Segregation Rule Effective Date, 44280-44282 [2014-17832]
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Federal Register / Vol. 79, No. 147 / Thursday, July 31, 2014 / Rules and Regulations
motions, including motions to remove
the matter to Federal court, to quash, or
to obtain a protective order.
(d) If a demand fails to follow the
requirements of these regulations, MCC
will not allow the testimony or produce
the documents.
(e) MCC will process demands in the
order in which they are received.
Absent unusual circumstances, MCC
will respond within 45 days of the date
that the demand was received. The time
for response will depend upon the
scope of the demand.
(f) The General Counsel may grant a
waiver of any procedure described by
this subpart where a waiver is
considered necessary to promote a
significant interest of MCC or the United
States or for other good cause.
§ 1305.7
Final determination.
The General Counsel makes the final
determination on demands to
employees for production of official
documents and information or
testimony. All final determinations are
within the sole discretion of the General
Counsel. The General Counsel will
notify the requester and the Court or
other authority of the final
determination, the reasons for the grant
or denial of the demand, and any
conditions that the General Counsel
may impose on the release of
documents, or on the testimony of an
employee. When in doubt about the
propriety of granting or denying a
demand for testimony or documents, the
General Counsel should consult with
the Department of Justice.
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§ 1305.8 Restrictions that apply to
testimony.
(a) The General Counsel may impose
conditions or restrictions on the
testimony of MCC employees including,
for example, limiting the areas of
testimony or requiring the requester and
other parties to the legal proceeding to
agree that the transcript of the testimony
will be kept under seal or will only be
used or made available in the particular
legal proceeding for which testimony
was requested. The General Counsel
may also require a copy of the transcript
of testimony at the requester’s expense.
(b) MCC may offer the employee’s
declaration in lieu of testimony, in
whatever form the court finds
acceptable.
(c) If authorized to testify pursuant to
this part, an employee may testify to
relevant unclassified materials or
information within his or her personal
knowledge, but, unless specifically
authorized to do so by the General
Counsel, the employee shall not:
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(1) Disclose confidential or privileged
information; or
(2) For a current MCC employee,
testify as an expert or opinion witness
with regard to any matter arising out of
the employee’s official duties or the
functions of MCC, unless testimony is
being given on behalf of the United
States.
§ 1305.9 Restrictions that apply to
released documents.
(a) The General Counsel may impose
conditions or restrictions on the release
of official documents and information,
including the requirement that parties to
the proceeding obtain a protective order
or execute a confidentiality agreement
to limit access and any further
disclosure. The terms of the protective
order or of the confidentiality agreement
must be acceptable to the General
Counsel. In cases where protective
orders or confidentiality agreements
have already been executed, MCC may
condition the release of official
documents and information on an
amendment to the existing protective
order or confidentiality agreement.
(b) If the General Counsel so
determines, original MCC documents
may be presented in response to a
demand, but they are not to be
presented as evidence or otherwise used
in a manner by which they could lose
their identity as official MCC documents
nor are they to be marked or altered. In
lieu of original records, certified copies
will be presented for evidentiary
purposes. (See 28 U.S.C. 1733).
§ 1305.10 Procedure when a decision is
not made prior to the time a response is
required.
If a response to a demand is required
before the General Counsel can make
the determination referred to above, the
General Counsel, when necessary, will
provide the court or other competent
authority with a copy of this part,
inform the court or other competent
authority that the demand is being
reviewed, and respectfully seek a stay of
the demand pending a final
determination.
§ 1305.11 Procedure in the event of an
adverse ruling.
If the court or other competent
authority declines to stay the demand in
response to a request made in
accordance with § 1305.10, or if the
court or other competent authority rules
that the demand must be complied with
irrespective of the instructions from the
General Counsel not to produce the
material or disclose the information
sought, the employee or former
employee upon whom the demand has
been made shall respectfully decline to
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comply with the demand (United States
ex rel. Touhy v. Ragen, 340 U.S. 462
(1951)).
