Net Investment Income Tax; Correction, 10055-10056 [2014-03763]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 79, Number 36 (Monday, February 24, 2014)]
[Proposed Rules]
[Pages 10055-10056]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03763]


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

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-130843-13]
RIN 1545-BL74


Net Investment Income Tax; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to a withdrawal of notice of proposed rulemaking and 
notice of proposed rulemaking.

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

SUMMARY: This document contains corrections to a withdrawal of notice 
of proposed rulemaking and notice of proposed rulemaking (REG-130843-
13) that was published in the Federal Register on Monday, December 2, 
2013, providing guidance on the computation of net investment income.

DATES: Written or electronic comments and requests for a public hearing 
for the notice of proposed rulemaking published at 78 FR 72451, 
December 2, 2013 are still being accepted and must be received by March 
3, 2014.

FOR FURTHER INFORMATION CONTACT: Adrienne M. Mikolashek at (202) 317-
6852 (not a toll free number).

SUPPLEMENTARY INFORMATION:

Background

    The withdrawal of notice of proposed rulemaking and notice of 
proposed rulemaking (REG-130843-13) that is the subject of these 
corrections is under section 1411 of the Internal Revenue Code.

Need for Correction

    As published, withdrawal of notice of proposed rulemaking and 
notice of proposed rulemaking (REG-130843-13) contains errors that may 
prove to be misleading and are in need of clarification.

Correction of Publication

    Accordingly, withdrawal of notice of proposed rulemaking and notice 
of proposed rulemaking (REG-130843-13) that was the subject of FR Doc. 
2013-28409, is corrected as follows:
    1. On page 72456, in the preamble, first column, twenty-first line 
from the top of the page, the language ``taken income account in 
computing net'' is corrected to read ``taken into account in computing 
net''.
    2. On page 72456, in the preamble, third column, under the 
paragraph heading ``B. Section 1291 Funds'', first line, the language 
``The Final 2013 Regulations also'' is corrected to read ``The 2013 
Final Regulations also''.
    3. On page 72457, in the preamble, first column, sixth line of the 
second full paragraph, the language ``chapter 1 under section 953(d) 
and'' is corrected to read ``chapter 1 under sections 953(d) and''.
    4. On page 72457, in the preamble, second column, tenth line of the 
first full paragraph, the language ``calculation rules for CFC QEFs, 
and'' is corrected to read ``calculation rules for CFCs, QEFs, and''.
    5. On page 72460, in the preamble, first column, second line from 
the top of the page, the language ``2T(e)(3)(ii)(B)(1)(i) requires the 
taxpayer'' is corrected to read ``2T(e)(3)(ii)(B)(1)(i) requires the 
taxpayer''.
    6. On page 72460, in the preamble, first column, sixth line of the 
second full paragraph, the language ``469 do not apply for purposes of 
these'' is corrected to read ``section 469 do not apply for purposes of 
these''.
    7. On page 72461, in the preamble, second column, twelfth line from 
the top of the page, the language ``through is appropriate'' is 
corrected to read ``is appropriate''.
    8. On page 72461, in the preamble, third column, under the 
paragraph heading ``G. Information Reporting'', fifth line, the 
language ``commentators expressed concern that'' is corrected to read 
``commentators expressed concern that the''.


Sec.  1.1411-4  [Corrected]

    9. On Page 72470, first column, the paragraph heading for 
(g)(11)(ii)(B) Example 1. should read ``Example 1. Distributive share 
for unrealized receivables.''
    10. On page 72470, first column, the first and second sentences of 
paragraph (g)(11)(ii)(B) Example 1. (i), should read ``A retires from 
PRS, a business entity classified as a partnership for Federal Income 
tax purposes for which capital is not a material income producing 
factor. A is entitled, pursuant to the partnership agreement, to 
receive 10% of PRS's net income for 60 months commencing immediately 
following A's retirement in exchange for A's fair market value share of 
PRS's unrealized receivables.''.
    11. On page 72470, first column, the fifth sentence of paragraph 
(g)(11)(ii)(B) Example 1. (i), should read ``Prior to A's retirement, A 
materially participated as a general partner in PRS's trade or business 
within the meaning of Sec.  1.469-5T.''.


Sec.  1.1411-7  [Corrected]

    12. On page 72473, second column, the first sentence of paragraph 
(c)(4),

[[Page 10056]]

should read ``The amount of net gain or loss from the transferor's 
Section 1411(c)(4) Disposition that is includable in Sec.  1.1411-
4(a)(1)(iii) is determined by multiplying the transferor's chapter 1 
gain or loss on the disposition by a fraction, the numerator of which 
is the sum of income, gain, loss, and deduction items (with any 
separately stated loss and deduction items netted as negative numbers) 
of a type that are taken into account in the calculation of net 
investment income (as defined in Sec.  1.1411-1(d)) that are allocated 
to the transferor during the Section 1411 Holding Period and the 
denominator of which is the sum of all items of income, gain, loss, and 
deduction allocated to the transferor during the Section 1411 Holding 
Period (with any separately stated loss and deduction items netted as 
negative numbers).''.
    13. On page 72473, third column, the second and the third sentence 
of paragraph (c)(5) Example 1. (ii), should read ``The total amount of 
A's allocated net items during the Section 1411 Holding Period equals 
$1,830,000 ($1,800,000 income from activity X, $10,000 loss from 
activity Y, and $20,000 income from marketable securities). Thus, less 
than 5% ($30,000/1,830,000) of A's allocations during the Section 1411 
Holding Period are of a type that are taken into account in the 
computation of net investment income, and because A's chapter 1 gain 
recognized of $900,000 is less than $5,000,000, A qualifies under Sec.  
1.1411-7(c)(2)(ii) to use the optional simplified method.''.
    14. On page 72474, first column, the second sentence of paragraph 
(c)(5) Example 2., should read ``Under paragraph (c)(4) of this 
section, A's percentage of Section 1411 Property is determined by 
dividing A's allocable share of income and loss of a type that are 
taken into account in the calculation of a net investment income (as 
defined in Sec.  1.1411-1(d)) that are allocated to the transferor by 
the Passthrough Entity during the Section 1411 Holding Period is 
$10,000 ($10,000 loss from Y + $20,000 income from marketable 
securities) by $1,810,000, which is the sum of A's share of income and 
loss from all of P's activates ($1,800,000 + ($10,000) + 20,000).''

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. 2014-03763 Filed 2-21-14; 8:45 am]
BILLING CODE 4830-01-P