[Federal Register Volume 72, Number 107 (Tuesday, June 5, 2007)]
[Proposed Rules]
[Pages 31021-31022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-10799]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-123365-03]
RIN 1545-BC94


Guidance Regarding the Active Trade or Business Requirement Under 
Section 355(b); Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to notice of proposed rulemaking.

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SUMMARY: This document contains corrections to a notice of proposed 
rulemaking (REG-123365-03) that was published in the Federal Register 
on Tuesday, May 8, 2007 (72 FR 26012) providing guidance on issues 
involving the active trade or business requirement under section 
355(b), including guidance resulting from the enactment of section 
355(b)(3).

FOR FURTHER INFORMATION CONTACT: Russell P. Subin, (202) 622-7790 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The correction notice that is the subject of this document is under 
section 355(b) of the Internal Revenue Code.

Need for Correction

    As published, the notice of proposed rulemaking (REG-123365-03) 
contains errors that may prove to be misleading and are in need of 
clarification.

Correction of Publication

    Accordingly, the publication of proposed rulemaking (REG-123365-
03), which was the subject of FR Doc. 07-2269, is corrected as follows:
    1. On page 26014, column 2, in the preamble, under the paragraph 
heading ``1. SAG Rule Applicable During the Pre-Distribution Period'', 
second paragraph of the column, fourth line, the language ``members are 
disregarded and all assets'' is corrected to read ``members is 
disregarded and all assets''.
    2. On page 26014, column 2, in the preamble, under the paragraph 
heading ``1. SAG Rule Applicable During the Pre-Distribution Period'', 
second paragraph of the column, eleventh line, the language ``a five-
year active trade or businesses.'' is corrected to read ``a five-year 
active trade or business.''.
    3. On page 26015, column 1, in the preamble, under the paragraph 
heading ``3. Acquisitions of Stock in Subsidiary SAG Members'', fifth 
line of the column, the language ``in sections B.4 and C.3.a.ii. of 
this'' is corrected to read ``in sections B.4. and C.3.a.ii. of this''.
    4. On page 26015, column 1, in the preamble, under the paragraph 
heading ``C. Acquisitions of a Trade or Business'', second line of the 
paragraph, the language ``provide that a trade or business'' is 
corrected to read ``provides that a trade or business''.
    5. On page 26015, column 3, in the preamble, under the paragraph 
heading ``1. Purpose of Section 355(b)(2)(C) and (D)'', second 
paragraph of the column, fourth line, the language ``using it assets--
instead of its stock, or'' is corrected to read ``using its assets--
instead of its stock, or''.
    6. On page 26016, column 2, in the preamble, under the paragraph 
heading ``i. Certain Acquisitions by the DSAG or CSAG'', last line of 
the first paragraph, the language ``assets to acquire the trade or 
business'' is corrected to read ``assets to acquire the trade or 
business.''.
    7. On page 26016, column 3, in the preamble, under the paragraph 
heading ``ii. Certain Acquisitions by a Distributee Corporation'', 
tenth line of the paragraph, the language ``section A.1 of this 
preamble, section'' is corrected to read ``section A.1. of this 
preamble, section''.
    8. On page 26017, column 2, in the preamble, under the paragraph 
heading ``i. Acquisitions in Exchange for Assets'', third paragraph of 
the column, first line, the language ``As discussed in section C.1 of 
this'' is corrected to read ``As discussed in section C.1. of this''.
    9. On page 26018, column 1, in the preamble, under the paragraph 
heading ``i. Acquisitions in Exchange for Assets'', fourth paragraph of 
the column, sixth line, the language ``and (D) are satisfied. Such an'' 
is corrected to read ``and (D) is satisfied. Such an''.
    10. On page 26019, column 3, in the preamble, under the paragraph 
heading ``c. Application of Section 355(b)(2)(C) and (D) to 
Predecessors'', second paragraph of the column, third line, the 
language ``singly-entity for purposes of section'' is corrected to read 
``single-entity for purposes of section''.
    11. On page 26025, column 1, in the preamble, under the paragraph 
heading ``J. Additional Requests for Comments'', eleventh line of the 
column, the language ``sections D.1.b. and D.2.c of this'' is corrected 
to read ``sections D.1.b. and D.2.c. of this''.
    12. On page 26025, column 2, in the preamble, under the paragraph 
heading ``J. Additional Requests for Comments'', fourth line from the 
bottom of second paragraph, the language ``example, Sec.  1.355-3(c) 
Example (9)'' is corrected to

[[Page 31022]]

read ``example, Sec.  1.355-3(c) Example 9''.