§ 1305.12
No private right of action.
This part is intended only to provide
guidance for the internal operations of
MCC, and is not intended to, and does
not, and may not be relied upon, to
create a right or benefit, substantive or
procedural, enforceable at law by a
party against the United States.
Dated: July 11, 2014.
John Mantini,
Assistant General Counsel, Millennium
Challenge Corporation.
[FR Doc. 2014–16757 Filed 7–30–14; 8:45 am]
BILLING CODE 9211–03–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9685]
RIN 1545–BM18
Segregation Rule Effective Date
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
AGENCY:
This document contains
temporary regulations under section 382
of the Internal Revenue Code (Code) that
modify the effective date provision of
recently published regulations. These
regulations affect corporations whose
stock is or was acquired by the
Department of the Treasury (Treasury)
pursuant to certain programs under the
Emergency Economic Stabilization Act
of 2008 (EESA). The text of these
temporary regulations also serves as the
text of the proposed regulations set forth
in the notice of proposed rulemaking on
this subject in the Proposed Rules
section in this issue of the Federal
Register. This document also modifies
the existing regulations to provide a
cross-reference to this temporary
regulation.
SUMMARY:
Effective Date: These regulations
are effective on July 31, 2014.
Applicability Date: For dates of
applicability, see section 1.382–
3T(j)(17).
DATES:
FOR FURTHER INFORMATION CONTACT:
Stephen R. Cleary, (202) 317–5353 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
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Federal Register / Vol. 79, No. 147 / Thursday, July 31, 2014 / Rules and Regulations
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Background
Section 382
Section 382 of the Code provides that
the taxable income of a loss corporation
for a year following an ownership
change may be offset by pre-change
losses only to the extent of the section
382 limitation for such year. An
ownership change occurs with respect
to a corporation if it is a loss corporation
on a testing date and, immediately after
the close of the testing date, the
percentage of stock of the corporation
owned by one or more 5-percent
shareholders has increased by more
than 50 percentage points over the
lowest percentage of stock of such
corporation owned by such
shareholders at any time during the
testing period.
Pursuant to section 382(g)(4)(A),
shareholders who own less than five
percent of a loss corporation are
aggregated and treated as a single 5percent shareholder (a public group). In
addition, new public groups may be
created as a result of certain transactions
under the segregation rules in the
section 382 regulations. Any new public
group is tracked separately from, and in
addition to, the public group or groups
that existed previously and is treated as
a new 5-percent shareholder that
increases its ownership interest in the
loss corporation.
One particular segregation rule, which
was imposed by § 1.382–2T(j)(3)(i) of
the Temporary Income Tax Regulations
until it was superseded, required
segregation when an individual or entity
that owned five percent or more of the
loss corporation transferred an interest
in the loss corporation to public
shareholders. After the sale, stock
owned by a public group that existed
immediately before the sale was treated
separately from the stock owned by the
public group that acquired stock from
the seller. This separate public group
was treated as a new 5-percent
shareholder. However, this rule was
rendered inoperative by § 1.382–3(j)(13),
part of a set of regulations published in
TD 9638 [78 FR 62418] on October 22,
2013. Under the new regulation, no new
public group is created on the transfer
of stock to the public shareholders;
instead, the transferred stock is treated
as acquired proportionately by the
public groups existing at the time of the
transfer.
Notice 2010–2 (2010–2 IRB 251
(December 16, 2009)) (see
§ 1.601.601(d)(2)(ii)(B) of this chapter),
provides guidance regarding the
application of section 382 of the Code
and other provisions of law to
corporations whose instruments are
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44281
acquired and disposed of by the
Treasury pursuant to EESA. Notice
2010–2 relates to instruments acquired
by Treasury pursuant to the following
EESA programs: (i) The Capital
Purchase Program for publicly-traded
issuers; (ii) the Capital Purchase
Program for private issuers; (iii) the
Capital Purchase Program for S
corporations; (iv) the Targeted
Investment Program; (v) the Asset
Guarantee Program; (vi) the
Systemically Significant Failing
Institutions Program; (vii) the
Automotive Industry Financing
Program; and (viii) the Capital
Assistance Program for publicly-traded
issuers. (These programs are collectively
referred to as ‘‘Programs’’ in that Notice
and in this preamble.)
