to

be filed, or any other act required under

the authority of the internal revenue

laws to be performed, at an office of the

Internal Revenue Service, or any other

office or agency of the United States,

located outside the District of Columbia

but within an internal revenue district,

the term legal holiday includes, in addition to the legal holidays in the District

of Columbia, any statewide legal holiday of the state where the act is required to be performed. If the act is

performed in accordance with law at an

office of the Internal Revenue Service

or any other office or agency of the

United States located in a territory or

possession of the United States, the term

legal holiday includes, in addition to the

legal holidays in the District of Columbia, any legal holiday that is recognized

throughout the territory or possession in

which the office is located.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved June 20, 1996.

Donald C. Lubick,

Acting Assistant Secretary

of the Treasury.

(Filed by the Office of the Federal Register on

August 13, 1996, 8:45 a.m., and published in the

issue of the Federal Register for August 14, 1996,

61 F.R. 42178)

Part IV. Items of General Interest

Notice of Proposed Rulemaking

and Notice of Public Hearing

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

Treatment of Section 355

Distributions by U.S. Corporations

to Foreign Persons

REG–209827–96

AGENCY: Internal Revenue Service

(IRS), Treasury.

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

regulations and notice of public hearing.

SUMMARY: In * * * TD 8682, page 4,

this Bulletin, the IRS is issuing temporary regulations revising the final regulations under section 367(e)(1) with respect to section 355 distributions of

stock or securities by domestic corporations to foreign persons. The IRS is also

modifying the temporary regulations under section 6038B to provide that distributions described under section

367(e)(1) are subject to rules under

section 6038B. The text of those temporary regulations also serves as the text

of these proposed regulations. This

document also provides notice of a

public hearing on these proposed regulations.

DATES: Written comments must be received by November 7, 1996. Outlines

of topics to be discussed at the public

hearing scheduled for November 20,

1996, at 10 a.m. must be received by

October 31, 1996.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (INTL 0020–96),

room 5228, Internal Revenue Service,

POB 7604, Ben Franklin Station, Washington, DC 20044. In the alternative,

submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (INTL–0020–96),

Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave. NW., Washington, DC. The public hearing will be

held in the IRS Auditorium, Internal

Revenue Building, 1111 Constitution

Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations,

Philip L. Tretiak at (202) 622–3860;

concerning submissions and the hearing,

Evangelista Lee at (202) 622–7180 (not

toll-free numbers).

The collection of information contained in this notice of proposed

rulemaking has been submitted to the

Office of Management and Budget for

review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3507).

Comments on the collection of information should be sent to the Office of

Management and Budget, Attn: Desk

Officer for the Department of Treasury,

Office of Information and Regulatory

Affairs, Washington, DC 20503, with

copies to the Internal Revenue Service,

Attn: IRS Reports Clearance Officer,

T:FP, Washington, DC 20224. Alternatively, taxpayers may submit comments

electronically via the Internet by selecting the ‘‘Tax Regs’’ option on the IRS

Home Page, or by submitting comments

directly to the IRS Internet site at

http://www.irs.ustreas.gov/prod/tax regs/

comments.html. Comments on the collection of information should be received by October 15, 1996.

An agency may not conduct or sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information displays a valid control number.

The collection of information under

section 367(e)(1) is in § 1.367(e)–

1T(c)(1)(ii), (2)(i)(C) and (3). The temporary regulations provide that in order

for taxpayers to qualify for either the

‘‘U.S. real property holding corporation

exception’’ or the ‘‘publicly traded corporation’’ exception, taxpayers must

comply with the reporting requirements

contained in § 1.367(e)–1T(c)(1)(ii) and

§ 1.367(e)–1T(c)(2)(i)(C), respectively.

The temporary regulations also modify

the reporting requirements under the

‘‘gain recognition agreement’’ exception

(§ 1.367(e)–1T(c)(3)). Under the temporary regulations, the controlled corporation, in addition to the distributing corporation, must sign the gain recognition

agreement (§ 1.367(e)–1T(c)(3)(ii)(F)

and (iii)), extend the statute of limitations accordingly (§ 1.367(e)–1T(c)(3)(ii)(F) and (iv)), and annually report its

distributees to the distributing corporation but not the Service (§ 1.367(e)–

1T(c)(3)(v)(B)). This information is required by the IRS as a condition for a

taxpayer to qualify for an exception to

the general rule of taxation under sec-

tion 367(e)(1), and to avoid the penalties

contained under section 6038B. This

information will be used to determine

whether a taxpayer properly qualifies for

a claimed exception. The respondents

generally will be U.S. corporations,

probably subsidiaries of foreign multinationals, that are either distributing another corporation or being distributed

under section 355, pursuant to a corporate restructuring.

Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any internal revenue law. Generally, tax returns

and tax return information are confidential, as required by 26 U.S.C. 6103.

Estimated total annual reporting burden: 2,124 hours. (This equals the sum

of (i) the prior burden of 1,604 hours,

and (ii) the additional burden of 520

hours contained in the new regulations.)

The estimated annual burden per respondent varies from 1 hour to 8 hours,

depending on individual circumstances,

with an estimated average of 2 hours.

Estimated number of respondents:

462.

Estimated annual frequency of responses: Once (in the case of taxpayers

that qualify for the U.S. real property

holding company exception and the publicly traded company exception). Annually (in the case of taxpayers that

qualify for the gain recognition agreement exception).

Background

The *** T.D. 8682, page 4 in this

Bulletin, amends the Income Tax Regulations (26 CFR part 1) under section

367(e)(1). The temporary regulations under section 367(e)(1) contain rules relating to the distribution of stock or securities under section 355 by a domestic

corporation to a person that is not a

U.S. person.

The text of T.D. 8682 also serves as

the text of these proposed regulations.

The preamble to T.D. 8682 explains the

reasons for the modifications to the final

regulations contained in the temporary

regulations.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a significant regulatory action as defined in EO

1996–37

I.R.B.

12866. Therefore, a regulatory assessment is not required. It is hereby certified that these regulations do not have a

significant impact on a substantial number of small entities. This certification is

based on the fact that these regulations

will primarily affect large multinational

corporations with foreign shareholders.

The regulations do not significantly alter

the reporting or recordkeeping duties of

small entities. Therefore, a Regulatory

Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6)

is not required. Pursuant to section

7805(f) of the Internal Revenue Code,

this notice of proposed rulemaking will

be submitted to the Chief Counsel for

Advocacy of the Small Business Administration for comment on their impact on

small business.

Comments and Notice of Public Hearing

Before these proposed regulations are

adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8)

copies) that are submitted timely to the

Internal Revenue Service. All comments

will be available for public inspection

and copying.

A public hearing has been scheduled

for November 20, 1996, at 10 a.m. in

the IRS Auditorium. Because of access

restrictions, visitors will not be admitted

beyond the building lobby more than 15

minutes before the hearing starts.

The rules of 26 CFR 601.601(a)(3)

apply to the hearing.

Persons that wish to present oral

comments at the hearing must submit

written comments by November 7,

1996, and submit an outline of the

topics to be discussed and the time to be

devoted to each topic (signed original

and eight (8) copies) by October 31,

1996.

A period of 10 minutes will be allotted to each person for making comments.

An agenda showing the scheduling of

the speakers will be prepared after the

deadline for receiving outlines has

passed. Copies of the agenda will be

available free of charge at the hearing.

Drafting Information

The principal author of these proposed

regulations is Philip L. Tretiak of the

Office of Associate Chief Counsel (International), IRS. However, other personnel

from the IRS and Treasury Department

participated in their development.

1996–37

I.R.B.

Proposed Amendments to the Regulations

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

PART 1—INCOME TAXES

Paragraph 1. The authority citation for

part 1 continues to read in part as

follows:

Authority: 26 U.S.C. 7805. * * *

Par. 2. Section 1.367(e)–1 is added to

read as follows:

§ 1.367(e)–1 Treatment of section 355

distributions by U.S. corporations to

foreign persons.

[The text of this proposed section is

the same as the text of § 1.367(e)–1T

published in T.D. 8682, page 4 of this

Bulletin].

Par. 3. Section 1.6038B–1, as proposed on May 16, 1986, at 51 FR

17990, is amended by revising the second sentence of paragraph (b)(2)(i) and

adding the text of paragraph (e) to read

as follows:

§ 1.6038B–1 Reporting of transfers described in section 367.

[The text of proposed paragraphs

(b)(2)(i) and (e) are the same as the text

of § 1.6038B–1T(b)(2)(i) and (e) published in T.D. 8682, page 4 of this

Bulletin].

Margaret Milner Richardson,

Commissioner of Internal Revenue.

