[Federal Register Volume 80, Number 178 (Tuesday, September 15, 2015)]
[Rules and Regulations]
[Pages 55243-55246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23137]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9737]
RIN 1545-BK96


Controlled Group Regulation Examples

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final rules with revisions to examples 
that illustrate the controlled group rules applicable to regulated 
investment companies (RICs). The revised examples illustrate how the 
controlled group rules affect the RIC asset diversification tests.

DATES: Effective Date: These regulations are effective on September 15, 
2015.
    Applicability Dates: For dates of applicability, see Sec. Sec.  
1.851-3(b), 1.851-5(b).

FOR FURTHER INFORMATION CONTACT: Julanne Allen or Susan Baker of the 
Office of Associate Chief Counsel (Financial Institutions and Products) 
at (202) 317-6945 (Julanne Allen) or (202) 317-7053 (Susan Baker) (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the Income Tax Regulations (26 
CFR, part 1) relating to the application of the controlled group rules 
under section 851(c) to RICs.
    To qualify as a RIC, a taxpayer must meet asset diversification 
tests pursuant to which, at the close of each quarter of the RIC's 
taxable year, not more than 25 percent of the value of the taxpayer's 
total assets may be invested in (i) the securities (other than 
Government securities or the securities of other RICs) of any one 
issuer; (ii) the securities (other than the securities of other RICs) 
of two or more issuers that the taxpayer controls and that are 
determined, under regulations prescribed by the Secretary, to be 
engaged in the same or similar trades or businesses or related trades 
or businesses; or (iii) the securities of one or more qualified 
publicly traded partnerships (as defined in section 851(h)) (the 25 
percent tests). See section 851(b)(3)(B).
    Section 851(c) provides special rules applicable to the asset 
diversification requirements of section 851(b)(3), including the 25 
percent tests. The controlled group rules in section 851(c)(1) provide 
that, when ascertaining the value of a taxpayer's investment in the 
securities of an issuer for purposes of determining whether the 25 
percent tests have been met, the taxpayer's proper proportion of any 
investment in the securities of such issuer that are held by a member 
of the taxpayer's ``controlled group'' must be aggregated with the 
taxpayer's investment in such issuer, as determined under regulations.
    Section 851(c)(3) defines a controlled group as one or more chains 
of corporations connected through stock ownership with the taxpayer if 
(i) 20 percent or more of the total combined voting power of all 
classes of stock entitled to vote of each of the corporations (except 
the taxpayer) is owned directly by one or more of the other 
corporations, and (ii) the taxpayer owns directly at least 20 percent 
or more of the total combined voting power of all classes of stock 
entitled to vote of at least one of the other corporations.
    On August 2, 2013, the Treasury Department and the IRS published in 
the Federal Register a notice of proposed rulemaking (REG-114122-12 at 
78 FR 46851) (NPRM). The proposed regulations would revise certain 
examples in Sec.  1.851-5 to clarify that a RIC and its controlled 
subsidiary are a controlled group even if the group consists of only 
that RIC and its subsidiary.
    No public hearing was requested or held. Written comments 
responding to the NPRM were received. The written comments are 
available for public inspection at http://www.regulations.gov or upon 
request. After consideration of all the comments, these final 
regulations adopt the provisions of the proposed regulations with 
certain clarifications. The comments and clarifications are discussed 
in this preamble.

Summary of Comments and Explanation of Revisions

    Comments received in response to the NPRM's request for comments 
addressed three general categories of issues: (1) application of the 
proposed changes to a parent RIC investing in the stock of subsidiary 
RICs (a Fund of Funds structure); (2) application of the proposed 
changes to a RIC's indirect investment in qualified publicly traded 
partnerships, as defined in section 851(h) (QPTPs); and (3) 
clarification of existing regulatory language implementing the 
controlled group rules of section 851(c).