Under Section III(G) of Notice 2010–
2, a ‘‘Covered Instrument’’ is an
instrument that is acquired by Treasury
in exchange for an instrument that was
issued to Treasury under the Programs,
or is acquired by Treasury in exchange
for another Covered Instrument. For
most purposes of that Notice, a Covered
Instrument is treated as though it had
been issued directly to Treasury under
the Programs.
Section III(E) of Notice 2010–2
provides the following rule to govern
the sale by Treasury of stock of a
corporation to public shareholders:
corporation to public shareholders.
However, under § 1.382–3(j)(13) as now
in effect, such a transfer does not create
a new public group.
Section 382 treatment of stock sold by
Treasury to public shareholders. If Treasury
sells stock that was issued to it pursuant to
the Programs (either directly or upon the
exercise of a warrant) and the sale creates a
public group (‘‘New Public Group’’), the New
Public Group’s ownership in the issuing
corporation shall not be considered to have
increased solely as a result of such a sale. A
New Public Group’s ownership shall be
treated as having increased to the extent the
New Public Group increases its ownership
pursuant to any transaction other than a sale
of stock by Treasury, including pursuant to
a stock issuance described in section 1.382–
3(j)(2) or a redemption (see § 1.382–
2T(j)(2)(iii)(C)). Such stock is considered
outstanding for purposes of determining the
percentage of stock owned by other 5-percent
shareholders on any testing date, and section
382 (and the regulations thereunder) shall
otherwise apply to the New Public Group in
the same manner as with respect to other
public groups.
Special Analyses
These regulations are necessary to
provide corporations with immediate
guidance regarding the continuing effect
of Notice 2010–2 in light of the change
to the segregation rules provided by TD
9638. Because of the need for immediate
guidance, the IRS and the Treasury
Department are issuing temporary
regulations which are effective
immediately.
It has also been determined that this
temporary regulation is not a significant
regulatory action as defined in
Executive Order 12866, as
supplemented by Executive Order
13563. Therefore, a regulatory
assessment is not required. For the
application of the Regulatory Flexibility
Act (5 U.S.C. chapter 6), refer to the
Special Analysis section of the preamble
of the cross-referenced notice of
proposed rulemaking published in this
issue of the Federal Register. 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.
This rule was created to prevent a loss
corporation from experiencing an owner
shift when Treasury sells stock to public
shareholders. By its terms, the rule
relies on the assumption that the stock
sale ‘‘creates a public group.’’ As
explained earlier in this preamble,
§ 1.382–2T(j)(3)(i), before it was
superseded, required creation of a new
public group when a 5-percent
shareholder sold stock in a loss
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Explanation of Provision
The IRS and Treasury are concerned
that the elimination of the segregation
rule described earlier in this preamble
may have unintentionally rendered
inoperative the rule in Notice 2010–2
that protects a loss corporation from an
owner shift when Treasury sells stock
that it held pursuant to the Programs to
public shareholders. To prevent this
result, the temporary regulation
modifies the effective date rule of TD
9638 to except from the changes to the
segregation rules in that regulation the
sale by the Treasury Department to
public shareholders of any ‘‘Program
Instrument’’ (an instrument issued
pursuant to a Program or a Covered
Instrument). As a result, a sale of stock
by Treasury to the public will create a
public group, and the rule of Section
III(E) of Notice 2010–2 will continue to
apply as intended. This provision will
only affect the sale of a Program
Instrument by the Treasury Department
and will not affect the application of the
segregation rule changes in TD 9638 to
any other transactions involving stock of
the corporations that participated in the
Programs.
