[Federal Register Volume 79, Number 12 (Friday, January 17, 2014)]
[Proposed Rules]
[Pages 3145-3146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00894]


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

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-121534-12]
RIN 1545-BL00


Guidance for Determining Stock Ownership

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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

SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS and the Treasury

[[Page 3146]]

Department are issuing temporary regulations that identify certain 
stock of a foreign corporation that is disregarded in calculating 
ownership of the foreign corporation for purposes of determining 
whether it is a surrogate foreign corporation. The temporary 
regulations also provide guidance with respect to the effect of 
transfers of stock of a foreign corporation after the foreign 
corporation has acquired substantially all of the properties of a 
domestic corporation or of a trade or business of a domestic 
partnership. These regulations affect certain domestic corporations and 
partnerships (and certain parties related thereto), and foreign 
corporations that acquire substantially all of the properties of such 
domestic corporations or of the trades or businesses of such domestic 
partnerships. The text of the temporary regulations also serves as the 
text of these proposed regulations. The preamble to the temporary 
regulations explains the temporary regulations and these proposed 
regulations.

DATES: Comments and requests for a public hearing must be received by 
April 17, 2014.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-121534-12), Room 
5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
121534-12), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at www.regulations.gov (IRS REG-121534-12).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
David A. Levine, (202) 317-6937; concerning submissions of comments or 
requests for a public hearing, Oluwafunmilayo Taylor, (202) 317-6901 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to section 7874 of the Internal Revenue Code. The 
temporary regulations identify certain stock of a foreign corporation 
that is not taken into account for purposes of calculating the 
ownership percentage described in section 7874(a)(2)(B)(ii), and also 
address the effect of certain transfers of stock of a foreign 
corporation that occur after the acquisition described in section 
7874(a)(2)(B)(i). The text of those regulations also serves as the text 
of these proposed regulations. The preamble to the temporary 
regulations explains these amendments.

Special Analyses

    It has been determined that that these regulations are not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations. It is hereby 
certified that the collection of information contained in these 
regulations will not have a significant economic impact on a 
substantial number of small entities. Accordingly, a regulatory 
flexibility analysis is not required. Given the complexity and cost of 
a transaction to which these regulations may apply, the IRS and the 
Treasury Department anticipate that these regulations primarily will 
affect large domestic corporations and partnerships and their 
shareholders and partners. Although small entities could be 
shareholders or partners of a larger domestic corporation or 
partnership involved in a transaction affected by the regulations, the 
IRS and the Treasury Department do not anticipate the number of these 
shareholders or partners to be substantial. Pursuant to section 
7805(f), these regulations have been submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on their 
impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the ``Addresses'' 
heading. The IRS and the Treasury Department request comments on all 
aspects of the proposed rules. All comments will be available at 
www.regulations.gov or upon request. A public hearing will be scheduled 
if requested in writing by any person who timely submits written 
comments. If a public hearing is scheduled, notice of the date, time, 
and place for the public hearing will be published in the Federal 
Register.

Drafting Information

    The principal authors of these regulations are David A. Levine of 
the Office of Associate Chief Counsel (International) and Mary W. 
Lyons, formerly 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 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding 
entries in numerical order to read as follows:

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

    Section 1.7874-4 also issued under 26 U.S.C. 7874(c)(6) and (g). 
Section 1.7874-5 also issued under 26 U.S.C. 7874(c)(6) and (g).

0
Par. 2. Section 1.7874-4 is added to read as follows:


Sec.  1.7874-4  Disregard of certain stock related to the acquisition.

    [The text of proposed Sec.  1.7874-4(a) through (k) is the same as 
the text of Sec.  1.7874-4T(a) through (k) published elsewhere in this 
issue of the Federal Register].
0
Par. 3. Section 1.7874-5 is added to read as follows:


Sec.  1.7874-5  Effect of certain transfers of stock related to the 
acquisition.

    [The text of proposed Sec.  1.7874-5(a) through (c) is the same as 
the text of Sec.  1.7874-5T(a) through (c) published elsewhere in this 
issue of the Federal Register].

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2014-00894 Filed 1-16-14; 8:45 am]
BILLING CODE 4830-01-P