[Federal Register Volume 63, Number 58 (Thursday, March 26, 1998)]
[Proposed Rules]
[Pages 14669-14673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7890]
[[Page 14669]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
[REG-104537-97]
RIN 1545-AV11
Guidance Under Subpart F Relating to Partnerships and Branches
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking, notice of proposed rulemaking by
cross-reference to temporary regulations and notice of public hearing.
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SUMMARY: The IRS and Treasury Department are issuing temporary
regulations, published elsewhere in this issue of the Federal Register,
relating to the treatment under subpart F of certain branches of a
controlled foreign corporation (CFC) that are treated as separate
entities for foreign tax purposes. The text of the temporary
regulations also serves as the text of these proposed regulations. In
addition, this document contains proposed regulations relating to the
treatment of a CFC's distributive share of partnership income. This
document also provides notice of a public hearing on these proposed
regulations.
DATES: Written comments must be received by June 24, 1998. Outlines of
oral comments to be discussed at the public hearing scheduled for July
15, 1998, must be received by June 24, 1998.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-104537-97), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington DC 20044. Submissions may be hand delivered between the
hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:T:R (REG-104537-97),
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue,
NW., Washington DC. 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. The public hearing will be held in room 2615, Internal
Revenue Building, 1111 Constitution Avenue NW., Washington, DC 20224.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Valerie
Mark, (202) 622-3840; concerning submissions and the hearing, Mike
Slaughter (202) 622-7190 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
I. In General
In these proposed regulations, and in temporary regulations
published elsewhere in this issue of the Federal Register, the Treasury
and IRS set forth a framework for dealing with the issues posed by the
use of certain entities which are regarded as fiscally transparent for
the purposes of U.S. tax law, with regard to the application of subpart
F of the Internal Revenue Code.
Subpart F was enacted by Congress to limit the deferral of U.S.
taxation of certain income earned outside the United States by foreign
corporations controlled by U.S. persons. Limited deferral was retained
after the enactment of subpart F to protect the competitiveness of
controlled foreign corporations (CFCs) doing business overseas. See S.
Rep. No. 1881, 87th Cong., 2d Sess. 78-80 (1962). This limited deferral
furthers the objective of allowing a CFC engaged in an active business,
and located in a foreign country for appropriate economic reasons, to
compete in a similar tax environment with non-U.S. owned corporations
located in the same country.
Conversely, one of the purposes of subpart F is to prevent CFCs
from converting active income that is not easily moveable and is earned
in a jurisdiction in which a business is located for non-tax reasons
into passive, easily moveable income shifted to a lower tax
jurisdiction primarily for tax avoidance. Moreover, when subpart F was
first enacted it was realized that related person transactions can be
easily manipulated to reduce both United States and foreign taxes.
Consequently, in enacting subpart F, Congress provided that
transactions of CFCs that involve related persons generally give rise
to subpart F income with certain enumerated exceptions.
Hybrid branches, by definition, are not regarded as fiscally
transparent under foreign law. Thus, they are particularly well suited
for the type of tax avoidance described above. In light of the recent
proliferation of hybrid branches, Treasury and the IRS believe that it
is appropriate to consider the issues related to transactions involving
hybrid branches, or other hybrid entities, under subpart F.
The use of other organizations that are fiscally transparent for
U.S. tax purposes, including partnerships, raise additional issues.
These entities may or may not be fiscally transparent under foreign
law. In the context of subpart F, issues similar to those raised in
connection with hybrid branches are raised in connection with
partnerships. (Other fiscally-transparent entities, such as grantor
trusts, will be the subject of guidance issued in conjunction with the
finalization of regulations under section 672(f).)
The entity classification regulations of Secs. 301.7701-1 through
301.7701-3 (the check-the-box regulations) make entity classification
generally elective, in part so that taxpayers can choose a tax status
consistent with their business objectives. This administrative
provision, however, was not intended to change substantive law.
