[Federal Register Volume 68, Number 127 (Wednesday, July 2, 2003)]
[Proposed Rules]
[Page 39498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16787]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-116914-03]
RIN 1545-BC06


Transfers of Compensatory Options

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations relating to 
the sale or other disposition of compensatory nonstatutory stock 
options to related persons. The text of those regulations also serves 
as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by September 30, 2003.

ADDRESSES: Send submissions to: CC:PA:RU (REG-116914-03), room 5226, 
Internal Revenue Service, POB 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:RU (REG-116914-03), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Ave., NW., 
Washington, DC. Alternatively, taxpayers may submit electronic comments 
directly to the IRS Internet site at www.irs.gov/regs.

FOR FURTHER INFORMATION CONTACT: Concerning the temporary regulations, 
Stephen Tackney (202) 622-6030; concerning submissions of comments and/
or requests for a hearing, Guy Traynor, (202) 622-7180 (not toll-free 
numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend 26 CFR part 1. The regulations 
provide that a sale or other disposition of a nonstatutory stock option 
to a related person will not be treated as a transaction that closes 
the application of section 83 with respect to the option. The text of 
the temporary regulations also serves as the text of these proposed 
regulations. The preamble to the temporary regulations explains the 
temporary regulations and these proposed regulations.

Special Analyses

    It has been determined that these temporary regulations are not a 
significant regulatory action as defined in Executive order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 533(b) of the Administrative Procedures Act (5 
U.S.C. chapter 5) does not apply to these regulations, and because 
these regulations do 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 Internal Revenue Code, these 
regulations are being submitted to the Chief Counsel for Advocacy of 
the Small Business Administration for comment on their impact on small 
business.

Comments and Requests for a 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) or electronic comments that are submitted timely 
to the IRS. The IRS and Treasury Department request comments on the 
clarity of the proposed rules and how they can be made easier to 
understand. The IRS and Treasury Department specifically request 
comments on the clarity and efficacy of the proposed definition of a 
related person. All comments will be available for public inspection 
and copying. A public hearing may be scheduled if requested 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.

Drafting Information

    The principal author of these proposed regulations is Stephen 
Tackney of the Office of Division Counsel/Associate Chief Counsel (Tax 
Exempt and Government Entities). 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.

Adoption of Amendments to the Regulations

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

PART 1--INCOME TAXES

    1. The authority citation for part 1 continues to read as follows:

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


Sec.  1.83-7  [Amended]

    2. Section 1.83-7 is amended as follows:
    1. Paragraph (a) is amended by adding a sentence at the end.
    2. Paragraphs (a)(1) and (a)(2) are added.
    3. Paragraph (d) is added.
    The additions read as follows:
    (a) [The text of proposed Sec.  1.83-7(a) is the same as the text 
of Sec.  1.83-7T(a) published elsewhere in this issue of the Federal 
Register].
* * * * *
    (d) Effective dates. This section is applicable to sales or other 
dispositions of options on or after the publication of final 
regulations in the Federal Register. For dates on or after July 2, 
2003, see Sec.  1.83-7T(d).

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 03-16787 Filed 7-1-03; 8:45 am]
BILLING CODE 4830-01-P