Treatment of Certain Interests in Corporations as Stock or Indebtedness, 72751-72753 [2016-25104]
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Federal Register / Vol. 81, No. 204 / Friday, October 21, 2016 / Proposed Rules
(h) Compliance Times for the Requirements
of Paragraph (g) of This AD
Do the actions required by paragraph (g) of
this AD at the earliest of the times specified
in paragraphs (h)(1), (h)(2), and (h)(3) of this
AD, or within 30 days after the effective date
of this AD, whichever occurs later.
(1) Before the accumulation of 5,000 total
flight cycles after the date of manufacture of
the airplane.
(2) Before the accumulation of 7,500 total
flight hours after the date of manufacture of
the airplane.
(3) Within 30 months after the date of
manufacture of the airplane.
(i) Exclusion From Actions Required by
Paragraph (g) of This AD
An airplane that does not have a
manufacturer serial number specified in
figure 1 to paragraphs (g) and (i) of this AD
is excluded from the requirements of
paragraph (g) of this AD, provided that, a
FVP having P/N 786073–1–0 with a serial
number specified in figure 2 to paragraphs (g)
and (i) of this AD has not been installed on
that airplane after July 2012. If a FVP having
P/N 786073–1–0 with a serial number
specified in figure 2 to paragraphs (g) and (i)
of this AD is installed, or the serial number
cannot be identified: Within 12 months after
the effective date of this AD, replace the FVP
with a serviceable part, in accordance with
the Accomplishment Instructions of Airbus
Service Bulletin A320–28–1221, Revision 02,
dated January 11, 2016. A review of airplane
maintenance records is acceptable if it can be
conclusively determined from that review
that a FVP having a serial number specified
in figure 2 to paragraphs (g) and (i) of this
AD has not been installed on that airplane
after July 2012.
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(j) Parts Installation Limitation
As of the effective date of this AD, a FVP
having P/N 786073–1–0 and a serial number
listed in figure 2 to paragraphs (g) and (i) of
this AD may be installed on any airplane,
provided the FVP is marked with ‘‘Amdt B.’’
(k) Other FAA AD Provisions
The following provisions also apply to this
AD:
(1) Alternative Methods of Compliance
(AMOCs): The Manager, International
Branch, ANM–116, Transport Airplane
Directorate, FAA, has the authority to
approve AMOCs for this AD, if requested
using the procedures found in 14 CFR 39.19.
In accordance with 14 CFR 39.19, send your
request to your principal inspector or local
Flight Standards District Office, as
appropriate. If sending information directly
to the International Branch, send it to ATTN:
Sanjay Ralhan, Aerospace Engineer,
International Branch, ANM–116, Transport
Airplane Directorate, FAA, 1601 Lind
Avenue SW., Renton, WA 98057–3356;
telephone 425–227–1405; fax 425–227–1149.
Information may be emailed to: 9-ANM-116AMOC-REQUESTS@faa.gov. Before using
any approved AMOC, notify your appropriate
principal inspector, or lacking a principal
inspector, the manager of the local flight
standards district office/certificate holding
district office.
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(2) Contacting the Manufacturer: For any
requirement in this AD to obtain corrective
actions from a manufacturer, the action must
be accomplished using a method approved
by the Manager, International Branch, ANM–
116, Transport Airplane Directorate, FAA; or
the European Aviation Safety Agency
(EASA); or Airbus’s EASA Design
Organization Approval (DOA). If approved by
the DOA, the approval must include the
DOA-authorized signature.
(3) Required for Compliance (RC): If any
service information contains procedures or
tests that are identified as RC, those
procedures and tests must be done to comply
with this AD; any procedures or tests that are
not identified as RC are recommended. Those
procedures and tests that are not identified
as RC may be deviated from using accepted
methods in accordance with the operator’s
maintenance or inspection program without
obtaining approval of an AMOC, provided
the procedures and tests identified as RC can
be done and the airplane can be put back in
an airworthy condition. Any substitutions or
changes to procedures or tests identified as
RC require approval of an AMOC.
ACTION:
(l) Related Information
(1) Refer to Mandatory Continuing
Airworthiness Information (MCAI) EASA
Airworthiness Directive 2016–0114, dated
June 15, 2016; corrected June 23, 2016; for
related information. This MCAI may be
found in the AD docket on the Internet at
https://www.regulations.gov by searching for
and locating Docket No. FAA–2015–7526.
