[Federal Register Volume 73, Number 248 (Wednesday, December 24, 2008)]
[Rules and Regulations]
[Page 78969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30716]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9434]
RIN 1545-BC88


Creditor Continuity of Interest; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

-----------------------------------------------------------------------

SUMMARY: This document contains a correction to final regulations (TD 
9434) that were published in the Federal Register on Friday, December 
12, 2008 (73 FR75566) providing guidance regarding when and to what 
extent creditors of a corporation will be treated as proprietors of the 
corporation in determining whether continuity of interest (``COI'') is 
preserved in a potential reorganization. These final regulations are 
necessary to provide clarity to parties engaging in reorganizations of 
insolvent corporations, both inside and outside of bankruptcy. These 
final regulations affect corporations, their creditors, and their 
shareholders.

DATES: Effective Date: This correction is effective December 24, 2008 
and is applicable on December 12, 2008.

FOR FURTHER INFORMATION CONTACT: Jean Brenner (202) 622-7790, Douglas 
Bates (202) 622-7550, or Bruce Decker (202) 622-7550 (not toll-free 
numbers).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations that are the subject of this document are 
under section 368 of the Internal Revenue Code.

Need for Correction

    As published, final regulations (TD 9434) contains an error that 
may prove to be misleading and is in need of clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

0
Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendment:

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(e)(6)(ii)(A) is amended by revising the last 
sentence as follows:


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

    (e) * * *
    (6) * * *
    (ii) * * *
    (A) * * * When only one class (or one set of equal classes) of 
creditors receives issuing corporation stock in exchange for a 
creditor's proprietary interest in the target corporation, such stock 
will be counted for measuring continuity of interest provided that the 
stock issued by the issuing corporation is not de minimis in relation 
to the total consideration received by the insolvent target 
corporation, its shareholders, and its creditors.
* * * * *

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
 [FR Doc. E8-30716 Filed 12-23-08; 8:45 am]
BILLING CODE 4830-01-P