(Filed by the Office of the Federal Register on

August 9, 1996, 12:19 p.m., and published in the

issue of the Federal Register for August 14, 1996,

61 F.R. 42217)

Excise Tax Changes

Announcement 96–85

The Small Business Job Protection

Act of 1996, which was signed into law

on August 20, 1996, makes the following changes to Federal excise taxes.

These changes will be reflected on Form

720, Quarterly Federal Excise Tax Return; Form 4136, Credit for Federal Tax

Paid on Fuels; and Form 8849, Refund

of Excise Taxes.

I. TAX ON AVIATION GASOLINE

Tax is imposed on aviation gasoline

(IRS No. 14) at a rate of 19.3 cents per

gallon beginning on August 27, 1996,

and ending December 31, 1996.

Also effective August 27, 1996, the

tax on aviation gasoline is imposed in

the same manner as on other gasoline,

rather than partly at the retail level. The

former retail level tax of one cent per

gallon is repealed. Thus, a tax of 19.3

cents per gallon will be imposed on the

removal of aviation gasoline from a

terminal at the terminal rack.

II. TAX ON AVIATION FUEL

(OTHER THAN GASOLINE)

Tax is imposed on aviation fuel (other

than gasoline) (IRS No. 69) at a rate of

21.8 cents per gallon beginning on August 27, 1996, and ending December 31,

1996.

III. FLOOR STOCKS TAX ON

AVIATION FUEL (OTHER THAN

GASOLINE)

A floor stocks tax is imposed on any

person that holds previously-taxed aviation fuel (other than gasoline) on the

first moment of August 27, 1996. The

rate of the floor stocks tax is 17.5 cents

per gallon. The floor stocks tax payment

is due by March 1, 1997.

The floor stocks tax does not apply to

aviation fuel held for use in foreign

trade or in military aircraft. Also, the

floor stocks tax does not apply if the

aggregate amount of aviation fuel held

by a person or related group of persons

on August 27, 1996, is not more than

2,000 gallons. Aviation fuel held for an

exempt use is not taken into account for

purposes of calculating the 2,000 gallons.

IV. DIESEL FUEL FOR

MOTORBOATS

Between August 27, 1996, and December 31, 1997, the use of diesel fuel

in a motorboat is exempt from tax and

the penalty for misuse of dyed diesel

fuel does not apply to use in a motorboat. Thus, you may now use either

dyed diesel fuel (which has not been

previously taxed) or undyed diesel fuel

(on which tax has been paid) in a

motorboat. If you use dyed fuel, no

penalty will be imposed on that use. If

you use undyed diesel fuel, you may

claim a credit or refund of the tax paid

on that fuel. Only the purchaser may

make this claim. The seller of the fuel is

not eligible for a credit or refund.

V. GASOHOL BLENDERS

The gasohol blender credit (or refund)

under section 6427(f) has been reinstated, retroactive to October 1, 1995.

Claims for gasoline used to produce

gasohol that was sold or used before

April 1, 1996, must be taken as an

income tax credit on Form 4136.

For sales or uses after March 31,

1996, you may use Form 8849 (Rev.

April 1996). Print the rate and amount

in the shaded area of line 10. The rates

per gallon of gasoline used in blending

are:

Percentage of alcohol

in the gasohol

Rate

At least 10%

$.03967

At least 7.7% alcohol but less

.02979

than 10%

At least 5.7% alcohol but less

.02158

than 7.7%

Write ‘‘GASOHOL CLAIM’’ at the

top of Form 8849 and on the envelope.

Mail your claim to the service center

using the special addresses under Where

to File on page 1 of the Instructions for

Form 8849. Note that refund claims for

sales or uses between April 1, 1996, and

June 30, 1996, must be filed by September 30, 1996.

VI. AIR TRANSPORTATION TAXES

The following taxes apply to amounts

paid on or after August 27, 1996, for

transportation beginning on or after August 27, 1996, and before January 1,

1997. No tax applies to amounts paid

before August 27, 1996, and, unless

extended by future legislation, these

taxes will not apply to amounts paid for

transportation beginning after December

31, 1996.

IRS

Tax

No.

Tax

rate

Transportation of

10%

persons by air

Transportation of

6.25%

property by air

Use of international air $6.00

travel facilities

The exemption for emergency medical transportation now includes flights

by certain fixed-wing aircraft. Also, the

exemption relating to affiliated corporations applies on a flight-by-flight basis.