(2) For service information identified in
this AD, contact Airbus, Airworthiness
Office—EIAS, 1 Rond Point Maurice
Bellonte, 31707 Blagnac Cedex, France;
telephone +33 5 61 93 36 96; fax +33 5 61
93 44 51; email account.airworth-eas@
airbus.com; Internet https://www.airbus.com.
You may view this referenced service
information at the FAA, Transport Airplane
Directorate, 1601 Lind Avenue SW., Renton,
WA. For information on the availability of
this material at the FAA, call 425–227–1221.
72751
ADDRESSES:
Notice of proposed rulemaking
by cross-reference to temporary
regulation.
The Department of the
Treasury (Treasury Department) and the
IRS are issuing temporary regulations
that affect corporations and partnerships
that issue purported indebtedness to
related corporations or partnerships in
the Rules and Regulations section of this
issue of the Federal Register. The
temporary regulations provide rules
addressing the treatment of instruments
issued by partnerships, consolidated
groups, and certain transactions
involving qualified cash-management
arrangements. The text of the temporary
regulations also serves as the text of
these proposed regulations.
SUMMARY:
Written or electronic comments
and requests for a public hearing must
be received by January 19, 2017.
DATES:
Send submissions to:
CC:PA:LPD:PR (REG–130314–16), Room
5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station,
Washington, DC 20224. Submissions
may be hand-delivered Monday through
Friday between the hours of 8 a.m. and
4 p.m. to CC:PA:LPD:PR (REG–130314–
16), Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue NW.,
Washington, DC 20224, or sent
electronically via the Federal
eRulemaking Portal at
https://www.regulations.gov (IRS REG–
130314–16).
FOR FURTHER INFORMATION CONTACT:
Issued in Renton, Washington, on
September 26, 2016.
Dionne Palermo,
Acting Manager, Transport Airplane
Directorate, Aircraft Certification Service.
Concerning the proposed regulations,
Austin M. Diamond-Jones, (202) 317–
5363, or Joshua G. Rabon, (202) 317–
6937; concerning submissions of
comments or requests for a public
hearing, Regina Johnson, (202) 317–
5177 (not toll-free numbers).
[FR Doc. 2016–23787 Filed 10–20–16; 8:45 am]
SUPPLEMENTARY INFORMATION:
BILLING CODE 4910–13–P
Background
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–130314–16]
RIN 1545–BN68
Treatment of Certain Interests in
Corporations as Stock or Indebtedness
Internal Revenue Service (IRS),
Treasury.
AGENCY:
PO 00000
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The temporary regulations in the
Rules and Regulations section of this
issue of the Federal Register contain
rules under sections 385 and 752 of the
Internal Revenue Code (Code) that
establish requirements that ordinarily
must be satisfied in order for certain
related-party interests in a corporation
to be treated as indebtedness for federal
tax purposes. The text of the temporary
regulations also serves as the text of the
proposed regulations herein. The
preamble to the temporary regulations
explains the temporary regulations and
the corresponding proposed regulations.
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72752
Federal Register / Vol. 81, No. 204 / Friday, October 21, 2016 / Proposed Rules
Special Analyses
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I. Regulatory Planning and Review
Executive Orders 13563 and 12866
direct agencies to assess costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. Related
rules in the final and temporary
regulations under section 385 in TD
9790, published in the Rules and
Regulations section of this issue of the
Federal Register, have been designated
a ‘‘significant regulatory action’’ under
section 3(f) of Executive Order 12866.
For a discussion of the economic impact
of those final and temporary regulations,
as well as these proposed regulations,
please see the Regulatory Assessment
accompanying TD 9790, published in
the Rules and Regulations section of this
issue of the Federal Register.
II. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. Chapter 6), it is hereby
certified that the final and temporary
regulations in TD 9790, published in the
Rules and Regulations section of this
issue of the Federal Register, and
accordingly, these proposed regulations
proposed by cross-reference to the
temporary regulations, will not have a
significant economic impact on a
substantial number of small entities.
Accordingly, a regulatory flexibility
analysis is not required.