1. Fund of Funds

    Commenters recognized that the changes to the examples in Sec.  
1.851-5 apply to structures in which the investments of a RIC (Upper 
RIC) include stock of one or more subsidiary RICs (Lower RICs). 
Commenters noted that there may be uncertainty in determining whether 
an Upper RIC satisfies its 25 percent tests when what might otherwise 
be a quarter-end violation by the Lower RIC is saved from being a 
violation by one or both of the relief provisions in section 851(d)(1) 
(sometimes called the ``market value exception'' and the ``30-day cure 
provision'') or when the Upper RIC and a Lower RIC have different 
quarter end testing dates.
    To resolve this uncertainty, commenters urged the Treasury 
Department and the IRS either to provide a safe harbor for Fund of 
Funds structures or to exempt these structures from the controlled 
group rules. Commenters noted that securities of RICs are listed as 
qualifying assets for purposes of the ``good asset'' 50 percent test of 
section 851(b)(3)(A) and are correspondingly excluded from the 
categories of assets listed in the 25 percent tests set forth in 
sections 851(b)(3)(B)(i) and (ii). In response to these requests, the 
Treasury Department and the IRS are issuing Revenue Procedure 2015-45 
(2015-39 IRB dated September 28, 2015), which describes conditions 
under which the IRS will treat an Upper RIC that invests in one or more 
Lower RICs as satisfying the 25 percent tests and provides procedures 
to lessen the burden of demonstrating compliance with the 25 percent 
tests, applying the market value exception and the 30-day cure 
provision, and dealing with different quarter-end testing dates.

2. QPTPs

    Comments were received both on the revised language in Example 1 
and on proposed Example 7. Example 7 illustrates the application of the 
controlled group rules to a RIC's indirect investment in securities of 
QPTPs.
    In 2004, Congress enacted section 851(b)(2)(B), which facilitated

[[Page 55244]]

investment by RICs in equity interests of QPTPs by providing that net 
income from an interest in a QPTP would be treated as qualifying income 
under the RIC income test set forth in section 851(b)(2) without regard 
to the character of the income earned by the QPTP. Congress provided 
for this new ability of RICs to invest in QPTPs to improve QPTP access 
to U.S. capital markets.\1\
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    \1\ ``The Congress understood that . . .[p]ublicly traded 
partnerships with specified types of income are not treated as 
corporations, however, for the reason that if the income is from 
sources that are commonly considered to be passive investments, then 
there is less reason to treat the publicly traded partnership as a 
corporation. The Congress understood that these types of publicly 
traded partnerships may have improved access to capital markets if 
their interests were permitted investments of mutual funds. 
Therefore, the Act treats publicly traded partnership interests as 
permitted investments for mutual funds (`RICs').'' Joint Committee 
on Taxation, General Explanation of Tax Legislation Enacted in the 
108th Congress at 249 (JCS-5-05), May 2005 (footnote omitted).
---------------------------------------------------------------------------

    At the same time, however, Congress enacted section 
851(b)(3)(B)(iii), which limits a RIC's investment in securities of one 
or more QPTPs to not more than 25 percent of the value of the RIC's 
assets. The Ways and Means Committee report explained the rationale for 
this limitation by stating:

    [T]he Committee bill requires that present-law limitations on 
ownership and composition of assets of mutual funds apply to any 
investment in a publicly traded partnership by a mutual fund. The 
Committee believes that these limitations will serve to limit the 
use of mutual funds as conduits for avoidance of unrelated business 
income tax or withholding rules [for effectively connected income] 
that would otherwise apply with respect to publicly traded 
partnership income.

