Mixed Straddles; Straddle-by-Straddle Identification Under Section 1092(b)(2)(A)(i)(I), 46854-46855 [2013-18701]

Download as PDF 46854 Federal Register / Vol. 78, No. 149 / Friday, August 2, 2013 / Proposed Rules Percent Securities of Corporation A ...... Securities of Corporation B ...... Securities of Corporation C ...... Securities of various corporations (not exceeding 5 percent of its assets in any one company) .............................. 5 10 25 Total ................................... 100 40 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. 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 ......................................... Securities of Corporation K (a regulated investment company) ..................................... Securities of Corporation A ...... Securities of Corporation B ...... Securities of various corporations (not exceeding 5 percent of its assets in any one company) .............................. 15 30 10 20 25 Total ................................... 100 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. 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: emcdonald on DSK67QTVN1PROD with PROPOSALS Percent Percentage of assets invested directly in Corporation B ....... Percentage invested through K and L (30% × 20% × 40%) ... Percentage invested indirectly through A (10% × 30%) ........ VerDate Mar<15>2010 17:00 Aug 01, 2013 Total percentage of assets of Investment Company Y invested in Corporation B .............................. 25.4 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 2013 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 2013 because of such distributions, nor will it lose its status as a regulated investment company for 2014 or 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 a calendar year, at the close of the first quarter of 2013, 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 2013, 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. Corporation Q does not lose its status as a regulated investment company for the taxable year 2013 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 2014 or any subsequent year solely as a result of such market value fluctuations. See section 851(d)(1). Example 7. 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 ......................................... Securities of Corporation A ...... Securities of various qualified publicly traded partnerships (within the meaning of sections 851(b)(3) and 851(h)) ... Securities of various corporations (not exceeding 5 percent of its assets in any one company) .............................. 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: 40 20 Percent Percentage of assets invested directly in qualified publicly traded partnerships ............... Percentage invested in qualified publicly traded partnerships indirectly through A (20% × 80%) ......................... Total percentage of assets of Investment Company T invested in qualified publicly traded partnerships ............................... 15.0 16.0 31.0 (b) Effective/applicability date. The proposed revisions apply to quarters that begin at least 90 days after the date of publication of the Treasury decision adopting these rules as a final regulation in the Federal Register. Beth Tucker, Deputy Commissioner for Operations Support. [FR Doc. 2013–18717 Filed 8–1–13; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG–112815–12] RIN 1545–BK99 Mixed Straddles; Straddle-by-Straddle Identification Under Section 1092(b)(2)(A)(i)(I) Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations and notice of public hearing. AGENCY: In the Rules and Regulations section of this issue of the Federal 15 Register the Treasury Department and the IRS are issuing temporary regulations that explain how to account for unrealized gain or loss on a position 25 held by a taxpayer prior to the time the Total ................................... 100 taxpayer establishes a mixed straddle using straddle-by-straddle Percent Investment Company T owns more than 20 identification. The text of the temporary percent of the voting power of Corporation A regulations also serves as the text of and less than 10 percent of the voting power these proposed regulations. This 20.0 of all of the other corporations. Corporation document also provides notice of a A has 80 percent of its assets invested in public hearing on these proposed 2.4 qualified publicly traded partnerships. regulations. Investment Company T is disqualified DATES: Comments must be received by 3.0 under subparagraph (B)(iii) of section 851(b)(3), because, after applying section October 31, 2013. Request to speak and Jkt 229001 PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 SUMMARY: E:\FR\FM\02AUP1.SGM 02AUP1 Federal Register / Vol. 78, No. 149 / Friday, August 2, 2013 / Proposed Rules outlines of topics to be discussed at the public hearing scheduled for December 4, 2013, at 10 a.m. must be received by October 31, 2013. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–112815–12), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–112815– 12), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–112815– 12). FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Elizabeth M. Bouzis or Robert B. Williams at (202) 622–3950; concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Oluwafunmilayo Taylor, (202) 622–7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background and Explanation of Provisions Temporary regulations in the Rules and Regulations section of this issue of the Federal Register amend the Income Tax Regulations (26 CFR part 1) relating to section 1092(b). First, the temporary regulations limit the application of § 1.1092(b)–3T(b)(6) to section 1092(b)(2) identified mixed straddles established on or before August 1, 2013. Second, a new § 1.1092(b)–6T provides that unrealized gain and loss on a position held prior to establishing a section 1092(b)(2) identified mixed straddle is taken into account at the time and has the character provided by provisions of the Internal Revenue Code (Code) that would apply if the section 1092(b)(2) identified mixed straddle had not been established. Section 1.1092(b)– 6T applies to section 1092(b)(2) identified mixed straddles established after August 1, 2013. The text of the temporary regulations also serves as the text of these proposed regulations. emcdonald on DSK67QTVN1PROD with PROPOSALS 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 supplemented by 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 regulations do not impose a collection VerDate Mar<15>2010 17:00 Aug 01, 2013 Jkt 229001 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 businesses. Comments and Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in the preamble under the ADDRESSES heading. The Treasury Department and the IRS welcome comments on this proposed regulation. All comments will be available at www.regulations.gov or upon request. A public hearing has been scheduled for December 4, 2013, beginning at 10 a.m. in the Auditorium of the Internal Revenue Service Building, 1111 Constitution Avenue NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble. The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit written comments and an outline of the topics to be discussed and the time to be devoted to each topic by October 31, 2013. Submit a signed paper original and eight (8) copies or an electronic copy. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing. Drafting Information The principal author of these regulations is Elizabeth M. Bouzis, Office of Associate Chief Counsel (Financial Institutions and Products). However, other personnel from the Treasury Department and the IRS participated in their development. PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 46855 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 entries in numerical order to read as follows: ■ Authority: 26 U.S.C. 7805 * * * Section 1.1092(b)–6 also issued under 26 U.S.C. 1092(b)(1). Section 1.1092(b)–6 also issued under 26 U.S.C. 1092(b)(2). * * * Par. 2. Section 1.1092(b)–3 is added to read as follows: ■ § 1.1092(b)–3 Mixed straddles; straddleby-straddle identification under section 1092(b)(2)(A)(i)(I). [The text of the proposed amendments to § 1.1092(b)–3(b)(6) is the same as the text for the amendments to § 1.1092(b)–3T(b)(6) published elsewhere in this issue of the Federal Register]. ■ Par. 3. Section 1.1092(b)–6 is added to read as follows: § 1.1092(b)–6 Mixed straddles; accrued gain and loss associated with a position that becomes part of a section 1092(b)(2) identified mixed straddle that is established after August 1, 2013. [The text of § 1.1092(b)–6 is the same as the text for § 1.1092(b)–6T published elsewhere in this issue of the Federal Register]. Beth Tucker, Deputy Commissioner for Operations Support. [FR Doc. 2013–18701 Filed 8–1–13; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG–2013–0600] RIN 1625–AA00 Safety Zone; East End Maritime Foundation Fireworks Display, Greenport Harbor, Greenport, NY Coast Guard, DHS. Notice of proposed rulemaking. AGENCY: ACTION: The Coast Guard proposes to establish a temporary safety zone on the SUMMARY: E:\FR\FM\02AUP1.SGM 02AUP1

