Sudanese Sanctions Regulations; Iranian Transactions Regulations, 12980-12981 [E7-4950]
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Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Rules and Regulations
cash. Therefore, the transaction satisfies the
continuity of interest requirement.
Example 9. Shareholder election. On
January 3 of Year 1, P and T sign a binding
contract pursuant to which T will be merged
with and into P on June 1 of Year 1. On
January 2 of Year 1, the value of the P stock
and the T stock is $1 per share. Pursuant to
the contract, at the shareholders’ election,
each share of T will be exchanged for cash
of $1, or alternatively, P stock. The contract
provides that the determination of the
number of shares of P stock to be exchanged
for a share of T stock is made using the value
of the P stock on the last business day before
the first date there is a binding contract (i.e.,
$1 per share). Accordingly, the contract
provides for fixed consideration, and the
determination of whether the transaction
satisfies the continuity of interest
requirement is based on the number of shares
of P stock the T shareholders receive in the
exchange and by reference to the value of the
P stock on January 2 of Year 1.
Example 10. Contingent adjustment based
on the value of the issuing corporation
stock—continuity not preserved. On January
3 of Year 1, P and T sign a binding contract
pursuant to which T will be merged with and
into P on June 1 of Year 1. On January 2 of
Year 1, the value of the P stock is $1 per
share. Pursuant to the contract, if the value
of the P stock does not decrease after January
2 of Year 1, the T shareholders will receive
40 P shares and $60 of cash in exchange for
all of the outstanding stock of T.
Furthermore, the contract provides that the T
shareholders will receive $.16 of additional
P shares and $.24 for every $.01 decrease in
the value of one share of P stock after January
2 of Year 1. On June 1 of Year 1, T merges
with and into P pursuant to the terms of the
contract. On that date, the value of the P
stock is $.40 per share. Pursuant to the terms
of the contract, the consideration is adjusted
so that the T shareholders receive 24 more P
shares ((60 × $.16)/$.40) and $14.40 more
cash (60 × $.24) than they would absent an
adjustment. Accordingly, at closing the T
shareholders receive 64 P shares and $74.40
of cash. Because the contract provides that
additional P shares and cash will be
delivered to the T shareholders if the value
of the stock of P decreases after January 2 of
Year 1, under paragraph (e)(2)(iii)(B)(2) of
this section, the contract is not treated as
providing for fixed consideration, and
therefore whether the transaction satisfies the
continuity of interest requirement cannot be
determined by reference to the value of the
P stock on January 2 of Year 1. For continuity
of interest purposes, the T stock is exchanged
for $25.60 of P stock (64 × $.40) and $74.40
of cash and the transaction does not preserve
a substantial part of the value of the
proprietary interest in T. Therefore, the
transaction does not satisfy the continuity of
interest requirement.
Example 11. Contingent adjustment to boot
based on the value of the target corporation
stock—continuity not preserved. On January
3 of Year 1, P and T sign a binding contract
pursuant to which T will be merged with and
into P on June 1 of Year 1. On January 2 of
Year 1, T has 100 shares outstanding, and
each T share is worth $1. On January 2 of
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Year 1, each P share is worth $1. Pursuant
to the contract, if the value of the T stock
does not increase after January 3 of Year 1,
the T shareholders will receive 40 P shares
and $60 of cash in exchange for all of the
outstanding stock of T. Furthermore, the
contract provides that the T shareholders will
receive $1 of additional cash for every $.01
increase in the value of one share of T stock
after January 3 of Year 1. On June 1 of Year
1, the value of the T stock is $1.40 per share
and the value of the P stock is $.75 per share.
Pursuant to the terms of the contract, the
consideration is adjusted so that the T
shareholders receive $40 more cash (40 × $1)
than they would absent an adjustment.
