[Federal Register Volume 70, Number 37 (Friday, February 25, 2005)]
[Rules and Regulations]
[Pages 9219-9220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-3588]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9182]
RIN 1545-BD31


Reorganizations Under Section 368(a)(1)(E) and Section 
368(a)(1)(F)

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulation.

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SUMMARY: This document contains final regulations regarding 
reorganizations under section 368(a)(1)(E) and section 368(a)(1)(F) of 
the Internal Revenue Code. The regulations affect corporations and 
their shareholders.

DATES: Effective Date: These regulations are effective on February 25, 
2005.
    Applicability Date: These regulations apply to transactions 
occurring on or after February 25, 2005.

FOR FURTHER INFORMATION CONTACT: Robert B. Gray, at (202) 622-7550 (not 
a toll free number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    On August 12, 2004, the IRS and Treasury Department published a 
notice of proposed rulemaking (REG-106889-04) in the Federal Register 
(69 FR 49836) proposing regulations regarding the requirements for a 
reorganization under section 368(a)(1)(E) and section 368(a)(1)(F) of 
the Internal Revenue Code (Code). Generally, a transaction must satisfy 
the continuity of interest and continuity of business enterprise 
requirements to qualify as a reorganization under section 368(a). The 
notice proposed amending Sec.  1.368-1(b) to provide that a continuity 
of interest

[[Page 9220]]

and a continuity of business enterprise are not required for a 
transaction to qualify as a reorganization under section 368(a)(1)(E) 
(E reorganization) or section 368(a)(1)(F) (F reorganization). The 
notice also proposed amending Sec.  1.368-2 to include rules regarding 
the requirements for a transaction to qualify as an F reorganization 
and regarding the effects of an F reorganization.
    The IRS and Treasury Department have received oral comments urging 
that the rule providing that the continuity of interest and continuity 
of business enterprise requirements do not apply to E and F 
reorganizations be finalized quickly. For the reasons expressed in the 
preamble to the proposed regulations, this Treasury decision adopts 
that rule for transactions on or after February 25, 2005. The IRS and 
Treasury Department continue to study the other issues addressed in the 
notice of proposed rulemaking, and welcomes further comment on those 
issues.

Effect on Other Documents

    The following publications are obsolete as of February 25, 2005:

Rev. Rul. 69-516 (1969-2 C.B. 56).
Rev. Rul. 77-415 (1977-2 C.B. 311).
Rev. Rul. 77-479 (1977-2 C.B. 119).
Rev. Rul. 82-34 (1982-1 C.B. 59).

Special Analyses

    It has been determined that this Treasury decision is 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 553(b) of the Administrative Procedure 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 Code, the proposed 
regulations preceding these regulations were submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on its impact on small business.

Drafting Information

    The principal author of these regulations is Robert B. Gray of the 
Office of Chief Counsel (Corporate). 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.

Adoption of Amendment to the Regulations

0
Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

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

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


0
Par. 2. Section 1.368-1(b) is amended by adding a sentence after the 
seventh sentence to read as follows:


Sec.  1.368-1  Purpose and scope of exception of reorganization 
exchanges.

* * * * *
    (b) Purpose. * * * Notwithstanding the requirements of this 
paragraph (b), for transactions occurring on or after February 25, 
2005, a continuity of the business enterprise and a continuity of 
interest are not required for the transaction to qualify as a 
reorganization under section 368(a)(1)(E) or (F). * * *
* * * * *

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
    Approved: February 14, 2005.
Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 05-3588 Filed 2-24-05; 8:45 am]
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