Allocation of Earnings and Profits in Tax-Free Transfers From One Corporation to Another; Acquiring Corporation for Purposes of Section 381, 66616-66617 [2014-26546]
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Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
for purposes of enhancing the safety of
the aircraft crew) for lethal end-items.
Note to paragraph (l). For non-lethal
defense end-items, no distinction will be
made between Vietnam’s existing and new
inventory.
*
*
*
*
*
Rose E. Gottemoeller,
Under Secretary, Arms Control and
International Security, Department of State.
[FR Doc. 2014–26632 Filed 11–7–14; 8:45 am]
BILLING CODE 4710–05–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9700]
RINs 1545–BK73; 1545–BL80
Allocation of Earnings and Profits in
Tax-Free Transfers From One
Corporation to Another; Acquiring
Corporation for Purposes of Section
381
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:
This document contains final
regulations under section 312 of the
Internal Revenue Code (Code) that
clarify the regulations under section 312
regarding the allocation of earnings and
profits in tax-free transfers from one
corporation to another. These
regulations affect corporations involved
in these transfers and their
shareholders. This document also
contains final regulations under section
381 of the Code that modify the
definition of an acquiring corporation
for purposes of section 381 with regard
to certain acquisitions of assets. These
regulations affect corporations that
acquire the assets of other corporations
in corporate reorganizations.
DATES: Effective Date: These regulations
are effective on November 10, 2014.
Applicability Date: These regulations
apply to transactions occurring on or
after November 10, 2014.
FOR FURTHER INFORMATION CONTACT:
Stephanie D. Floyd at (202) 317–6848 or
Isaac W. Zimbalist at (202) 317–6847
(not toll-free numbers).
SUPPLEMENTARY INFORMATON:
rmajette on DSK2TPTVN1PROD with RULES
SUMMARY:
Background
This document contains amendments
to 26 CFR part 1 under section 312 and
section 381 of the Code. On April 16,
2012, the IRS and the Treasury
VerDate Sep<11>2014
14:43 Nov 07, 2014
Jkt 235001
Department published a notice of
proposed rulemaking (REG–141268–11)
in the Federal Register (77 FR 22515)
containing proposed regulations under
section 312 (proposed section 312
regulations) to clarify § 1.312–11
regarding the allocation of earnings and
profits in nonrecognition transfers of
property from one corporation to
another. The proposed section 312
regulations provided that, in a transfer
described in section 381(a) (section 381
transaction), the acquiring corporation,
as defined in § 1.381(a)–1(b)(2), would
succeed to the earnings and profits of
the distributor or transferor corporation.
For example, in a reorganization under
section 368(a)(1) by reason of section
368(a)(2)(C), if the transferee
corporation that directly acquires a
transferor corporation’s assets
transferred some, but not all, of the
acquired assets to a controlled
subsidiary, the transferee corporation
(the acquiring corporation under
§ 1.381(a)–1(b)(2)) would succeed to the
transferor corporation’s earnings and
profits. However, if the transferee
corporation instead transferred all of the
acquired assets to a controlled
subsidiary, then the controlled
subsidiary (the acquiring corporation
under § 1.381(a)–1(b)(2)) would succeed
to the transferor corporation’s earnings
and profits.
Comments responding to the
proposed section 312 regulations were
received, but no public hearing was
requested or held. In response to the
comments received on the proposed
section 312 regulations, on May 7, 2014,
the IRS and the Treasury Department
published a notice of proposed
rulemaking (REG–131239–13) in the
Federal Register (79 FR 26190)
containing proposed regulations under
section 381 (proposed section 381
regulations) to modify the definition of
an acquiring corporation for purposes of
section 381 with regard to certain
acquisitions of assets. As discussed in
the preamble to the proposed section
381 regulations, commenters generally
welcomed the apparent certainty
provided by the proposed section 312
regulations regarding the location of the
transferor corporation’s earnings and
profits. However, commenters suggested
that this certainty was illusory because
the existing definition of ‘‘acquiring
corporation’’ under § 1.381(a)–1(b)(2)
focused on whether the direct transferee
corporation in a reorganization further
transferred all of the assets it received
in the section 381 transaction. Thus,
commenters suggested that the existing
regulations under section 381 should be
revised to limit the degree of electivity
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
regarding the identity of the acquiring
corporation, as well as the uncertainty
regarding whether all of the assets
transferred in the section 381
transaction were further transferred to a
single controlled corporation.
