Inversions and Related Transactions; Correction, 40810-40812 [2016-14649]
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40810
Federal Register / Vol. 81, No. 121 / Thursday, June 23, 2016 / Rules and Regulations
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9761]
RIN 1545–BM88
Inversions and Related Transactions;
Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations; correction.
AGENCY:
This document contains
corrections to final and temporary
regulations (TD 9761) that were
published in the Federal Register on
April 8, 2016 (81 FR 20858). The
temporary regulations address
transactions that are structured to avoid
the purposes of sections 7874 and 367
of the Internal Revenue Code and
certain post-inversion tax avoidance
transactions.
SUMMARY:
This correction is effective on
June 23, 2016 and applicable on April
8, 2016.
FOR FURTHER INFORMATION CONTACT: Rose
E. Jenkins at (202) 317–6934 (not a toll
free number).
SUPPLEMENTARY INFORMATION:
DATES:
Background
The final and temporary regulations
(TD 9761) that are the subject of this
correction are under sections 304, 367,
956, 7701(l), and 7874 of the Internal
Revenue Code.
Need for Correction
As published, the final and temporary
regulations (TD 9761) contain errors that
may prove to be misleading and are in
need of clarification.
asabaliauskas on DSK3SPTVN1PROD with RULES
Correction of Publication
Accordingly, the final and temporary
regulations (TD 9761), that are the
subject of FR Doc. 2016–07300, are
corrected as follows:
1. On page 20858, in the preamble,
the second column, the ninth line from
the bottom of the column, the language
‘‘section 7874 and § 1.367(a)–3(c) and’’
is corrected to read ‘‘section 7874 and’’.
2. On page 20860, in the preamble,
the third column, under the paragraph
heading ‘‘E. Section 7701’’, the language
‘‘re-characterizing’’ and ‘‘recharacterization’’ is corrected to read
‘‘recharacterizing’’ and
‘‘recharacterization’’ respectively
wherever it appears.
3. On page 20862, in the preamble,
the third column, under the paragraph
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16:58 Jun 22, 2016
Jkt 238001
heading ‘‘a. § 1.7874–4T, In General’’
the fifth and sixth lines, the language
‘‘entity acquisition described in section
7874(a)(2)(B)(i) is excluded from the’’ is
corrected to read ‘‘entity acquisition is
excluded from the’’.
4. On page 20869, in the preamble,
the first column, the twenty-fifth line
from the bottom of the column, the
language ‘‘60% or 80% on the
completion date.’’ is corrected to read
‘‘60 or 80 on the completion date.’’.
5. On page 20871, in the preamble,
the second column, the third and tenth
lines from the top of the first full
paragraph, the language ‘‘domestic’’ is
removed.
6. On page 20873, in the preamble,
the third column, under the paragraph
heading ‘‘II. Rules Addressing Certain
Post-Inversions Tax Avoidance
Transactions’’ the first line, the
language ‘‘As stated in Section 1 of the
2014’’ is corrected to read ‘‘As stated in
section 1 of the 2014’’.
7. On page 20874, in the preamble,
the third column, the twenty-second
line from the top of the column, the
language ‘‘completion date, is treated as
an’’ is corrected to read ‘‘completion
date is treated as an’’.
8. On page 20877, in the preamble,
the first column, under the paragraph
heading ‘‘ii. Exceptions From
Recharacterization’’ the twelfth line of
the first full paragraph, the language
‘‘recognized. See Section 2.C of this
Part’’ is corrected to read ‘‘recognized.
See Section 2.c of this Part’’.
9. On page 20880, in the preamble,
the first column, under the paragraph
heading ‘‘b. Regulations Implementing
the Section 367(b) Asset Dilution Rule’’
the third line from the bottom of the
column, the language ‘‘property to a
foreign transferee’’ is corrected to read
‘‘property to a transferee foreign’’.
Martin V. Franks,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel (Procedure and Administration).
Final and temporary
regulations; correcting amendment.