To facilitate the federal tax analysis of
an interest in a corporation, taxpayers
are required under existing law to
substantiate their classification of an
interest as stock or indebtedness for
federal tax purposes. Section 1.385–3
provides that certain interests in a
corporation that are held by a member
of the corporation’s expanded group and
that otherwise would be treated as
indebtedness for federal tax purposes
are treated as stock. Section 1.385–3T
provides that for certain debt
instruments issued by a controlled
partnership, the holder is deemed to
transfer all or a portion of the debt
instrument to the partner or partners in
the partnership in exchange for stock in
the partner or partners. Section 1.385–
4T provides rules regarding the
application of §§ 1.385–3 and 1.385–3T
to members of a consolidated group.
Sections 1.385–3 and 1.385–3T include
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multiple exceptions that limit their
application. In particular, the threshold
exception provides that the first $50
million of expanded group debt
instruments that otherwise would be
reclassified as stock or deemed to be
transferred to a partner in a controlled
partnership under § 1.385–3 or § 1.385–
3T will not be reclassified or deemed
transferred under § 1.385–3 or § 1.385–
3T. Although it is possible that the
classification rules in §§ 1.385–3, 1.385–
3T, and 1.385–4T could have an effect
on small entities, the threshold
exception of the first $50 million of debt
instruments otherwise subject to
recharacterization or deemed transfer
under §§ 1.385–3, 1.385–3T, and 1.385–
4T makes it unlikely that a substantial
number of small entities will be affected
by §§ 1.385–3T or 1.385–4T.
Pursuant to section 7805(f) of the
Code, the final regulations in TD 9790,
published in the Rules and Regulations
section of this issue of the Federal
Register, have been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on their impact on small business.
Comments were received requesting that
the monetary thresholds contained in
proposed §§ 1.385–2, 1.385–3, and
1.385–4 be increased in order to
mitigate the impact on small businesses.
These comments are addressed in Parts
IV.B.1.d and V.E.4 of the Summary of
Comments and Explanation of Revisions
in the preamble of TD 9790, published
in the Rules and Regulations section of
this issue of the Federal Register. No
comments were received concerning the
economic impact on small entities from
the Small Business Administration.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations,
consideration will be given to any
comments that are submitted timely to
the IRS as prescribed in this preamble
under the ‘‘Addresses’’ heading.
Treasury and the IRS request comments
on all aspects of the proposed rules. All
comments will be available at
www.regulations.gov or upon request. A
public hearing will be scheduled if
requested in writing by any person that
timely submits electronic or written
comments. If a public hearing is
scheduled, notice of the date, time, and
place for the public hearing will be
published in the Federal Register.
Drafting Information
The principal authors of these
regulations are Austin M. DiamondJones of the Office of Associate Chief
Counsel (Corporate) and Joshua G.
PO 00000
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Fmt 4702
Sfmt 4702
Rabon of the Office of Associate Chief
Counsel (International). However, other
personnel from the Treasury
Department and the IRS participated in
their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
proposed to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding an entry
in numerical order to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *
Section 1.385–4 also issued under 26
U.S.C. 385 and 1502.
■ Par. 2. Section 1.385–3 is amended
by:
■ 1. Revising paragraph (b)(3)(vii).
■ 2. Revising paragraph (d)(4).
■ 3. Revising paragraph (f).
■ 4. Revising paragraphs (g)(5)–(8), (15)–
(17), and (22)–(23).
■ 5. Revising Example 12 through
Example 19 in paragraph (h)(3).
■ 6. Adding paragraph (k).
The revisions and additions read as
follows:
§ 1.385–3 Transactions in which debt
proceeds are distributed or that have a
similar effect.
*
*
*
*
*
(b) * * *
(3) * * *
(vii) [The text of the proposed
amendment to § 1.385–3(b)(3)(vii) is the
same as the text of § 1.385–3T(b)(3)(vii)
published elsewhere in this issue of the
Federal Register.]
*
*
*
*
*
(d) * * *
(4) [The text of the proposed
amendment to § 1.385–3(d)(4) is the
same as the text of § 1.385–3T(d)(4)
published elsewhere in this issue of the
Federal Register.]
*
*
*
*
*
(f) [The text of the proposed
amendment to § 1.385–3(f) is the same
as the text of § 1.385–3T(f) published
elsewhere in this issue of the Federal
Register.]
(g) * * *
(5) [The text of the proposed
amendment to § 1.385–3(g)(5) is the
same as the text of § 1.385–3T(g)(5)
published elsewhere in this issue of the
Federal Register.]
(6) [The text of the proposed
amendment to § 1.385–3(g)(6) is the
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same as the text of § 1.385–3T(g)(6)
published elsewhere in this issue of the
Federal Register.]