VII. DIESEL-POWERED HIGHWAY

VEHICLE CREDIT

Effective for vehicles bought after

August 20, 1996, the diesel-powered

highway vehicle credit is repealed. For

vehicles purchased between January 1,

1996, and August 20, 1996, the credit is

claimed on Form 4136, Part I.

VIII. OZONE-DEPLETING

CHEMICALS (ODCs)

Need for Correction

Effective August 27, 1996, no tax is

imposed on ODCs (IRS No. 98) used as

propellants in metered-dose inhalers.

As published, the final regulations

(TD 8664) contain errors which may

prove to be misleading and are in need

of clarification.

IX. LUXURY TAX

Correction of Publication

Effective for sales after August 27,

1996, the luxury tax on passenger automobiles (IRS No. 92) decreases from

10% to 9% and applies to the amount

by which the sales price exceeds

$34,000. The base amount for 1996

($34,000) has not changed. For example,

for a sale after August 27, 1996, if the

sales price of the automobile is $35,000,

the tax is $90 (9% of $1,000). This tax

will be phased down one percentage

point each year through the year 2002.

Accordingly, the publication of final

regulations (TD 8664), which are the

subject of FR Doc. 96–9456 is corrected

as follows:

1. On page 17572, column 3, in the

preamble following the paragraph heading ‘‘Paperwork Reduction Act’’, the

first line of the column, the language

‘‘Washington DC 20224, and the Office

of’’ is corrected to read ‘‘Washington,

DC 20224, and the Office of’’.

2. On page 17573, column 1, in the

preamble following the paragraph heading ‘‘B. Comments on Canadian Reporting Provisions’’, the third paragraph,

line 5, the language ‘‘the Form 1042–S

to be the transmittal’’ is corrected to

read ‘‘the Form 1042 to be the transmittal’’.

X. HOW TO GET FORMS

IRS Forms can be obtained by calling

1–800–829–3676 or downloaded from

the IRS Internet Home Page at ftp://

irs.ustreas.gov.

Information Reporting and Backup

Withholding; Correction

Announcement 96–86

AGENCY: Internal Revenue Service,

Treasury.

ACTION: Correction to final regulations.

SUMMARY: This document contains

corrections to final regulations (TD

8664 [1996–20 I.R.B. 7]) which were

published in the Federal Register on

Monday, April 22, 1996 (61 FR 17572).

The final regulations provide rules regarding the reporting on Form 1042–S

of certain bank deposit interest paid

with respect to a United States bank

account to an individual who is a nonresident alien of the United States and a

resident of Canada.

EFFECTIVE DATE: January 1, 1997.

Part 1 [Corrected]

3. On page 17573, column 2, in the

authority citation, line 2, the language

‘‘Sections 1.6049–4 also issued under

26’’ is corrected to read ‘‘Section

1.6049–4 also issued under 26’’.

§ 1.6049–6 [Corrected]

4. On page 17574, column 1,

§ 1.6049–6(e)(4), the fourth line from

the bottom of the paragraph, the language ‘‘information on the Form is

being’’ is corrected to read ‘‘information

on the form is being’’.

Cynthia E. Grigsby,

Chief, Regulations Unit,

Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on

August 6, 1996, 8:45 a.m., and published in the

issue of the Federal Register for August 7, 1996,

61 F.R. 40993)

FOR FURTHER INFORMATION CONTACT: Teresa Burridge Hughes, (202)

622–3880 (not a toll-free number).

Deletions from Cumulative List of

Organizations Contributions to

Which Are Deductible Under

Section 170 of the Code

SUPPLEMENTARY INFORMATION:

Announcement 96–87

Background

The names of organizations that no

longer qualify as organizations described

in section 170(c)(2) of the Internal Revenue Code of 1986 are listed below.

Generally, the Service will not disallow deductions for contributions made

The final regulations which are the

subject of these corrections are under

sections 3406 and 6049 of the Internal

Revenue Code.

1996–37

I.R.B.

to a listed organization on or before the

date of announcement in the Internal

Revenue Bulletin that an organization

no longer qualifies. However, the Service is not precluded from disallowing a

deduction for any contributions made

after an organization ceases to qualify

under section 170(c)(2) if the organization has not timely filed a suit for

declaratory judgment under section 7428

and if the contributor (1) had knowledge

of the revocation of the ruling or determination letter, (2) was aware that such

revocation was imminent, or (3) was in

part responsible for or was aware of the

activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely

filed, contributions from individuals and

organizations described in section

170(c)(2) that are otherwise allowable

will continue to be deductible. Protection under section 7428(c) would begin

on September 9, 1996, and would end

on the date the court first determines

that the organization is not described in

section 170(c)(2) as more particularly

set forth in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor.

