Dividend Equivalents From Sources Within the United States, 8172-8173 [2017-01161]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 82, Number 14 (Tuesday, January 24, 2017)]
[Proposed Rules]
[Pages 8172-8173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01161]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-135122-16]
RIN 1545-BN76


Dividend Equivalents From Sources Within the United States

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: This document contains proposed regulations relating to 
certain financial products providing for payments that are contingent 
upon or determined by reference to U.S. source dividend payments.

[[Page 8173]]


DATES: Written or electronic comments must be received by April 24, 
2017.

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-135122-16), room 5203, 
Internal Revenue Service, PO Box 7604, Ben Franklin Station, 
Washington, DC 20044. 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-
135122-16), Courier's desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20044, or sent electronically, via the 
Federal eRulemaking Portal at www.regulations.gov (IRS REG-135122-16). 
The public hearing will be held in the IRS Auditorium, Internal Revenue 
Building, 1111 Constitution Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, D. Peter 
Merkel or Karen Walny at (202) 317-6938; concerning submissions of 
comments, the hearing, and/or to be placed on the building access list 
to attend the hearing Regina Johnson at (202) 317-6901 (not toll-free 
numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    Final and temporary regulations in the Rules and Regulations 
section of this issue of the Federal Register contain amendments to the 
Income Tax Regulations (26 CFR part 1), which provide rules relating to 
dividend equivalents for purposes of section 871(m). The temporary 
regulations provide guidance relating to when the delta of an option 
that is listed on a foreign regulated exchange may be calculated based 
on the delta of that option at the close of business on the business 
day prior to the date of issuance. The temporary regulations also 
provide guidance identifying which party to a potential section 871(m) 
transaction is responsible for determining whether a transaction is a 
section 871(m) transaction when multiple brokers or dealers are 
involved in the transaction. The text of those temporary regulations 
also serves as the text of these proposed regulations. The preamble to 
the final and temporary regulations explains the temporary regulations 
and these proposed regulations. The regulations affect nonresident 
alien individuals, foreign corporations, and withholding agents, as 
well as certain other parties to section 871(m) transactions and their 
agents.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required. Because the 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), these 
regulations have been submitted to the Chief Counsel for Advocacy of 
the Small Business Administration for comment on its impact on small 
business.

Comments and Request 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. The Treasury Department 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 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 D. Peter Merkel and 
Karen Walny of the Office of 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 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Sec.  1.871-15 also issued under 26 U.S.C. 871(m). * * *

0
Par. 2. Section 1.871-15 is amended by revising paragraph (a)(1), 
paragraph (g)(4)(ii)(B), paragraphs (p)(1)(ii) through (p)(1)(iv), and 
paragraph (p)(5) to read as follows:


Sec.  1.871-15  Treatment of dividend equivalents.

    (a) * * *
    (1) [The text of the proposed amendments to Sec.  1.871-15(a)(1) is 
the same as the text of Sec.  1.871-15T(a)(1) published elsewhere in 
this issue of the Federal Register.]
* * * * *
    (g) * * *
    (4) * * *
    (ii) * * *
    (B) [The text of the proposed amendments to Sec.  1.871-
15(g)(4)(ii)(B) is the same as the text of Sec.  1.871-15T(g)(4)(ii)(B) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (p) * * *
    (1) * * *
    (ii) [The text of the proposed amendments to Sec.  1.871-
15(p)(1)(ii) is the same as the text of Sec.  1.871-15T(p)(1)(ii) 
published elsewhere in this issue of the Federal Register.
    (iii) [The text of the proposed amendments to Sec.  1.871-
15(p)(1)(iii) is the same as the text of Sec.  1.871-15T(p)(1)(iii) 
published elsewhere in this issue of the Federal Register.]
    (iv) [The text of the proposed amendments to Sec.  1.871-
15(p)(1)(iv) is the same as the text of Sec.  1.871-15T(p)(1)(iv) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (5) [The text of the proposed amendments to Sec.  1.871-15(p)(5) is 
the same as the text of Sec.  1.871-15T(p)(5) published elsewhere in 
this issue of the Federal Register.]
* * * * *

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2017-01161 Filed 1-19-17; 4:15 pm]
 BILLING CODE 4830-01-P