Drafting Information
The principal author of these
regulations is Stephen R. Cleary of the
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Federal Register / Vol. 79, No. 147 / Thursday, July 31, 2014 / Rules and Regulations
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.
Amendments to the Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
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 * * *
Section 1.382–3T also issued under 26
U.S.C. 382(g)(4)(C) and 26 U.S.C. 382(m).
* * *
Par. 2. Section 1.382–3 is amended by
revising paragraph (j)(17) to read as
follows:
■
§ 1.382–3 Definitions and rules relating to
a 5-percent shareholder.
*
*
*
*
*
(j) * * *
(17) Effective/applicability date.
[Reserved]. For further guidance, see
§ 1.382–3T(j)(17).
*
*
*
*
*
■ Par. 3. Section 1.382–3T is added to
read as follows:
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§ 1.382–3T Definitions and rules relating to
a 5-percent shareholder (temporary).
(a) through (j)(16) [Reserved]. For
further guidance see § 1.382–3(a)
through (j)(16).
(17) Effective/applicability date. This
paragraph (j) generally applies to
issuances or deemed issuances of stock
in taxable years beginning on or after
November 4, 1992. However, paragraphs
(j)(11)(ii) and (j)(13) through (j)(15) of
this section and Examples 5 through 13
of paragraph (j)(16) of this section apply
to testing dates occurring on or after
October 22, 2013, other than with
respect to the sale of a Program
Instrument by the Treasury Department.
For purposes of this paragraph (j)(17), a
Program Instrument is an instrument
issued pursuant to a Program, as defined
in Internal Revenue Service Notice
2010–2 (2010–2 IRB 251 (December 16,
2009)) (see § 601.601(a)(2)(ii)(B) of this
chapter), or a Covered Instrument, as
defined in that Notice. Taxpayers may
apply paragraphs (j)(11)(ii) and (j)(13)
through (j)(15) of this section and
Examples 5 through 13 of paragraph
(j)(16) of this section in their entirety
(other than with respect to a sale of a
Program Instrument by the Treasury
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Jkt 232001
Department) to all testing dates that are
included in a testing period beginning
before and ending on or after October
22, 2013. However, the provisions
described in the preceding sentence
may not be applied to any date on or
before the date of any ownership change
that occurred before October 22, 2013,
under the regulations in effect before
October 22, 2013, and they may not be
applied as described in the preceding
sentence if such application would
result in an ownership change occurring
on a date before October 22, 2013, that
did not occur under the regulations in
effect before October 22, 2013. See
§ 1.382–3(j)(14)(ii) and (iii), as contained
in 26 CFR part 1 revised as of April 1,
1994 for the application of paragraph
(j)(10) to stock issued on the exercise of
certain options exercised on or after
November 4, 1992, and for an election
to apply paragraphs (j)(1) through (12)
retroactively to certain issuances and
deemed issuances of stock occurring in
taxable years prior to November 4, 1992.
(18) Expiration date. This section
1.382–3T expires on or before July 28,
2017.
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
Approved: July 18, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2014–17832 Filed 7–30–14; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9686]
RIN 1545–BF59
Material Advisor Penalty for Failure To
Furnish Information Regarding
Reportable Transactions
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
This document contains final
regulations relating to the assessment of
penalties against material advisors who
fail to timely file a true and complete
return. The regulations implement
amendments made by the American
Jobs Creation Act of 2004. These
regulations affect material advisors
responsible for disclosing reportable
transactions.
SUMMARY:
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Effective Date: These regulations
are effective on July 31, 2014.
Applicability Date: For dates of
applicability, see § 301.6707–1(f).
FOR FURTHER INFORMATION CONTACT:
James G. Hartford at (202) 317–6844 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
DATES:
Background
This document contains amendments
to the Procedure and Administration
Regulations (26 CFR Part 301) under
section 6707. On December 22, 2008, a
notice of proposed rulemaking (REG–
160872–04) was published in the
Federal Register (73 FR 78254) relating
to the penalty under section 6707 of the
Internal Revenue Code imposed on
material advisors for failure to furnish
information regarding reportable
transactions (the proposed regulations).
