Conduit Financing Arrangements, 76895-76896 [2011-31672]

Download as PDF Federal Register / Vol. 76, No. 237 / Friday, December 9, 2011 / Rules and Regulations experiencing an outbreak of BRD must be initiated during the first 45 days of the production period, shall not exceed a single 14-consecutive-day treatment, should not occur concurrent with or following administration of an injectable macrolide, and should not occur within 3 days following administration of a nonmacrolide injectable BRD therapy. Tilmicosin medicated feed treatment has not been evaluated in cattle with severe clinical disease. Cattle with severe clinical illness should be evaluated for individual treatment with an alternative non-macrolide therapy. * * * * * (e) Conditions of use. It is used in feed as follows: Tilmicosin phosphate in grams/ton Indications for use Limitations (1) 181 to 363 .......... Swine: For the control of swine respiratory disease associated with Actinobacillus pleuropneumoniae and Pasteurella multocida. (2) 568 to 757 .......... Cattle: For the control of bovine respiratory disease (BRD) associated with Mannheimia haemolytica, Pasteurella multocida, and Histophilus somni in groups of beef and nonlactating dairy cattle, where active BRD has been diagnosed in at least 10 percent of the animals in the group. Feed continuously as the sole ration for 21-day period, beginning approximately 7 days before an anticipated disease outbreak. The safety of tilmicosin has not been established in male swine intended for breeding purposes. Swine intended for human consumption must not be slaughtered within 7 days of the last treatment with this drug product. Feed continuously for 14 days to provide 12.5 milligrams/kilogram/head/day. The safety of tilmicosin has not been established in cattle intended for breeding purposes. This drug product is not approved for use in female dairy cattle 20 months of age or older. Use in these cattle may cause drug residues in milk. This drug product is not approved for use in calves intended to be processed for veal. A withdrawal period has not been established in preruminating calves. Cattle intended for human consumption must not be slaughtered within 28 days of the last treatment with this drug product. Dated: December 5, 2011. Bernadette Dunham, Director, Center for Veterinary Medicine. FOR FURTHER INFORMATION CONTACT: [FR Doc. 2011–31613 Filed 12–8–11; 8:45 am] SUPPLEMENTARY INFORMATION: BILLING CODE 4160–01–P Background Quyen P. Huynh at (202) 622–3880 (not a toll-free number). DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9562] RIN 1545–BH77 Conduit Financing Arrangements Internal Revenue Service (IRS), Treasury. ACTION: Final regulation. AGENCY: This document contains final regulations relating to conduit financing arrangements. The final regulations apply to multiple-party financing arrangements that are effected through disregarded entities, and are necessary in order to determine which of those arrangements should be recharacterized as a conduit financing arrangement. DATES: Effective Date: These regulations are effective on December 9, 2011. Applicability Date: These regulations apply to payments made on or after December 9, 2011. sroberts on DSK5SPTVN1PROD with RULES SUMMARY: VerDate Mar<15>2010 15:52 Dec 08, 2011 Jkt 226001 On August 10, 1995, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) published final regulations under Treas. Reg. § 1.881–3 relating to conduit financing arrangements pursuant to the authority granted by section 7701(l) of the Internal Revenue Code (the conduit financing regulations). See TD 8611 (1995–37 IRB 20; 60 FR 40997). On December 22, 2008, the Treasury Department and the IRS published in the Federal Register (73 FR 246) a notice of proposed rulemaking (REG– 113462–08) that proposed amending § 1.881–3(a)(2)(i)(C) of the conduit financing regulations to treat an entity disregarded as an entity separate from its owner for U.S. tax purposes as a person for purposes of determining whether a conduit financing arrangement exists. The proposed regulations were proposed to be effective as of the date final regulations are published in the Federal Register. In addition, the preamble to the proposed regulations requested comments on whether ‘‘hybrid instruments’’ (instruments treated as debt for foreign law purposes and equity for U.S. PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 76895 Sponsor 000986 000986 purposes) should constitute per se ‘‘financing transactions’’ under § 1.881– 3(a)(2)(ii)(A) and part of a ‘‘financing arrangement’’ within the meaning of § 1.881–3(a)(2)(i)(A), or whether, at a minimum, certain hybrid instruments should be so treated, depending on specific factors or criteria. Only one comment letter responding to the notice of proposed rulemaking was received. No public hearing was requested or held. After consideration of the comment, this Treasury decision adopts the proposed regulations with minor edits to Example 3 and to clarify that the effective date of the final regulations also applies to new Example 3. Explanation and Summary of Comment The comment supported the proposed regulations and their interpretation of the term ‘‘person’’ to include a business entity that is disregarded as an entity separate from its single member owner under § 301.7701–1 through § 301.7701– 3. The comment stated that to disregard an entity that is ‘‘regarded’’ for purposes of claiming treaty benefits would be inconsistent with the policy and purpose of the anti-conduit financing regulations. As