    H.R. Rep. No. 108-548, pt. 1 at 152 (2004). Commenters relied on 
this legislative history in support of their position that the section 
851(b)(3)(B)(iii) QPTP test (which focuses on a RIC's holdings of 
securities of a category of issuers) is fundamentally different from 
the section 851(b)(3)(B)(i) and (ii) tests (which focus on a RIC's 
holdings of securities of particular issuers). These commenters 
contended that an interest in a QPTP should not be subject to the 
clarified controlled group rules in the NPRM when the interest in the 
QPTP is held by a corporation that is not a RIC.
    The Treasury Department and the IRS do not find this argument 
sufficiently persuasive to overcome the plain language of section 
851(c) regarding the application of the controlled group rules. 
Pursuant to its introductory language, section 851(c) applies generally 
``[f]or purposes of subsection 851(b)(3),'' and pursuant to section 
851(c)(1), the look-through rule for controlled group members applies 
specifically ``for purposes of subparagraph (B)'' of section 851(b)(3), 
in each case without distinguishing between the various 25 percent 
tests. Moreover, the Treasury Department and the IRS note that 
Congress, in the same legislation in which it enacted section 
851(b)(3)(B)(iii), had the opportunity to amend these rules in the 
manner urged by the commenters. In that legislation, Congress made 
other changes to conform section 851(c) to the changes relating to 
QPTPs by redesignating former section 851(c)(5) as section 851(c)(6) 
and adding a new section 851(c)(5), which defines the term 
``outstanding voting securities of such issuer'' to include equity 
securities of QPTPs. Congress made no changes, however, to limit the 
application of the section 851(c) controlled group rules to solely the 
25 percent tests under section 851(b)(3)(i) and (ii).
    Thus, the Treasury Department and the IRS believe, consistent with 
the statutory language, that the controlled group rules should apply to 
section 851(b)(3)(B)(iii) because (1) Congress specifically provided 
that a RIC's investment in QPTP securities should be limited to 25 
percent of the RIC's total asset value; (2) the controlled group rules 
of section 851(c) by their terms apply to all of section 851(b)(3), 
including section 851(b)(3)(B)(iii); and (3) Congress did not carve out 
section 851(b)(3)(B)(iii) when it updated section 851(c).

3. Clarifying regulatory language

    Some practitioners have interpreted section 851(c)(3) to require 
the presence of at least two levels of controlled entities for a 
controlled group to exist and have relied on certain of the examples in 
the existing regulations to support this interpretation. These final 
regulations clarify, through revisions to the existing examples, that 
as few as two corporations are enough to constitute a controlled group 
if the ownership requirements of section 851(c)(3) are met.
    The Treasury Department and the IRS believe that the interpretation 
of the controlled group rules reflected in these final regulations is 
consistent with both the statutory language of section 851(c)(3) and 
the well-established interpretation of analogous Code provisions. For 
example, for purposes of the consolidated return rules, the IRS has 
consistently treated a parent and its directly owned subsidiary as 
``affiliated'' within the meaning of section 1504(a)(1). Similarly, in 
limiting certain tax benefits for affiliated corporations, the IRS 
treats a parent and its subsidiary as a ``controlled group'' under 
section 1563, which uses language similar to section 1504(a). See 
section 1563(a)(1) and Sec.  1.1563-1(a)(2)(ii),

    Example 1. The interpretation reflected in these final 
regulations is also consistent with the purpose of section 
851(c)(3), which is to aggregate the investments of a RIC's related 
corporations for purposes of determining whether the RIC satisfies 
its 25 percent tests.

    As stated in the preamble to the NPRM, the Treasury Department and 
the IRS believe that the language in the examples in the existing 
regulations was intended merely to simplify the description of certain 
fact patterns and not to articulate a legal interpretation that is 
inconsistent with the statutory language of section 851(c) and the 
construction of substantially similar language elsewhere in the Code.
    Commenters noted that Sec.  1.851-3 states that ``[i]n determining 
the value of the taxpayer's investment in the securities of any one 
issuer, for the purposes of subparagraph (B) of section 851(b)[(3)], 
there shall be included its proper proportion of the investment of any 
other corporation, a member of a controlled group, in the securities of 
such issuer'' (emphasis added). Commenters cited the phrase ``any one 
issuer'' in support of the proposition that the controlled group rules 
should not be applied for purposes of section 851(b)(3)(B)(iii), which 
addresses not the value of a RIC's direct and indirect holdings of 
securities of any single issuer but rather a RIC's aggregate direct and 
indirect holdings of securities of a category of issuers (that is, 
QPTPs). While the Treasury Department and the IRS do not believe that 
the use of ``any one issuer'' in Sec.  1.851-3 bears the weight these 
commenters attribute to it, in order to respond to the comment and more 
closely align Sec.  1.851-3 with the statutory language of section 
851(c)(1), these final regulations update the language of Sec.  1.851-3 
by changing ``any one issuer'' to ``an issuer.''
    Commenters similarly maintained that because section 851(c)(1) 
refers to use of the controlled group rules ``in ascertaining the value 
of the taxpayer's investment in the securities of an issuer'' (emphasis 
added), the rules should not apply for purposes of a limitation that 
applies to holdings of securities in a category of issuers, such as the 
section 851(b)(3)(B)(iii) limitation on investment in QPTPs. The 
Treasury Department and the IRS do not agree with this reading of the 
statute. As noted above, the controlled group rules expressly apply for 
purposes of section 851(b)(3)(B) without qualification. The