ACTION:
This document contains
corrections to final and temporary
regulations (TD 9761) that were
published in the Federal Register on
April 8, 2016 (81 FR 20858). The
temporary regulations address
transactions that are structured to avoid
the purposes of sections 7874 and 367
of the Internal Revenue Code and
certain post-inversion tax avoidance
transactions.
SUMMARY:
This correction is effective on
June 23, 2016 and applicable on April
8, 2016.
FOR FURTHER INFORMATION CONTACT: Rose
E. Jenkins at (202) 317–6934 (not a toll
free number).
SUPPLEMENTARY INFORMATION:
DATES:
Background
The final and temporary regulations
(TD 9761) that are the subject of this
correction are under sections 304, 367,
956, 7701(l), and 7874 of the Internal
Revenue Code.
Need for Correction
As published, the final and temporary
regulations (TD 9761) contain errors that
may prove to be misleading and are in
need of clarification.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Correction of Publication
Accordingly, 26 CFR part 1 is
corrected by making the following
correcting amendments:
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 * * *
BILLING CODE 4830–01–P
Par. 2. Section 1.304–7T is amended
by revising paragraph (f) to read as
follows:
DEPARTMENT OF THE TREASURY
§ 1.304–7T Certain acquisitions by foreign
acquiring corporations (temporary).
Internal Revenue Service
*
[FR Doc. 2016–14648 Filed 6–22–16; 8:45 am]
*
*
*
*
(f) Expiration date. This section
expires on or before April 4, 2019.
■ Par. 3. Section 1.367(a)–3T is
amended by revising paragraph (k) to
read as follows:
26 CFR Part 1
[TD 9761]
RIN 1545–BM88
Inversions and Related Transactions;
Correction
Internal Revenue Service (IRS),
Treasury.
AGENCY:
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■
§ 1.367(a)–3T Treatment of transfers of
stock or securities to foreign corporations
(temporary).
*
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*
*
23JNR1
*
*
Federal Register / Vol. 81, No. 121 / Thursday, June 23, 2016 / Rules and Regulations
(k) Expiration date. Paragraph
(c)(3)(iii)(C) of this section expires on or
before April 4, 2019.
§ 1.367(b)–4
[Amended]
Par. 4. For each entry in § 1.367(b)–4
in the ‘‘Paragraph’’ column remove the
■
Paragraph
§ 1.367(b)–4T
[Amended]
Par. 5. Section 1.367(b)–4T(d)(1) is
amended by removing the language
‘‘§ 1.367(b)–(3)’’ and adding in its place
the language ‘‘§ 1.367(b)–3’’.
■ Par. 6. Section 1.956–2T is amended
by revising the first sentence of
paragraph (a)(4)(iii) Example 3.(A), the
second sentence of paragraph (a)(4)(iii)
Example 3.(B), and the third sentence of
paragraph (a)(4)(iii) Example 4.(B) to
read as follows:
■
§ 1.956–2T Definition of United States
property (temporary).
*
*
*
(a) * * *
(4) * * *
(iii) * * *
*
*
*
*
*
■ Par. 7. Section 1.7701(l)–4T is
amended by revising the ninth sentence
of paragraph (a), the fourth sentence of
paragraph (g) Example 3.(ii)(B), and the
third sentence of paragraph (g) Example
11.(ii) to read as follows:
asabaliauskas on DSK3SPTVN1PROD with RULES
*
§ 1.7701(l)–4T Rules regarding inversion
transactions (temporary).
(a) * * * See § 1.367(b)–4T(e) and (f)
for rules concerning certain other
exchanges after an inversion
transaction. * * *
*
*
*
*
*
(g) * * *
16:58 Jun 22, 2016
Jkt 238001
foreign
foreign
foreign
foreign
foreign
foreign
foreign
acquiring
acquiring
acquiring
acquiring
acquiring
acquiring
acquiring
*
*
*
*
Example 11. * * *
(ii) * * * However, after the April 30, 2016
transfer, because FS ceases to be a foreign
related person, it ceases to be a specified
related person. * * *
*
*
*
*
*
■ Par. 8. Section 1.7874–1T is amended
by revising paragraph (i) to read as
follows:
§ 1.7874–1T Disregard of affiliate-owned
stock (temporary).