relates to hybrid instruments, the comment did not support either approach raised in the preamble to the proposed regulations, expressing both policy and administrative concerns with E:\FR\FM\09DER1.SGM 09DER1 76896 Federal Register / Vol. 76, No. 237 / Friday, December 9, 2011 / Rules and Regulations each. The comment stated that any specific abuses that the Treasury Department and the IRS were concerned about could be better addressed by a more targeted rule that described the specific transactions and limited the application of the regulations to those transactions. In light of the wide array of considerations raised, the Treasury Department and the IRS have decided to continue to study the area and not to provide any specific rules on hybrid instruments as part of this regulation package. Accordingly, these regulations are finalized without change, except to clarify that the effective date of the final regulations also applies to new Example 3 and to make minor edits to Example 3. The Treasury Department and the IRS continue to solicit comments on the treatment of hybrid instruments in financing transactions. No inference should be drawn from any provision of these final regulations as to the treatment of financing transactions entered into with disregarded entities before the effective date of these final regulations or involving hybrid instruments. 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 is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Drafting Information The principal author of these regulations is Quyen P. Huynh of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development. sroberts on DSK5SPTVN1PROD with RULES 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: VerDate Mar<15>2010 15:52 Dec 08, 2011 Jkt 226001 PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.881–3 is amended by: ■ 1. Removing the language ‘‘district director’’ throughout this section and adding ‘‘director of field operations’’ in its place. ■ 2. Removing the language ‘‘§ 1.1441– 3(j)’’ throughout this section and adding ‘‘§ 1.1441–3(g)’’ in its place. ■ 3. Removing the language ‘‘§ 1.1441– 7(d)’’ throughout this section and adding ‘‘§ 1.1441–7(f)’’ in its place. ■ 4. In the last sentence of paragraph (a)(3)(ii)(B), removing the second ‘‘financed’’ and adding ‘‘financing’’ in its place. ■ 5. Removing the parenthetical language ‘‘(or a similar interest in a partnership or trust)’’ in paragraphs (a)(2)(ii)(A)(2) and (a)(2)(ii)(B)(1) and adding ‘‘(or a similar interest in a partnership, trust, or other person)’’ in its place. ■ 6. Adding a new paragraph (a)(2)(i)(C). ■ 7. In paragraph (e), redesignating Examples 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 25 as Examples 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, and 26, respectively. ■ 8. Adding a new Example 3 in paragraph (e). ■ 9. Revising the paragraph heading and adding a new sentence at the end of paragraph (f). The revisions and additions read as follows: ■ § 1.881–3 Conduit financing arrangements. * * * * * (a) * * * (2) * * * (i) * * * (C) Treatment of disregarded entities. For purposes of this section, the term person includes a business entity that is disregarded as an entity separate from its single member owner under § 301.7701–1 through § 301.7701–3. * * * * * (e) Examples. * * * Example 3. Participation of a disregarded intermediate entity. The facts are the same as in Example 2, except that FS is an entity that is disregarded as an entity separate from its owner, FP, under § 301.7701–3. Under paragraph (a)(2)(i)(C) of this section, FS is a person and, therefore, may itself be an intermediate entity that is linked by financing transactions to other persons in a financing arrangement. The DS note held by FS and the FS note held by FP are financing transactions within the meaning of paragraph PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 (a)(2)(ii) of this section, and together constitute a financing arrangement within the meaning of paragraph (a)(2)(i) of this section. * * * * * (f) Effective/applicability date. * * * Paragraph (a)(2)(i)(C) and Example 3 of paragraph (e) of this section apply to payments made on or after December 9, 2011. Steven T. Miller, Deputy Commissioner for Services and Enforcement. Approved: November 29, 2011. Emily S. McMahon, Acting Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2011–31672 Filed 12–8–11; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 8 [Docket No. USCG–2011–0745] RIN 1625–AB79 International Anti-Fouling System Certificate Coast Guard, DHS. Final rule. AGENCY: ACTION: The Coast Guard is amending its vessel inspection regulations to add the International Anti-fouling System (IAFS) Certificate to the list of certificates a recognized classification society may issue on behalf of the Coast Guard. This action is being taken in response to recently enacted legislation implementing the International Convention on the Control of Harmful Anti-fouling Systems on Ships, 2001. This final rule will enable recognized classification societies to apply to the Coast Guard for authorization to issue IAFS Certificates to vessel owners on behalf of the Coast Guard. DATES: This final rule is effective January 9, 2012. ADDRESSES: Comments and material received from the public, if any, as well as documents mentioned in this preamble as being available in the docket, are part of docket USCG–2011– 0745 and are available for inspection or copying at the Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the SUMMARY: E:\FR\FM\09DER1.SGM 09DER1