[[Page 55245]]

Treasury Department and the IRS believe that the more natural reading 
of the statutory language is that, in assessing compliance with section 
851(b)(3), a RIC applies the controlled group rules to determine its 
indirect holdings in each individual issuer (including each QPTP), and 
the RIC then aggregates its direct and indirect holdings in each 
individual issuer for purposes of applying the test in section 
851(b)(3)(B)(i); aggregates its direct and indirect holdings of 
securities of issuers engaged in the same or similar trades or 
businesses or related trades or businesses for purposes of applying the 
test in section 851(b)(3)(ii); and aggregates its direct and indirect 
holdings of securities of issuers that are QPTPs for purposes of 
applying the test in section 851(b)(3)(iii).
    Finally, commenters suggested that operative rules should be set 
forth in substantive rules in addition to being demonstrated in the 
examples. They urged the Treasury Department and the IRS to provide 
regulatory text setting forth general rules, with the examples in Sec.  
1.851-5 demonstrating the application of those rules. The Treasury 
Department and the IRS believe that the revised examples are intended 
to, and do, make sufficiently clear how the statutory rules are to be 
interpreted and applied, and accordingly no changes are being made in 
response to this comment.

Applicability Date

    The final regulations apply to quarters that begin on or after 
December 14, 2015. Under section 851(d)(1), whether a taxpayer loses 
status as a RIC in one quarter may depend on whether the taxpayer 
satisfied section 851(b)(3) and (c) at the close of one or more prior 
quarters. For purposes of applying the first sentence of section 
851(d)(1) to a quarter that begins on or after March 14, 2016, these 
final regulations apply in determining whether the taxpayer met the 
requirements of section 851(b)(3) and (c) at the close of prior 
quarters.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact 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, and because the regulations do not impose a 
collection of information on small entities, the Regulatory Flexibility 
Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of 
the Code, the proposed regulations preceding these final regulations 
were submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on their impact on small businesses. No 
comments were received.

Drafting Information

    The principal author of these regulations is Julanne Allen, Office 
of Associate Chief Counsel (Financial Institutions and Products). 
However, other personnel from the Treasury Department and the IRS 
participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

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

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

    Sections 1.851-3 and 1.851-5 are also issued under 26 U.S.C. 
851(c).
* * * * *

0
Par. 2. Section 1.851-3 is revised to read as follows:


Sec.  1.851-3  Rules applicable to section 851(b)(3).

    (a) In general. In determining the value of the taxpayer's 
investment in the securities of an issuer, for purposes of subparagraph 
(B) of section 851(b)(3), there shall be included its proper proportion 
of the investment of any other corporation, a member of a controlled 
group, in the securities of such issuer. See Example 4 in Sec.  1.851-
5. For purposes of Sec. Sec.  1.851-2, 1.851-4, 1.851-5, and 1.851-6, 
the terms ``controls,'' ``controlled group,'' and ``value'' have the 
meaning assigned to them by section 851(c). All other terms used in 
these sections have the same meaning as when used in the Investment 
Company Act of 1940 (15 U.S.C., chapter 2D), as amended.
    (b) Effective/applicability dates. The rules of this section apply 
to quarters that begin on or after December 14, 2015. For purposes of 
applying the first sentence of section 851(d)(1) to a quarter that 
begins on or after March 14, 2016, the rules of this section apply in 
determining whether the taxpayer met the requirements of section 
851(b)(3) and (c) at the close of prior quarters.


