Corporate Alternative Minimum Tax Applicable After 2022; Technical Correction, 104909-104915 [2024-29958]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 89, Number 247 (Thursday, December 26, 2024)]
[Proposed Rules]
[Pages 104909-104915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29958]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-112129-23]
RIN 1545-BQ84


Corporate Alternative Minimum Tax Applicable After 2022; 
Technical Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking; technical correction.

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SUMMARY: This document contains technical corrections to a notice of 
proposed rulemaking (REG-112129-23), which was published in the Federal 
Register on Friday, September 13, 2024. REG-112129-23 contains proposed 
regulations that relate to the application of the corporate alternative 
minimum tax, which is imposed on the adjusted financial statement 
income of certain corporations for applicable taxable years beginning 
after 2022.

DATES: Written or electronic comments are still being accepted and must 
be received by Thursday, January 16, 2025.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically via the Federal eRulemaking Portal at https://www.regulations.gov (indicate IRS and REG-112129-23) by following the 
online instructions for submitting comments. Once submitted to the 
Federal eRulemaking Portal, comments cannot be edited or withdrawn. The 
Department of the Treasury (Treasury Department) and the IRS will 
publish for public availability any comments submitted to the IRS's 
public docket. Send paper submissions to: CC:PA:01:PR (REG-112129-23), 
Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin 
Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning general corrections 
(including corrections to proposed Sec. Sec.  1.56A-1 and 1.59-2), 
Madeline Padner at (202) 317-7006, and concerning corrections to 
proposed Sec. Sec.  1.56A-15 and 1.56A-16, C. Dylan Durham at (202) 
317-7005, each of the Office of Associate Chief Counsel (Income Tax and 
Accounting); concerning corrections to proposed Sec. Sec.  1.56A-5 and 
1.56A-20, Elizabeth Zanet or Brian Barrett, each of the Office of 
Associate Chief Counsel (Passthroughs and Special Industries) at (202) 
317-6850; concerning corrections to proposed Sec. Sec.  1.56A-18, 
1.56A-19, 1.56A-21, 1.56A-23(e) and (f), and 1.1502-56A, Jeremy Aron-
Dine or William W. Burhop, each of the Office of Associate Chief 
Counsel (Corporate) at (202) 317-3181; concerning corrections to 
proposed Sec.  1.56A-26, Michelle L. Ng at (202) 317-6939, and 
concerning Sec.  1.59-4, John J. Lee at (202) 317-6934, each of the 
Office of Associate Chief Counsel (International); and concerning 
submissions of comments or the public hearing, the Publications and 
Regulations Section, (202) 317-6901 (not toll-free numbers) or by email 
at [email protected] (preferred).

SUPPLEMENTARY INFORMATION:

Background

    The notice of proposed rulemaking (REG-112129-23) that is the 
subject of these corrections is under sections 55, 56A, 59, and 1502 of 
the Internal Revenue Code.

Need for Correction

    As published, the notice of proposed rulemaking (REG-112129-23) 
contains errors that need to be corrected.
    The Treasury Department and the IRS intended that CAMT basis be 
used in amortizing or depreciating property not subject to the rules in 
proposed Sec.  1.56A-15 (AFSI adjustments for section 168 property) and 
proposed Sec.  1.56A-16 (AFSI adjustments for qualified wireless 
spectrum property). Therefore, the Treasury Department and IRS correct 
proposed Sec.  1.56A-1(d)(4) to clarify that to the extent the CAMT 
basis of an asset is different than its AFS basis, and if income and 
expense (as well as gain or loss) is recognized for AFSI purposes under 
the section 56A regulations, then such income or expense (as well as 
gain or loss) reflected in FSI is redetermined for AFSI purposes by 
reference to the CAMT basis of the asset.
    The Treasury Department and the IRS intended that the simplified 
method for determining applicable corporation status take into account 
the adjustments provided to tax-exempt entities in section 56A(c)(12) 
and proposed Sec.  1.56A-14. Therefore, the Treasury Department and IRS 
correct proposed Sec.  1.59-2(g)(2) to take into account the 
adjustments provided to tax-exempt entities by proposed Sec.  1.56A-14.
    The Treasury Department and the IRS intended proposed Sec.  1.56A-
19(g)(4)(iii) and (g)(5)(iii) to prevent a section 351 transferee that 
is an applicable corporation from (i) causing a section 351 exchange to 
be treated as a covered recognition transaction by issuing a de minimis 
amount of boot to a section 351 transferor that is not an applicable 
corporation, and thereby (ii) determining the section 351 transferee's 
CAMT basis in the assets received to be its AFS basis (that is, taking 
a fair value basis in the assets). Therefore, the Treasury Department 
and IRS correct proposed Sec.  1.56A-19(g)(4)(iii) and (g)(5)(iii) to 
clarify that, if the amount of boot issued by the section 351 
transferee to a section 351 transferor that is not an applicable 
corporation is less than ten percent of the fair market value of the 
assets transferred to the section 351