Agencies

[Federal Register Volume 76, Number 237 (Friday, December 9, 2011)]
[Rules and Regulations]
[Pages 76895-76896]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31672]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9562]
RIN 1545-BH77


Conduit Financing Arrangements

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulation.

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

SUMMARY: This document contains final regulations relating to conduit 
financing arrangements. The final regulations apply to multiple-party 
financing arrangements that are effected through disregarded entities, 
and are necessary in order to determine which of those arrangements 
should be recharacterized as a conduit financing arrangement.

DATES: Effective Date: These regulations are effective on December 9, 
2011.
    Applicability Date: These regulations apply to payments made on or 
after December 9, 2011.

FOR FURTHER INFORMATION CONTACT: Quyen P. Huynh at (202) 622-3880 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    On August 10, 1995, the Department of the Treasury (Treasury 
Department) and the Internal Revenue Service (IRS) published final 
regulations under Treas. Reg. Sec.  1.881-3 relating to conduit 
financing arrangements pursuant to the authority granted by section 
7701(l) of the Internal Revenue Code (the conduit financing 
regulations). See TD 8611 (1995-37 IRB 20; 60 FR 40997). On December 
22, 2008, the Treasury Department and the IRS published in the Federal 
Register (73 FR 246) a notice of proposed rulemaking (REG-113462-08) 
that proposed amending Sec.  1.881-3(a)(2)(i)(C) of the conduit 
financing regulations to treat an entity disregarded as an entity 
separate from its owner for U.S. tax purposes as a person for purposes 
of determining whether a conduit financing arrangement exists. The 
proposed regulations were proposed to be effective as of the date final 
regulations are published in the Federal Register. In addition, the 
preamble to the proposed regulations requested comments on whether 
``hybrid instruments'' (instruments treated as debt for foreign law 
purposes and equity for U.S. purposes) should constitute per se 
``financing transactions'' under Sec.  1.881-3(a)(2)(ii)(A) and part of 
a ``financing arrangement'' within the meaning of Sec.  1.881-
3(a)(2)(i)(A), or whether, at a minimum, certain hybrid instruments 
should be so treated, depending on specific factors or criteria.
    Only one comment letter responding to the notice of proposed 
rulemaking was received. No public hearing was requested or held. After 
consideration of the comment, this Treasury decision adopts the 
proposed regulations with minor edits to Example 3 and to clarify that 
the effective date of the final regulations also applies to new Example 
3.