Accordingly, at closing the T shareholders
receive 40 P shares and $100 of cash. Because
the contract provides the number of shares of
P stock and the amount of money to be
exchanged for all the proprietary interests in
T, and the contingent adjustment to the cash
consideration is not based on changes in the
value of the P stock, P assets, or any surrogate
thereof, after January 2 of Year 1, there is a
binding contract providing for fixed
consideration as of January 3 of Year 1.
Therefore, whether the transaction satisfies
the continuity of interest requirement is
determined by reference to the value of the
P stock on January 2 of Year 1. For continuity
of interest purposes, the T stock is exchanged
for $40 of P stock (40 × $1) and $100 of cash.
Therefore, the transaction does not satisfy the
continuity of interest requirement.
Example 12. Contingent adjustment to
stock based on the value of the target
corporation stock—continuity preserved. On
January 3 of Year 1, P and T sign a binding
contract pursuant to which T will be merged
with and into P on June 1 of Year 1. On that
date T has 100 shares outstanding, and each
T share is worth $1. On January 2 of Year 1,
each P share is worth $1. Pursuant to the
contract, if the value of the T stock does not
decrease after January 3 of Year 1, the T
shareholders will receive 40 P shares and $60
of cash in exchange for all of the outstanding
stock of T. Furthermore, the contract
provides that the T shareholders will receive
$.40 less P stock and $.60 less cash for every
$.01 decrease in the value of one share of T
stock after January 3 of Year 1. The contract
also provides that the number of P shares by
which the consideration will be reduced as
a result of this adjustment will be determined
based on the value of the P stock on January
2 of Year 1. On June 1 of Year 1, T merges
with and into P pursuant to the terms of the
contract. On that date, the value of the T
stock is $.70 per share and the value of the
P stock is $.75 per share. Pursuant to the
terms of the contract, the consideration is
adjusted so that the T shareholders receive 12
fewer P shares ((30 × $.40)/$1) and $18 less
cash (30 × $.60) than they would absent an
adjustment. Accordingly, at closing the T
shareholders receive 28 P shares and $42 of
cash. Because the contract provides for the
number of shares of P stock and the amount
of money to be exchanged for all of the
proprietary interests in T, the contract does
not provide for contingent adjustments to the
consideration based on a change in value of
the P stock, P assets, or any surrogate thereof,
after January 2 of Year 1, and the adjustment
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Sfmt 4700
to the number of P shares the T shareholders
receive is determined based on the value of
the P shares on January 2 of Year 1, there is
a binding contract providing for fixed
consideration as of January 3 of Year 1.
Therefore, whether the transaction satisfies
the continuity of interest requirement is
determined by reference to the value of the
P stock on January 2 of Year 1. For continuity
of interest purposes, the T stock is exchanged
for $28 of P stock (28 × $1) and $42 of cash.
Therefore, the transaction satisfies the
continuity of interest requirement.
(e)(3) through (7) [Reserved]. For
further guidance, see § 1.368–1(e)(3)
through (7).
(8) Effective dates. (i) [Reserved]. For
further guidance, see § 1.368–1(e)(8)(i).
(ii) Signing date rule. Paragraph (e)(2)
of this section applies to transactions
occurring pursuant to binding contracts
entered into after September 16, 2005.
For transactions occurring pursuant to
binding contracts entered into after
September 16, 2005, and on or before
March 20, 2007, the parties to the
transaction may elect to apply the
provisions of § 1.368–1(e)(2) as
contained in 26 CFR part 1, revised
April 1, 2006, instead of the provisions
of this paragraph (e)(2). However, the
target corporation, the issuing
corporation, the controlling corporation
of the acquiring corporation if stock
thereof is provided as consideration in
the transaction, and any direct or
indirect transferee of transferred basis
property from any of the foregoing, may
not elect to apply the provisions of
§ 1.368–1(e)(2) as contained in 26 CFR
part 1, revised April 1, 2006, unless all
such taxpayers elect to apply the
provisions of such regulations. This
election requirement will be satisfied if
none of the specified parties adopts
inconsistent treatment. The
applicability of this section expires on
or before March 19, 2010.