Agencies

[Federal Register Volume 78, Number 149 (Friday, August 2, 2013)]
[Proposed Rules]
[Pages 46854-46855]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18701]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-112815-12]
RIN 1545-BK99


Mixed Straddles; Straddle-by-Straddle Identification Under 
Section 1092(b)(2)(A)(i)(I)

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations and notice of public hearing.

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

SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register the Treasury Department and the IRS are issuing 
temporary regulations that explain how to account for unrealized gain 
or loss on a position held by a taxpayer prior to the time the taxpayer 
establishes a mixed straddle using straddle-by-straddle identification. 
The text of the temporary regulations also serves as the text of these 
proposed regulations. This document also provides notice of a public 
hearing on these proposed regulations.

DATES: Comments must be received by October 31, 2013. Request to speak 
and

[[Page 46855]]

outlines of topics to be discussed at the public hearing scheduled for 
December 4, 2013, at 10 a.m. must be received by October 31, 2013.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-112815-12), Room 
5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
112815-12), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at www.regulations.gov (IRS REG-112815-12).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Elizabeth M. Bouzis or Robert B. Williams at (202) 622-3950; concerning 
submissions of comments, the hearing, and/or to be placed on the 
building access list to attend the hearing, Oluwafunmilayo Taylor, 
(202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to section 1092(b). First, the temporary regulations 
limit the application of Sec.  1.1092(b)-3T(b)(6) to section 1092(b)(2) 
identified mixed straddles established on or before August 1, 2013. 
Second, a new Sec.  1.1092(b)-6T provides that unrealized gain and loss 
on a position held prior to establishing a section 1092(b)(2) 
identified mixed straddle is taken into account at the time and has the 
character provided by provisions of the Internal Revenue Code (Code) 
that would apply if the section 1092(b)(2) identified mixed straddle 
had not been established. Section 1.1092(b)-6T applies to section 
1092(b)(2) identified mixed straddles established after August 1, 2013. 
The text of the temporary regulations also serves as the text of these 
proposed regulations.

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 supplemented by 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 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 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 businesses.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in the preamble under the ADDRESSES heading. 
The Treasury Department and the IRS welcome comments on this proposed 
regulation. All comments will be available at www.regulations.gov or 
upon request.
    A public hearing has been scheduled for December 4, 2013, beginning 
at 10 a.m. in the Auditorium of the Internal Revenue Service Building, 
1111 Constitution Avenue NW., Washington, DC. Due to building security 
procedures, visitors must enter at the Constitution Avenue entrance. In 
addition, all visitors must present photo identification to enter the 
building. Because of access restrictions, visitors will not be admitted 
beyond the immediate entrance area more than 30 minutes before the 
hearing starts. For information about having your name placed on the 
building access list to attend the hearing, see the FOR FURTHER 
INFORMATION CONTACT section of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit written 
comments and an outline of the topics to be discussed and the time to 
be devoted to each topic by October 31, 2013. Submit a signed paper 
original and eight (8) copies or an electronic copy. A period of 10 
minutes will be allotted to each person for making comments. An agenda 
showing the scheduling of the speakers will be prepared after the 
deadline for receiving outlines has passed. Copies of the agenda will 
be available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is Elizabeth M. Bouzis, 
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.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

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

    Authority:  26 U.S.C. 7805 * * *
    Section 1.1092(b)-6 also issued under 26 U.S.C. 1092(b)(1).
    Section 1.1092(b)-6 also issued under 26 U.S.C. 1092(b)(2). * * 
*

0
Par. 2. Section 1.1092(b)-3 is added to read as follows:


Sec.  1.1092(b)-3  Mixed straddles; straddle-by-straddle identification 
under section 1092(b)(2)(A)(i)(I).

    [The text of the proposed amendments to Sec.  1.1092(b)-3(b)(6) is 
the same as the text for the amendments to Sec.  1.1092(b)-3T(b)(6) 
published elsewhere in this issue of the Federal Register].

0
Par. 3. Section 1.1092(b)-6 is added to read as follows:


Sec.  1.1092(b)-6   Mixed straddles; accrued gain and loss associated 
with a position that becomes part of a section 1092(b)(2) identified 
mixed straddle that is established after August 1, 2013.

    [The text of Sec.  1.1092(b)-6 is the same as the text for Sec.  
1.1092(b)-6T published elsewhere in this issue of the Federal 
Register].

Beth Tucker,
Deputy Commissioner for Operations Support.
[FR Doc. 2013-18701 Filed 8-1-13; 8:45 am]
BILLING CODE 4830-01-P