0
Par. 3. Section 1.851-5 is revised to read as follows:


Sec.  1.851-5  Examples.

    (a) Examples. The provisions of section 851 may be illustrated by 
the following examples:

    Example 1. (i) Investment Company W at the close of its first 
quarter of its taxable year has its assets invested as follows:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Cash.........................................................          5
Government securities........................................         10
Securities of regulated investment companies.................         20
Securities of Corporation A..................................         10
Securities of Corporation B..................................         15
Securities of Corporation C..................................         20
Securities of various corporations (not exceeding 5 percent           20
 of its assets in any one company)...........................
                                                              ----------
  Total......................................................        100
------------------------------------------------------------------------

    (ii) Investment Company W owns all of the voting stock of 
Corporations A and B, 15 percent of the voting stock of Corporation 
C, and less than 10 percent of the voting stock of regulated 
investment companies and various other corporations. Neither 
Corporation A nor Corporation B owns:
    (A) 20 percent or more of the voting stock of any other 
corporation;
    (B) Securities issued by Corporation C; or
    (C) Securities issued by any of the regulated investment 
companies or various corporations whose securities are owned by 
Investment Company W. Except for Corporation A and Corporation B, 
none of the corporations (including the regulated investment 
companies) is a member of a controlled group with Investment Company 
W.
    (iii) Investment Company W meets the requirements under section 
851(b)(3) at the end of its first quarter. It complies with 
subparagraph (A) of section 851(b)(3) because it has 55 percent of 
its assets invested as provided in that subparagraph. It complies 
with subparagraph (B) of section 851(b)(3) because it does not have 
more than 25 percent of its assets invested in the securities of any 
one issuer, of two or more issuers that it controls, or of one or 
more qualified publicly traded partnerships (as defined in section 
851(h)).
    Example 2. (i) Investment Company V at the close of a particular 
quarter of the taxable year has its assets invested as follows:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Cash.........................................................         10
Government securities........................................         35
Securities of Corporation A..................................          7
Securities of Corporation B..................................         12
Securities of Corporation C..................................         15
Securities of Corporation D..................................         21
                                                              ----------
  Total......................................................        100
------------------------------------------------------------------------

    (ii) Investment Company V fails to meet the requirements of 
subparagraph (A) of section

[[Page 55246]]

851(b)(3) since its assets invested in Corporations A, B, C, and D 
exceed in each case 5 percent of the value of the total assets of 
the company at the close of the particular quarter.
    Example 3. (i) Investment Company X at the close of a particular 
quarter of the taxable year has its assets invested as follows:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Cash and Government securities...............................         20
Securities of Corporation A..................................          5
Securities of Corporation B..................................         10
Securities of Corporation C..................................         25
Securities of various corporations (not exceeding 5 percent           40
 of its assets in any one company)...........................
                                                              ----------
  Total......................................................        100
------------------------------------------------------------------------

    (ii) Investment Company X owns more than 20 percent of the 
voting power of Corporations B and C and less than 10 percent of the 
voting power of all of the other corporations. Corporation B 
manufactures radios and Corporation C acts as its distributor and 
also distributes radios for other companies. Investment Company X 
fails to meet the requirements of subparagraph (B) of section 
851(b)(3) since it has 35 percent of its assets invested in the 
securities of two issuers which it controls and which are engaged in 
related trades or businesses.
    Example 4. (i) Investment Company Y at the close of a particular 
quarter of its taxable year has its assets invested as follows:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Cash and Government securities...............................         15
Securities of Corporation K (a regulated investment company).         30
Securities of Corporation A..................................         10
Securities of Corporation B..................................         20
Securities of various corporations (not exceeding 5 percent           25
 of its assets in any one company)...........................
                                                              ----------
  Total......................................................        100
------------------------------------------------------------------------