*
*
*
*
*
(i) Expiration date. This section
expires on or before April 4, 2019.
■ Par. 9. Section 1.7874–2T is amended
by revising paragraphs (c)(4)(iii) and (m)
to read as follows:
§ 1.7874–2T Surrogate foreign corporation
(temporary).
*
*
*
*
*
(c) * * *
(4) * * *
(iii) Additional related transactions.
If, pursuant to the same plan (or a series
of related transactions), a foreign
corporation directly or indirectly
acquires (under the principles of
paragraph (c)(4)(ii) of this section)
substantially all of the properties
directly or indirectly held by a
subsequent acquiring corporation in a
transaction occurring after the
subsequent acquisition, then the
principles of paragraph (c)(4)(i) of this
section apply to such transaction (and
any subsequent transaction or
transactions occurring pursuant to the
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Fmt 4700
Sfmt 4700
Add
corporation ...........
corporation ...........
corporations .........
corporation ...........
corporation ...........
corporation ...........
corporation ...........
Example 3. * * *
(ii) * * *
(B) * * * Although FA (a non-CFC foreign
related person) indirectly owns $4x of FT
stock both immediately before and after the
specified transaction and any related
transaction, all of that stock is directly owned
by DT (a domestic corporation), and as a
result, under paragraph (f)(4) of this section,
none of that stock is treated as directly or
indirectly owned by FP for purposes of
calculating the pre-transaction ownership
percentage and the post-transaction
ownership percentage with respect to FT.
* * *
*
*
Example 3. (A) Facts. Before the inversion
transaction, FA also wholly owns USP, a
domestic corporation, which, in turn, wholly
owns, LFS, a foreign corporation that is a
controlled foreign corporation. * * *
(B) * * * Because LFS was a controlled
foreign corporation and a member of the EAG
with respect to the inversion transaction on
the completion date, and DT was not a
United States shareholder with respect to
LFS on or before the completion date, LFS is
excluded from the definition of expatriated
foreign subsidiary pursuant to § 1.7874–
12T(a)(9)(ii). * * *
Example 4. * * *
(B) * * * Because LFSS was not a member
of the EAG with respect to the inversion
transaction on the completion date, LFSS is
not excluded from the definition of
expatriated foreign subsidiary pursuant to
§ 1.7874–12T(a)(9)(ii). * * *
VerDate Sep<11>2014
language in the ‘‘Remove’’ column and
add in its place the language in the
‘‘Add’’ column as set forth below:
Remove
(b)(1)(i)(B)(2) .......................................................................................
(b)(1)(ii)(A), first sentence ...................................................................
(b)(2)(i)(A) ...........................................................................................
(b)(2)(i)(B) ...........................................................................................
(b)(2)(i)(C) ...........................................................................................
(b)(3)(i) ................................................................................................
(d)(2), Example, heading ....................................................................
40811
transferee
transferee
transferee
transferee
transferee
transferee
transferee
foreign
foreign
foreign
foreign
foreign
foreign
foreign
corporation.
corporation.
corporation.
corporation.
corporation.
corporation.
corporation.
plan (or the series of related
transactions)).
*
*
*
*
*
(m) Expiration date. This section
expires on or before April 4, 2019.
■ Par. 10. Section 1.7874–3T is
amended by revising paragraph (g) to
read as follows:
§ 1.7874–3T Substantial business
activities (temporary).
*
*
*
*
*
(g) Expiration date. The applicability
of paragraphs (b)(4) and (d)(10) of this
section expires on or before April 4,
2019.
■ Par. 11. Section 1.7874–6T is
amended by revising paragraphs (f)(3)
and (i) to read as follows:
§ 1.7874–6T Stock transferred by members
of the EAG (temporary).
*
*
*
*
*
(f) * * *
(3) A transferring corporation means a
corporation that is a former domestic
entity shareholder or former domestic
entity partner.
*
*
*
*
*
(i) Expiration date. This section
expires on or before April 4, 2019.
