[Federal Register Volume 71, Number 129 (Thursday, July 6, 2006)]
[Rules and Regulations]
[Pages 38261-38262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-55522]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1


Corporate Distributions and Adjustments

CFR Correction

    In Title 26 of the Code of Federal Regulations, part 1 (Sec. Sec.  
1.301 to 1.400),

[[Page 38262]]

revised as of April 1, 2006, on page 10, Sec.  1.301-1 is corrected by 
adding paragraph (g) to read as follows:


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

* * * * *
    (g) Reduction for liabilities--(1) General rule. For the purpose of 
section 301, no reduction shall be made for the amount of any 
liability, unless the liability is assumed by the shareholder within 
the meaning of section 357(d).
    (2) No reduction below zero. Any reduction pursuant to paragraph 
(g)(1) of this section shall not cause the amount of the distribution 
to be reduced below zero.
    (3) Effective dates--(i) In general. This paragraph (g) applies to 
distributions occurring after January 4, 2001.
    (ii) Retroactive application. This paragraph (g) also applies to 
distributions made on or before January 4, 2001, if the distribution is 
made as part of a transaction described in, or substantially similar 
to, the transaction in Notice 99-59 (1999-2 C.B. 761), including 
transactions designed to reduce gain (see Sec.  601.601(d)(2) of this 
chapter). For rules for distributions on or before January 4, 2001 
(other than distributions on or before that date to which this 
paragraph (g) applies), see rules in effect on January 4, 2001 (see 
Sec.  1.301-1(g) as contained in 26 CFR part 1 revised April 1, 2001).

[FR Doc. 06-55522 Filed 7-5-06; 8:45 am]
BILLING CODE 1505-01-D