[Federal Register Volume 79, Number 36 (Monday, February 24, 2014)]
[Proposed Rules]
[Pages 10054-10055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03767]


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

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-120282-10]
RIN 1545-BJ56


Dividend Equivalents From Sources Within the United States; 
Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to a withdrawal of notice of proposed rulemaking, 
notice of proposed rulemaking and notice of public hearing.

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

SUMMARY: This document contains corrections to a withdrawal of notice 
of proposed rulemaking, notice of proposed rulemaking and notice of 
public hearing (REG-120282-10) that was published in the Federal 
Register on Thursday, December 5, 2013 (78 FR 73128). The proposed 
rules provide guidance to nonresident alien individuals and foreign 
corporations that hold certain financial products providing for 
payments that are contingent upon or determined by reference to U.S. 
source dividend payments and to withholding agents.

DATES: Written or electronic comments and requests for a public hearing 
for the notice of proposed rulemaking published at 78 FR 73129, 
December 5, 2013 are still being accepted and must be received by March 
5, 2014.

FOR FURTHER INFORMATION CONTACT: D. Peter Merkel at (202) 317-6938 (not 
a toll free number).

SUPPLEMENTARY INFORMATION:

Background

    The withdrawal of notice of proposed rulemaking, notice of proposed 
rulemaking and notice of public hearing (REG-120282-10) that is the 
subject of these corrections is under section 871 of the Internal 
Revenue Code.

Need for Correction

    As published, withdrawal of notice of proposed rulemaking, notice 
of proposed rulemaking and notice of public hearing (REG-120282-10) 
contains errors that may prove to be misleading and are in need of 
clarification.

Correction of Publication

    Accordingly, withdrawal of notice of proposed rulemaking, notice of 
proposed rulemaking and notice of public hearing (REG-120282-10), that 
was the subject of FR Doc. 2013-28932, is corrected as follows:
    1. On page 73131, in the preamble, first column, under paragraph 
heading ``B. Definition of ELI'', second line, the language ``specified 
ELI in the 2012 proposed'' is corrected to read ``a specified ELI in 
the 2012 proposed''
    2. On page 73134, in the preamble, second column, twelfth line from 
the bottom of the page, the language ``security referenced in the 
contract'' is corrected to read ``security referenced in the 
transaction''.
    3. On page 73135, in the preamble, third column, fifteenth line of 
the first full paragraph, the language ``any of the following to has 
occurred: (a)'' is corrected to read ``any of the following has 
occurred: (a)''.
    4. On page 73135, in the preamble, third column, Twelfth line from 
the bottom of the page, the language ``option with a delta below 0.7, 
or both.'' is corrected to read ``option with a delta below 0.70, or 
both.''
    5. On page 73136, in the preamble, second column, seventh line from 
the top of the page, the language ``for April 11, 2013, beginning at 10 
a.m.'' is corrected to read ``for April 11, 2014, beginning at 10 
a.m.''.


Sec.  1.871-15  [Corrected]

    6. On Page 73137, first column, the first sentence of paragraph 
(a)(7)(iv)(B) Example. (i) should read ``Stock X and Stock Y are 
underlying securities within the meaning of paragraph (a)(11) of this 
section.''.
    7. On page 73137, third column, the first sentence of paragraph 
(c)(2)(i) should read ``A payment pursuant to a section 871(m) 
transaction that references a distribution with respect to an 
underlying security is not a dividend equivalent to the extent that the

[[Page 10055]]

distribution would not be subject to tax pursuant to section 871 or 
881, or withholding under chapter 3 or 4, if the long party owned the 
underlying security referenced by the section 871(m) transaction.''.
    8. On page 73137, third column, the first sentence of paragraph (e) 
should read ``With respect to payments made on or after January 1, 
2016, a specified ELI is any ELI acquired by the long party on or after 
March 5, 2014, that has a delta of 0.70 or greater with respect to an 
underlying security at the time that the long party acquires the 
ELI.''.
    9. On page 73141, first column, paragraph (l)(6) Example 3. (ii) 
should read ``FI's purchased call option has an initial delta of 0.75 
and therefore is a specified ELI and a section 871(m) transaction. FI's 
purchased call option and sold put option reference the same underlying 
security. Because FI sold the put option referencing Stock X to adjust 
FI's economic position associated with the call option referencing 
Stock X, these options are entered into in connection with each other 
and treated as a combined transaction under paragraph (l)(1) of this 
section. Because the delta of the combined transaction is tested on the 
date that FI entered into the additional transaction, the delta of the 
combined purchased call option and sold put option is 0.60 (0.35 + 
0.25). The combined transaction is not a specified ELI; however, the 
purchased call option remains a specified ELI.''.


Sec.  1.1441-1  [Corrected]

    10. On page 73142, third column, paragraph (b)(4)(xxiii) should 
read ``If a potential section 871(m) transaction is only a section 
871(m) transaction as a result of applying Sec.  1.871-15(l) (combined 
transactions) and the withholding agent did not know that the long 
party (or a related person) entered into the potential section 871(m) 
transaction in connection with any other potential section 871(m) 
transaction, the potential section 871(m) transaction is exempt from 
withholding under section 1441(a).''.

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2014-03767 Filed 2-21-14; 8:45 am]
BILLING CODE 4830-01-P