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Approved: March 14, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E7–5128 Filed 3–19–07; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Parts 538 and 560
Sudanese Sanctions Regulations;
Iranian Transactions Regulations
Office of Foreign Assets
Control, Treasury.
AGENCY:
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Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Rules and Regulations
ACTION:
Policy statement.
erjones on PRODPC74 with RULES
SUMMARY: The Office of Foreign Assets
Control of the U.S. Department of the
Treasury is issuing this notice to clarify
its policy with respect to the process for
issuing one-year licenses to export
agricultural commodities, medicine, and
medical devices to Sudan and Iran
pursuant to section 906 of the Trade
Sanctions Reform and Export
Enhancement Act of 2000, Title IX of
Public Law 106–387 (October 28, 2000).
FOR FURTHER INFORMATION CONTACT:
Assistant Director for Compliance
Outreach & Implementation, tel.: 202/
622–2490, Assistant Director for
Licensing, tel.: 202/622–2480, Assistant
Director for Policy, tel.: 202/622–4855,
or Chief Counsel, tel.: 202/622–2410,
Office of Foreign Assets Control,
Department of the Treasury,
Washington, DC 20220.
Clarification of Policy With Respect to
the Process for Issuing One-Year
Licenses To Export Agricultural
Commodities, Medicine, and Medical
Devices to Sudan and Iran
The Trade Sanctions Reform and
Export Enhancement Act of 2000, Title
IX of Public Law 106–387 (October 28,
2000), as amended (‘‘TSRA’’), provides
that, with certain exceptions, the
President may not impose a unilateral
agricultural sanction or unilateral
medical sanction against a foreign
country or foreign entity unless, at least
60 days before imposing such a
sanction, the President submits a report
describing the proposed sanction and
the reasons for it and Congress enacts a
joint resolution approving the report.
Section 906 of TSRA, however, requires
that the export of agricultural
commodities, medicine, and medical
devices to Cuba, or to the government of
a country that has been determined by
the Secretary of State to have repeatedly
provided support for acts of
international terrorism, or to any entity
in such country, shall only be made
pursuant to one-year licenses issued by
the United States Government. Section
906 also requires that procedures shall
be in place to deny licenses for exports
to any entity within such country that
promotes international terrorism.
Effective July 26, 2001, the Office of
Foreign Assets Control (‘‘OFAC’’)
promulgated amendments to the
Sudanese Sanctions Regulations, 31
CFR part 538 (the ‘‘SSR’’), and the
Iranian Transactions Regulations, 31
CFR part 560 (the ‘‘ITR’’), to implement
section 906 of TSRA. See 66 FR 36683
(July 12, 2001) (the ‘‘rule’’). The
preamble to the rule described an
expedited process for the issuance of the
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Jkt 211001
one-year license required by section 906
for all exports and reexports of
agricultural commodities, medicine, and
medical devices to Sudan or Iran. The
expedited process included, when
appropriate, referral of the one-year
license request to other government
agencies for guidance in evaluating the
request. If no government agency raised
an objection to or concern with the
application within nine business days
from the date of any such referral, OFAC
would issue the one-year license,
provided that the request otherwise met
the requirements set forth in the rule.
Conversely, if any government agency
raised an objection to the request within
nine business days from the date of
referral, OFAC would deny the license
request. Finally, if any government
agency raised a concern short of an
objection with the request within nine
business days from the date of referral,
OFAC would delay its response to the
license request for no more than thirty
additional days to allow for further
review of the request.
OFAC instituted this expedited
licensing process described in the
preamble following the rule’s
publication in July 2001. However, the
terrorist attacks of September 11, 2001,
magnified concerns about international
terrorism and proliferation of weapons
of mass destruction. These concerns
prompted greater scrutiny on the part of
OFAC and other agencies of the U.S.
Government of those entities within
state sponsors of terrorism to whom
agricultural commodities, medicine, and
medical devices were being exported.