[[Page 104910]]

transferee by that section 351 transferor, the section 351 transferee 
determines its CAMT basis in the transferred assets under section 362 
(that is, the CAMT basis of the assets in the hands of the section 351 
transferor), increased by the regular tax gain recognized by the 
section 351 transferor. Proposed Sec.  1.56A-19(g)(6)(iv) (Example 4) 
is revised to reflect the corrections to proposed Sec.  1.56A-
19(g)(5)(iii).
    This document also contains corrections for other errors contained 
in the notice of proposed rulemaking (REG-112129-23) that need to be 
corrected.

Correction of Publication

    Accordingly, FR Doc. 2024-20089 (REG-112129-23), appearing on page 
75062 in the Federal Register on Friday, September 13, 2024, is 
corrected as follows:
    1. On page 75063, in the third column, in the first partial 
paragraph, in the fifth line down from the top of the paragraph, the 
language ``56(c)(3)(A)'' is corrected to read ``56A(c)(3)(A)''.
    2. On page 75065, in the first column, in the second full 
paragraph, in the fifth line up from the bottom of the paragraph, the 
language ``AFSI Tests'' is corrected to read ``AFSI tests''.
    3. On page 75066, in the second column, in the first paragraph, in 
the third line down from the top of the paragraph, the language ``2024-
3 I.R.B.'' is corrected to read ``2024-3 I.R.B. 406''.
    4. On page 75074, in the second column, in the first partial 
paragraph, in the tenth line up from the bottom of the paragraph, the 
language ``388(g)'' is corrected to read ``338(g)''.
    5. On page 75075, in the first column, in the thirteenth line up 
from the bottom of the page, the language ``asset acquisition'' is 
corrected to read ``asset transaction''.
    6. On page 75080, in the first column, the third line down from the 
top of the page is corrected to read ``distributive share amount that 
is disallowed''.
    7. On page 75086, in the third column, in the first full paragraph, 
the eighth line up from the bottom of the paragraph is corrected to 
read, ``ending after December 31, 2019,''.
    8. On page 75088, in the third column, in the first partial 
paragraph, the ninth line down from the top of the paragraph is 
corrected to read ``in method of accounting for depreciation or a 
tax''.
    9. On page 75088, in the third column, in the first full paragraph, 
in the ninth line up from the bottom of the paragraph, the language, 
``Sec.  1.56A-(d)(1)(iii)'' is corrected to read, ``Sec.  1.56A-
15(d)(1)(iii)''.
    10. On page 75089, in the third column, in the first full 
paragraph, the language, ``Sec.  1.56A-15(e)(7)'' is corrected to read, 
``Sec.  1.56A-15(e)(8)''.
    11. On page 75090, in the second column, in the first full 
paragraph, the second line up from the bottom of the paragraph is 
corrected to read ``ending on or before December 31,''.
    12. On page 75090, in the second column, in the second full 
paragraph, the second line up from the bottom of the paragraph is 
corrected to read ``ending on or before December 31,''.
    13. On page 75091, in the second column, in the first full 
paragraph, the eighth line up from the bottom of the paragraph is 
corrected to read ``taxable years ending on or before''.
    14. On page 75101, in the first column, in the first partial 
paragraph:
    i. The ninth and eighth lines up from the bottom of the paragraph 
are corrected to read, ``causing the deferred sale gain or loss to be 
accelerated into AFSI in''.
    ii. The fifth line up from the bottom of the paragraph is corrected 
to read ``sum of (A) the deferred sale gain or loss that''.
    15. On page 75101, in the third column, in the first partial 
paragraph, the last line of the paragraph is corrected to read ``in 
which the distribution occurs unless the special rule in proposed Sec.  