(7) [The text of the proposed
amendment to § 1.385–3(g)(7) is the
same as the text of § 1.385–3T(g)(7)
published elsewhere in this issue of the
Federal Register.]
(8) [The text of the proposed
amendment to § 1.385–3(g)(8) is the
same as the text of § 1.385–3T(g)(8)
published elsewhere in this issue of the
Federal Register.]
*
*
*
*
*
(15) [The text of the proposed
amendment to § 1.385–3(g)(15) is the
same as the text of § 1.385–3T(g)(15)
published elsewhere in this issue of the
Federal Register.]
(16) [The text of the proposed
amendment to § 1.385–3(g)(16) is the
same as the text of § 1.385–3T(g)(16)
published elsewhere in this issue of the
Federal Register.]
(17) [The text of the proposed
amendment to § 1.385–3(g)(16) is the
same as the text of § 1.385–3T(g)(17)
published elsewhere in this issue of the
Federal Register.]
*
*
*
*
*
(22) [The text of the proposed
amendment to § 1.385–3(g)(22) is the
same as the text of § 1.385–3T(g)(22)
published elsewhere in this issue of the
Federal Register.]
(23) [The text of the proposed
amendment to § 1.385–3(g)(23) is the
same as the text of § 1.385–3T(g)(23)
published elsewhere in this issue of the
Federal Register.]
*
*
*
*
*
(h) * * *
(3) * * *
Example 12. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 12 is
the same as the text of § 1.385–3T(h)(3),
Example 12 published elsewhere in this
issue of the Federal Register.]
Example 13. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 13 is
the same as the text of § 1.385–3T(h)(3),
Example 13 published elsewhere in this
issue of the Federal Register.]
Example 14. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 14 is
the same as the text of § 1.385–3T(h)(3),
Example 14 published elsewhere in this
issue of the Federal Register.]
Example 15. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 15 is
the same as the text of § 1.385–3T(h)(3),
Example 15 published elsewhere in this
issue of the Federal Register.]
Example 16. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 16 is
the same as the text of § 1.385–3T(h)(3),
Example 16 published elsewhere in this
issue of the Federal Register.]
Example 17. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 17 is
the same as the text of § 1.385–3T(h)(3),
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17:22 Oct 20, 2016
Jkt 241001
Example 17 published elsewhere in this
issue of the Federal Register.]
Example 18. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 18 is
the same as the text of § 1.385–3T(h)(3),
Example 18 published elsewhere in this
issue of the Federal Register.]
Example 19. [The text of the proposed
amendment to § 1.385–3(h)(3), Example 19 is
the same as the text of § 1.385–3T(h)(3),
Example 19 published elsewhere in this
issue of the Federal Register.]
*
*
*
*
*
(k) [The text of the proposed
amendment to § 1.385–3(k) is the same
as the text of § 1.385–3T(k) published
elsewhere in this issue of the Federal
Register.]
■ Par. 3. Section 1.385–4 is added to
read as follows:
§ 1.385–4
groups.
Treatment of consolidated
[The text of proposed § 1.385–4 is the
same as the text of § 1.385–4T published
elsewhere in this issue of the Federal
Register.]
■ Par. 4. Section 1.752–2 is amended
by:
■ 1. Revising paragraph (c)(3).
■ 2. Revising paragraph (l)(4).
The addition and revision read as
follows
§ 1.752–2 Partner’s share of recourse
liabilities.
*
*
*
*
*
(c) * * *
(3) [The text of the proposed
amendment to § 1.752–2(c)(3) is the
same as the text of § 1.752–2T(c)(3)
published elsewhere in this issue of the
Federal Register.]
*
*
*
*
*
(l) * * *
(4) [The text of the proposed
amendment to § 1.752–2(l)(4) is the
same as the text of § 1.752–2T(l)(4)
published elsewhere in this issue of the
Federal Register.]
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. 2016–25104 Filed 10–13–16; 5:00 pm]
BILLING CODE 4830–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[Docket Number USCG–2016–0929]
RIN 1625–AA00
Safety Zone; Willamette River,
Portland, OR
AGENCY:
PO 00000
Coast Guard, DHS.
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ACTION:
72753
Notice of proposed rulemaking.
The Coast Guard proposes to
establish a temporary safety zone for
certain waters of the Willamette River.
