In this issue of the Bulletin, the IRS and the Treasury Department are issuing temporary regulations that eliminate one of two exceptions to the coordination rule between asset transfers and indirect stock transfers for certain outbound asset reorganizations. The temporary regulations also modify the exception to the coordination rule for certain outbound exchanges so that it is consistent with the remaining asset reorganization exception. In addition, the regulations modify, in various contexts, procedures for obtaining reasonable cause relief. Finally, the temporary regulations implement certain changes with respect to transfers of stock or securities by a domestic corporation to a foreign corporation in a section 361 exchange. The regulations primarily affect domestic corporations that transfer property to foreign corporations in certain outbound nonrecognition exchanges. The text of the temporary regulations published in this issue of the Bulletin also serves as the text of these proposed regulations.
Send submissions to: CC:PA:LPD:PR (REG-132702-10), room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-132702-10), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-132702-10).
Concerning the proposed regulations, Robert B. Williams, Jr., (202) 622-3860; concerning submissions of comments or requests for a public hearing, Oluwafunmilayo Taylor, (202) 622-7180 (not toll-free numbers).
Temporary regulations in the Rules and Regulations section of this issue of the Federal Register amend the Income Tax Regulations (26 CFR part 1) under section 367 of the Internal Revenue Code (Code). The text of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the amendments.
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It is hereby certified that the collections of information contained in these regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. These regulations primarily will affect United States persons that are large corporations engaged in corporate transactions among their controlled corporations. Thus, the number of affected small entities—in whichever of the three categories defined in the Regulatory Flexibility Act (small businesses, small organizations, and small governmental jurisdictions)—will not be substantial. The IRS and the Treasury Department estimate that small organizations and small governmental jurisdictions are likely to be affected only insofar as they transfer the stock of a controlled corporation to a related corporation. While a certain number of small entities may engage in such transactions, the IRS and the Treasury Department do not anticipate the number to be substantial. Pursuant to section 7805(f) of the Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under “Addresses” heading. The IRS and the Treasury Department request comments on all aspects of the proposed rules. All comments will be available at www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
Paragraph 1. The authority citation for part 1 continues to read as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.367(a)-3 is amended by:
1. Revising paragraphs (d)(2)(vi)(B), (d)(3) Example 6B, Example 6C, and Example 9.
2. Revising paragraph (e).
3.Adding paragraphs (g)(1)(vii)(A) and (g)(1)(ix) .
The revisions and additions to read as follows:
* * * * *
(d) * * *
(2) * * *
(vi) * * *
(B) [The text of proposed §1.367(a)-3(d)(2)(vi)(B) is the same as the text of §1.367(a)-3T(d)(2)(vi)(B) published elsewhere in this issue of the Bulletin.
* * * * *
(3) * * *
Example 6B. [The text of proposed §1.367(a)-3(d)(3) Example 6B is the same as the text of §1.367(a)-3T(d)(3) Example 6B published elsewhere in this issue of the Bulletin.
Example 6C. [The text of proposed §1.367(a)-3(d)(3) Example 6C is the same as the text of §1.367(a)-3T(d)(3) Example 6C published elsewhere in this issue of the Bulletin.
* * * * *
Example 9. [The text of proposed §1.367(a)-3(d)(3) Example 9 is the same as the text of §1.367(a)-3T(d)(3) Example 9 published elsewhere in this issue of the Bulletin.
* * * * *
(e) [The text of proposed §1.367(a)-3(e) is the same as the text of §1.367(a)-3T(e) published elsewhere in this issue of the Bulletin.
* * * * *
(g)* * *(1)* * *
(vii)(A) [The text of proposed §1.367(a)-3(a)(1)(vii)(A) is the same as the text of §1.367(a)-3T(g)(1)(vii)(A) published elsewhere in this issue of the Bulletin.
* * * * *
(ix) [The text of proposed §1.367(a)-3(g)(1)(ix) is the same as the text of §1.367(a)-3T(g)(1)(ix) published elsewhere in this issue of the Bulletin.
* * * * *
Par. 3. Section 1.367(a)-6 is amended by revising paragraph (e)(4) to read as follows:
* * * * *
(e) * * *
(4) * * * [The text of the final sentence of proposed §1.367(a)-6(e)(4) is the same as the text of the final sentence of §1.367(a)-6T(e)(4) published elsewhere in this issue of the Bulletin.
Par. 4. Section 1.367(a)-7 is amended by revising paragraph (e)(2) to read as follows:
* * * * *
(e) * * *
(2) [The text of proposed §1.367(a)-7(e)(2) is the same as the text of §1.367(a)-7T(e)(2) published elsewhere in this issue of the Bulletin.
* * * * *
Par. 5. Section 1.1248(f)-3 is amended by revising paragraph (a) to read as follows:
(a) [The text of proposed §1.1248(f)-3 is the same as the text of proposed §1.1248(f)-3T published elsewhere in this issue of the Bulletin.
* * * * *
Par. 6. Section 1.6038B-1 is amended by revising paragraph (f)(3) to read as follows:
* * * * *
(f) * * *
(3) [The text of proposed §1.6038B-1(f)(3) is the same as the text of §1.6038B-1T(f)(3) published elsewhere in this issue of the Bulletin.
* * * * *
Steven T. Miller,The Internal Revenue Bulletin is produced and published by the Internal Revenue Service and contains IRS pronouncements affecting tax analysis under the Code and the Regulations, including but not limited to Revenue Procedures, Revenue Rulings, Notices and Announcements. Access the IRS site at https://www.irs.gov/help/irsgov-accessibility for information concerning accessibility of IRS materials. While every effort has been made to ensure that the IRB database files available through the TouchTax application are accurate, those using TouchTax for legal research should verify their results against the printed versions of the IRBs available from the IRS.