[Federal Register Volume 69, Number 234 (Tuesday, December 7, 2004)]
[Rules and Regulations]
[Pages 70550-70551]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26745]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9144]
RIN 1545-BA75


Statutory Options; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document corrects final regulations (TD 9144) that were 
published in the Federal Register on Monday, August 3, 2004 (69 FR 
46401) and corrected on Monday, October 18, 2004 (69 FR 61309). The 
final regulations relate to statutory options.

DATES: This document is effective on August 3, 2004.

FOR FURTHER INFORMATION CONTACT: Erinn Madden, (202) 622-6030 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations (TD 9144) that are the subject of these 
corrections are under sections 421, 422, and 424 of the Internal 
Revenue Code.

Need for Correction

    As published, the final regulations (TD 9144) contain errors that 
may prove to be misleading and are in need of clarification.

[[Page 70551]]

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Correction of Publication

0
Accordingly, 26 CFR Parts 1 and 602 is corrected by making the 
following correcting amendments:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 and continues to read in 
part as follows:

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


Sec.  1.421-1  [Corrected]

0
1. Section 1.421-1(j)(2), the second sentence is amended by removing 
the language ``the REG-122917-02 or this section.'' and adding the 
language ``REG-122917-02 or this section.'' in its place.


Sec.  1.421-2  [Corrected]

0
2. Section 1.421-2(f)(2), the second sentence is amended by removing 
the language ``corporation at least 6 months after August 3, 2004, 
taxpayers may rely on either the REG-122917-02 or section.'' and adding 
the language ``corporation occurring at least 6 months after August 3, 
2004, taxpayers may rely on either REG-122917-02 or this section.'' in 
its place.


Sec.  1.422-1  [Corrected]

0
3. Section 1.422-1(b)(3), Example 2, the fourth sentence is amended by 
removing the language ``consequences of the disposition and the holding 
period for capital gain purposes begin on the vesting date, six months 
after exercise.'' and adding the language ``consequences of the 
disposition, and the holding period for capital gain purposes begins on 
the vesting date, six months after exercise.'' in its place.


Sec.  1.422-4  [Corrected]

0
4. Section 1.422-4(d), Example 5 (iii), the last sentence is amended by 
removing the language ``it is treated as a nonstatutory options in its 
entirety.'' and adding the language ``it is treated as a nonstatutory 
option in its entirety.'' in its place.


Sec.  1.422-5  [Corrected]

0
5. Section 1.422-5(e), Example 2, the fourth sentence is amended by 
removing the language ``Under the rules of paragraph (b)(2) and (b)(3) 
of this section,'' and adding the language ``Under the rules of 
paragraphs (b)(2) and (b)(3) of this section,'' in its place.

0
6. Section 1.422-5(f)(2), the second sentence is amended by removing 
the language ``taxpayers may rely on either the REG-122917-02 or this 
section.'' and adding the language ``taxpayers may rely on either REG-
122917-02 or this section.'' in its place.

0
7.Section 1.424-1 is amended by:
0
1. Revising the sixth and seventh sentences in paragraph (a)(10), 
Example 8.
0
2. Adding a comma after the word ``Thus'' in the second sentence of 
paragraph(e)(4)(viii).
    The revision reads as follows:


Sec.  1.424-1  Definitions and special rules applicable to statutory 
options.

    (a) * * *
    (10) * * *
    Example 8.  * * * Based on these facts, a new option to purchase 
200 shares of Y at an option price of $25 per share could be granted 
to E in complete substitution of E's old option. In the alternative, 
it would also be permissible in connection with the spin off, to 
grant E a new option to purchase 100 shares of Y, at an option price 
of $25 per share, and for E to retain an option to purchase 100 
shares of X under the old option, with the option price adjusted to 
$25.
* * * * *

0
8. Section 1.424-1(g)(2), the second sentence is amended by removing 
the language ``on either the REG-122917-02 or this section.'' and 
adding the language ``on either REG-122917-02 or this section.'' in its 
place.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 2. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.


Sec.  602.101  [Corrected]

0
9. Section 602.101(b) is amended by adding the entry ``1.422-1-1545-
0820'' to the table in numerical order.

Cynthia E. Grigsby,
Acting Chief, Publications and Regulations Branch, Legal Processing 
Division, Associate Chief Counsel, (Procedures and Administration).
[FR Doc. 04-26745 Filed 12-6-04; 8:45 am]
BILLING CODE 4830-01-P