No comments were received from the
public in response to the notice of
proposed rulemaking. No public hearing
was requested or held. The proposed
regulations are adopted by this Treasury
decision with revisions as discussed in
this preamble.
Section 6707 was originally added to
the Code by section 141(b) of the Tax
Reform Act of 1984, Public Law 98–369,
98 Stat. 494 (July 18, 1984). At that time,
section 6707 imposed a penalty for
failing to timely register a tax shelter or
for filing false or incomplete
information with respect to the tax
shelter registration. Section 301.6707–
1T of the temporary regulations
implementing the penalty was
published shortly after section 6707
became law.
The American Jobs Creation Act of
2004, Public Law 108–357, 118 Stat.
1418 (AJCA), was enacted on October
22, 2004. As amended by AJCA, section
6707 imposes a penalty on a material
advisor required to file a return under
section 6111(a) with respect to a
reportable transaction who fails to
timely file such a return or who files the
return with false or incomplete
information. Section 6707, as amended,
is effective for returns due after October
22, 2004.
In 2007, the Treasury Department and
the IRS issued Rev. Proc. 2007–21,
2007–1 CB 613 (February 26, 2007), (see
§ 601.601(d)(2)(ii)(b)), of this chapter, to
provide procedures for requesting
rescission of a penalty assessed under
section 6707 for failure by a material
advisor to disclose a reportable
transaction and under section 6707A for
failure by a taxpayer to disclose a
reportable transaction. For each penalty,
the revenue procedure provides the
deadline by which a person must
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]]>Agencies
[Federal Register Volume 79, Number 147 (Thursday, July 31, 2014)]
[Rules and Regulations]
[Pages 44280-44282]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-17832]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9685]
RIN 1545-BM18
Segregation Rule Effective Date
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains temporary regulations under section 382
of the Internal Revenue Code (Code) that modify the effective date
provision of recently published regulations. These regulations affect
corporations whose stock is or was acquired by the Department of the
Treasury (Treasury) pursuant to certain programs under the Emergency
Economic Stabilization Act of 2008 (EESA). The text of these temporary
regulations also serves as the text of the proposed regulations set
forth in the notice of proposed rulemaking on this subject in the
Proposed Rules section in this issue of the Federal Register. This
document also modifies the existing regulations to provide a cross-
reference to this temporary regulation.
DATES: Effective Date: These regulations are effective on July 31,
2014.
Applicability Date: For dates of applicability, see section 1.382-
3T(j)(17).
FOR FURTHER INFORMATION CONTACT: Stephen R. Cleary, (202) 317-5353 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
[[Page 44281]]
Background
Section 382
Section 382 of the Code provides that the taxable income of a loss
corporation for a year following an ownership change may be offset by
pre-change losses only to the extent of the section 382 limitation for
such year. An ownership change occurs with respect to a corporation if
it is a loss corporation on a testing date and, immediately after the
close of the testing date, the percentage of stock of the corporation
owned by one or more 5-percent shareholders has increased by more than
50 percentage points over the lowest percentage of stock of such
corporation owned by such shareholders at any time during the testing
period.
Pursuant to section 382(g)(4)(A), shareholders who own less than
five percent of a loss corporation are aggregated and treated as a
single 5-percent shareholder (a public group). In addition, new public
groups may be created as a result of certain transactions under the
segregation rules in the section 382 regulations. Any new public group
is tracked separately from, and in addition to, the public group or
groups that existed previously and is treated as a new 5-percent
shareholder that increases its ownership interest in the loss
corporation.