Particularly in the international area, however, the ability to more
easily achieve fiscal transparency can lead to inappropriate results
under certain substantive international provisions of the Code. Thus,
the Treasury and the IRS believe that it is necessary to provide
additional guidance regarding the use of hybrid entities in the
international context. See preamble to T.D. 8697, 61 Fed. Reg. 66585
(December 18, 1996).
II. Controlled Foreign Corporation's Distributive Share of Partnership
Income
In Brown Group, Inc. v. Commissioner, 77 F.3d 217 (8th Cir. 1996),
vacating and remanding 104 T.C. 105 (1995), a Cayman Islands
partnership with a Cayman Islands CFC partner earned commission income
from selling footwear purchased in Brazil on behalf of the CFC's U.S.
parent. This commission income would have been subpart F income,
specifically foreign base company sales income under section 954(d), to
the CFC if it had earned this commission income directly and under the
same circumstances in which the partnership earned this income. The Tax
Court held that the CFC's distributive share of this commission income
was subpart F income. The Eighth Circuit, vacating and remanding the
Tax Court's decision, held that the CFC's distributive share of this
commission income was not subpart F income.
In response to the Eighth Circuit's opinion, the IRS announced that
it intended to issue regulations under subpart F to confirm its
position that whether a CFC partner's distributive share of partnership
income is subpart F income generally is determined at the CFC partner
level. See Notice 96-39 (1996-2 C.B. 209).
These proposed regulations would address the treatment of a CFC
partner's distributive share of partnership income
[[Page 14670]]
under subpart F. These regulations apply to all categories of subpart F
income, not only to foreign base company sales income, which was at
issue in Brown Group. These regulations would provide specific rules
that apply to determine a CFC partner's distributive share of foreign
personal holding company income, foreign base company sales income,
foreign base company services income, and earnings invested in United
States property.
The approach taken by these proposed regulations is based on the
provisions of subchapter K and subpart F and the policies underlying
those provisions. The legislative history of subchapter K indicates
that a partnership distributive share should be characterized by using
the approach that best serves the Code or regulations section at issue.
Subpart F limits deferral of U.S. income tax on common types of passive
income received by CFCs, as well as on certain other types of easily
moveable income. To allow a CFC to avoid subpart F treatment for items
of income by the simple expedient of receiving them as distributive
shares of partnership income, rather than directly, is contrary to the
intent of subpart F.
Explanation of Provisions
Under these proposed regulations, income and deductions would be
characterized at the partnership level. If any part of the
partnership's gross income would be subpart F income if received
directly by partners that are CFCs, it must be separately stated under
section 702. Comments are requested as to whether this rule should not
apply for ownership levels under certain thresholds. The regulations
under section 702 also would be clarified to expressly provide that an
item must be separately stated when, if separately taken into account
by any partner, the separately stated item would affect the income tax
liability of that partner or any other person. This clarification
incorporates in the regulations the position of the IRS. See Rev. Rul.
86-138 (1986-2 C.B. 84) (holding that a subsidiary partnership in a
multi-tiered arrangement must separately state items which, if
separately taken into account by any partner of any partnership in the
multi-tiered arrangement, would affect the income tax liability of that
partner).
The regulations under section 952 would also be clarified to
expressly include within the definition of subpart F income a CFC's
distributive share of any item of gross income of a partnership to the
extent the income would have been subpart F income if received by the
CFC partner directly. The proposed regulations would further provide
that, generally, in determining whether a distributive share of
partnership income is subpart F income, whether an entity is a related
person and whether activity takes place in or outside the CFC's country
of incorporation is determined with respect to the CFC partner and not
the partnership. Thus, on the Brown Group facts, the income in issue
would retain its character as commission income from the sale of shoes
purchased in Brazil on behalf of a U.S. parent for sale in the U.S. It
would be determined at the CFC partner level that the shoes were
manufactured and sold for use outside of the CFC's country of
incorporation (Cayman Islands), and that the U.S. parent was a related
person with respect to the CFC. Thus, the income would be foreign base
company sales income.