The proposed section 381 regulations
provided greater certainty regarding the
identity of the acquiring corporation by
providing that, in a transaction
described in section 381(a)(2), the term
acquiring corporation means the
corporation that directly acquired the
assets transferred by the transferor
corporation, even if the direct transferee
corporation ultimately retained none of
the assets so transferred. As discussed
in the preamble to the proposed section
381 regulations, the IRS and the
Treasury Department believe that this
rule is appropriate with respect to
determining the location of the earnings
and profits (as well as other tax
attributes) of a transferor corporation
because it generally maintains such
earnings and profits at the corporation
closest to the transferor corporation’s
former shareholders in a manner that
minimizes electivity and administrative
burden. No comments were received in
response to the proposed section 381
regulations, and no public hearing was
requested or held.
Explanation of Provisions
The proposed section 381 regulations
are adopted without substantive change
by this Treasury decision. Because the
proposed section 312 regulations merely
cross-reference the section 381
regulations, this Treasury decision also
adopts the proposed section 312
regulations without substantive change.
However, these final regulations make
a clarifying, non-substantive change to
the proposed section 312 regulations.
The proposed section 312 regulations
provided that ‘‘[e]xcept as provided in
§ 1.312–10, in all other cases in which
property is transferred from one
corporation to another and no gain or
loss is recognized (or is recognized only
to the extent of the property received
other than that permitted to be received
without the recognition of gain), no
allocation of the earnings and profits of
the transferor is made to the transferee.’’
These final regulations remove the
language ‘‘and no gain or loss is
recognized (or is recognized only to the
extent of the property received other
than that permitted to be received
without the recognition of gain).’’ The
IRS and the Treasury Department
believe this language may
inappropriately imply that allocation of
earnings and profits may be permitted
in cases in which gain not expressly
described is recognized on the transfer
E:\FR\FM\10NOR1.SGM
10NOR1
Federal Register / Vol. 79, No. 217 / Monday, November 10, 2014 / Rules and Regulations
of property between corporations (for
example, gain required to be recognized
under section 367 or 1001). This
clarifying, non-substantive change
confirms that except as provided in
§ 1.312–10, in all other cases in which
property is transferred from one
corporation to another, no allocation of
earnings and profits is made.
Special Analyses
It has been determined that this
Treasury decision 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. It has also
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 these
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 Code, the notices
of proposed rulemaking that preceded
these regulations were submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on their impact on small business, and
no comments were received.
Drafting Information
The principal author of these
regulations is Stephanie D. Floyd of the
Office of Associate Chief Counsel
(Corporate). 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
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
■
Par. 3. Section 1.381(a)–1 is amended
by:
■ a. Removing the third, fourth, and
fifth sentences of paragraph (b)(2)(i) and
adding one sentence in their place.
■ b. Removing from the last sentence of
paragraph (b)(2)(ii) Example 2 ‘‘Y’’ and
adding ‘‘X’’ in its place.
■ c. Redesignating paragraph (b)(3)(i) as
paragraph (b)(3).
■ d. Removing paragraph (b)(3)(ii).
■ e. Adding a sentence at the end of
paragraph (e).
The additions read as follows:
Authority: 26 U.S.C. 7805 * * *
§ 1.381(a)–1 General rule relating to
carryovers in certain corporate
acquisitions.
*
*
*
*
*
(b) * * *
(2) * * * (i) * * * In a transaction to
which section 381(a)(2) applies, the
acquiring corporation is the corporation
that, pursuant to the plan of
reorganization, directly acquires the
assets transferred by the transferor
corporation, even if that corporation
ultimately retains none of the assets so
transferred.
