Guidance Under Section 956 for Determining the Basis of Property Acquired in Certain Nonrecognition Transactions; Correction, 43891-43892 [2011-18469]

Download as PDF Federal Register / Vol. 76, No. 141 / Friday, July 22, 2011 / Rules and Regulations The Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) is making technical amendments to the rule by which applications for exemptive relief under section 36 of the Securities and Exchange Act of 1934 (‘‘Exchange Act’’) may be submitted electronically. The amendments are intended only to clarify and update references to an SEC Web site address and to eliminate certain formatting requirements. SUMMARY: DATES: Effective Date: July 22, 2011. FOR FURTHER INFORMATION CONTACT: Linda Stamp Sundberg, Senior Special Counsel, at (202) 551–5550, Office of the Chief Counsel, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549. SUPPLEMENTARY INFORMATION: The Commission is amending § 240.0–12(b) to update references to an SEC Web site address to be used in submitting applications for exemptive relief under section 36 of the Exchange Act and to eliminate certain formatting requirements. I. Certain Findings Under the Administrative Procedure Act (‘‘APA’’), notice of proposed rulemaking is not required when an agency, for good cause, finds ‘‘that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’’ 1 The Commission is making technical changes to update the instructions and method for submitting a petition. The Commission finds that because the amendment is technical in nature and is being made solely to reflect the changes in way a person would submit and the Commission would receive a petition, publishing the amendment for comment is unnecessary.2 The APA also requires publication of a rule at least 30 days before its effective date unless the agency finds otherwise for good cause.3 For the same reasons described above with respect to notice and opportunity for comment, the Commission finds that there is good U.S.C. 553(b). similar reasons, the amendments do not require analysis under the Regulatory Flexibility Act (‘‘RFA’’) or analysis of major rule status under the Small Business Regulatory Enforcement Fairness Act. See 5 U.S.C. 601(2) (for purposes of RFA analysis, the term ‘‘rule’’ means any rule for which the agency publishes a general notice of proposed rulemaking); and 5 U.S.C. 804(3)(C) (for purposes of Congressional review of agency rulemaking, the term ‘‘rule’’ does not include any rule of agency organization, procedure or practice that does not substantially affect the rights or obligations of non-agency parties). 3 See 5 U.S.C. 553(d)(3). cause for these technical amendments to take effect on July 22, 2011. 1350, and 12 U.S.C. 5221(e)(3), unless otherwise noted. II. Consideration of Competitive Effects of Amendment Section 3(f) of the Exchange Act,4 provides that whenever the Commission is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. Section 23(a)(2) of the Exchange Act requires the Commission, in adopting rules under the Exchange Act, to consider the competitive effects of such rules, if any, and to refrain from adopting a rule that would impose a burden on competition not necessary or appropriate in the furtherance of the purposes of the Exchange Act.5 Because these procedural amendments are technical in nature, and do not impose any additional requirements beyond those already required, we do not anticipate that the amendments would have a significant effect on efficiency, competition, or capital formation, and we do not anticipate that any competitive advantages or disadvantages would be created. * III. Statutory Authority and Text of Amendment We are adopting these technical amendments pursuant to the authority set forth in the Exchange Act and particularly Sections 23(a) and 36(a) (15 U.S.C. 78w(a), and 78mm(a), respectively). [TD 9530] List of Subjects in 17 CFR Part 240 Brokers, Confidential business information, Fraud, Reporting and recordkeeping requirements, Securities. For the reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulations is amended as follows: PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934 15 emcdonald on DSK2BSOYB1PROD with RULES 2 For VerDate Mar<15>2010 18:10 Jul 21, 2011 Jkt 223001 43891 1. The authority citation for part 240 continues to read, in part, as follows: ■ Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m, 78n, 78n–1, 78o, 78o–4, 78p, 78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– 3, 80b–4, 80b–11, and 7201 et seq., 18 U.S.C. PO 00000 4 15 5 15 U.S.C. 78c(f). U.S.C. 78w(a)(2). Frm 00089 Fmt 4700 Sfmt 4700 * * * * 2. Section 240.0–12 is amended by revising paragraph (b) to read as follows: ■ § 240.0–12 Commission procedures for filing applications for orders for exemptive relief under Section 36 of the Exchange Act. * * * * * (b) An applicant may submit a request electronically. The electronic mailbox to use for these applications is described on the Commission’s Web site at http://www.sec.gov in the ‘‘Exchange Act Exemptive Applications’’ section. In the event the electronic mailbox is revised in the future, applicants can find the appropriate mailbox by accessing the ‘‘Electronic Mailboxes at the Commission’’ section. * * * * * Dated: July 19, 2011. Elizabeth M. Murphy, Secretary. [FR Doc. 2011–18513 Filed 7–21–11; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 RIN 1545–BH56 Guidance Under Section 956 for Determining the Basis of Property Acquired in Certain Nonrecognition Transactions; Correction Internal Revenue Service (IRS), Treasury. ACTION: Correction to final and temporary regulations. AGENCY: This document describes a correction to final and temporary regulations (TD 9530) that were published in the Federal Register on Friday, June 24, 2011, regarding the determination of basis in certain United States property acquired by a controlled foreign corporation in certain nonrecognition transactions that are intended to repatriate earnings and profits of the controlled foreign corporation without U.S. income taxation. SUMMARY: This correction is effective on July 22, 2011, and is applicable beginning June 24, 2011. FOR FURTHER INFORMATION CONTACT: Kristine A. Crabtree, (202) 622–3840 (not a toll-free number). SUPPLEMENTARY