Corporate Reorganizations; Allocation of Basis in “All Cash D” Reorganizations, 71919 [2011-29794]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 76, Number 224 (Monday, November 21, 2011)]
[Proposed Rules]
[Page 71919]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29794]



[[Page 71919]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-101273-10]
RIN 1545-BJ21


Corporate Reorganizations; Allocation of Basis in ``All Cash D'' 
Reorganizations

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations that provide 
guidance regarding the determination of the basis of stock or 
securities in a reorganization where no stock or securities of the 
issuing corporation is issued and distributed in the transaction. These 
regulations clarify that, in certain reorganizations where no stock or 
securities of the issuing corporation is issued and distributed in the 
transaction, the ability to designate the share of stock of the issuing 
corporation to which the basis, if any, of the stock or securities 
surrendered will attach applies only to a shareholder that owns actual 
shares in the issuing corporation. These regulations affect 
corporations engaging in such transactions and their shareholders. The 
text of those temporary regulations published in this issue of the 
Federal Register also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by February 21, 2012.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-101273-10), Internal 
Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 
20044. Submissions may be hand delivered or sent electronically, via 
the Federal eRulemaking Portal at www.regulations.gov (IRS REG-101273-
10).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Lisa A. Fuller, (202) 622-7550; concerning submission of comments, 
Oluwafunmilayo Taylor, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend 26 CFR part 1. The temporary 
regulations provide guidance regarding the determination of the basis 
of stock or securities in a reorganization where no stock or securities 
of the issuing corporation is issued and distributed in the 
transaction. The text of those regulations also serves as the text of 
these proposed regulations. The preamble to the temporary regulations 
explains the amendments.

Explanation of Provisions

    These temporary regulations clarify that, in certain 
reorganizations where no stock or securities of the issuing corporation 
is issued and distributed in the transaction, the ability to designate 
the share of stock of the issuing corporation to which the basis, if 
any, of the stock or securities surrendered will attach applies only to 
a shareholder that owns actual shares in the issuing corporation.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866, as defined in Executive Order 13563. 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, and because the regulation does 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 Internal Revenue Code, this notice of proposed 
rulemaking has been submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its 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 written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and the Treasury Department request comments on the 
clarity of the proposed rules and how they can be made easier to 
understand. All comments will be available for public inspection and 
copying. A public hearing will be scheduled if requested in writing by 
any person that 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 author of these regulations is Lisa A. Fuller, Office 
of Associate Chief Counsel (Corporate). 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

    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 * * *
    Section 1.358-2 also issued under 26 U.S.C. 358(b)(1).

    Par. 2. Section 1.358-2 is amended by:
    1. Revising paragraph (a)(2)(iii).
    2. Adding a new Example 15 and Example 16 to paragraph (c).
    3. Revising paragraph (d).
    The revision and addition reads as follows:


Sec.  1.358-2  Allocation of basis among nonrecognition property.

    (a) * * *
    (2) * * *
    (iii) [The text of this proposed amendments to Sec.  1.358-
2(a)(2)(iii) is the same as the text of Sec.  1.358-2T(a)(2)(iii) 
published elsewhere in this issue of the Federal Register].
* * * * *
    (c) Examples * * *
    [The text of this proposed amendments to Sec.  1.358-2, Examples 15 
and 16 are the same as the text of Examples 15 and 16 in Sec.  1.358-2T 
published elsewhere in this issue of the Federal Register].
* * * * *
    (d) [The text of this proposed amendment to Sec.  1.358-2(d) is the 
same as the text of Sec.  1.358-2T(d) published elsewhere in this issue 
of the Federal Register].

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2011-29794 Filed 11-18-11; 8:45 am]
BILLING CODE 4830-01-P