1.56A-20(d)(1)(ii)(E) would apply to the timing of the inclusion.''.
    16. On page 75103, in the third column, in the first partial 
paragraph, the seventh and sixth lines up from the bottom of the 
paragraph are corrected to read ``which an acceleration or partial 
acceleration event described in Sec.  1.721(c)-4(b) or Sec.  1.721(c)-
5(d), respectively, occurred; and (D) the''.
    17. On page 75105, in the second column, in the first partial and 
first full paragraphs, the language ``Section 168 Property'', is 
corrected to read ``section 168 property'', everywhere it appears.
    18. On page 75113, in the first column, the heading ``3. 
Corporation in Existence for Less Than Three Taxable Years'' is 
corrected to read ``3. Corporation in Existence for Less Than Three 
Taxable Years and Short Taxable Years''.
    19. On page 75120, in the first column, in the second partial 
paragraph, in the twelfth line up from the bottom of the paragraph, the 
language ``section 904'' is corrected to read ``section 901''.
    20. On page 75120, in the third column, the heading ``XXX. Proposed 
Sec. Sec.  1.1502-2, 1.1502-3, 1.1502-53, and 1.1502-55: Computation of 
Tax Liability of a Tax Consolidated Group and Computation of 
Alternative Minimum Tax of Consolidated Groups'' is corrected to read 
``XXX. Proposed Sec. Sec.  1.1502-2, 1.1502-3, 1.1502-53, and 1.1502-
55: Computation of Tax Liability of a Tax Consolidated Group and 
Computation of Minimum Tax Credits of Consolidated Groups''.
    21. On page 75124, in the third column, in the second full 
paragraph, in the ninth line down from the top of the paragraph, the 
language ``beginning after'' is corrected to read ``ending after''.
    22. On page 75125, in the second column, in the first full 
paragraph, in the eighteenth line down from the top of the paragraph, 
the language ``beginning after'' is corrected to read ``ending after''.
    23. On page 75125, in the second column, in the first full 
paragraph, in the twenty-third line down from the top of the paragraph, 
following the word ``holds'', the word ``the'' is removed.
    24. On page 75125, in the third column, in the first paragraph, in 
the tenth line down from the top of the paragraph, the language 
``beginning after December 31, 2019.'' is corrected to read ``ending 
after December 31, 2019.''.
    25. On page 75127, in the first column, in the last partial 
paragraph, in the fourth line up from the bottom of the page, following 
the word ``applicable'', the language ``and also apply all of the rules 
in proposed Sec. Sec.  1.56A-4 and 1.56A-6 that apply to transfers (as 
defined in proposed Sec.  1.56A-4(b)(3)) to any transfers occurring in 
such taxable years'' is added.
    26. On page 75127, in the first column, in the last partial 
paragraph, the second line up from the bottom of the page is corrected 
to read ``and 1.56A-6 that apply to transfers,'' and the last line of 
the page is removed.
    27. On page 75127, in the second column, in the first partial 
paragraph, in the fifth line up from the bottom of the paragraph, 
following the language ``September 13, 2024,'' the language ``during a 
taxable year of the taxpayer and each subsequent taxable year until the 
final regulations are applicable to such transfers,'' is added.
    28. On page 75127, in the second column, in the first full 
paragraph, following the word ``applicable'' in the sixteenth line up 
from the bottom of the paragraph, the language ``and also apply all of 
the rules described in proposed Sec. Sec.  1.56A-4 and 1.56A-6 that 
apply to any transfers occurring in such taxable years'' is added.
    29. On page 75130, in the second column, under the authority 
citation for Part 1, in the last paragraph in the column, in the entry 
for Sec. Sec.  1.1502-53 and 1.1502-56A, the language