The proposed and temporary regulations also address the question of
whether a CFC's distributive share of partnership income can qualify
for the exceptions from foreign personal holding company income
treatment. Some of these exceptions are based on whether the income is
earned in a transaction with a related person that is incorporated, or
uses property, in the CFC's country of incorporation. The proposed and
temporary regulations address the application of those exceptions.
Other exceptions are based on the activities performed by the CFC in
connection with the property through which it earns the income. The
proposed regulations would provide that the exceptions requiring
activity will generally apply if the exception would have applied to
the income had the partnership itself been a CFC. This requirement is
not met if the partnership can qualify for the exception only by taking
into account the separate activities of its partners (e.g., the
partnership owns property and the CFC provides the management
services).
These proposed regulations would amend the rules regarding the
application of the manufacturing exception of Sec. 1.954-3(a)(4). The
regulations would clarify the Service's current position that, in
general, a controlled foreign corporation can apply the exception only
if it has performed the manufacturing activities itself. Thus,
manufacturing activities of a contract manufacturer will not be taken
into account.
Nevertheless, the manufacturing activities of a partnership may be
taken into account under the distributive share rules when the
partnership sells the property that it manufactures. These proposed
regulations would clarify how the manufacturing exception of
Sec. 1.954-3(a)(4) applies in the context of the distributive share
rules. As previously noted, the general rules would provide that income
that could be foreign base company sales income at the CFC partner
level is separately stated and that determinations as to relatedness
and the relevant country are made at the partner level. Consistent with
the framework outlined above, these regulations would allow a CFC's
distributive share of sales income to be excluded, under the
manufacturing exception of Sec. 1.954-3(a)(4), when the partnership's
activities with respect to the property it sells (without regard to the
CFC partner's activities) would be sufficient to constitute
manufacturing.
Treasury and the IRS are considering applying foreign base company
sales income rules in the context of manufacturing branches of
partnerships. Comments are requested as to the appropriate scope of
such rules.
Under the general rule for determining whether a CFC partner's
distributive share includes subpart F income, a CFC partner's
distributive share of partnership income earned from performing
services for or on behalf of a person that is a related person with
respect to the CFC partner will be foreign base company services
income. These proposed regulations also would describe how the
substantial assistance rule of Sec. 1.954-4(b)(1)(iv) applies when the
CFC earns services income through a partnership. When the partnership
is performing services for a person unrelated to the CFC partner but
the CFC partner provides substantial assistance to the partnership
contributing to the performance of those services, the partner and the
partnership would be regarded as separate entities and the substantial
assistance provided from the CFC to the partnership would cause the
CFC's distributive share of the services income to be treated as
foreign base company services income. Treasury and the IRS are
considering applying similar principles to branches. Comments are
requested on this issue.
Finally, consistent with Rev. Rul. 90-112 (1990-2 C.B. 186), the
regulations would provide that, for purposes of section 956, a CFC
partner's investment in U.S. property includes the U.S. property held
by a partnership to the extent of the CFC's ownership interest in the
partnership. Comments are requested on this issue.
III. Hybrid Branches
Temporary regulations, published elsewhere in this issue of the
Federal Register amend the Income Tax
[[Page 14671]]
Regulations (26 CFR part 1) relating to sections 952 and 954 by adding
rules relating to the treatment under subpart F of certain branches of
a CFC or a partnership in which a CFC is a partner that are treated as
separate entities for foreign tax purposes. The text of those temporary
regulations also serves as the text of the proposed regulations. The
preamble to the temporary regulations explains the reasons for the
addition.
IV. Proposed Effective Date
These regulations are proposed to apply for taxable years of a
controlled foreign corporation beginning on or after the date the final
regulations are published in the Federal Register. For prior periods,
the IRS will rely on principles and authorities under subpart F and
subchapter K to apply an aggregate approach, including Sec. 1.701-2(e)
and (f) of the regulations for periods for which it is effective.
