[Federal Register Volume 66, Number 3 (Thursday, January 4, 2001)]
[Proposed Rules]
[Pages 748-749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-201]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-106791-00]
RIN 1545-AY55


Liabilities Assumed in Certain Corporate Transactions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations, and notice of public hearing.

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SUMMARY: In the Rules and Regulations portion of this issue of the 
Federal Register, the IRS is issuing temporary regulations relating to 
the assumption of liabilities in certain corporate transactions under 
section 301 of the Internal Revenue Code. The temporary regulations 
affect corporations and their shareholders. The text of those temporary 
regulations also serves as the text of these proposed regulations. This 
document also gives notice of a public hearing on these proposed 
regulations.

DATES: Written comments must be received by May 10, 2001. Requests to 
speak and outlines of topics to be discussed at the public hearing 
scheduled for May 31, 2001 at 10 a.m. must be received by May 10, 2001.

ADDRESSES: Send submissions to: CC:M&SP:RU (REG-106791-00), 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:M&SP:RU (REG-106791-00), 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 of the IRS Home Page or 
by submitting comments directly to the IRS Internet site at http://www.irs.gov/tax-regs/regslist.html. A public hearing will be held in 
room 4718, Internal Revenue Building, 1111 Constitution Avenue NW., 
Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Mary E. 
Dean, (202) 622-7550; concerning submissions and the hearings, Guy 
Traynor, (202) 622-7180.

SUPPLEMENTARY INFORMATION

Background

    The temporary regulations amend the income tax regulations (26 CFR 
part 1) under section 301 relating to liabilities assumed in connection 
with distributions made by a corporation to shareholders with respect 
to their stock. These regulations provide that the amount of a 
distribution under section 301 will be reduced by the amount of any 
liability that is treated as assumed by the distributee within the 
meaning of section 357(d)(1) and (2). Thus, in a distribution under 
section 301, if a liability is treated as not having been assumed by 
the distributee under section 357(d)(1) and (2), the amount of the 
distribution will not be reduced by the amount of any liability the 
property is subject to under section 301(b)(2)(B). The text of the 
temporary regulations also serves as the text of these proposed 
regulations. The preamble to the temporary regulations explains the 
proposed regulations.

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 is hereby certified that these regulations do not have a 
significant economic impact on a substantial number of small entities. 
These proposed regulations under section 301 of the Internal Revenue 
Code (Code) address distributions by corporations in which liabilities 
are assumed by the shareholders or in which the distributed property is 
subject to liabilities. These proposed regulations provide that the 
amount of a distribution under section 301 will be reduced by the 
amount of any liability that is treated as assumed by the distributee 
within the meaning of section 357(d)(1) and (2).
    If adopted these regulations will affect only corporations making 
distributions of property, in which the property is subject to a 
liability, or in which liabilities are assumed by the distributee. 
Moreover, if adopted, the proposed regulations will affect only those 
corporations that would have, but for the regulations, considered 
liabilities to have been assumed in circumstances other than those 
described in section 357(d)(1) and (2). Therefore, most corporations, 
whether large or small, will not be affected by the proposed 
regulations in any given year. 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 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 
businesses.

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) or electronically generated 
comments that are submitted timely to the IRS. The IRS and Treasury 
specifically request comments on the clarity of the proposed 
regulations and how they may be made easier to understand. All comments 
will be available for public inspection and copying.
    A public hearing has been scheduled for May 31, 2000, at 10 a.m., 
in room 4718, Internal Revenue Building, 1111 Constitution Avenue NW., 
Washington, DC. Due to building security procedures, visitors must 
enter at the 1111 Constitution Avenue entrance, located between 10th 
and 12th streets. In addition, all visitors must present photo 
identification to enter the building. Because of access restrictions, 
visitors will not be admitted beyond the immediate entrance area more 
than 15 minutes before the hearing starts. For information about having 
your name placed on the access list to attend the hearing, see the FOR 
FURTHER INFORMATION CONTACT section of this preamble.

[[Page 749]]

    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit written 
comments and an outline of the topics to be discussed and the time to 
be devoted to each topic (signed original and eight (8) copies) by May 
10, 2001. 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 Mary E. Dean, Office 
of Associate Chief Counsel (Corporate). However, other personnel from 
the IRS and Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

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

PART 1--INCOME TAXES

    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 1.301-1 is amended by revising paragraph (g) to 
read as follows:


Sec. 1.301-1  Rules applicable with respect to distributions of money 
and other property.

* * * * *
    (g) [The text of the proposed amendment to paragraph (g) of 
Sec. 1.301-1 is the same as the text of paragraph (g) of Sec. 1.301-1T 
published elsewhere in this issue of the Federal Register].

David A. Mader,
Acting Deputy Commissioner of Internal Revenue.
[FR Doc. 01-201 Filed 1-3-01; 8:45 am]
BILLING CODE 4830-01-U