*
*
*
*
*
(e) * * * The last sentence of
paragraph (b)(2)(i) of this section and
Example 2 of paragraph (b)(2)(ii) of this
section apply to transactions occurring
on or after November 10, 2014.
[Amended]
Par. 4. Section 1.381(c)(2)-1 is
amended by removing paragraph (d).
■
Par. 2. Section 1.312–11 is amended
by revising paragraph (a) and adding
paragraph (e) to read as follows:
§ 1.312–11 Effect on earnings and profits
of certain other tax-free exchanges, tax-free
distributions, and tax-free transfers from
one corporation to another.
(a) In a transfer described in section
381(a), the acquiring corporation, as
defined in § 1.381(a)–1(b)(2), and only
that corporation, succeeds to the
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
Approved: October 17, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2014–26546 Filed 11–7–14; 8:45 am]
VerDate Sep<11>2014
14:43 Nov 07, 2014
Jkt 235001
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2520
RIN 1210–AB66
Revisions to Annual Return/Report—
Multiple-Employer Plans
Employee Benefits Security
Administration, Labor.
ACTION: Interim final rule with request
for comments.
AGENCY:
■
§ 1.381(c)(2)–1
■
rmajette on DSK2TPTVN1PROD with RULES
earnings and profits of the distributor or
transferor corporation (within the
meaning of § 1.381(a)–1(a)). Except as
provided in § 1.312–10, in all other
cases in which property is transferred
from one corporation to another, no
allocation of the earnings and profits of
the transferor is made to the transferee.
*
*
*
*
*
(e) Effective/applicability date.
Paragraph (a) of this section applies to
transactions occurring on or after
November 10, 2014.
66617
BILLING CODE 4830–01–P
PO 00000
Frm 00027
Fmt 4700
Sfmt 4700
This interim final rule
describes revisions to the Form 5500
Annual Return/Report of Employee
Benefit Plan and Form 5500–SF Annual
Return/Report of Small Employee
Benefit Plan (together ‘‘Form 5500
Annual Return/Report’’) to implement
annual reporting changes for multipleemployer plans required by The
Cooperative and Small Employer
Charity Pension Flexibility Act (CSEC
Act), enacted on April 7, 2014. The
Form 5500 annual return/report is filed
by employee benefit plans under the
Employee Retirement Income Security
Act of 1974 (ERISA) and sections
6047(e), 6057(b), 6058(a), and 6059 of
the Internal Revenue Code (Code). The
CSEC Act established additional annual
reporting requirements for multipleemployer plans for plan years beginning
after December 31, 2013, by adding new
section 103(g) to Title I of ERISA.
Specifically, the annual return/report of
a multiple-employer plan must include
a list of participating employers and a
good faith estimate of the percentage of
total contributions made by each
participating employer during the plan
year. This interim final rule also
includes findings by the Department of
Labor (Department) under the
Administrative Procedure Act that good
cause exists to adopt these revisions on
an interim final basis without prior
notice and public comments.
DATES: Effective Date. This interim final
rule is effective on November 10, 2014.
Comment Date. Comments are due on
or before January 9, 2015. We will
consider public comments in
connection with publishing a final rule
that would apply no earlier than the
2015 Form 5500.
Applicability Dates. The multipleemployer plan reporting requirements
under the CSEC Act apply to plan years
beginning after December 31, 2013,
which created an immediate need for
changes to the Form 5500 and Form
5500–SF. Accordingly, the CSEC Act
form changes in this document will be
applicable beginning with the 2014
SUMMARY:
E:\FR\FM\10NOR1.SGM
10NOR1
]]>Agencies
[Federal Register Volume 79, Number 217 (Monday, November 10, 2014)]
[Rules and Regulations]
[Pages 66616-66617]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26546]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9700]
RINs 1545-BK73; 1545-BL80
Allocation of Earnings and Profits in Tax-Free Transfers From One
Corporation to Another; Acquiring Corporation for Purposes of Section
381
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations under section 312 of
the Internal Revenue Code (Code) that clarify the regulations under
section 312 regarding the allocation of earnings and profits in tax-
free transfers from one corporation to another. These regulations
affect corporations involved in these transfers and their shareholders.