Special Analyses
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 has also
been determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) does not apply to these regulations, and, because
the regulation does not impose a collection of information on small
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of the Code, this notice of proposed
rulemaking will be submitted to the Chief Counsel for Advocacy of the
Small Business Administration for comment on its impact on small
business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (preferably a
signed original and eight (8) copies) that are timely submitted to the
IRS. All comments will be available for public inspection and copying.
A public hearing has been scheduled for July 15, 1998, at 10 a.m.,
in room 2615, Internal Revenue Building, 1111 Constitution Avenue NW.,
Washington, DC. 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 June 22, 1998 and submit an outline of
topics to be discussed and time to be devoted to each topic (signed
original and eight (8) copies) by June 24, 1998.
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 regulations is Valerie Mark of the
Office of the Associate Chief Counsel (International), IRS. However,
other personnel from the IRS and Treasury Department participated in
their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for 26 CFR part 1 continues to
read in part as follows:
Authority: 26 U.S.C. 7805 * * *.
Par. 2. Section 1.702-1 is amended as follows:
1. Paragraph (a)(8)(ii) is revised.
2. A new paragraph (c)(1)(v) is added.
The addition and revision read as follows:
Sec. 1.702-1 Income and credits of partner.
(a) * * *
(8) * * *
(ii) Each partner must also take into account separately the
partner's distributive share of any partnership item which, if
separately taken into account by any partner, would result in an income
tax liability for that partner, or for any other person, different from
that which would result if that partner did not take the item into
account separately. Thus, if any partner is a controlled foreign
corporation, as defined in section 957, items of income that would be
gross subpart F income if taken into account by the controlled foreign
corporation must be separately stated for all partners. Under section
911(a), if any partner is a bona fide resident of a foreign country who
may exclude from gross income the part of the partner's distributive
share which qualifies as earned income as defined in section 911(b),
the earned income of the partnership for all partners must be
separately stated. Similarly, all relevant items of income or deduction
of the partnership must be separately stated for all partners in
determining the applicability of section 183 (relating to activities
not engaged in for profit) and the recomputation of tax thereunder for
any partner.
* * * * *
(c) * * *
(1) * * *
(v) In determining whether the de minimis or full inclusion rules
of section 954(b)(3) apply.
* * * * *
Par. 3. In Sec. 1.952-1, paragraphs (b) through (f) are
redesignated as paragraphs (c) through (g), respectively, and a new
paragraph (b) is added to read as follows:
Sec. 1.952-1 Subpart F income defined.
* * * * *
(b) Treatment of distributive share of partnership income--
(1) In general. A controlled foreign corporation's distributive
share of any item of income of a partnership is income that falls
within a category of subpart F income described in section 952(a) to
the extent the item of income would have been income in such category
if received by the controlled foreign corporation directly. For
specific rules regarding the treatment of a distributive share of
partnership income under certain provisions of subpart F, see
Secs. 1.954-1(g); 1.954-2(a)(5); 1.954-3(a)(6); 1.954-4(b)(2)(iii); and
1.954-6(g).
(2) Example. The application of this paragraph (b) may be
illustrated by the following example.
Example. CFC, a controlled foreign corporation, is an 80-percent
partner in PRS, a foreign partnership. PRS earns $100 of interest
income that is not export financing interest, as defined in section
954(c)(2)(B), from a person unrelated to CFC. This interest income
would have been foreign personal holding company income to CFC, under
section 954(c), if it had received this income directly. Accordingly,
CFC's distributive share of this interest income, $80, is foreign
personal holding company income.
* * * * *
Par. 4. Section 1.954-1 is amended as follows:
[[Page 14672]]
1. Paragraphs (c)(1)(i)(A) through (D) are redesignated as
(c)(1)(i)(A)(1) through (4), respectively.
2. A new paragraph heading for newly designated paragraph
(c)(1)(i)(A) is added.
3. New paragraphs (c)(1)(i)(B) through (E) are added.
4. Paragraph (g) is added.
The additions read as follows:
Sec. 1.954-1 Foreign base company income.