[[Page 104911]]

``56A(C)(2)(B)'' is removed, and the language ``56A(c)(2)(B)'' is added 
in its place.


Sec.  1.56A-0  [Corrected]

    30. On page 75135, in the third column, the entry for Sec.  1.56A-
20(c)(2)(iv) is corrected to read as follows:
* * * * *
Sec.  1.56A-20 AFSI adjustments to apply certain subchapter K 
principles.
* * * * *
    (c) * * *
    (2) * * *
    (iv) Inclusion of deferred sale gain upon an acceleration or 
partial acceleration event described in Sec.  1.721(c)-4(b) or Sec.  
1.721(c)-5(d).
* * * * *
    31. On page 75136, in the second column, the entries for Sec.  
1.56A-21(c)(6) introductory text and (c)(6)(i) through (iv) are 
redesignated as entries for Sec.  1.56A-21(c)(7) introductory text and 
(c)(7)(i) through (iv), and a new entry for Sec.  1.56A-21(c)(6) is 
added to read as follows:
* * * * *
Sec.  1.56A-21 AFSI adjustments for troubled companies.
* * * * *
    (c) * * *
    (6) Exclusion from AFSI.
    (7) Examples.
    (i) Example 1: Bankruptcy emergence in a covered nonrecognition 
transaction.
    (ii) Example 2: Bankruptcy emergence in a covered recognition 
transaction.
    (iii) Example 3: Attribute reduction.
    (iv) Example 4: Excluded income from the discharge of indebtedness 
of insolvent taxpayer.
* * * * *


Sec.  1.56A-1  [Corrected]

    32. On page 75140, in the second column, in paragraph (c)(4)(ii), 
the last line of the paragraph is corrected to read ``18(c)(3) and (4) 
and 1.56A-4(c)(4) and (d)(4)).''
    33. On page 75142, in the first column, in paragraph (d)(4):
    i. The paragraph heading is corrected to read, ``(4) 
Redetermination of FSI.''.
    ii. The third line down from the top of the paragraph is corrected 
to read, ``the section 56A regulations, if income, expense, gain or''.
    iii. The seventh line up from the bottom of the paragraph is 
corrected to read, ``different from its AFS basis, and if such income, 
expense,''.
    iv. The fourth line up from the bottom of the paragraph is 
corrected to read, ``regulations, then such income, expense, gain or 
loss''.


Sec.  1.56A-5  [Corrected]

    34. On page 75154, in the third column, in paragraph (k)(4)(i), in 
the sixth and fourth lines up from the bottom of the paragraph, the 
language ``AFS $50'' is corrected to read ``AFS $50x''.
    35. On page 75155, in the first column, in paragraph (k)(5)(i):
    i. In the fifth line down from the top of the page, the language 
``AFS $75'' is corrected to read ``AFS $75x''.
    ii. In the sixth and eighth lines down from the top of the page, 
the language ``AFS $50'' is corrected to read ``AFS $50x''.
    36. On page 75155, in the third column, in paragraph (k)(7), the 
eighth line up from the bottom of the paragraph is corrected to read, 
``property owned by PRS1. As a result of''.


