Implementation of the Nondiscrimination and Equal Opportunity Provisions of the Workforce Innovation and Opportunity Act, 88110 [C1-2016-27737]

Download as PDF 88110 Federal Register / Vol. 81, No. 235 / Wednesday, December 7, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES into account under section 901(m) after the subsequent CAA. Furthermore, the subsequent CAA may give rise to additional basis difference subject to section 901(m). (ii) Foreign basis election. [Reserved]. (iii) Multiple section 743(b) CAAs. If an RFA is subject to two section 743(b) CAAs (prior section 743(b) CAA and subsequent section 743(b) CAA) and the same partnership interest is acquired in both the CAAs, the RFA will be treated as having no unallocated basis difference with respect to the prior section 743(b) CAA if the basis difference for the section 743(b) CAA is determined independently from the prior section 743(b) CAA. In this regard, see generally § 1.743–1(f). If the subsequent section 743(b) CAA results from the acquisition of only a portion of the partnership interest acquired in the prior section 743(b) CAA, then the transferor will be required to equitably apportion the unallocated basis difference attributable to the prior section 743(b) CAA between the portion retained by the transferor and the portion transferred. In this case, with respect to the portion transferred, the RFAs will be treated as having no unallocated basis difference with respect to the prior section 743(b) CAA if basis difference for the subsequent section 743(b) CAA is determined independently from the prior section 743(b) CAA. (5) Example. The following example illustrates the rules of paragraph (b) of this section. Example. (i) Facts. USP, a domestic corporation, wholly owns CFC, a foreign corporation organized in Country A and treated as a corporation for both U.S. and Country A tax purposes. FT is an unrelated foreign corporation organized in Country A and treated as a corporation for both U.S. and Country A tax purposes. FT owns one asset, a parcel of land (Asset). Country A imposes a single tax that is a foreign income tax. On January 1, Year 1, CFC acquires all of the stock of FT in exchange for 300u in a qualified stock purchase (as defined in section 338(d)(3)) to which section 338(a) applies (Acquisition). Immediately before the Acquisition, Asset had a U.S. basis of 100u, and immediately after the Acquisition, Asset had a U.S. basis of 300u. Effective on February 1, Year 1, FT elects to be a disregarded entity pursuant to § 301.7701–3. As a result of the election, FT is deemed, for U.S. income tax purposes, to distribute Asset to CFC in liquidation (Deemed Liquidation) immediately before the closing of the day before the election is effective pursuant to § 301.7701–3(g)(1)(iii) and (3)(ii). The Deemed Liquidation is disregarded for Country A tax purposes. No gain or loss is recognized on the Deemed Liquidation for either U.S. or Country A tax purposes. (ii) Result. Under § 1.901(m)–2T(b)(1), the Acquisition by CFC of the stock of FT is a VerDate Sep<11>2014 16:02 Dec 06, 2016 Jkt 241001 section 338 CAA. Under § 1.901(m)–2T(c)(1), Asset is an RFA with respect to Country A tax and the Acquisition, because immediately after the Acquisition, Asset is relevant in determining foreign income of FT for Country A tax purposes, and FT owned Asset when the Acquisition occurred. Under § 1.901(m)–4T(b), the basis difference with respect to Asset is 200u (300u¥100u). Under § 1.901(m)–2T(b)(2), the Deemed Liquidation is a CAA (subsequent CAA) because the Deemed Liquidation is treated as an acquisition of assets for U.S. income tax purposes and is disregarded for Country A tax purposes. Because the U.S. basis in Asset is 300u immediately before and after the Deemed Liquidation, the subsequent CAA does not give rise to any additional basis difference. The Deemed Liquidation is not a disposition under § 1.901(m)–1T(a)(10) because it did not result in gain or loss being recognized with respect to Asset for U.S. or Country A tax purposes. Accordingly, no basis difference with respect to Asset is taken into account under § 1.901(m)–5T as a result of the Deemed Liquidation, and the unallocated basis difference with respect to Asset immediately after the Deemed Liquidation is 200u (200u¥0u). Under paragraph (b)(2) of this section, the Deemed Liquidation is a successor transaction because there is a transfer of Asset for U.S. income tax purposes from FT to CFC and Asset has unallocated basis difference with respect to the Acquisition immediately after the Deemed Liquidation. Accordingly, under paragraph (b)(1) of this section, section 901(m) will continue to apply to the unallocated basis difference with respect to Asset until the entire 200u basis difference has been taken into account under § 1.901(m)–5T. (c) Successor rules for aggregate basis difference carryover [Reserved]. (d) Effective/applicability date. (1) Paragraphs (a), (b)(1), (b)(2), (b)(4)(i), (b)(4)(iii), and (b)(5) of this section apply to CAAs occurring on or after July 21, 2014, and to CAAs occurring before that date resulting from an entity classification election made under § 301.7701–3 of this chapter that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014. Paragraphs (a), (b)(1), (b)(2), (b)(4)(i), (b)(4)(iii), and (b)(5) of this section also apply to CAAs occurring on or after January 1, 2011, and before July 21, 2014, other than CAAs occurring before July 21, 2014, resulting from an entity classification election made under § 301.7701–3 that is filed on or after July 29, 2014, and that is effective on or before July 21, 2014, but only with respect to basis difference determined under § 1.901(m)–4T(e) with respect to the CAA. (2)–(3) [Reserved] (e) Expiration date. The applicability of this section expires on December 6, 2019. PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 Par. 8. Sections 1.901(m)–7T and 1.901(m)–8T are added and reserved to read as follows: ■ § 1.901(m)–7T [Reserved]. De minimis rules. § 1.901(m)–8T Miscellaneous. [Reserved]. John Dalrymple, Deputy Commissioner for Services and Enforcement. Approved: November 4, 2016. Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2016–28755 Filed 12–6–16; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF LABOR Office of the Secretary 29 CFR Part 38 RIN 1291–AA36 Implementation of the Nondiscrimination and Equal Opportunity Provisions of the Workforce Innovation and Opportunity Act Correction In rule document 2016–27737 beginning on page 87130 in the issue of Friday, December 2, 2016, make the following correction: 1. On page 87130, in the first column, after the DATES heading, the second line, ‘‘December 2, 2016.’’ should read ‘‘January 3, 2017.’’ [FR Doc. C1–2016–27737 Filed 12–6–16; 8:45 am] BILLING CODE 1301–00–D DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG–2016–1020] RIN 1625–AA00 Safety Zone; Upper Mississippi River, St. Louis, MO Coast Guard, DHS. Temporary final rule. AGENCY: ACTION: The Coast Guard is establishing a temporary safety zone for navigable waters on the Upper Mississippi River from mile 179.2 to mile 180. The safety zone is needed to protect personnel, vessels, and the marine environment from potential SUMMARY: E:\FR\FM\07DER1.SGM 07DER1

Agencies

[Federal Register Volume 81, Number 235 (Wednesday, December 7, 2016)]
[Rules and Regulations]
[Page 88110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: C1-2016-27737]


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DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Part 38

RIN 1291-AA36


Implementation of the Nondiscrimination and Equal Opportunity 
Provisions of the Workforce Innovation and Opportunity Act

Correction

    In rule document 2016-27737 beginning on page 87130 in the issue of 
Friday, December 2, 2016, make the following correction:
    1. On page 87130, in the first column, after the DATES heading, the 
second line, ``December 2, 2016.'' should read ``January 3, 2017.''

[FR Doc. C1-2016-27737 Filed 12-6-16; 8:45 am]
BILLING CODE 1301-00-D