■ Par. 12. Section 1.7874–7T is
amended by revising the first sentence
of paragraph (g) Example 2.(ii) and
paragraph (i) to read as follows:
§ 1.7874–7T Disregard of certain stock
attributable to passive assets (temporary).
*
*
*
(g) * * *
*
*
Example 2. * * *
(ii) Analysis. Without regard to the
application of §§ 1.7874–4T(b) and 1.7874–
10T(b) and paragraph (b) of this section, the
ownership percentage described in section
7874(a)(2)(B)(ii) would be less than 5 (by vote
and value), or 4 (4/100, or 4 shares of FA
stock held by Individual B by reason of
owning the DT stock, determined under
§ 1.7874–2(f)(2), over 100 shares of FA stock
outstanding after the DT acquisition).
*
*
*
*
*
(i) Expiration date. The applicability
of this section expires on or before April
4, 2019.
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40812
Federal Register / Vol. 81, No. 121 / Thursday, June 23, 2016 / Rules and Regulations
Par. 13. Section 1.7874–8T is
amended by revising the third sentence
of paragraph (h) Example 1.(ii), the fifth
sentence of paragraph (h) Example 2.(ii),
the ninth sentence of paragraph (h)
Example 3.(ii), and paragraph (j) to read
as follows:
■
§ 1.7874–8T Disregard of certain stock
attributable to multiple domestic entity
acquisitions (temporary).
*
*
*
(h) * * *
*
*
Example 1. * * *
(ii) * * * As a result, and because there
were no redemptions of FA stock, the
excluded amount is $150x (calculated as 100,
the total number of prior acquisition shares,
multiplied by $1.50x, the fair market value of
a single share of FA stock on the completion
date with respect to the DT2 acquisition).
* * *
*
*
*
*
*
Example 2. * * *
(ii) * * * As a result, the excluded amount
is $112.50x, calculated as 75 (100, the total
number of prior acquisition shares, less 25,
the allocable redeemed shares) multiplied by
$1.50x (the fair market value of a single share
of FA stock on the completion date with
respect to the DT2 acquisition). * * *
*
*
*
*
*
Example 3. * * *
(ii) * * * Accordingly, the excluded
amount is $112.50x, calculated as 150 (200,
the total number of prior acquisition shares,
less 50, the allocable redeemed shares)
multiplied by $0.75x (the fair market value
of a single class of FA stock on the
completion date with respect to the DT2
acquisition). * * *
*
*
*
*
*
(j) Expiration date. The applicability
of this section expires on or before April
4, 2019.
■ Par. 14. Section 1.7874–9T is
amended by revising paragraph (e)(1),
the first sentence of paragraph (f)
Example.(ii)(A), the seventh sentence of
paragraph (f) Example.(iv) and
paragraph (h) to read as follows:
§ 1.7874–9T Disregard of certain stock in
third-country transactions (temporary).
asabaliauskas on DSK3SPTVN1PROD with RULES
*
*
*
*
*
(e) * * *
(1) Acquisition of multiple foreign
corporations that are tax residents of the
same foreign country. When multiple
foreign acquisitions occur pursuant to
the same plan (or a series of related
transactions) and two or more of the
acquired foreign corporations were
subject to tax as a resident of the same
foreign country before the foreign
acquisitions and all related transactions,
then those foreign acquisitions are
treated as a single foreign acquisition
and those acquired foreign corporations
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16:58 Jun 22, 2016
Jkt 238001
are treated as a single acquired foreign
corporation for purposes of this section.
*
*
*
*
*
(f) * * *
Example. * * *
(ii) * * *
(A) The FT acquisition is a foreign
acquisition because, pursuant to the FT
acquisition, FA (a foreign acquiring
corporation) acquires 100 percent of the stock
of FT and is thus treated as indirectly
acquiring 100 percent of the properties held
by FT (an acquired foreign corporation).
* * *
*
*
*
*
*
(iv) * * * FA’s indirect acquisition of FT’s
properties is a covered foreign acquisition
because 35 shares of FA stock (the shares
received by Individual B) are held by reason
of holding stock in FT; thus, the foreign
ownership percentage is 100 percent (35/35).