This benefit is not extended to any

individual who was responsible, in

whole or in part, for the acts or omissions of the organization that were the

basis for revocation.

Gordon Jensen Health Care Association,

Inc. Atlanta, GA

National Assistance Bureau, Inc. Atlanta,

Definition of Structure; Hearing

2615, Internal Revenue Building, 1111

Constitution Avenue NW, Washington,

DC.

FOR FURTHER INFORMATION CONTACT: Christina Vasquez of the Regulations Unit, Assistant Chief Counsel

(Corporate), (202) 622–7180 (not a tollfree number).

SUPPLEMENTARY INFORMATION:

A notice of proposed rulemaking and

notice of public hearing appearing in the

Federal Register on Thursday, June 20,

1996 (61 FR 31473 [PS–39–93,

1996–34 I.R.B. 27]), announced that a

public hearing on proposed regulations

relating to deductions available upon

demolition of a building will be held on

Wednesday, October 9, 1996, beginning

at 10:00 a.m. in the Commissionser’s

Conference Room, 1111 Constitution

Avenue NW, Washington, DC and that

request to speak and outlines of oral

comments should be received by

Wednesday, September 18, 1996.

The location of the pubic hearing has

changed. The hearing is scheduled for

Wednesday, October 9, 1996, beginning

at 10:00 a.m. in room 2615, Internal

Revenue Building, 1111 Constitution

Avenue NW, Washington, DC. The requests to speak and outlines of oral

comments must have been received by

Wednesday, September 18, 1996. Because of controlled access restrictions,

attenders are not admitted beyond the

lobby of the Internal Revenue Building

until 9:45 a.m.

The Service will prepare an agenda

showing the scheduling of the speakers

after the outlines are received from the

persons testifying and make copies

available free of charge at the hearing.

Announcement 96–89

AGENCY: Internal Revenue Service,

Treasury.

ACTION: Change of location of public

hearing.

SUMMARY: This document changes the

location of the public hearing on proposed regulations relating to deductions

available upon demolition of a building.

DATE: The public hearing is being held

on Wednesday, October 9, 1996, beginning at 10:00 a.m.

ADDRESSES: The public hearing originally scheduled in the Commissioner’s

Conference Room, Internal Revenue

Building, 1111 Constitution Avenue NW,

Washington, DC is changed to Room

1996–37

I.R.B.

Michael L. Slaughter,

Acting Chief, Regulations Unit,

Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on

August 23, 1996, 8:45 a.m., and published in the

issue of the Federal Register for August 26, 1996,

61 F.R. 43695)

8644 [1996–7 I.R.B. 16]) which were

published in the Federal Register for

Wednesday, December 27, 1995 (60 FR

66898), as corrected on June 12, 1996

(61 FR 29653). The final regulations

relate to generation-skipping transfer

tax.

EFFECTIVE DATE: December 27,

1995.

FOR FURTHER INFORMATION CONTACT: Jim Hogan (202) 622–3090 (not

a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are subject

to these corrections are under chapter 13

of the Internal Revenue Code.

Need for Correction

As published, TD 8644 as corrected,

contains errors that may prove to be

misleading and are in need of clarification.

Accordingly, 26 CFR part 26 is corrected by making the following correcting amendments:

PART 26—GENERATION-SKIPPING

TRANSFER TAX REGULATIONS UNDER THE TAX REFORM ACT OF

1986

Paragraph 1. The authority citation for

part 26 continues to read in part as

follows:

Authority: 26 U.S.C. 7805 * * *

§ 26.2601–1 [Corrected]

Par. 2. In § 26.2601–1, paragraph

(b)(3)(iii)(B) is amended by revising

‘‘(b)(3)(iii)(A), (B), (C)’’ to read

‘‘(b)(3)(iii)(A)(1), (2), (3)’’.

§ 26.2642–5 [Corrected]

Par. 3. Section 26.2642–5 is amended

by removing the punctuation ‘‘;’’ following the word ‘‘ratio’’ in the first sentence of paragraph (b)(1).