This document also contains final regulations under section 381 of the
Code that modify the definition of an acquiring corporation for
purposes of section 381 with regard to certain acquisitions of assets.
These regulations affect corporations that acquire the assets of other
corporations in corporate reorganizations.
DATES: Effective Date: These regulations are effective on November 10,
2014.
Applicability Date: These regulations apply to transactions
occurring on or after November 10, 2014.
FOR FURTHER INFORMATION CONTACT: Stephanie D. Floyd at (202) 317-6848
or Isaac W. Zimbalist at (202) 317-6847 (not toll-free numbers).
SUPPLEMENTARY INFORMATON:
Background
This document contains amendments to 26 CFR part 1 under section
312 and section 381 of the Code. On April 16, 2012, the IRS and the
Treasury Department published a notice of proposed rulemaking (REG-
141268-11) in the Federal Register (77 FR 22515) containing proposed
regulations under section 312 (proposed section 312 regulations) to
clarify Sec. 1.312-11 regarding the allocation of earnings and profits
in nonrecognition transfers of property from one corporation to
another. The proposed section 312 regulations provided that, in a
transfer described in section 381(a) (section 381 transaction), the
acquiring corporation, as defined in Sec. 1.381(a)-1(b)(2), would
succeed to the earnings and profits of the distributor or transferor
corporation. For example, in a reorganization under section 368(a)(1)
by reason of section 368(a)(2)(C), if the transferee corporation that
directly acquires a transferor corporation's assets transferred some,
but not all, of the acquired assets to a controlled subsidiary, the
transferee corporation (the acquiring corporation under Sec. 1.381(a)-
1(b)(2)) would succeed to the transferor corporation's earnings and
profits. However, if the transferee corporation instead transferred all
of the acquired assets to a controlled subsidiary, then the controlled
subsidiary (the acquiring corporation under Sec. 1.381(a)-1(b)(2))
would succeed to the transferor corporation's earnings and profits.
Comments responding to the proposed section 312 regulations were
received, but no public hearing was requested or held. In response to
the comments received on the proposed section 312 regulations, on May
7, 2014, the IRS and the Treasury Department published a notice of
proposed rulemaking (REG-131239-13) in the Federal Register (79 FR
26190) containing proposed regulations under section 381 (proposed
section 381 regulations) to modify the definition of an acquiring
corporation for purposes of section 381 with regard to certain
acquisitions of assets. As discussed in the preamble to the proposed
section 381 regulations, commenters generally welcomed the apparent
certainty provided by the proposed section 312 regulations regarding
the location of the transferor corporation's earnings and profits.
However, commenters suggested that this certainty was illusory because
the existing definition of ``acquiring corporation'' under Sec.
1.381(a)-1(b)(2) focused on whether the direct transferee corporation
in a reorganization further transferred all of the assets it received
in the section 381 transaction. Thus, commenters suggested that the
existing regulations under section 381 should be revised to limit the
degree of electivity regarding the identity of the acquiring
corporation, as well as the uncertainty regarding whether all of the
assets transferred in the section 381 transaction were further
transferred to a single controlled corporation.
The proposed section 381 regulations provided greater certainty
regarding the identity of the acquiring corporation by providing that,
in a transaction described in section 381(a)(2), the term acquiring
corporation means the corporation that directly acquired the assets
transferred by the transferor corporation, even if the direct
transferee corporation ultimately retained none of the assets so
transferred. As discussed in the preamble to the proposed section 381
regulations, the IRS and the Treasury Department believe that this rule
is appropriate with respect to determining the location of the earnings
and profits (as well as other tax attributes) of a transferor
corporation because it generally maintains such earnings and profits at
the corporation closest to the transferor corporation's former
shareholders in a manner that minimizes electivity and administrative
burden. No comments were received in response to the proposed section
381 regulations, and no public hearing was requested or held.