One particular segregation rule, which was imposed by Sec. 1.382-
2T(j)(3)(i) of the Temporary Income Tax Regulations until it was
superseded, required segregation when an individual or entity that
owned five percent or more of the loss corporation transferred an
interest in the loss corporation to public shareholders. After the
sale, stock owned by a public group that existed immediately before the
sale was treated separately from the stock owned by the public group
that acquired stock from the seller. This separate public group was
treated as a new 5-percent shareholder. However, this rule was rendered
inoperative by Sec. 1.382-3(j)(13), part of a set of regulations
published in TD 9638 [78 FR 62418] on October 22, 2013. Under the new
regulation, no new public group is created on the transfer of stock to
the public shareholders; instead, the transferred stock is treated as
acquired proportionately by the public groups existing at the time of
the transfer.
Notice 2010-2 (2010-2 IRB 251 (December 16, 2009)) (see Sec.
1.601.601(d)(2)(ii)(B) of this chapter), provides guidance regarding
the application of section 382 of the Code and other provisions of law
to corporations whose instruments are acquired and disposed of by the
Treasury pursuant to EESA. Notice 2010-2 relates to instruments
acquired by Treasury pursuant to the following EESA programs: (i) The
Capital Purchase Program for publicly-traded issuers; (ii) the Capital
Purchase Program for private issuers; (iii) the Capital Purchase
Program for S corporations; (iv) the Targeted Investment Program; (v)
the Asset Guarantee Program; (vi) the Systemically Significant Failing
Institutions Program; (vii) the Automotive Industry Financing Program;
and (viii) the Capital Assistance Program for publicly-traded issuers.
(These programs are collectively referred to as ``Programs'' in that
Notice and in this preamble.)
Under Section III(G) of Notice 2010-2, a ``Covered Instrument'' is
an instrument that is acquired by Treasury in exchange for an
instrument that was issued to Treasury under the Programs, or is
acquired by Treasury in exchange for another Covered Instrument. For
most purposes of that Notice, a Covered Instrument is treated as though
it had been issued directly to Treasury under the Programs.
Section III(E) of Notice 2010-2 provides the following rule to
govern the sale by Treasury of stock of a corporation to public
shareholders:
Section 382 treatment of stock sold by Treasury to public
shareholders. If Treasury sells stock that was issued to it pursuant
to the Programs (either directly or upon the exercise of a warrant)
and the sale creates a public group (``New Public Group''), the New
Public Group's ownership in the issuing corporation shall not be
considered to have increased solely as a result of such a sale. A
New Public Group's ownership shall be treated as having increased to
the extent the New Public Group increases its ownership pursuant to
any transaction other than a sale of stock by Treasury, including
pursuant to a stock issuance described in section 1.382-3(j)(2) or a
redemption (see Sec. 1.382-2T(j)(2)(iii)(C)). Such stock is
considered outstanding for purposes of determining the percentage of
stock owned by other 5-percent shareholders on any testing date, and
section 382 (and the regulations thereunder) shall otherwise apply
to the New Public Group in the same manner as with respect to other
public groups.
This rule was created to prevent a loss corporation from
experiencing an owner shift when Treasury sells stock to public
shareholders. By its terms, the rule relies on the assumption that the
stock sale ``creates a public group.'' As explained earlier in this
preamble, Sec. 1.382-2T(j)(3)(i), before it was superseded, required
creation of a new public group when a 5-percent shareholder sold stock
in a loss corporation to public shareholders. However, under Sec.
1.382-3(j)(13) as now in effect, such a transfer does not create a new
public group.
Explanation of Provision
The IRS and Treasury are concerned that the elimination of the
segregation rule described earlier in this preamble may have
unintentionally rendered inoperative the rule in Notice 2010-2 that
protects a loss corporation from an owner shift when Treasury sells
stock that it held pursuant to the Programs to public shareholders. To
prevent this result, the temporary regulation modifies the effective
date rule of TD 9638 to except from the changes to the segregation
rules in that regulation the sale by the Treasury Department to public
shareholders of any ``Program Instrument'' (an instrument issued
pursuant to a Program or a Covered Instrument). As a result, a sale of
stock by Treasury to the public will create a public group, and the
rule of Section III(E) of Notice 2010-2 will continue to apply as
intended. This provision will only affect the sale of a Program
Instrument by the Treasury Department and will not affect the
application of the segregation rule changes in TD 9638 to any other
transactions involving stock of the corporations that participated in
the Programs.
