[Federal Register Volume 73, Number 230 (Friday, November 28, 2008)]
[Rules and Regulations]
[Pages 72345-72346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28211]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9433]
RIN 1545-BH23


Classification of Certain Foreign Entities

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains final regulations relating to certain 
business entities included on the list of foreign business entities 
that are always classified as corporations for Federal tax purposes. 
The regulations are needed to make the Federal tax classification of 
the Bulgarian public limited liability company (aktsionerno druzhestvo) 
consistent with the Federal tax classification of public limited 
liability companies organized in other countries of the European 
Economic Area. The regulations will affect persons owning an interest 
in a Bulgarian aktsionerno druzhestvo on or after January 1, 2007.

DATES: Effective Date: These regulations are effective on November 28, 
2008.
    Applicability Date: For the dates of applicability of these 
regulations, see Sec.  301.7701-2(e)(7).

FOR FURTHER INFORMATION CONTACT: S. James Hawes, (202) 622-3860 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    On March 21, 2008, the IRS and Treasury Department published in the 
Federal Register temporary regulations (TD 9388, 2008-17 IRB 832, 73 FR 
15064) and a notice of proposed rulemaking (REG-143468-07, 2008-17 IRB 
848, 73 FR 15107) under section 7701 of the Internal Revenue Code 
(Code). The regulations added the Bulgarian aktsionerno druzhestvo to 
the list of entities in Sec.  301.7701-2(b)(8) (the per se corporation 
list). For further background, see TD 9388 and Notice 2007-10 (2007-4 
IRB 354).
    On October 8, 2001, the Council of the European Union adopted 
Council Regulation 2157/2001 (2001 Official

[[Page 72346]]

Journal of the European Communities, L 294/1) (the EU Regulation) 
permitting the organization of a new public limited liability company, 
the Societas Europaea (SE). The EU Regulation entered into force on 
October 8, 2004. The general rules for the formation and operation of 
an SE provided by the EU Regulation are supplemented by the laws of the 
member country in which the SE has its registered office. On December 
16, 2005, the IRS and Treasury Department published final regulations 
in the Federal Register (TD 9235) adding the SE to the per se 
corporation list. The preamble to TD 9388 stated incorrectly that the 
aktsionerno druzhestvo is Bulgaria's SE. In fact, the aktsionerno 
druzhestvo is a public limited liability company organized in Bulgaria. 
The IRS and Treasury Department continue to study issues related to the 
residence of an SE for application of relevant Federal income tax 
provisions, such as the same-country exception under section 954(c)(3) 
of the Code. Comments are requested.

Explanation of Provisions

    No written comments were received from the public or the Small 
Business Administration on the temporary or proposed regulations. No 
public hearing was requested or held. Accordingly, these regulations 
finalize the proposed regulations without modification and remove the 
text of the temporary regulations from the Code of Federal Regulations.

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 has also been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. Chapter 5) does not apply to these regulations. Because the 
regulations do not impose a collection of information requirement on 
small entities, the Regulatory Flexibility Act (5 U.S.C. Chapter 6) 
does not apply either. Pursuant to section 7805(f) of the Internal 
Revenue Code, the notice of proposed rulemaking preceding this 
regulation was 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 S. James Hawes of the 
Office of Associate Chief Counsel (International); however, other 
personnel from the IRS and the Treasury Department participated in 
their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in 
part as follows:

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


0
Par. 2. Section 301.7701-2 is amended by:
0
1. Adding an entry in alphabetical order to paragraph (b)(8)(i).
0
2. Removing paragraph (b)(8)(vi).
0
3. Revising paragraph (e)(7).
    The revisions and addition read as follows:


Sec.  301.7701-2  Business entities; definitions.

* * * * *
    (b) * * *
    (8) * * *
    (i) * * *
    Bulgaria, Aktsionerno Druzhestvo.
* * * * *
    (e) * * *
    (7) The reference to the Bulgarian entity in paragraph (b)(8)(i) of 
this section applies to such entities formed on or after January 1, 
2007, and to any such entity formed before such date from the date 
that, in the aggregate, a 50 percent or more interest in such entity is 
owned by any person or persons who were not owners of the entity as of 
January 1, 2007. For purposes of the preceding sentence, the term 
interest means--
    (i) In the case of a partnership, a capital or profits interest; 
and
    (ii) In the case of a corporation, an equity interest measured by 
vote or value.


Sec.  301.7701-2T  [Removed]

0
Par. 3. Section 301.7701-2T is removed.

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
    Approved: October 31, 2008.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
 [FR Doc. E8-28211 Filed 11-26-08; 8:45 am]
BILLING CODE 4830-01-P