* * *
*
*
*
*
*
(h) Expiration date. The applicability
of this section expires on or before April
4, 2019.
■ Par. 15. Section 1.7874–10T is
amended by revising paragraphs (d)(2)
and (j) to read as follows:
§ 1.7874–10T Disregard of certain
distributions (temporary).
*
*
*
*
*
(d) * * *
(2) On the completion date, former
domestic entity shareholders or former
domestic entity partners, as applicable,
in the aggregate, own (applying the
attribution rules of section 318(a) with
the modifications described in section
304(c)(3)(B)) less than five percent (by
vote and value) of the stock of (or a
partnership interest in) each member of
the expanded affiliated group.
*
*
*
*
*
(j) Expiration date. This section
expires on or before April 4, 2019.
■ Par. 16. Section 1.7874–11T is
amended by revising paragraphs (b)(1)
and (2), and (g) to read as follows:
§ 1.7874–11T Rules regarding inversion
gain (temporary).
*
*
*
*
*
(b) * * * (1) General rule. Except as
provided in paragraphs (b)(2) and (3) of
this section, inversion gain includes
income (including an amount treated as
a dividend under section 78) or gain
recognized by an expatriated entity for
any taxable year that includes any
portion of the applicable period by
reason of a direct or indirect transfer of
stock or other properties or license of
any property either as part of the
domestic entity acquisition, or after
such acquisition if the transfer or
license is to a specified related person.
(2) Exception for property described
in section 1221(a)(1). Inversion gain
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does not include income or gain
recognized by reason of the transfer or
license, after the domestic entity
acquisition, of property that is described
in section 1221(a)(1) in the hands of the
transferor or licensor.
*
*
*
*
*
(g) Expiration date. This section
expires on or before April 4, 2019.
■ Par. 17. Section 1.7874–12T is
amended by revising paragraph (c) to
read as follows:
§ 1.7874–12T
Definitions (temporary).
*
*
*
*
*
(c) Expiration date. This section
expires on or before April 4, 2019.
Martin V. Franks,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel (Procedure and Administration).
[FR Doc. 2016–14649 Filed 6–22–16; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE INTERIOR
Bureau of Safety and Environmental
Enforcement
30 CFR Part 250
[Docket ID: BSEE–2016–0006; EEEE500000
16XE1700DX EX1SF0000.DAQ000]
RIN 1014–AA15
Oil and Gas and Sulphur Operations in
the Outer Continental Shelf—Technical
Corrections; Correction
Bureau of Safety and
Environmental Enforcement (BSEE),
Interior.
ACTION: Final rule; correction.
AGENCY:
The Bureau of Safety and
Environmental Enforcement (BSEE) is
correcting a final rule that appeared in
the Federal Register on June 6, 2016 (81
FR 36145).
DATES: Effective July 28, 2016.
FOR FURTHER INFORMATION CONTACT:
Betty Cox, Regulations and Standards
Branch at (703) 787–1665 or email at
regs@bsee.gov.
SUPPLEMENTARY INFORMATION: In the FR
Doc. 2016–12487 appearing on page
36150 in the Federal Register of
Monday, June 6, 2016, the following
correction is made:
SUMMARY:
§ 250.904
[Corrected]
1. On page 36150, in the first column,
remove amendatory instruction 20
correcting § 250.904.
E:\FR\FM\23JNR1.SGM
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]]>Agencies
[Federal Register Volume 81, Number 121 (Thursday, June 23, 2016)]
[Rules and Regulations]
[Pages 40810-40812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14649]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9761]
RIN 1545-BM88
Inversions and Related Transactions; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations; correcting amendment.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to final and temporary
regulations (TD 9761) that were published in the Federal Register on
April 8, 2016 (81 FR 20858). The temporary regulations address
transactions that are structured to avoid the purposes of sections 7874
and 367 of the Internal Revenue Code and certain post-inversion tax
avoidance transactions.
DATES: This correction is effective on June 23, 2016 and applicable on
April 8, 2016.
FOR FURTHER INFORMATION CONTACT: Rose E. Jenkins at (202) 317-6934 (not
a toll free number).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations (TD 9761) that are the subject
of this correction are under sections 304, 367, 956, 7701(l), and 7874
of the Internal Revenue Code.