Explanation of Provisions
The proposed section 381 regulations are adopted without
substantive change by this Treasury decision. Because the proposed
section 312 regulations merely cross-reference the section 381
regulations, this Treasury decision also adopts the proposed section
312 regulations without substantive change.
However, these final regulations make a clarifying, non-substantive
change to the proposed section 312 regulations. The proposed section
312 regulations provided that ``[e]xcept as provided in Sec. 1.312-10,
in all other cases in which property is transferred from one
corporation to another and no gain or loss is recognized (or is
recognized only to the extent of the property received other than that
permitted to be received without the recognition of gain), no
allocation of the earnings and profits of the transferor is made to the
transferee.'' These final regulations remove the language ``and no gain
or loss is recognized (or is recognized only to the extent of the
property received other than that permitted to be received without the
recognition of gain).'' The IRS and the Treasury Department believe
this language may inappropriately imply that allocation of earnings and
profits may be permitted in cases in which gain not expressly described
is recognized on the transfer
[[Page 66617]]
of property between corporations (for example, gain required to be
recognized under section 367 or 1001). This clarifying, non-substantive
change confirms that except as provided in Sec. 1.312-10, in all other
cases in which property is transferred from one corporation to another,
no allocation of earnings and profits is made.
Special Analyses
It has been determined that this Treasury decision 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. It has also 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 these 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 Code, the notices of proposed rulemaking that
preceded these regulations were submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on their
impact on small business, and no comments were received.
Drafting Information
The principal author of these regulations is Stephanie D. Floyd of
the Office of Associate Chief Counsel (Corporate). 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 1.312-11 is amended by revising paragraph (a) and
adding paragraph (e) to read as follows:
Sec. 1.312-11 Effect on earnings and profits of certain other tax-
free exchanges, tax-free distributions, and tax-free transfers from one
corporation to another.
(a) In a transfer described in section 381(a), the acquiring
corporation, as defined in Sec. 1.381(a)-1(b)(2), and only that
corporation, succeeds to the earnings and profits of the distributor or
transferor corporation (within the meaning of Sec. 1.381(a)-1(a)).
Except as provided in Sec. 1.312-10, in all other cases in which
property is transferred from one corporation to another, no allocation
of the earnings and profits of the transferor is made to the
transferee.
* * * * *
(e) Effective/applicability date. Paragraph (a) of this section
applies to transactions occurring on or after November 10, 2014.
0
Par. 3. Section 1.381(a)-1 is amended by:
0
a. Removing the third, fourth, and fifth sentences of paragraph
(b)(2)(i) and adding one sentence in their place.
0
b. Removing from the last sentence of paragraph (b)(2)(ii) Example 2
``Y'' and adding ``X'' in its place.
0
c. Redesignating paragraph (b)(3)(i) as paragraph (b)(3).
0
d. Removing paragraph (b)(3)(ii).
0
e. Adding a sentence at the end of paragraph (e).
The additions read as follows:
Sec. 1.381(a)-1 General rule relating to carryovers in certain
corporate acquisitions.
* * * * *
(b) * * *
(2) * * * (i) * * * In a transaction to which section 381(a)(2)
applies, the acquiring corporation is the corporation that, pursuant to
the plan of reorganization, directly acquires the assets transferred by
the transferor corporation, even if that corporation ultimately retains
none of the assets so transferred.
* * * * *
(e) * * * The last sentence of paragraph (b)(2)(i) of this section
and Example 2 of paragraph (b)(2)(ii) of this section apply to
transactions occurring on or after November 10, 2014.
Sec. 1.381(c)(2)-1 [Amended]
0
Par. 4. Section 1.381(c)(2)-1 is amended by removing paragraph (d).
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
Approved: October 17, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2014-26546 Filed 11-7-14; 8:45 am]
BILLING CODE 4830-01-P