Sec.  1.56A-15  [Corrected]

    37. On page 75163, in the second column:
    i. In paragraph (b)(11)(i), in the third line up from the bottom of 
the paragraph, the language ``beginning after'' is corrected to read 
``ending after''.
    ii. In paragraph (b)(11)(ii), the fifth line up from the bottom of 
the paragraph, the language ``beginning after December 31, 2019,'' is 
corrected to read ``ending after December 31, 2019,''.
    38. On page 75165, in the first column, in paragraph (d)(4), the 
seventh line up from the bottom of the column is corrected to read, 
``taxable year were a full 12-month taxable''.
    39. On page 75168, in the first column, in paragraph (d)(5)(v)(C), 
in the thirteenth line up from the bottom of the paragraph, the number 
``481'' is corrected to read, ``481(a)''.
    40. On page 75168, in the second column, in paragraph (d)(5)(v)(D):
    i. The thirteenth line down from the top of the page is corrected 
to read, ``taxable years ending after''.
    ii. The twentieth and twenty-first lines down from the top of the 
page are corrected to read ``respect to taxable years ending after 
December 31, 2019, and before the''.
    iii. The ninth and tenth lines up from the bottom of the paragraph 
are corrected to read, ``to taxable years ending after December 31, 
2019, and before the tax''.
    41. On page 75168, in the third column, in paragraph (d)(5)(vi)(B), 
in the thirteenth line up from the bottom of the paragraph, the word 
``be'' is removed.
    42. On page 75169, in the first column, in paragraph (d)(5)(vi)(C):
    i. The eighth line down from the top of the page is corrected to 
read, ``ending after December 31, 2019,''.
    ii. The sixteenth line down from the top of the page is corrected 
to read, ``ending after December 31, 2019,''.
    iii. The eighth line up from the bottom of the paragraph is 
corrected to read ``years ending after December 31,''.
    43. On page 75170, in the first column, in paragraph (d)(5)(ix)(A), 
the sixth line up from the bottom of the paragraph is corrected to 
read, ``PRS1. As a result of the basis adjustment,''.
    44. On page 75170, in the second column, in paragraph (d)(5)(x)(A), 
the fourth line up from the bottom of the paragraph is corrected to 
read, ``As a result of the basis adjustment, X is''.
    45. On page 75173, in the second column, in paragraph 
(e)(8)(iii)(B), the third line up from the bottom of paragraph is 
corrected to read, ``following the Exchange/40 years) of''.
    46. On page 75174, in the first column, in paragraph (e)(8)(iv)(A):
    i. In the fifth line up from the bottom of the paragraph, the 
number ``$50'' is corrected to read ``$50x''.
    ii. The fourth line up from the bottom of the paragraph is 
corrected to read ``sale of Property A ($900x''.
    iii. In the third line up from the bottom of the paragraph the 
number ``$850'' is corrected to read ``$850x''.
    iv. The last line of the paragraph is corrected to read, 
``expense)).''.
    47. On page 75176, in the first column, in paragraph (e)(8)(ix)(B), 
in the sixth line up from the bottom of the page, the word ``to'' is 
corrected to read ``into''.
    48. On page 75176, in the third column, in paragraph (e)(8)(xi)(A), 
the seventh line up from the bottom of the paragraph is corrected to 
read ``owned by PRS1. As a result of the basis''.
    49. On page 75177, in the first column, in paragraph (e)(8)(xi)(C), 
the second line up from the bottom of the paragraph is corrected to 
read ``Sec.  1.56A-5(e)(1)(iv) and (e)(4)(ii)(A),''.


Sec.  1.56A-16  [Corrected]

    50. On page 75177, in the second column, in paragraph (b)(8)(i), 
the third line up from the bottom of the paragraph is corrected to 
read, ``to taxable years ending after''.
    51. On page 75177, in the second column, in paragraph (b)(8)(ii), 
the sixth line up from the bottom of the paragraph is corrected to 
read, ``with respect to taxable years ending''.
    52. On page 75179, in the first column, in paragraph (e)(2)(ii)(D), 
the tenth line up from the bottom of the page is corrected to read 
``adjustments described in paragraphs''.