Need for Correction
As published, the final and temporary regulations (TD 9761) contain
errors that may prove to be misleading and are in need of
clarification.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Correction of Publication
Accordingly, 26 CFR part 1 is corrected by making the following
correcting amendments:
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 1.304-7T is amended by revising paragraph (f) to read
as follows:
Sec. 1.304-7T Certain acquisitions by foreign acquiring corporations
(temporary).
* * * * *
(f) Expiration date. This section expires on or before April 4,
2019.
0
Par. 3. Section 1.367(a)-3T is amended by revising paragraph (k) to
read as follows:
Sec. 1.367(a)-3T Treatment of transfers of stock or securities to
foreign corporations (temporary).
* * * * *
[[Page 40811]]
(k) Expiration date. Paragraph (c)(3)(iii)(C) of this section
expires on or before April 4, 2019.
Sec. 1.367(b)-4 [Amended]
0
Par. 4. For each entry in Sec. 1.367(b)-4 in the ``Paragraph'' column
remove the language in the ``Remove'' column and add in its place the
language in the ``Add'' column as set forth below:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Paragraph Remove Add
--------------------------------------------------------------------------------------------------------------------------------------------------------
(b)(1)(i)(B)(2)......................... foreign acquiring corporation......................... transferee foreign corporation.
(b)(1)(ii)(A), first sentence........... foreign acquiring corporation......................... transferee foreign corporation.
(b)(2)(i)(A)............................ foreign acquiring corporations........................ transferee foreign corporation.
(b)(2)(i)(B)............................ foreign acquiring corporation......................... transferee foreign corporation.
(b)(2)(i)(C)............................ foreign acquiring corporation......................... transferee foreign corporation.
(b)(3)(i)............................... foreign acquiring corporation......................... transferee foreign corporation.
(d)(2), Example, heading................ foreign acquiring corporation......................... transferee foreign corporation.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 1.367(b)-4T [Amended]
0
Par. 5. Section 1.367(b)-4T(d)(1) is amended by removing the language
``Sec. 1.367(b)-(3)'' and adding in its place the language ``Sec.
1.367(b)-3''.
0
Par. 6. Section 1.956-2T is amended by revising the first sentence of
paragraph (a)(4)(iii) Example 3.(A), the second sentence of paragraph
(a)(4)(iii) Example 3.(B), and the third sentence of paragraph
(a)(4)(iii) Example 4.(B) to read as follows:
Sec. 1.956-2T Definition of United States property (temporary).
* * * * *
(a) * * *
(4) * * *
(iii) * * *
Example 3. (A) Facts. Before the inversion transaction, FA also
wholly owns USP, a domestic corporation, which, in turn, wholly
owns, LFS, a foreign corporation that is a controlled foreign
corporation. * * *
(B) * * * Because LFS was a controlled foreign corporation and a
member of the EAG with respect to the inversion transaction on the
completion date, and DT was not a United States shareholder with
respect to LFS on or before the completion date, LFS is excluded
from the definition of expatriated foreign subsidiary pursuant to
Sec. 1.7874-12T(a)(9)(ii). * * *
Example 4. * * *
(B) * * * Because LFSS was not a member of the EAG with respect
to the inversion transaction on the completion date, LFSS is not
excluded from the definition of expatriated foreign subsidiary
pursuant to Sec. 1.7874-12T(a)(9)(ii). * * *
* * * * *
0
Par. 7. Section 1.7701(l)-4T is amended by revising the ninth sentence
of paragraph (a), the fourth sentence of paragraph (g) Example
3.(ii)(B), and the third sentence of paragraph (g) Example 11.(ii) to
read as follows:
Sec. 1.7701(l)-4T Rules regarding inversion transactions (temporary).
