[Federal Register Volume 65, Number 43 (Friday, March 3, 2000)]
[Rules and Regulations]
[Pages 11467-11468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3564]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8834]
RIN 1545-AU22 and 1545-AX30


Treatment of Distributions to Foreign Persons Under Sections 
367(e)(1) and 367(e)(2); Correction

AGENCY:  Internal Revenue Service (IRS), Treasury.

ACTION:  Correction to final regulations.

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SUMMARY:  This document contains corrections to final regulations which 
were published in the Federal Register on Monday, August 9, 1999 (64 FR 
43072), relating to the treatment of distributions to foreign persons 
under section 367(e)(1) and (2) as added to the Internal Revenue Code 
by the Tax Reform Act of 1986, which affects U.S. corporations.

DATES:  This correction is effective August 9, 1999.

FOR FURTHER INFORMATION CONTACT:  Guy A. Bracuti, 202-622-3860 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:  

Background

    The final regulations that are subject to these corrections are 
under section 367(e)(1) and (2) of the Internal Revenue Code.

Need for Correction

    As published, final regulations (TD 8834) contain errors that may 
prove to be misleading and are in need of clarification.

Correction of Publication

    Accordingly, the publication of the final regulations (TD 8834), 
which was the subject of FR Doc. 99-20092, is corrected as follows:


Sec. 1.367(e)-1  [Corrected]

    1. On page 43076, column 2, Sec. 1.367(e)-1(b)(2), lines 19, 20 and 
21 from the bottom of the column, the language ``entity (disregarded 
entity) under Sec. 1.7701-3(b)(1)(ii) or (b)(2)(i)(C) are'' is 
corrected to read ``entity separate from its owner (disregarded entity) 
under Sec. 301.7701-3 of this chapter are''.
    2. On page 43076, column 3, Sec. 1.367(e)-1(d)(1), lines 2 and 3 
from the bottom of the column, the language ``described in paragraph 
(b)(1) of this section are'' is corrected to read ``described in 
section 355 in which the distributing corporation is domestic and the 
controlled corporation is foreign are''.


Sec. 1.367(e)-2  [Corrected]

    3. On page 43078, column 1, Sec. 1.367(e)-2(b)(1)(ii)(B)(2), lines 
7, 8 and 9 from the bottom of the Example, the language ``allocate $45 
(60 x .75) of the recognized capital loss to Asset B and will allocate 
the remaining $15 (60  x  .25) of'' is corrected to read ``allocate $15 
(60 x .25) of the recognized capital loss to Asset B and will allocate 
the remaining $45 (60 x .75) of''.
    4. On page 43078, column 1, Sec. 1.367(e)-2(b)(1)(ii)(C), lines 16 
and 17, the language ``shall not offset loss'' is corrected to read 
``shall not be offset by a loss''.
    5. On page 43081, column 1, Sec. 1.367(e)-2(b)(2)(iii)(A)(2), line 
2, the language ``(directly)'' is corrected to read ``(directly and 
without regard to paragraph (b)(1)(iii) of this section)''.
    6. On page 43081, column 1, Sec. 1.367(e)-2(b)(2)(iii)(A)(3), line 
2, the language ``(directly)'' is corrected to read ``(directly and 
without regard to paragraph (b)(1)(iii) of this section)''.
    7. On page 43081, column 1, Sec. 1.367(e)-2(b)(2)(iii)(B), lines 7 
through 11, the language ``(or was a U.S. real property holding 
corporation with respect to the foreign distributee corporation during 
the five year period ending on the date of liquidation)'' is corrected 
to read ``(or is a former U.S. real property holding corporation the 
stock of which is treated as a U.S. real property interest for five 
years under section 897(c)(1)(A)(ii))''.
    8. On page 43081, column 1, Sec. 1.367(e)-2(b)(2)(iii)(C)(2), line 
8 from the bottom of the paragraph, the language ``disposes of'' is 
corrected to read ``disposes of (whether in a recognition or 
nonrecognition transaction)''.
    9. On page 43081, column 1, Sec. 1.367(e)-2(b)(2)(iii)(C)(2), the 
last three

[[Page 11468]]

lines of the paragraph, the language ``that a principal purpose of the 
liquidation was not the avoidance of U.S. tax'' is corrected to read 
``that the avoidance of U.S. tax was not a principal purpose of the 
liquidation''.
    10. On page 43081, column 2, Sec. 1.367(e)-2(b)(2)(iii)(D), line 10 
from the bottom of the paragraph, the language ``to such stock'' is 
corrected to read ``to the distributed stock''.
    11. On page 43081, column 2, Sec. 1.367(e)-2(b)(3)(i), the last 
sentence of the paragraph is removed.
    12. On page 43081, column 3, Sec. 1.367(e)-2(c)(2)(i)(A), line 7, 
the language ``gain on the'' is corrected to read ``gain (or loss in 
accordance with principles contained in paragraph (b)(1)(ii) of this 
section) on the''.
    13. On page 43082, column 2, Sec. 1.367(e)-2(c)(3)(i), the last 
sentence of the paragraph is removed.
    14. On page 43082, column 2, Sec. 1.367(e)-2(e), lines 2 and 3, the 
language ``occurring 30 days after August 9, 1999 or'' is corrected to 
read ``occurring on or after September 7, 1999 or''.

Dale D. Goode,
Federal Register Liaison, Assistant Chief Counsel (Corporate).
[FR Doc. 00-3564 Filed 3-2-00; 8:45 am]
BILLING CODE 4830-01-U