This action is necessary to provide for
the safety of life on these navigable
waters during a fireworks display on
November 13, 2016. This proposed
rulemaking would prohibit persons and
vessels from being in the safety zone
unless authorized by the Captain of the
Port Sector Columbia River or a
designated representative. We invite
your comments on this proposed
rulemaking.
SUMMARY:
Comments and related material
must be received by the Coast Guard on
or before November 4, 2016.
ADDRESSES: You may submit comments
identified by docket number USCG–
2016–0929 using the Federal
eRulemaking Portal at https://
www.regulations.gov. See the ‘‘Public
Participation and Request for
Comments’’ portion of the
SUPPLEMENTARY INFORMATION section for
further instructions on submitting
comments.
DATES:
If
you have questions about this proposed
rulemaking, call or email Mr. Kenneth
Lawrenson, Waterways Management
Division, U.S. Coast Guard; telephone
503–240–9319, email msupdxwwm@
uscg.mil.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Table of Abbreviations
CFR—Code of Federal Regulations
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
§ Section
U.S.C. United States Code
II. Background, Purpose, and Legal
Basis
On September 22, 2016, Western
Display Fireworks, Ltd., notified the
Coast Guard that it will be conducting
a fireworks display from 7 p.m. to 7:30
p.m. on November 13, 2016, for a
celebration of life of recently deceased
Donald W. Gardner. The fireworks are to
be launched from a barge in the
Willamette River between the Burnside
and Steel Bridges. Hazards from
firework displays include accidental
discharge of fireworks, dangerous
projectiles, and falling hot embers or
other debris. The Captain of the Port
Sector Columbia River (COTP) has
determined that potential hazards
associated with the fireworks to be used
in this display would be a safety
concern for anyone within a 450-yard
radius of the barge.
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]]>Agencies
[Federal Register Volume 81, Number 204 (Friday, October 21, 2016)]
[Proposed Rules]
[Pages 72751-72753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25104]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-130314-16]
RIN 1545-BN68
Treatment of Certain Interests in Corporations as Stock or
Indebtedness
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary
regulation.
-----------------------------------------------------------------------
SUMMARY: The Department of the Treasury (Treasury Department) and the
IRS are issuing temporary regulations that affect corporations and
partnerships that issue purported indebtedness to related corporations
or partnerships in the Rules and Regulations section of this issue of
the Federal Register. The temporary regulations provide rules
addressing the treatment of instruments issued by partnerships,
consolidated groups, and certain transactions involving qualified cash-
management arrangements. The text of the temporary regulations also
serves as the text of these proposed regulations.
DATES: Written or electronic comments and requests for a public hearing
must be received by January 19, 2017.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-130314-16), Room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20224. Submissions may be hand-delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
130314-16), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue NW., Washington, DC 20224, or sent electronically via the
Federal eRulemaking Portal at https://www.regulations.gov (IRS REG-
130314-16).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Austin M. Diamond-Jones, (202) 317-5363, or Joshua G. Rabon, (202) 317-
6937; concerning submissions of comments or requests for a public
hearing, Regina Johnson, (202) 317-5177 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The temporary regulations in the Rules and Regulations section of
this issue of the Federal Register contain rules under sections 385 and
752 of the Internal Revenue Code (Code) that establish requirements
that ordinarily must be satisfied in order for certain related-party
interests in a corporation to be treated as indebtedness for federal
tax purposes. The text of the temporary regulations also serves as the
text of the proposed regulations herein. The preamble to the temporary
regulations explains the temporary regulations and the corresponding
proposed regulations.
[[Page 72752]]
Special Analyses
I. Regulatory Planning and Review
Executive Orders 13563 and 12866 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). Executive Order 13563
emphasizes the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
Related rules in the final and temporary regulations under section 385
in TD 9790, published in the Rules and Regulations section of this
issue of the Federal Register, have been designated a ``significant
regulatory action'' under section 3(f) of Executive Order 12866. For a
discussion of the economic impact of those final and temporary
regulations, as well as these proposed regulations, please see the
Regulatory Assessment accompanying TD 9790, published in the Rules and
Regulations section of this issue of the Federal Register.
II. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (5 U.S.C. Chapter 6), it
is hereby certified that the final and temporary regulations in TD
9790, published in the Rules and Regulations section of this issue of
the Federal Register, and accordingly, these proposed regulations
proposed by cross-reference to the temporary regulations, will not have
a significant economic impact on a substantial number of small
entities. Accordingly, a regulatory flexibility analysis is not
required.