(a) * * * See Sec. 1.367(b)-4T(e) and (f) for rules concerning
certain other exchanges after an inversion transaction. * * *
* * * * *
(g) * * *
Example 3. * * *
(ii) * * *
(B) * * * Although FA (a non-CFC foreign related person)
indirectly owns $4x of FT stock both immediately before and after
the specified transaction and any related transaction, all of that
stock is directly owned by DT (a domestic corporation), and as a
result, under paragraph (f)(4) of this section, none of that stock
is treated as directly or indirectly owned by FP for purposes of
calculating the pre-transaction ownership percentage and the post-
transaction ownership percentage with respect to FT. * * *
* * * * *
Example 11. * * *
(ii) * * * However, after the April 30, 2016 transfer, because
FS ceases to be a foreign related person, it ceases to be a
specified related person. * * *
* * * * *
0
Par. 8. Section 1.7874-1T is amended by revising paragraph (i) to read
as follows:
Sec. 1.7874-1T Disregard of affiliate-owned stock (temporary).
* * * * *
(i) Expiration date. This section expires on or before April 4,
2019.
0
Par. 9. Section 1.7874-2T is amended by revising paragraphs (c)(4)(iii)
and (m) to read as follows:
Sec. 1.7874-2T Surrogate foreign corporation (temporary).
* * * * *
(c) * * *
(4) * * *
(iii) Additional related transactions. If, pursuant to the same
plan (or a series of related transactions), a foreign corporation
directly or indirectly acquires (under the principles of paragraph
(c)(4)(ii) of this section) substantially all of the properties
directly or indirectly held by a subsequent acquiring corporation in a
transaction occurring after the subsequent acquisition, then the
principles of paragraph (c)(4)(i) of this section apply to such
transaction (and any subsequent transaction or transactions occurring
pursuant to the plan (or the series of related transactions)).
* * * * *
(m) Expiration date. This section expires on or before April 4,
2019.
0
Par. 10. Section 1.7874-3T is amended by revising paragraph (g) to read
as follows:
Sec. 1.7874-3T Substantial business activities (temporary).
* * * * *
(g) Expiration date. The applicability of paragraphs (b)(4) and
(d)(10) of this section expires on or before April 4, 2019.
0
Par. 11. Section 1.7874-6T is amended by revising paragraphs (f)(3) and
(i) to read as follows:
Sec. 1.7874-6T Stock transferred by members of the EAG (temporary).
* * * * *
(f) * * *
(3) A transferring corporation means a corporation that is a former
domestic entity shareholder or former domestic entity partner.
* * * * *
(i) Expiration date. This section expires on or before April 4,
2019.
0
Par. 12. Section 1.7874-7T is amended by revising the first sentence of
paragraph (g) Example 2.(ii) and paragraph (i) to read as follows:
Sec. 1.7874-7T Disregard of certain stock attributable to passive
assets (temporary).
* * * * *
(g) * * *
Example 2. * * *
(ii) Analysis. Without regard to the application of Sec. Sec.
1.7874-4T(b) and 1.7874-10T(b) and paragraph (b) of this section,
the ownership percentage described in section 7874(a)(2)(B)(ii)
would be less than 5 (by vote and value), or 4 (4/100, or 4 shares
of FA stock held by Individual B by reason of owning the DT stock,
determined under Sec. 1.7874-2(f)(2), over 100 shares of FA stock
outstanding after the DT acquisition).
* * * * *
(i) Expiration date. The applicability of this section expires on
or before April 4, 2019.
[[Page 40812]]
0
Par. 13. Section 1.7874-8T is amended by revising the third sentence of
paragraph (h) Example 1.(ii), the fifth sentence of paragraph (h)
Example 2.(ii), the ninth sentence of paragraph (h) Example 3.(ii), and
paragraph (j) to read as follows:
Sec. 1.7874-8T Disregard of certain stock attributable to multiple
domestic entity acquisitions (temporary).