Moreover, the volume of license
requests has increased substantially
since the inception of the TSRA
program, and applications are now
much more complicated than earlier
ones, often involving dozens and
sometimes hundreds of products and
parties to the transaction. All of these
factors have contributed to longer OFAC
and interagency reviews of the
applications, and thus longer processing
times for the applications, than
suggested in the preamble to the rule.
This review is often further complicated
by the fact that these license requests
are evaluated both in terms of whether
the foreign entities involved in the
transaction ‘‘promote international
terrorism,’’ as required by section 906 of
TSRA, and in terms of whether the
products at issue implicate independent
export control regimes involving
chemical or biological weapons or
weapons of mass destruction, as
provided in section 904(2)(C) of TSRA.
Scrutiny of license applications on the
latter ground often results in requests
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Fmt 4700
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12981
for additional information by the
reviewing agencies, which neither the
applicant nor OFAC can anticipate,
further delaying the review process.
Accordingly, today OFAC is issuing
this notice to clarify its policy with
respect to the licensing process for
TSRA exports. OFAC will continue to
conduct a review of all applications for
one-year licenses consistent with the
requirements of section 906 of TSRA,
which may include a referral to other
government agencies for guidance, and
will respond to such applications upon
completion of the review. Please be
aware that OFAC’s processing of oneyear license requests may take longer
than the time periods suggested at the
inception of the TSRA program. OFAC
will continue to respond to such
applications in as timely a manner as is
possible under the circumstances of
each individual license application,
consistent with OFAC’s obligations
under TSRA, the ITR, and the SSR.
Dated: February 9, 2007.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. E7–4950 Filed 3–19–07; 8:45 am]
BILLING CODE 4811–42–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[CGD01–07–027]
Drawbridge Operation Regulations;
Raritan River, Arthur Kill, and Their
Tributaries, NJ
Coast Guard, DHS.
Notice of temporary deviation
from regulations; request for comments.
AGENCY:
ACTION:
SUMMARY: The Commander, First Coast
Guard District, has issued a temporary
deviation from the regulation governing
the operation of the AK Railroad Bridge
across Arthur Kill at mile 11.6, between
Staten Island, New York and Elizabeth,
New Jersey. This temporary deviation
requires the AK Railroad Bridge to
remain in the open position at all times,
except that the draw would close for the
passage of trains for two daily one-hour
closure periods on a fixed schedule with
a one hour adjustment whenever high
water occurs during or up to one hour
after the applicable closure period. In
addition, a number of unscheduled
requests for one hour closure periods
may be granted by the Coast Guard
within one to three hours of receipt of
the request. The purpose of this
E:\FR\FM\20MRR1.SGM
20MRR1
]]>Agencies
[Federal Register Volume 72, Number 53 (Tuesday, March 20, 2007)]
[Rules and Regulations]
[Pages 12980-12981]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4950]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Parts 538 and 560
Sudanese Sanctions Regulations; Iranian Transactions Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
[[Page 12981]]
ACTION: Policy statement.
-----------------------------------------------------------------------
SUMMARY: The Office of Foreign Assets Control of the U.S. Department of
the Treasury is issuing this notice to clarify its policy with respect
to the process for issuing one-year licenses to export agricultural
commodities, medicine, and medical devices to Sudan and Iran pursuant
to section 906 of the Trade Sanctions Reform and Export Enhancement Act
of 2000, Title IX of Public Law 106-387 (October 28, 2000).
FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance
Outreach & Implementation, tel.: 202/622-2490, Assistant Director for
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.:
202/622-4855, or Chief Counsel, tel.: 202/622-2410, Office of Foreign
Assets Control, Department of the Treasury, Washington, DC 20220.
