Implementation of the Nondiscrimination and Equal Opportunity Provisions of the Workforce Innovation and Opportunity Act, 88110 [C1-2016-27737]
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Federal Register / Vol. 81, No. 235 / Wednesday, December 7, 2016 / Rules and Regulations
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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
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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
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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