To facilitate the federal tax analysis of an interest in a
corporation, taxpayers are required under existing law to substantiate
their classification of an interest as stock or indebtedness for
federal tax purposes. Section 1.385-3 provides that certain interests
in a corporation that are held by a member of the corporation's
expanded group and that otherwise would be treated as indebtedness for
federal tax purposes are treated as stock. Section 1.385-3T provides
that for certain debt instruments issued by a controlled partnership,
the holder is deemed to transfer all or a portion of the debt
instrument to the partner or partners in the partnership in exchange
for stock in the partner or partners. Section 1.385-4T provides rules
regarding the application of Sec. Sec. 1.385-3 and 1.385-3T to members
of a consolidated group. Sections 1.385-3 and 1.385-3T include multiple
exceptions that limit their application. In particular, the threshold
exception provides that the first $50 million of expanded group debt
instruments that otherwise would be reclassified as stock or deemed to
be transferred to a partner in a controlled partnership under Sec.
1.385-3 or Sec. 1.385-3T will not be reclassified or deemed
transferred under Sec. 1.385-3 or Sec. 1.385-3T. Although it is
possible that the classification rules in Sec. Sec. 1.385-3, 1.385-3T,
and 1.385-4T could have an effect on small entities, the threshold
exception of the first $50 million of debt instruments otherwise
subject to recharacterization or deemed transfer under Sec. Sec.
1.385-3, 1.385-3T, and 1.385-4T makes it unlikely that a substantial
number of small entities will be affected by Sec. Sec. 1.385-3T or
1.385-4T.
Pursuant to section 7805(f) of the Code, the final regulations in
TD 9790, published in the Rules and Regulations section of this issue
of the Federal Register, have been submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on their
impact on small business. Comments were received requesting that the
monetary thresholds contained in proposed Sec. Sec. 1.385-2, 1.385-3,
and 1.385-4 be increased in order to mitigate the impact on small
businesses. These comments are addressed in Parts IV.B.1.d and V.E.4 of
the Summary of Comments and Explanation of Revisions in the preamble of
TD 9790, published in the Rules and Regulations section of this issue
of the Federal Register. No comments were received concerning the
economic impact on small entities from the Small Business
Administration.
Comments and Requests for Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any comments that are submitted timely
to the IRS as prescribed in this preamble under the ``Addresses''
heading. Treasury and the IRS request comments on all aspects of the
proposed rules. All comments will be available at www.regulations.gov
or upon request. A public hearing will be scheduled if requested in
writing by any person that timely submits electronic or written
comments. If a public hearing is scheduled, notice of the date, time,
and place for the public hearing will be published in the Federal
Register.
Drafting Information
The principal authors of these regulations are Austin M. Diamond-
Jones of the Office of Associate Chief Counsel (Corporate) and Joshua
G. Rabon of the Office of Associate Chief Counsel (International).
However, other personnel from the Treasury Department and the IRS
participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by adding an
entry in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.385-4 also issued under 26 U.S.C. 385 and 1502.
0
Par. 2. Section 1.385-3 is amended by:
0
1. Revising paragraph (b)(3)(vii).
0
2. Revising paragraph (d)(4).
0
3. Revising paragraph (f).
0
4. Revising paragraphs (g)(5)-(8), (15)-(17), and (22)-(23).
0
5. Revising Example 12 through Example 19 in paragraph (h)(3).
0
6. Adding paragraph (k).
The revisions and additions read as follows:
Sec. 1.385-3 Transactions in which debt proceeds are distributed or
that have a similar effect.
* * * * *
(b) * * *
(3) * * *
(vii) [The text of the proposed amendment to Sec. 1.385-
3(b)(3)(vii) is the same as the text of Sec. 1.385-3T(b)(3)(vii)
published elsewhere in this issue of the Federal Register.]
* * * * *
(d) * * *
(4) [The text of the proposed amendment to Sec. 1.385-3(d)(4) is
the same as the text of Sec. 1.385-3T(d)(4) published elsewhere in
this issue of the Federal Register.]
* * * * *
(f) [The text of the proposed amendment to Sec. 1.385-3(f) is the
same as the text of Sec. 1.385-3T(f) published elsewhere in this issue
of the Federal Register.]