* * * * *
(c) * * *
(1) * * *
(i) Deductions against gross foreign base company income--
(A) In general.* * *
* * * * *
(B) through (E) [The text of the proposed paragraphs (c)(1)(i)(B)
through (E) is the same as the text of Sec. 1.954-1T(c)(1)(i)(B)
through (E) published elsewhere in this issue of the Federal Register].
* * * * *
(g) Distributive share of partnership income--(1) Application of
related person and country of organization tests. Unless otherwise
provided, to determine the extent to which a controlled foreign
corporation's distributive share of any item of gross income of a
partnership would have been subpart F income if received by it
directly, under Sec. 1.952-1(b), if a provision of subpart F requires a
determination of whether an entity is a related person, within the
meaning of section 954(d)(3), or whether an activity occurred within or
outside the country under the laws of which the controlled foreign
corporation is created or organized, this determination shall be made
by reference to such controlled foreign corporation and not by
reference to the partnership.
(2) Example. The application of paragraph (g)(1) of this section is
illustrated by the following example:
Example. (i) CFC1, a controlled foreign corporation organized in
Country A, is an 80-percent partner in Partnership, a partnership
organized in Country B. CFC2, a controlled foreign corporation
organized in Country B, owns the remaining 20 percent interest in
Partnership. CFC1 and CFC2 are owned by a common U.S. parent, USP.
CFC2 manufactures Product A in Country B. Partnership earns sales
income from purchasing Product A from CFC2 and selling it to third
parties located in Country B that are not related persons with
respect to CFC1 or CFC2. For purposes of determining whether CFC1's
distributive share of Partnership's sales income is foreign base
company sales income under section 954(d), CFC1 is treated as if it
purchased Product A from CFC2 and sold it to third parties in
Country B. Under section 954(d)(3), CFC2 is a related person with
respect to CFC1. Thus, with respect to CFC1, the sales income is
deemed to be derived from the purchase of personal property from a
related person. Because the property purchased is both manufactured
and sold for use outside of Country A, CFC1's country of
organization, CFC1's distributive share of the sales income is
foreign base company sales income.
(ii) For purposes of determining whether CFC2's distributive
share of Partnership's sales income is foreign base company sales
income, CFC2 is treated as if it directly sold Product A to third
parties within Country B. Therefore, Product A is both manufactured
and sold for use within CFC2's country of organization. Thus, CFC2's
distributive share of Partnership's sales income is not foreign base
company sales income.
Par. 5. In Sec. 1.954-2, paragraphs (a)(5) and (a)(6) are added to
read as follows:
Sec. 1.954-2 Foreign personal holding company income.
(a) * * *
(5) Special rules applicable to distributive share of partnership
income--(i) [The text of the proposed paragraph (a)(5)(i) is the same
as the text of Sec. 1.954-2T(a)(5) published elsewhere in this issue of
the Federal Register].
(ii) Certain other exceptions applicable to foreign personal
holding company income. To determine the extent to which a controlled
foreign corporation's distributive share of an item of income of a
partnership is foreign personal holding company income, the exceptions
contained in sections 954(c)(2) and Sec. 1.954-2(b)(2) and (6),
(e)(1)(ii), (f)(1)(ii), (g)(2)(ii), and (h)(3)(ii), shall apply only if
any such exception would have applied to exclude the income from
foreign personal holding company income if the controlled foreign
corporation had earned the income directly, determined by taking into
account only the activities of, and property owned by, the partnership
and not the separate activities or property of the controlled foreign
corporation or any other person.
(iii) [The text of the proposed paragraph (a)(5)(iii) is the same
as the text of Sec. 1.954-2T(a)(5)(iii) published elsewhere in this
issue of the Federal Register].
(6) Special rules applicable to exceptions from foreign personal
holding company income treatment in circumstances involving hybrid
branches --(i) [The text of the proposed paragraph (a)(6)(i) is the
same as the text of Sec. 1.954-2T(a)(6) published elsewhere in this
issue of the Federal Register].