* * * * *
(h) * * *
Example 1. * * *
(ii) * * * As a result, and because there were no redemptions of
FA stock, the excluded amount is $150x (calculated as 100, the total
number of prior acquisition shares, multiplied by $1.50x, the fair
market value of a single share of FA stock on the completion date
with respect to the DT2 acquisition). * * *
* * * * *
Example 2. * * *
(ii) * * * As a result, the excluded amount is $112.50x,
calculated as 75 (100, the total number of prior acquisition shares,
less 25, the allocable redeemed shares) multiplied by $1.50x (the
fair market value of a single share of FA stock on the completion
date with respect to the DT2 acquisition). * * *
* * * * *
Example 3. * * *
(ii) * * * Accordingly, the excluded amount is $112.50x,
calculated as 150 (200, the total number of prior acquisition
shares, less 50, the allocable redeemed shares) multiplied by $0.75x
(the fair market value of a single class of FA stock on the
completion date with respect to the DT2 acquisition). * * *
* * * * *
(j) Expiration date. The applicability of this section expires on
or before April 4, 2019.
0
Par. 14. Section 1.7874-9T is amended by revising paragraph (e)(1), the
first sentence of paragraph (f) Example.(ii)(A), the seventh sentence
of paragraph (f) Example.(iv) and paragraph (h) to read as follows:
Sec. 1.7874-9T Disregard of certain stock in third-country
transactions (temporary).
* * * * *
(e) * * *
(1) Acquisition of multiple foreign corporations that are tax
residents of the same foreign country. When multiple foreign
acquisitions occur pursuant to the same plan (or a series of related
transactions) and two or more of the acquired foreign corporations were
subject to tax as a resident of the same foreign country before the
foreign acquisitions and all related transactions, then those foreign
acquisitions are treated as a single foreign acquisition and those
acquired foreign corporations are treated as a single acquired foreign
corporation for purposes of this section.
* * * * *
(f) * * *
Example. * * *
(ii) * * *
(A) The FT acquisition is a foreign acquisition because,
pursuant to the FT acquisition, FA (a foreign acquiring corporation)
acquires 100 percent of the stock of FT and is thus treated as
indirectly acquiring 100 percent of the properties held by FT (an
acquired foreign corporation). * * *
* * * * *
(iv) * * * FA's indirect acquisition of FT's properties is a
covered foreign acquisition because 35 shares of FA stock (the
shares received by Individual B) are held by reason of holding stock
in FT; thus, the foreign ownership percentage is 100 percent (35/
35). * * *
* * * * *
(h) Expiration date. The applicability of this section expires on
or before April 4, 2019.
0
Par. 15. Section 1.7874-10T is amended by revising paragraphs (d)(2)
and (j) to read as follows:
Sec. 1.7874-10T Disregard of certain distributions (temporary).
* * * * *
(d) * * *
(2) On the completion date, former domestic entity shareholders or
former domestic entity partners, as applicable, in the aggregate, own
(applying the attribution rules of section 318(a) with the
modifications described in section 304(c)(3)(B)) less than five percent
(by vote and value) of the stock of (or a partnership interest in) each
member of the expanded affiliated group.
* * * * *
(j) Expiration date. This section expires on or before April 4,
2019.
0
Par. 16. Section 1.7874-11T is amended by revising paragraphs (b)(1)
and (2), and (g) to read as follows:
Sec. 1.7874-11T Rules regarding inversion gain (temporary).
* * * * *
(b) * * * (1) General rule. Except as provided in paragraphs (b)(2)
and (3) of this section, inversion gain includes income (including an
amount treated as a dividend under section 78) or gain recognized by an
expatriated entity for any taxable year that includes any portion of
the applicable period by reason of a direct or indirect transfer of
stock or other properties or license of any property either as part of
the domestic entity acquisition, or after such acquisition if the
transfer or license is to a specified related person.
(2) Exception for property described in section 1221(a)(1).
Inversion gain does not include income or gain recognized by reason of
the transfer or license, after the domestic entity acquisition, of
property that is described in section 1221(a)(1) in the hands of the
transferor or licensor.
* * * * *
(g) Expiration date. This section expires on or before April 4,
2019.
0
Par. 17. Section 1.7874-12T is amended by revising paragraph (c) to
read as follows:
Sec. 1.7874-12T Definitions (temporary).
* * * * *
(c) Expiration date. This section expires on or before April 4,
2019.
Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2016-14649 Filed 6-22-16; 8:45 am]
BILLING CODE 4830-01-P