[[Page 104912]]

Sec.  1.56A-17  [Corrected]

    53. On page 75180, in the third column, in the first full 
paragraph, in paragraph (c)(2)(i)(A), the second line up from the 
bottom of the paragraph is corrected to read ``ending on or before 
December 31,''.
    54. On page 75180, in the third column, in paragraph (c)(2)(ii)(A), 
in the second line up from the bottom of the paragraph, the language 
``beginning on or before'' is corrected to read ``ending on or 
before''.
    55. On page 75180, in the third column, the paragraph heading for 
paragraph (c)(3)(ii)(A) is corrected to read, ``(ii) Omissions--(A) 
Increase to AFSI.''.
    56. On page 75181, in the third column, in paragraph (d)(1)(i):
    i. In the twenty-fourth line up from the bottom of the paragraph, 
the language ``beginning after December'' is corrected to read ``ending 
after December''.
    ii. In the sixth line up from the bottom of the paragraph, the 
language ``taxable years beginning'' is corrected to read ``taxable 
years ending''.
    57. On page 75182, in the third column, paragraph (g) is corrected 
to read as follows:
* * * * *
    (g) Applicability date--(1) In general. Except as provided in 
paragraph (g)(2) of this section, this section applies to taxable years 
ending after September 13, 2024.
    (2) Rule for changes in accounting principle and restatements of a 
prior year's AFS. In the case of rules contained in paragraphs (c) and 
(d) of this section, those rules are applicable to changes in 
accounting principle implemented in, and restated AFS issued in, 
taxable years ending after September 13, 2024.


Sec.  1.56A-18  [Corrected]

    58. On page 75182, in the third column, in paragraph (a)(2)(i), in 
the third line down from the top of the paragraph, the language 
``shareholders of other'' is removed.
    59. On page 75183, in the third column, in paragraph (b)(9)(i), in 
the last line of the column, the word ``respectively,'' is removed.
    60. On page 75184, in the first column, in paragraph (b)(12)(i)(A), 
in the second line of the paragraph, the language ``the corporation'' 
is corrected to read ``that party or property''.
    61. On page 75184, in the third column, paragraph (b)(19)(xv) is 
corrected to read ``(xv) A transferor corporation; and''.
    62. On page 75186, in the second column, the last sentence in 
paragraph (c)(6) is removed.
    63. On page 75187, in the second column, in paragraph 
(c)(8)(vi)(C), in the second line up from the bottom of the page, the 
word ``transaction'' is corrected to read ``exchange''.
    64. On page 75187, in the third column, in paragraph (c)(8)(vi)(E), 
in the third line up from the bottom of the paragraph, the word 
``transaction'' is corrected to read ``exchange''.
    65. On page 75188, in the third column, in paragraph (d)(4)(iv), 
the second line of the paragraph is corrected to read ``recipient's 
CAMT basis in the other property''.
    66. On page 75189, in the first column, in paragraph (d)(5)(i)(A), 
the first partial paragraph, the fourth line down from the top of the 
page is corrected to read ``issued stock with a fair market value of 
$25x to X (that is, a distribution''.
    67. On page 75189, in the third column, in paragraph (d)(5)(iv)(B), 
the last two lines up from the bottom of the paragraph are corrected to 
read ``section 312 by the amount of AFSI, or $12.5x.''.
    68. On page 75190, in the first column, in paragraph (e)(2)(ii), 
the last three lines of the paragraph are corrected to read ``equal to 
the target corporation's AFS basis in that property that would obtain 
if the transaction were treated as an asset sale for AFS purposes.''.
    69. On page 75190, in the third column, in paragraph (e)(6), the 
last two lines of the paragraph are corrected to read ``AFS basis in 
that property that would obtain if the transaction were treated as an 
asset sale for AFS purposes.''.
    70. On page 75190, in the third column, in paragraph (e)(7)(i), in 
the tenth line down from the top of the paragraph, the language ``a 
regular tax'' is corrected to read ``an AFS''.
    71. On page 75190, in the third column, in paragraph (e)(7)(ii), 
the last line of the page is corrected to read ``Distributing applies 
section 336(e) to the''.
    72. On page 75191, in the first column, in paragraph (e)(7)(ii), 
the first partial paragraph, in the fourth line up from the bottom of 
the paragraph, the number ``$66x'' is corrected to read ``$60x''.
    73. On page 75191, in the first column, in the first partial 
paragraph, paragraph (e)(7)(ii), in the last line of the paragraph, the 
language ``regular tax'' is corrected to read ``AFS''.
    74. On page 75193, in the first column, in paragraph (g)(4), the 
last two lines of the paragraph are corrected to read ``corporation's 
AFS basis in that property that would obtain if the transaction were 
treated as an asset sale for AFS purposes.''.
    75. On page 75193, in the first column, in paragraph (g)(6)(i)(A), 
in the second line up from the bottom of the paragraph, the language 
``and a value of $30x'' is removed.
    76. On page 75193, in the second column, in the first partial 
paragraph, paragraph (g)(6)(ii)(B), in the last line of the paragraph, 
the language ``regular tax'' is corrected to read ``AFS''
    77. On page 75193, in the second column, in paragraph 
(g)(6)(iii)(A), in the fourteenth line up from the bottom of the 
paragraph, the language ``regular tax'' is corrected to read ``AFS''.
    78. On page 75193, in the second column, in paragraph 
(g)(6)(iii)(B), the last two lines of the paragraph are corrected to 
read ``assets is equal to new Target's AFS basis in those assets, or 
$100x.''.