INFORMATION: DATES: E:\FR\FM\22JYR1.SGM 22JYR1 43892 Federal Register / Vol. 76, No. 141 / Friday, July 22, 2011 / Rules and Regulations Background The final and temporary regulations that are the subject of this correction are under section 956 of the Internal Revenue Code. Need for Correction As published at (76 FR 36993), final and temporary regulations (TD 9530) contain an error that may prove to be misleading and is in need of clarification. Correction of Publication Accordingly, the publication of the final and temporary regulations (TD 9530) which were the subject of FR Doc. 2011–15741 is corrected as follows: On page 36995, column 3, in the signature block, line 5, the name ‘‘Emily S. Mahon’’ is corrected to read ‘‘Emily S. McMahon’’. LaNita Van Dyke, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, Procedure and Administration. [FR Doc. 2011–18469 Filed 7–21–11; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9538] RIN 1545–BK14 Modifications of Certain Derivative Contracts Internal Revenue Service (IRS), Treasury. ACTION: Final and temporary regulations. AGENCY: This document contains final and temporary regulations that address when a transfer or assignment of certain derivative contracts does not result in an exchange to the nonassigning counterparty for purposes of § 1.1001– 1(a). The text of these temporary regulations also serves as the text of the proposed regulations (REG–109006–11) set forth in the Proposed Rules section in this issue of the Federal Register. DATES: Effective Date: These regulations are effective on July 22, 2011. Applicability Date: For the date of applicability, see § 1.1001–4T(d). FOR FURTHER INFORMATION CONTACT: Andrea M. Hoffenson, (202) 622–3920 (not a toll-free number). SUPPLEMENTARY INFORMATION: emcdonald on DSK2BSOYB1PROD with RULES SUMMARY: VerDate Mar<15>2010 18:10 Jul 21, 2011 Jkt 223001 Background Section 1001 of the Internal Revenue Code (Code) provides rules for the computation and recognition of gain or loss from a sale or other disposition of property. For purposes of section 1001, § 1.1001–1(a) of the Income Tax Regulations generally provides that gain or loss is realized upon an exchange of property for other property differing materially either in kind or in extent. As a general matter, the assignment of a notional principal contract is treated as a taxable disposition to a nonassigning counterparty if the resulting contract differs materially either in kind or in extent. See Cottage Savings Association v. Commissioner, 499 U.S. 554, 566 (1991) [1991–2 CB 34, 38] (‘‘Under [the Court’s] interpretation of [section] 1001(a), an exchange of property gives rise to a realization event so long as the exchanged properties are ‘materially different’—that is, so long as they embody legally distinct entitlements.’’). Section 1.1001–4(a) provides, however, that the substitution of a new party on a notional principal contract is not treated as a deemed exchange of the contract by the nonassigning party for purposes of § 1.1001–1(a) if two conditions are satisfied: the assignment is between dealers in notional principal contracts and the terms of the contract permit the substitution. Many notional principal contracts permit assignment of the contract only with the consent of the nonassigning counterparty. There has been some uncertainty as to whether a contract that requires the consent of the nonassigning counterparty as a condition to assignment will satisfy the second requirement of § 1.1001–4(a) as described in the previous paragraph. In addition, commenters have suggested that the scope of § 1.1001–4 is too narrow because it only applies to notional principal contracts. The need to amend § 1.1001–4 has been increased by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203 (124 Stat 1376 (2010)) (Dodd-Frank), which in some cases will necessitate the movement of entire books of derivative contracts. In particular, there is a concern that the assignment of derivative contracts may create a taxable event for the nonassigning counterparties to the assigned contracts. The IRS and the Treasury Department agree that § 1.1001–4 should be amended and expanded to include derivative contracts other than notional principal contracts. These temporary regulations replace the current, final regulations of § 1.1001–4. PO 00000 Frm 00090 Fmt 4700 Sfmt 4700 Explanation of Provisions These temporary regulations provide that there is no exchange to the nonassigning counterparty for purposes of § 1.1001–1(a) solely because a dealer in securities or a clearinghouse transfers or assigns a derivative contract to another dealer in securities or clearinghouse, provided that the transfer or assignment is permitted by the terms of the contract. The derivative contracts to which these regulations apply are those described in section 475(c)(2)(D), 475(c)(2)(E), or 475(c)(2)(F). In addition, these temporary regulations provide that transfers or assignments are permitted by the terms of the contract when consent of the nonassigning counterparty is required as well as those transfers or assignments that do not require consent. If consideration passes between the assignor and assignee in connection with the transfer or assignment, the consideration will not affect the treatment of the nonassigning counterparty for purposes of § 1.1001–4. If any consideration is paid to or received by the nonassigning counterparty, however, the payment or receipt of the consideration is analyzed under the general principles of section 1001 to determine its effect on the nonassigning counterparty. In addition, any changes to the terms of the contract are analyzed under the general principles of section 1001 to determine whether there has been a sale or disposition of the contract by the parties. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory 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, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. Drafting Information The principal author of these regulations is Andrea M. Hoffenson, Office of Associate Chief Counsel (Financial Institutions and Products). However, other personnel from the IRS and the Treasury Department participated in their development. E:\FR\FM\22JYR1.SGM 22JYR1