Generation-Skipping Transfer Tax;

Correction

§ 26.2654–1 [Corrected]

Announcement 96–90

Par. 4. Section 26.2654–1 is amended

by revising paragraph (a)(1)(ii)(B) to

read as follows:

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Correcting amendment.

SUMMARY: This document contains

corrections to final regulations (T.D.

§ 26.2654–1 Certain trusts treated as

separate trusts.

(a) * * * (1) * * *

(ii) * * *

(B) If the pecuniary amount is payable in kind on the basis of value other

than the date of distribution value of the

assets, the trustee is required to allocate

assets to the pecuniary payment in a

manner that fairly reflects net appreciation or depreciation in the value of the

assets in the fund available to pay the

pecuniary amount measured from the

valuation date to the date of payment.

Michael L. Slaughter,

Acting Chief, Regulations Unit,

Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on

August 23, 1996, 8:45 a.m., and published in the

issue of the Federal Register for August 26, 1996,

61 F.R. 43656)

Foundations Status of Certain

Organizations

Announcement 96–91

The following organizations have

failed to establish or have been unable

to maintain their status as public charities or as operating foundations. Accordingly, grantors and contributors may not,

after this date, rely on previous rulings

or designations in the Cumulative List

of Organizations (Publication 78), or on

the presumption arising from the filing

of notices under section 508(b) of the

Code. This listing does not indicate that

the organizations have lost their status

as organizations described in section

501(c)(3), eligible to receive deductible

contributions.

Former Public Charities. The following organizations (which have been

treated as organizations that are not

private foundations described in section

509(a) of the Code) are now classified

as private foundations:

Ada Village, Benton Harbor, MI

Allen County Foster Parent Association,

Lima, OH

Benny Brink Evangelistic Association,

Inc., Littleton, CO

Blue Ribbon Committee on Education,

Attalla, AL

B.M.P.C. & Associates, Rosenberg, TX

Bridgforth Foundation, Grosse Pointe

Shores, MI

Browns Mount Association, Inc.,

Macon, GA

Carrolton Farmers Branch Insurance

Agents Assoc., Carrolton, TX

Center for Economic Development, Inc.,

Cary, NC

Chatham Volunteer Firemen’s

Association, Spencer, OH

Childrens Covenant Foundation, Inc.,

San Antonio, TX

Cincinnati Womens Health Project,

Cincinnati, OH

Circle City Family Child Care

Association, Inc., Indianapolis, IN

City of Lagrange Foundation, Inc.,

Lagrange, KY

Classic One Fifty, Chattanooga, TN

Community Care Center, Inc., Dayton,

Cumberland Homestead Tower

Association, Inc., Crossville, TN

Development Services International,

Inc., Warrenton, VA

Dialogue on Diversity, Inc., Washington,

Don’t Waste the United States, Inc.,

Takoma Park, MD

Downtown Petersburg, Inc., Petersburg,

Drinker Society for Critical Care in

Phila., Philadelphia, PA

Drug Awareness Foundation, Pontiac,

DVV Leukemia Fund, Wayne, NJ

Eagle Clan Shawnee Tribe of Ohio, Inc.,

Rayland, OH

Ekklesia Incorporated, Leonard, MI

Enviro-Rite, Inc., Corydon, IN

Family Outreach Central, Inc., Houston,

Forest Park School Foundation, Crystal

Falls, MI

Foundation for Emergency Medical

Research, Phoenix, AZ

Freedom Link, Ann Arbor, MI

Free Spirit Enterprise Association,

Chicago, IL

Greater Latrobe Caring Program,

Latrobe, PA

Guiding Star Ministries, Inc.,

Philadelphia, PA

Haad Support Groups, Roanoke, VA

Hand of the Master Ministries, Inc.,

Ephrata, PA

Hanna Ministries, Inc., Columbus, OH

Hardyston Creative Playground, Inc.,

Franklin, NJ

Harford Leadership Association, Inc.,

Bel Air, MD

Harvest Fellowship, Upper Marlboro,

Harvest International, Inc., Big Stone

Gap, VA

Health Start, Inc., Wilkinsburg, PA

Hearts for Croatia-SRCE ZA

Hrvatsku-Inc., Cherry Hill, NJ

Heros Touch, Washington, DC

High Bridge Athletic Association, Inc.,

High Bridge, NJ

Historic Morristown, Inc., Morristown,

Historic Riverton Nomination

Committee, Inc., Riverton, NJ

Hoboken Creative Alliance, Inc.,

Hoboken, NJ

Hot Line React Team 4086, Inc.,

Hagerstown, MD

Housing and Business Development

Corporation of Philadelphia,

Philadelphia, PA

Housing and Neighborhood Resources,

Washington, DC

Human Strategies, Inc., Millersburg, OH

Hyattsville Mt. Rainier Brentwood Boys

and Girls Club Incorporated, Mt.