Clarification of Policy With Respect to the Process for Issuing One-
Year Licenses To Export Agricultural Commodities, Medicine, and Medical
Devices to Sudan and Iran
The Trade Sanctions Reform and Export Enhancement Act of 2000,
Title IX of Public Law 106-387 (October 28, 2000), as amended
(``TSRA''), provides that, with certain exceptions, the President may
not impose a unilateral agricultural sanction or unilateral medical
sanction against a foreign country or foreign entity unless, at least
60 days before imposing such a sanction, the President submits a report
describing the proposed sanction and the reasons for it and Congress
enacts a joint resolution approving the report. Section 906 of TSRA,
however, requires that the export of agricultural commodities,
medicine, and medical devices to Cuba, or to the government of a
country that has been determined by the Secretary of State to have
repeatedly provided support for acts of international terrorism, or to
any entity in such country, shall only be made pursuant to one-year
licenses issued by the United States Government. Section 906 also
requires that procedures shall be in place to deny licenses for exports
to any entity within such country that promotes international
terrorism.
Effective July 26, 2001, the Office of Foreign Assets Control
(``OFAC'') promulgated amendments to the Sudanese Sanctions
Regulations, 31 CFR part 538 (the ``SSR''), and the Iranian
Transactions Regulations, 31 CFR part 560 (the ``ITR''), to implement
section 906 of TSRA. See 66 FR 36683 (July 12, 2001) (the ``rule'').
The preamble to the rule described an expedited process for the
issuance of the one-year license required by section 906 for all
exports and reexports of agricultural commodities, medicine, and
medical devices to Sudan or Iran. The expedited process included, when
appropriate, referral of the one-year license request to other
government agencies for guidance in evaluating the request. If no
government agency raised an objection to or concern with the
application within nine business days from the date of any such
referral, OFAC would issue the one-year license, provided that the
request otherwise met the requirements set forth in the rule.
Conversely, if any government agency raised an objection to the request
within nine business days from the date of referral, OFAC would deny
the license request. Finally, if any government agency raised a concern
short of an objection with the request within nine business days from
the date of referral, OFAC would delay its response to the license
request for no more than thirty additional days to allow for further
review of the request.
OFAC instituted this expedited licensing process described in the
preamble following the rule's publication in July 2001. However, the
terrorist attacks of September 11, 2001, magnified concerns about
international terrorism and proliferation of weapons of mass
destruction. These concerns prompted greater scrutiny on the part of
OFAC and other agencies of the U.S. Government of those entities within
state sponsors of terrorism to whom agricultural commodities, medicine,
and medical devices were being exported. Moreover, the volume of
license requests has increased substantially since the inception of the
TSRA program, and applications are now much more complicated than
earlier ones, often involving dozens and sometimes hundreds of products
and parties to the transaction. All of these factors have contributed
to longer OFAC and interagency reviews of the applications, and thus
longer processing times for the applications, than suggested in the
preamble to the rule. This review is often further complicated by the
fact that these license requests are evaluated both in terms of whether
the foreign entities involved in the transaction ``promote
international terrorism,'' as required by section 906 of TSRA, and in
terms of whether the products at issue implicate independent export
control regimes involving chemical or biological weapons or weapons of
mass destruction, as provided in section 904(2)(C) of TSRA. Scrutiny of
license applications on the latter ground often results in requests for
additional information by the reviewing agencies, which neither the
applicant nor OFAC can anticipate, further delaying the review process.
Accordingly, today OFAC is issuing this notice to clarify its
policy with respect to the licensing process for TSRA exports. OFAC
will continue to conduct a review of all applications for one-year
licenses consistent with the requirements of section 906 of TSRA, which
may include a referral to other government agencies for guidance, and
will respond to such applications upon completion of the review. Please
be aware that OFAC's processing of one-year license requests may take
longer than the time periods suggested at the inception of the TSRA
program. OFAC will continue to respond to such applications in as
timely a manner as is possible under the circumstances of each
individual license application, consistent with OFAC's obligations
under TSRA, the ITR, and the SSR.
Dated: February 9, 2007.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. E7-4950 Filed 3-19-07; 8:45 am]
BILLING CODE 4811-42-P