(g) * * *
(5) [The text of the proposed amendment to Sec. 1.385-3(g)(5) is
the same as the text of Sec. 1.385-3T(g)(5) published elsewhere in
this issue of the Federal Register.]
(6) [The text of the proposed amendment to Sec. 1.385-3(g)(6) is
the
[[Page 72753]]
same as the text of Sec. 1.385-3T(g)(6) published elsewhere in this
issue of the Federal Register.]
(7) [The text of the proposed amendment to Sec. 1.385-3(g)(7) is
the same as the text of Sec. 1.385-3T(g)(7) published elsewhere in
this issue of the Federal Register.]
(8) [The text of the proposed amendment to Sec. 1.385-3(g)(8) is
the same as the text of Sec. 1.385-3T(g)(8) published elsewhere in
this issue of the Federal Register.]
* * * * *
(15) [The text of the proposed amendment to Sec. 1.385-3(g)(15) is
the same as the text of Sec. 1.385-3T(g)(15) published elsewhere in
this issue of the Federal Register.]
(16) [The text of the proposed amendment to Sec. 1.385-3(g)(16) is
the same as the text of Sec. 1.385-3T(g)(16) published elsewhere in
this issue of the Federal Register.]
(17) [The text of the proposed amendment to Sec. 1.385-3(g)(16) is
the same as the text of Sec. 1.385-3T(g)(17) published elsewhere in
this issue of the Federal Register.]
* * * * *
(22) [The text of the proposed amendment to Sec. 1.385-3(g)(22) is
the same as the text of Sec. 1.385-3T(g)(22) published elsewhere in
this issue of the Federal Register.]
(23) [The text of the proposed amendment to Sec. 1.385-3(g)(23) is
the same as the text of Sec. 1.385-3T(g)(23) published elsewhere in
this issue of the Federal Register.]
* * * * *
(h) * * *
(3) * * *
Example 12. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 12 is the same as the text of Sec. 1.385-3T(h)(3),
Example 12 published elsewhere in this issue of the Federal
Register.]
Example 13. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 13 is the same as the text of Sec. 1.385-3T(h)(3),
Example 13 published elsewhere in this issue of the Federal
Register.]
Example 14. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 14 is the same as the text of Sec. 1.385-3T(h)(3),
Example 14 published elsewhere in this issue of the Federal
Register.]
Example 15. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 15 is the same as the text of Sec. 1.385-3T(h)(3),
Example 15 published elsewhere in this issue of the Federal
Register.]
Example 16. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 16 is the same as the text of Sec. 1.385-3T(h)(3),
Example 16 published elsewhere in this issue of the Federal
Register.]
Example 17. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 17 is the same as the text of Sec. 1.385-3T(h)(3),
Example 17 published elsewhere in this issue of the Federal
Register.]
Example 18. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 18 is the same as the text of Sec. 1.385-3T(h)(3),
Example 18 published elsewhere in this issue of the Federal
Register.]
Example 19. [The text of the proposed amendment to Sec. 1.385-
3(h)(3), Example 19 is the same as the text of Sec. 1.385-3T(h)(3),
Example 19 published elsewhere in this issue of the Federal
Register.]
* * * * *
(k) [The text of the proposed amendment to Sec. 1.385-3(k) is the
same as the text of Sec. 1.385-3T(k) published elsewhere in this issue
of the Federal Register.]
0
Par. 3. Section 1.385-4 is added to read as follows:
Sec. 1.385-4 Treatment of consolidated groups.
[The text of proposed Sec. 1.385-4 is the same as the text of
Sec. 1.385-4T published elsewhere in this issue of the Federal
Register.]
0
Par. 4. Section 1.752-2 is amended by:
0
1. Revising paragraph (c)(3).
0
2. Revising paragraph (l)(4).
The addition and revision read as follows
Sec. 1.752-2 Partner's share of recourse liabilities.
* * * * *
(c) * * *
(3) [The text of the proposed amendment to Sec. 1.752-2(c)(3) is
the same as the text of Sec. 1.752-2T(c)(3) published elsewhere in
this issue of the Federal Register.]
* * * * *
(l) * * *
(4) [The text of the proposed amendment to Sec. 1.752-2(l)(4) is
the same as the text of Sec. 1.752-2T(l)(4) published elsewhere in
this issue of the Federal Register.]
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-25104 Filed 10-13-16; 5:00 pm]
BILLING CODE 4830-01-P