Sec.  1.355-3  [Corrected]

    13. On page 26026, column 2, Sec.  1.355-3(b)(1)(i), lines eight 
and nine of the paragraph, the language ``355(b)(1). Sections 
355(b)(2)(A) and (b)(3)(A) provide that a corporation is'' is corrected 
to read ``355(b)(1). Section 355(b)(2)(A) and (b)(3)(A) provides that a 
corporation is''.
    14. On page 26026, column 2, Sec.  1.355-3(b)(1)(i), seventh line 
from the bottom of the paragraph, the language ``sections solely as a 
result of'' is corrected to read ``section solely as a result of''.
    15. On page 26028, column 1, Sec.  1.355-3(b)(4)(i)(A), fourth line 
of the paragraph, the language ``Under sections 355(b)(2)(C) and 
(b)(3), a'' is corrected to read ``Under section 355(b)(2)(C) and 
(b)(3), a''.
    16. On page 26028, column 1, Sec.  1.355-3(b)(4)(i)(A), last line 
of the column, the language ``by reasons of such transactions'' is 
corrected to read ``by reason of such transactions''.
    17. On page 26030, column 2, Sec.  1.355-3(d)(1)(iv), third line, 
the language ``within the meeting of section 368(c).'' is corrected to 
read ``within the meaning of section 368(c).''.
    18. On page 26031, column 3, Sec.  1.355-3(d)(2) Example 9.(iii), 
fourth line from the bottom of paragraph, the language ``is engaged the 
active conduct of ATB2.'' is corrected to read ``is engaged in the 
active conduct of ATB2.''.
    19. On page 26033, column 2, Sec.  1.355-3(d)(2) Example 24., lines 
six through twelve, the language ``Partnership, each of X, Y, and Z 
satisfy the requirements of paragraph (b)(2)(v)(B) of this section. 
Accordingly, each of X, Y, and Z are attributed the trade or business 
assets and activities of Partnership, satisfy the requirements of 
paragraph (b)(2)(i) of this section, and are engaged in the active'' is 
corrected to read ``Partnership, each of X, Y, and Z satisfies the 
requirements of paragraph (b)(2)(v)(B) of this section. Accordingly, 
each of X, Y, and Z is attributed the trade or business assets and 
activities of Partnership, satisfies the requirements of paragraph 
(b)(2)(i) of this section, and is engaged in the active''.
    20. On page 26034, column 1, Sec.  1.355-3(d)(2) Example 27., sixth 
line from the bottom of paragraph, the language ``recognized. 
Accordingly, if the D were to'' is corrected to read ``recognized. 
Accordingly, if D were to''.
    21. On page 26034, column 1, Sec.  1.355-3(d)(2) Example 29., 
seventh line, the language ``under section 357(c) gain on the transfer 
of'' is corrected to read ``under section 357(c) on the transfer of''.
    22. On page 26034, column 2, Sec.  1.355-3(d)(2) Example 32., sixth 
line from the bottom of paragraph, the language ``neither ATB1 nor 
control of C were acquired'' is corrected to read ``neither ATB1 nor 
control of C was acquired''.
    23. On page 26034, column 3, Sec.  1.355-3(d)(2) Example 35., 
second line from the bottom of paragraph, the language ``distribution, 
it can rely on ATB1 to satisfy'' is corrected to read ``distribution, 
it could rely on ATB1 to satisfy''.
    24. On page 26034, column 3, Sec.  1.355-3(d)(2) Example 36., 
second line, the language ``reorganization and distributions. For 
more'' is corrected to read ``reorganization and distribution. For 
more''.
    25. On page 26035, column 2, Sec.  1.355-3(d)(2) Example 39., fifth 
line from the bottom of paragraph, the language ``The result would also 
be the same if prior to'' is corrected to read ``The result would be 
the same if prior to''.
    26. On page 26035, column 2, Sec.  1.355-3(d)(2) Example 40., 
fourth line from the bottom of paragraph, the language ``The result 
would be the same if P acquired'' is corrected to read ``The results 
would be the same if P acquired''.
    27. On page 26035, column 3, Sec.  1.355-3(d)(2) Example 42., third 
line of the column, the language ``distributes all the C stock, C could 
not rely'' is corrected to read ``distributes all the C stock, C cannot 
rely''.
    28. On page 26036, column 3, Sec.  1.355-3(d)(2) Example 50., 
fifteenth line from the bottom of paragraph, the language ``if X, 
instead if S, merged into D, S would'' is corrected to read ``if X, 
instead of S, merged into D, S would''.

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
 [FR Doc. E7-10799 Filed 6-4-07; 8:45 am]
BILLING CODE 4830-01-P