Agencies

[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Rules and Regulations]
[Pages 43891-43892]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-18469]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9530]
RIN 1545-BH56


Guidance Under Section 956 for Determining the Basis of Property 
Acquired in Certain Nonrecognition Transactions; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to final and temporary regulations.

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SUMMARY: This document describes a correction to final and temporary 
regulations (TD 9530) that were published in the Federal Register on 
Friday, June 24, 2011, regarding the determination of basis in certain 
United States property acquired by a controlled foreign corporation in 
certain nonrecognition transactions that are intended to repatriate 
earnings and profits of the controlled foreign corporation without U.S. 
income taxation.

DATES: This correction is effective on July 22, 2011, and is applicable 
beginning June 24, 2011.

FOR FURTHER INFORMATION CONTACT: Kristine A. Crabtree, (202) 622-3840 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

[[Page 43892]]

Background

    The final and temporary regulations that are the subject of this 
correction are under section 956 of the Internal Revenue Code.

Need for Correction

    As published at (76 FR 36993), final and temporary regulations (TD 
9530) contain an error that may prove to be misleading and is in need 
of clarification.

Correction of Publication

    Accordingly, the publication of the final and temporary regulations 
(TD 9530) which were the subject of FR Doc. 2011-15741 is corrected as 
follows:
    On page 36995, column 3, in the signature block, line 5, the name 
``Emily S. Mahon'' is corrected to read ``Emily S. McMahon''.

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, Procedure and Administration.
[FR Doc. 2011-18469 Filed 7-21-11; 8:45 am]
BILLING CODE 4830-01-P