Sec.  1.56A-19  [Corrected]

    79. On page 75194, in the third column, in paragraph (b)(4)(i), the 
eighth line up from the bottom of the paragraph is corrected to read 
``paragraphs (b)(1) and (3) of this''.
    80. On page 75195, in the second column, in paragraph (b)(7)(ii):
    i. The seventh line down from the top of the paragraph is corrected 
to read ``of Acquiror nonvoting stock.'' and the eighth line down from 
the top of the paragraph is removed.
    ii. The thirteenth through tenth lines up from the bottom of the 
paragraph are corrected to read ``determines its AFSI by redetermining 
any FSI reflected in its AFS resulting from the transaction by 
reference to its CAMT basis in the Target stock. As a result, X''.
    81. On page 75196, in the third column, in the first full 
paragraph, paragraph (c)(8)(i)(A), in the fourth line up from the 
bottom of the paragraph, the language ``and a value of $30x'' is 
removed.
    82. On page 75198, in the second column, in paragraph (d)(6)(i)(A), 
the seventeenth line up from the bottom of the paragraph is corrected 
to read ``transactions that qualify for nonrecognition treatment under 
section''.
    83. On page 75198, in the second column, in paragraph (d)(6)(i)(B), 
the sixth line up from the bottom of the page is corrected to read, 
``Contribution, or $0x. Additionally, under paragraph (d)(1)(i)(C) of 
this section, Distributing adjusts its CAMT earnings resulting from the 
Controlled Split-Off by applying section 312. Under paragraph''.

[[Page 104913]]

