[Federal Register Volume 72, Number 214 (Tuesday, November 6, 2007)]
[Proposed Rules]
[Pages 62608-62609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21820]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-143397-05]
RIN 1545-BE99


Partner's Distributive Share; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to notice of proposed regulations.

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SUMMARY: This document contains corrections to the notice of proposed 
regulations (REG-143397-05) that was published in the Federal Register 
on Wednesday, August 22, 2007 (72 FR 46932) concerning the application 
of sections 704(c)(1)(B) and 737 to distributions of property after two 
partnerships engage in an assets-over merger. The proposed regulations 
affect partnerships and their partners.

FOR FURTHER INFORMATION CONTACT: Jason Smyczek or Laura Fields at (202) 
622-3050 (not toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The notice of proposed rulemaking (REG-143397-05) that is the 
subject of these corrections is under sections 704(c) and 737 of the 
Internal Revenue Code.

Need for Correction

    As published, this notice of proposed rulemaking (REG-143397-05) 
contains errors that may prove to be misleading and are in need of 
clarification.

Correction for Publication

    Accordingly, the notice of proposed rulemaking (REG-143397-05) that 
was the subject of FR Doc. E7-16189 is corrected as follows:
    1. On page 46932, column 1, the heading, the subject ``Partner's 
Distributive Share'' is corrected to read ``Rules for Contribution and 
Subsequent Distribution of Section 704(c) Property in Connection with 
Partnership Mergers''.
    2. On page 46932, column 3, in the preamble under the paragraph 
heading Background, first full paragraph in the column, line 6, the 
language ``described in Sec.  1.708-1(c)(3). Rev. Rul.'' is corrected 
to read ``described in Sec.  1.708-1(c)(3)(i). Rev. Rul.''.
    3. On page 46933, column 3, in the preamble under the paragraph 
heading ``A. Assets-Over Partnership Mergers'', first full paragraph in 
the column, line 2, the language ``3(c)(4)(iii) provide that taxpayers 
may'' is corrected to read ``3(a)(9) provide that taxpayers may''.


Sec.  1.704-3  [Corrected]

    4. On page 46934, column 2, Sec.  1.704-3(a)(9), line 6, the 
language ``Sec.  1.708-1(c)(3) (the transferor'' is corrected to read 
``Sec.  1.708-1(c)(3)(i) (the transferor''.


Sec.  1.704-4  [Corrected]

    5. On page 46935, column 1, Sec.  1.704-4(c)(4), line 3 from the 
top of the column, the language ``Sec.  1.708-1(c)(3) by a partnership 
(the'' is corrected to read ``Sec.  1.708-1(c)(3)(i) by a partnership 
(the''.
    6. On page 46935, column 2, Sec.  1.704-4(c)(4)(ii)(B), second line 
from the bottom of the paragraph is corrected to read ``See Sec.  
1.737-2(b)(1)(ii)(B) for a similar rule in''.
    7. On page 46935, column 3, Sec.  1.704-4(c)(4)(ii)(E) is corrected 
by adding a

[[Page 62609]]

sentence at the end of the paragraph to read as follows:


Sec.  1.704-4  Distribution of contributed property.

* * * * *
    (c) * * *
    (4) * * *
    (ii) * * *
    (E) * * * See Sec.  1.737-2(b)(1)(ii)(E) for a similar rule in the 
context of section 737.
* * * * *
    8. On page 46936, column 1, Sec.  1.704-4(c)(4)(ii)(F), Example 
(2)(i), line 7 from the bottom of the paragraph, the language ``fair 
market value of $400x, and $450x in'' is corrected to read ``fair 
market value of $400x, and $400x in''.
    9. On page 46936, column 1, Sec.  1.704-4(c)(4)(ii)(F), Example 
(2)(i), lines 3 and 4 from the bottom of the paragraph, the language 
``PRS1 as follows: A, 25%; B, 25%; C, 16.67%; D, 16.67% and E, 16.67%. 
On January 1,'' is corrected to read ``PRS1 as follows: A, 25.76 
percent; B, 25.76 percent; C, 16.16 percent; D, 16.16 percent; and E, 
16.16 percent. On January 1,''.
    10. On page 46936, column 2, Sec.  1.704-4(c)(4)(ii)(F), Example 
(2)(ii), first line of the column, the language ``as a result of the 
merger. C also has $100 of'' is corrected to read ``as a result of the 
merger. C also has $100x of''.
    11. On page 46936, column 2, Sec.  1.704-4(c)(4)(ii)(F), Example 
(3)(i), lines 3 and 4 from the bottom of the paragraph, the language 
``loss interests in PRS1 as follows: A, 27.5%; B, 27.5%; C, 15%; D, 15% 
and E, 15%. On'' is corrected to read ``loss interests in PRS1 as 
follows: A, 27.5 percent; B, 27.5 percent; C, 15 percent; D, 15 
percent; and E, 15 percent. On''.
    12. On page 46936, column 2, Sec.  1.704-4(c)(4)(ii)(F), Example 
(3)(i), last line of the paragraph, the language ``when its value is 
still $600.'' is corrected to read ``when its value is still $600x.''
    13. On page 46936, column 2, Sec.  1.704-4(c)(4)(ii)(F), Example 
(3)(ii), line 8, the language ``($600x (fair market value)--100x 
(adjusted'' is corrected to read ``($600x (fair market value)--$100x 
(adjusted''.
    14. On page 46936, column 2, Sec.  1.704-4(c)(4)(ii)(F), Example 
(3)(ii), line 5 from the bottom of the paragraph, the language ``E each 
succeed to $150 of new section 704(c)'' is corrected to read ``E each 
succeed to $150x of new section 704(c)''.
    15. On page 46936, column 2, Sec.  1.704-4 paragraph (c)(4)(ii)(F), 
Example (3)(ii), last line of the paragraph, the language ``recognize 
$150 of gain.'' is corrected to read ``recognize $150x of gain.''.
    16. On page 46936, column 3, Sec.  1.704-4(c)(4)(ii)(F), Example 
(5)(i), line 5 from the bottom of the paragraph, the language ``of the 
partnerships, A contributed the Asset'' is corrected to read ``of the 
partnerships, A contributed Asset''.
    17. On page 46936, column 3, Sec.  1.704-4(c)(4)(ii)(F), Example 
(5)(ii), last line of the paragraph, the language ``distributes all of 
Asset X to A.'' is corrected to read ``distributes Asset X to A.''.


Sec.  1.737-2  [Corrected]

    18. On page 46937, column 1, item 2 in instructional Par. 5. is 
corrected, and item 3 is added to read as follows:
    Par. 5. Section 1.737-2 is amended as follows:
    1. * * *
    2. Paragraph (e) is redesignated as paragraph (f).
    3. New paragraph (e) is added.
    The addition and revision read as follows:


Sec.  1.737-2  Exceptions and special rules.

* * * * *
    (e) Reverse section 704(c) gain. * * *
    19. On page 46938, column 3, Sec.  1.737-2(b)(1)(ii)(F), Example 
(5)(ii), line 2 from the bottom of the paragraph, the language 
``liabilities. In 2006, PRS2 distributes all of'' is corrected to read 
``liabilities. In 2006, PRS2 distributes''.

Cynthia Grigsby,
Senior Federal Register Liaison Officer, Publications and Regulations 
Branch, Legal Processing Division, Associate Chief Counsel (Procedure 
and Administration).
[FR Doc. E7-21820 Filed 11-5-07; 8:45 am]
BILLING CODE 4830-01-P