    (ii) Corporation K has 20 percent of its assets invested in 
Corporation L, and Corporation L has 40 percent of its assets 
invested in Corporation B. Corporation A also has 30 percent of its 
assets invested in Corporation B. Investment Company Y owns more 
than 20 percent of the voting power of Corporations A and K. 
Corporation K owns more than 20 percent of the voting power of 
Corporation L.
    (iii) At the end of that quarter, Investment Company Y is 
disqualified under subparagraph (B)(i) of section 851(b)(3) because, 
after applying section 851(c)(1), more than 25 percent of the value 
of Investment Company Y's total assets is invested in the securities 
of Corporation B. This result is shown by the following calculation:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Percentage of assets invested directly in Corporation B......       20.0
Percentage invested indirectly through K and L (30% x 20% x          2.4
 40%)........................................................
Percentage invested indirectly through A (10% x 30%).........        3.0
                                                              ----------
  Total percentage of assets of Investment Company Y invested       25.4
   in Corporation B..........................................
------------------------------------------------------------------------

    Example 5. Investment Company Z, which keeps its books and makes 
its returns on the basis of the calendar year, at the close of the 
first quarter of 2016 meets the requirements of section 851(b)(3) 
and has 20 percent of its assets invested in Corporation A. Later 
during the taxable year it makes distributions to its shareholders 
and because of such distributions, it finds at the close of the 
taxable year that it has more than 25 percent of its remaining 
assets invested in Corporation A. Investment Company Z does not lose 
its status as a regulated investment company for the taxable year 
2016 because of such distributions, nor will it lose its status as a 
regulated investment company for any subsequent year solely as a 
result of such distributions. See section 851(d)(1).
    Example 6. Investment Company Q, which keeps its books and makes 
its returns on the basis of the calendar year, at the close of the 
first quarter of 2016 meets the requirements of section 851(b)(3) 
and has 20 percent of its assets invested in Corporation P. At the 
close of the taxable year 2016, it finds that it has more than 25 
percent of its assets invested in Corporation P. This situation 
results entirely from fluctuations in the market values of the 
securities in Investment Company Q's portfolio and is not due in 
whole or in part to the acquisition of any security or other 
property. Investment Company Q does not lose its status as a 
regulated investment company for the taxable year 2016 because of 
such fluctuations in the market values of the securities in its 
portfolio, nor will it lose its status as a regulated investment 
company for any subsequent year solely as a result of such market 
value fluctuations. See section 851(d)(1).
    Example 7. (i) Investment Company T at the close of a particular 
quarter of its taxable year has its assets invested as follows:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Cash and Government securities...............................         40
Securities of Corporation A..................................         20
Securities of various qualified publicly traded partnerships          15
 (within the meaning of sections 851(b)(3) and 851(h)).......
Securities of various corporations (not exceeding 5 percent           25
 of its assets in any one company)...........................
                                                              ----------
  Total......................................................        100
------------------------------------------------------------------------

    (ii) Investment Company T owns more than 20 percent of the 
voting power of Corporation A and less than 10 percent of the voting 
power of all of the other corporations. Corporation A has 80 percent 
of its assets invested in qualified publicly traded partnerships.
    (iii) Investment Company T is disqualified under subparagraph 
(B)(iii) of section 851(b)(3), because, after applying section 
851(c)(1), more than 25 percent of the value of Investment Company 
T's total assets is invested in the securities of one or more 
qualified publicly traded partnerships. This result is shown by the 
following calculation:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Percentage of assets invested directly in qualified publicly        15.0
 traded partnerships.........................................
Percentage invested in qualified publicly traded partnerships       16.0
 indirectly through A (20% x 80%)............................
                                                              ----------
  Total percentage of assets of Investment Company T invested       31.0
   in qualified publicly traded partnerships.................
------------------------------------------------------------------------

    (b) Effective/applicability dates. The rules of this section apply 
to quarters that begin on or after December 14, 2015. For purposes of 
applying the first sentence of section 851(d)(1) to a quarter that 
begins on or after March 14, 2016, the rules of this section apply in 
determining whether the taxpayer met the requirements of section 
851(b)(3) and (c) at the close of prior quarters.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
    Approved: September 2, 2015.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2015-23137 Filed 9-14-15; 8:45 am]
 BILLING CODE 4830-01-P