Explanation and Summary of Comment

    The comment supported the proposed regulations and their 
interpretation of the term ``person'' to include a business entity that 
is disregarded as an entity separate from its single member owner under 
Sec.  301.7701-1 through Sec.  301.7701-3. The comment stated that to 
disregard an entity that is ``regarded'' for purposes of claiming 
treaty benefits would be inconsistent with the policy and purpose of 
the anti-conduit financing regulations.
    As relates to hybrid instruments, the comment did not support 
either approach raised in the preamble to the proposed regulations, 
expressing both policy and administrative concerns with

[[Page 76896]]

each. The comment stated that any specific abuses that the Treasury 
Department and the IRS were concerned about could be better addressed 
by a more targeted rule that described the specific transactions and 
limited the application of the regulations to those transactions. In 
light of the wide array of considerations raised, the Treasury 
Department and the IRS have decided to continue to study the area and 
not to provide any specific rules on hybrid instruments as part of this 
regulation package. Accordingly, these regulations are finalized 
without change, except to clarify that the effective date of the final 
regulations also applies to new Example 3 and to make minor edits to 
Example 3. The Treasury Department and the IRS continue to solicit 
comments on the treatment of hybrid instruments in financing 
transactions.
    No inference should be drawn from any provision of these final 
regulations as to the treatment of financing transactions entered into 
with disregarded entities before the effective date of these final 
regulations or involving hybrid instruments.

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 is hereby 
certified that this regulation will not have a significant economic 
impact on a substantial number of small entities. Accordingly, a 
regulatory flexibility analysis is not required. Pursuant to section 
7805(f) of the Internal Revenue Code, the notice of proposed rulemaking 
preceding this regulation was submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small business.

Drafting Information

    The principal author of these regulations is Quyen P. Huynh of the 
Office of Associate Chief Counsel (International). 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.

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 continues to read in 
part as follows:

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


0
Par. 2. Section 1.881-3 is amended by:
0
1. Removing the language ``district director'' throughout this section 
and adding ``director of field operations'' in its place.
0
2. Removing the language ``Sec.  1.1441-3(j)'' throughout this section 
and adding ``Sec.  1.1441-3(g)'' in its place.
0
3. Removing the language ``Sec.  1.1441-7(d)'' throughout this section 
and adding ``Sec.  1.1441-7(f)'' in its place.
0
4. In the last sentence of paragraph (a)(3)(ii)(B), removing the second 
``financed'' and adding ``financing'' in its place.
0
5. Removing the parenthetical language ``(or a similar interest in a 
partnership or trust)'' in paragraphs (a)(2)(ii)(A)(2) and 
(a)(2)(ii)(B)(1) and adding ``(or a similar interest in a partnership, 
trust, or other person)'' in its place.
0
6. Adding a new paragraph (a)(2)(i)(C).
0
7. In paragraph (e), redesignating Examples 3, 4, 5, 6, 7, 8, 9, 10, 
11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 25 as 
Examples 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 
21, 22, 23, 24, 25, and 26, respectively.
0
8. Adding a new Example 3 in paragraph (e).
0
9. Revising the paragraph heading and adding a new sentence at the end 
of paragraph (f).
    The revisions and additions read as follows:


Sec.  1.881-3  Conduit financing arrangements.

* * * * *
    (a) * * *
    (2) * * *
    (i) * * *
    (C) Treatment of disregarded entities. For purposes of this 
section, the term person includes a business entity that is disregarded 
as an entity separate from its single member owner under Sec.  
301.7701-1 through Sec.  301.7701-3.
* * * * *
    (e) Examples. * * *

    Example 3. Participation of a disregarded intermediate entity. 
The facts are the same as in Example 2, except that FS is an entity 
that is disregarded as an entity separate from its owner, FP, under 
Sec.  301.7701-3. Under paragraph (a)(2)(i)(C) of this section, FS 
is a person and, therefore, may itself be an intermediate entity 
that is linked by financing transactions to other persons in a 
financing arrangement. The DS note held by FS and the FS note held 
by FP are financing transactions within the meaning of paragraph 
(a)(2)(ii) of this section, and together constitute a financing 
arrangement within the meaning of paragraph (a)(2)(i) of this 
section.
* * * * *

    (f) Effective/applicability date. * * * Paragraph (a)(2)(i)(C) and 
Example 3 of paragraph (e) of this section apply to payments made on or 
after December 9, 2011.

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
    Approved: November 29, 2011.
Emily S. McMahon,
Acting Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2011-31672 Filed 12-8-11; 8:45 am]
BILLING CODE 4830-01-P

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