* * * * *
Par. 6. Section 1.954-3 is amended as follows:
1. The second sentence of paragraph (a)(4)(i) is revised.
2. The first sentence of paragraph (a)(4)(ii) is revised.
3. Paragraph (a)(6) is added.
The revisions and addition read as follows:
Sec. 1.954-3 Foreign base company sales income.
(a) * * *
(4) * * *
(i) * * * A controlled foreign corporation (selling corporation)
will be considered, for purposes of this paragraph (a)(4), to have
manufactured, produced, or constructed personal property that it sells
if, as a result of the operations conducted by such selling corporation
in connection with the property that it purchased and sold, the
property sold is in effect not the property that it purchased. * * *
(ii) * * * If, prior to its sale of property that it has purchased,
a selling corporation substantially transforms the property, the
selling corporation will be treated as having manufactured, produced,
or constructed such property. * * *
* * * * *
(6) Special rule applicable to distributive share of partnership
income--(i) In general. To determine the extent to which a controlled
foreign corporation's distributive share of any item of gross income of
a partnership would have been foreign base company sales income if
received by it directly, under Sec. 1.952-1(b), the property sold will
be considered to be manufactured, produced or constructed by the
controlled foreign corporation within the meaning of paragraph (a)(4)
of this section only if the manufacturing exception of paragraph (a)(4)
of this section would have applied to exclude the income from foreign
base company sales income if the controlled foreign corporation had
earned the income directly, determined by taking into account only the
activities of, and property owned by, the partnership and not the
separate activities or property of the controlled foreign corporation
or any other person.
* * * * *
Par. 7. In Sec. 1.954-4, paragraph (b)(2)(iii) is added to read as
follows:
Sec. 1.954-4 Foreign base company services income.
* * * * *
(b) * * *
(2) * * *
(iii) Special rule applicable to distributive share of partnership
income. A controlled foreign corporation's distributive share of a
partnership's services income will be deemed to be derived from
services
[[Page 14673]]
performed for or on behalf of a related person, within the meaning of
section 954(e)(1)(A), if the partnership is a related person with
respect to the controlled foreign corporation, under section 954(d)(3),
and, in connection with the services performed by the partnership, the
controlled foreign corporation provided assistance that would have
constituted substantial assistance contributing to the performance of
such services, under paragraph (b)(2)(ii) of this section, if furnished
to the controlled foreign corporation by a related person.
* * * * *
Par. 8. Section 1.954-9 is added to read as follows:
Sec. 1.954-9 Hybrid branches.
[The text of this proposed section is the same as the text of
Sec. 1.954-9T published elsewhere in this issue of the Federal
Register.]
Par. 9. In Sec. 1.956-2, paragraph (a)(3) is added to read as
follows:
Sec. 1.956-2 Definition of United States property.
(a) * * *
(3) For purposes of section 956, if a controlled foreign
corporation is a partner in a partnership that owns property that would
be United States property, within the meaning of paragraph (a)(1) of
this section, if owned directly by the controlled foreign corporation,
the controlled foreign corporation will be treated as holding an
interest in the property equal to its ownership interest in the
partnership and such ownership interest will be treated as an interest
in United States property.
* * * * *
PART 301--PROCEDURE AND ADMINISTRATION
Par. 10. The authority citation for 26 CFR part 301 continues to
read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 11. Section 301.7701-3 is amended as follows:
1. Paragraph (a) is amended by adding a sentence at the end of the
paragraph.
2. Paragraph (c)(1)(iv) is amended by adding a sentence at the end
of the paragraph.
The additions read as follows:
Sec. 301.7701-3 Classification of certain business entities.
(a) [The text of the proposed paragraph (a) of this section is the
same as the text of Sec. 301.7701-3T(a) published elsewhere in this
issue of the Federal Register.]
* * * * *
(c) * * *
(1) * * *
(iv) [The text of the proposed paragraph (c)(1)(iv) of this section
is the same as the text of Sec. 301.7701-3T(c)(1)(iv) published
elsewhere in this issue of the Federal Register.]
* * * * *
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
[FR Doc. 98-7890 Filed 3-23-98; 12:58 pm]
BILLING CODE 4830-01-P