Rainier, MD

IAC-Enterprises Nehemiah Development

Inc., Columbia, MD

I.H.C. Professional Services, Inc., Salt

Lake City, UT

Indiana Soviet Trade Consortium Inc.,

Indianapolis, IN

Inspirational Media, Inc., Mentor, OH

Institute for Cooperation on Sec

Economics and the Environment,

Washington, DC

Institute for Latin American Unity,

Washington, DC

Institute for Social and Educational

Research, Inc., Tuscaloosa, AL

Institute for the Harmonious

Development of Man, Silver Spring,

Inter-American Management Education

Foundation, Washington, DC

Interface Group Homes, Inc., Willow

Grove, PA

International Biotest Foundation, Troy,

International Community School of

Abidjan Inc., Princeton, NJ

Izetta Cutrell Mae Zimmerman

Foundation, Herrin, IL

Jane Silva House Inc., Fort Wayne, IN

Jesus Unlimited J.U.L., Tulsa, OK

Knox County Child Abuse Prevention

Council, Inc., Vincennes, IN

Marine Corps Coordinating Council

Louisville, Inc., Louisville, KY

Marshall Recycling Partnership, Inc.,

Marshall, TX

Masters of Business Administration

Association MBAA, Bloomington, IN

Mercy Assoc., Little Rock, AR

Miami County Child Abuse Prevention

Council Inc., Peru, IN

Minority Business Owners of

Washtenaw County, Ypsilanti, MI

National Association of Minority

Contractors, Atlanta, GA

National Commission on Rape

Prevention, Mesa, AZ

1996–37

I.R.B.

North American Plant Preservation

Council, Inc., Renick, WV

Northeastern Indiana Allen County

Medical Response Team, Inc., Ft.

Wayne, IN

Parents Helping Parents of Wyoming,

Inc., Buffalo, WY

Preston Plantation, Inc., Bedford, KY

PRIDE Community Center, Flint, MI

P R I D E Corporation, Ft. Wayne, IN

Ray and Rosetta Doerhoff Scholarship

Trust, St. Elizabeth, MO

Shelby County Child Abuse Prevention

Council, Inc., Shelbyville, IN

Sherman County Crime Stoppers, Inc.,

Stratford, TX

1996–37

I.R.B.

Skillful Child Care Inc., Lansing, MI

Stress Research Foundation, Dallas, TX

Summer Enrichment Program for

Handicapped Children of Trumbull

County, Warren, OH

Teamnester Retiree Housing of

Birmingham Inc., Birmingham, AL

Tell It To Jesus Ministries Inc., Monroe,

Tennessee Association Education

Foundation, Nashville, TN

Texas Literacy Foundation, San Antonio,

Williams Community Living Inc.,

Detroit, MI

If an organization listed above submits information that warrants the renewal of its classification as a public

charity or as a private operating foundation, the Internal Revenue Service will

issue a ruling or determination letter

with the revised classification as to

foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided

in section 1.509(a)–7 of the Income Tax

Regulations. It is not the practice of the

Service to announce such revised classification of foundation status in the Internal Revenue Bulletin.

Numerical Finding List1

Bulletins 1996–27 through 1996–36

Announcements:

96–61, 1996–27 I.R.B. 72

96–62, 1996–28 I.R.B. 55

96–63, 1996–29 I.R.B. 18

96–64, 1996–29 I.R.B. 18

96–65, 1996–29 I.R.B. 18

96–66, 1996–29 I.R.B. 19

96–67, 1996–30 I.R.B. 27

96–68, 1996–31 I.R.B. 45

96–69, 1996–32 I.R.B. 38

96–70, 1996–32 I.R.B. 40

96–71, 1996–33 I.R.B. 16

96–72, 1996–33 I.R.B. 16

96–73, 1996–33 I.R.B. 18

96–74, 1996–33 I.R.B. 19

96–75, 1996–34 I.R.B. 29

96–76, 1996–34 I.R.B. 29

96–77, 1996–35 I.R.B. 15

96–78, 1996–35 I.R.B. 15

96–79, 1996–35 I.R.B. 15

96–80, 1996–35 I.R.B. 16

96–81, 1996–36 I.R.B. 13

96–82, 1996–36 I.R.B. 14

96–83, 1996–36 I.R.B. 14

96–84, 1996–36 I.R.B. 14

Court Decisions:

2058, 1996–34 I.R.B. 13

2059, 1996–34 I.R.B. 10

2060, 1996–34 I.R.B. 5

Revenue Procedures—Continued

96–39, 1996–33 I.R.B. 11

96–40, 1996–32 I.R.B. 8

96–41, 1996–32 I.R.B. 9

96–42, 1996–32 I.R.B. 14

96–43, 1996–35 I.R.B. 6

96–44, 1996–35 I.R.B. 7

96–45, 1996–35 I.R.B. 12

Revenue Rulings:

96–33, 1996–27 I.R.B. 4

96–34, 1996–28 I.R.B. 4

96–35, 1996–31 I.R.B. 4

96–36, 1996–30 I.R.B. 6

96–37, 1996–32 I.R.B. 4

96–38, 1996–33 I.R.B. 4

96–39, 1996–34 I.R.B. 4

96–42, 1996–35 I.R.B. 4

96–43, 1996–36 I.R.B. 4

Tax Conventions:

1996–28 I.R.B. 36

1996–36 I.R.B. 6

Treasury Decisions:

8673, 1996–27 I.R.B. 4

8674, 1996–28 I.R.B. 7

8675, 1996–29 I.R.B. 5

8676, 1996–30 I.R.B. 4

8677, 1996–30 I.R.B. 7

8678, 1996–31 I.R.B. 11

8679, 1996–31 I.R.B. 4

8680, 1996–33 I.R.B. 5

Notices:

96–36, 1996–27 I.R.B. 11

96–37, 1996–31 I.R.B. 29

96–38, 1996–31 I.R.B. 29

96–39, 1996–32 I.R.B. 8

96–40, 1996–33 I.R.B. 11

96–41, 1996–35 I.R.B. 6

96–42, 1996–35 I.R.B. 6

96–43, 1996–36 I.R.B. 7

96–44, 1996–36 I.R.B. 7

Proposed Regulations:

CO–9–96, 1996–34 I.R.B. 20

CO–24–96, 1996–30 I.R.B. 22

CO–25–96, 1996–31 I.R.B. 30

CO–26–96, 1996–31 I.R.B. 31

FI–28–96, 1996–31, I.R.B. 33

FI–32–95, 1996–34 I.R.B. 21

FI–48–95, 1996–31 I.R.B. 36

FI–59–94, 1996–30 I.R.B. 23

GL–7–96, 1996–33 I.R.B. 13

IA–26–94, 1996–30 I.R.B. 24

IA–29–96, 1996–33 I.R.B. 14

IA–292–84, 1996–28 I.R.B. 38

INTL–4–95, 1996–36 I.R.B. 8

PS–22–96, 1996–33 I.R.B. 15

PS–39–93, 1996–34 I.R.B. 27

Public Laws:

104–117, 1996–34 I.R.B. 19

Railroad Retirement Quarterly Rate

1996–29 I.R.B. 14

Revenue Procedures:

96–36, 1996–27 I.R.B. 11

96–37, 1996–29 I.R.B. 16

A cumulative list of all Revenue Rulings, Revenue Procedures, Treasury Decisions, etc., published in Internal Revenue Bulletins 1996–1

through 1996–26 will be found in Internal Revenue Bulletin 1996–27, dated July 1, 1996.

Finding List of Current Action on

Previously Published Items1

Bulletins 1996–27 through 1996–36

*Denotes entry since last publication

Revenue Procedures:

80–27

Modified by

96–40, 1996–32 I.R.B. 8

87–32

Modified by

TD 8680, 1996–33 I.R.B. 5

92–20

Modified by

TD 8680, 1996–33 I.R.B. 5

95–29

Superseded by

96–36, 1996–27 I.R.B. 11

95–29A

Superseded by

96–36, 1996–27 I.R.B. 11

95–30

Superseded by

96–42, 1996–32 I.R.B. 14

A cumulative finding list for previously published

items mentioned in Internal Revenue Bulletins

1996–1 through 1996–26 will be found in Internal

Revenue Bulletin 1996–27, dated July 1, 1996.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.