Special Analyses
These regulations are necessary to provide corporations with
immediate guidance regarding the continuing effect of Notice 2010-2 in
light of the change to the segregation rules provided by TD 9638.
Because of the need for immediate guidance, the IRS and the Treasury
Department are issuing temporary regulations which are effective
immediately.
It has also been determined that this temporary regulation is not a
significant regulatory action as defined in Executive Order 12866, as
supplemented by Executive Order 13563. Therefore, a regulatory
assessment is not required. For the application of the Regulatory
Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analysis
section of the preamble of the cross-referenced notice of proposed
rulemaking published in this issue of the Federal Register. 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 Stephen R. Cleary of
the
[[Page 44282]]
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.
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 * * *
Section 1.382-3T also issued under 26 U.S.C. 382(g)(4)(C) and 26
U.S.C. 382(m). * * *
0
Par. 2. Section 1.382-3 is amended by revising paragraph (j)(17) to
read as follows:
Sec. 1.382-3 Definitions and rules relating to a 5-percent
shareholder.
* * * * *
(j) * * *
(17) Effective/applicability date. [Reserved]. For further
guidance, see Sec. 1.382-3T(j)(17).
* * * * *
0
Par. 3. Section 1.382-3T is added to read as follows:
Sec. 1.382-3T Definitions and rules relating to a 5-percent
shareholder (temporary).
(a) through (j)(16) [Reserved]. For further guidance see Sec.
1.382-3(a) through (j)(16).
(17) Effective/applicability date. This paragraph (j) generally
applies to issuances or deemed issuances of stock in taxable years
beginning on or after November 4, 1992. However, paragraphs (j)(11)(ii)
and (j)(13) through (j)(15) of this section and Examples 5 through 13
of paragraph (j)(16) of this section apply to testing dates occurring
on or after October 22, 2013, other than with respect to the sale of a
Program Instrument by the Treasury Department. For purposes of this
paragraph (j)(17), a Program Instrument is an instrument issued
pursuant to a Program, as defined in Internal Revenue Service Notice
2010-2 (2010-2 IRB 251 (December 16, 2009)) (see Sec.
601.601(a)(2)(ii)(B) of this chapter), or a Covered Instrument, as
defined in that Notice. Taxpayers may apply paragraphs (j)(11)(ii) and
(j)(13) through (j)(15) of this section and Examples 5 through 13 of
paragraph (j)(16) of this section in their entirety (other than with
respect to a sale of a Program Instrument by the Treasury Department)
to all testing dates that are included in a testing period beginning
before and ending on or after October 22, 2013. However, the provisions
described in the preceding sentence may not be applied to any date on
or before the date of any ownership change that occurred before October
22, 2013, under the regulations in effect before October 22, 2013, and
they may not be applied as described in the preceding sentence if such
application would result in an ownership change occurring on a date
before October 22, 2013, that did not occur under the regulations in
effect before October 22, 2013. See Sec. 1.382-3(j)(14)(ii) and (iii),
as contained in 26 CFR part 1 revised as of April 1, 1994 for the
application of paragraph (j)(10) to stock issued on the exercise of
certain options exercised on or after November 4, 1992, and for an
election to apply paragraphs (j)(1) through (12) retroactively to
certain issuances and deemed issuances of stock occurring in taxable
years prior to November 4, 1992.
(18) Expiration date. This section 1.382-3T expires on or before
July 28, 2017.
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
Approved: July 18, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2014-17832 Filed 7-30-14; 8:45 am]
BILLING CODE 4830-01-P