    84. On page 75198, in the third column, in paragraph (d)(6)(ii)(A), 
the seventh line up from the bottom of the paragraph is corrected to 
read ``$200x, and additionally Controlled transfers $10x cash to''.
    85. On page 75198, in the third column, in paragraph 
(d)(6)(iii)(A), the seventh through third lines up from the bottom of 
the page are corrected to read ``$210x, and additionally Distributing 
receives $20x of cash. Distributing distributes only $15x of the cash 
received from Controlled to its shareholders.''.
    86. On page 75199, in the first column, in paragraph 
(d)(6)(iii)(B):
    i. In the second through seventh lines down from the top of the 
paragraph, the language, ``Distributing distributed Controlled 
securities with a fair market value of more than the adjusted basis of 
the property transferred to Controlled, resulting in gain to 
Distributing under section 361(b)(3),'' is removed and the language 
``Distributing did not purge all of the boot received from Controlled 
in the Contribution,'' is added in its place.
    ii. The ninth line down from the top of the paragraph is corrected 
to read ``is a covered recognition transaction. See paragraph 
(d)(6)(iii)(D) (Example 3) of this section.''.
    iii. The last line of the paragraph is corrected to read ``$190x. 
Under paragraph (d)(5)(i)(A) of this section, the Contribution is a 
covered recognition transaction to Controlled. Under paragraph 
(d)(5)(ii)(B) of this section Controlled's CAMT basis in the property 
received from Distributing is its AFS basis, or $210x.''.
    87. On page 75199, in the first column, in paragraph 
(d)(6)(iii)(C), the sixth line down from the top of the paragraph is 
corrected to read ``of this section (Example 1). Under paragraph 
(d)(1)(i)(C) of this section, Distributing adjusts its CAMT earnings 
resulting from the Controlled Split-Off by applying section 312. 
Under''.
    88. On page 75199, in the second column, in paragraph (e)(2)(ii), 
the fourth and third lines up from the bottom of the paragraph are 
corrected to read ``or security holder. See Sec.  1.56A-18(d) for 
rules''.
    89. On page 75201, in the third column, in paragraph (g)(4)(ii), in 
the third line up from the bottom of the paragraph, the language ``CAMT 
gain'' is corrected to read ``AFSI''.
    90. On page 75201, in the third column, the introductory text of 
paragraph (g)(4)(iii) is corrected to read as follows:
* * * * *
    (g) * * *
    (4) * * *
    (iii) Special CAMT basis limitation rule. If the requirements of 
paragraphs (g)(4)(iii)(A) through (C) of this section are satisfied, 
the section 351 transferee determines its CAMT basis under paragraph 
(g)(4)(ii) of this section in the property received from a section 351 
transferor by applying section 362 using the CAMT basis (in lieu of AFS 
basis) of that property, increased by the amount of gain recognized to 
the section 351 transferor on the transfer for regular tax purposes.
* * * * *
    91. On page 75202, in the first column, the introductory text of 
paragraph (g)(5)(iii) is corrected to read as follows:
* * * * *
    (g) * * *
    (5) * * *
    (iii) Special CAMT basis limitation rule. If the requirements of 
paragraphs (g)(5)(iii)(A) through (C) of this section are satisfied, 
the section 351 transferee determines its CAMT basis under paragraph 
(g)(5)(ii) of this section in the property received from a section 351 
transferor by applying section 362 using the CAMT basis (in lieu of AFS 
basis) of that property, increased by the amount of gain recognized to 
the section 351 transferor on the transfer for regular tax purposes.
* * * * *
    92. On page 75202, in the second column, in paragraph (g)(6), the 
last line of the introductory text is corrected to read ``of a tax 
consolidated group. Additionally, X is a section 351 transferor, and Y 
is a section 351 transferee.''.
    93. On page 75202, in the second column, in paragraph (g)(6)(i):
    i. The language ``Acquiror'' is removed, and the language ``X'' is 
added in its place, everywhere it appears.
    ii. The language ``Target'' is removed, and the language ``Y'' is 
added in its place everywhere it appears.
    94. On page 75202, in the second column, in paragraph 
(g)(6)(ii)(A):
    i. In the third line up from the bottom of the paragraph, the 
language ``Acquiror'' is corrected to read ``X''.
    ii. In the second line up from the bottom of the paragraph, the 
language ``Target'' is corrected to read ``Y''.
    95. On page 75202, in the second and third columns, paragraph 
(g)(6)(ii)(B) is corrected to read as follows:
* * * * *
    (g) * * *
    (6) * * *
    (ii) * * *
    (B) Analysis. The Exchange is a covered recognition transaction to 
each of X and Y. See paragraph (g)(1)(ii) of this section. Under 
paragraph (g)(3)(i) of this section, X redetermines its AFSI by 
computing any gain or loss using its CAMT basis in the assets 
transferred to Y, or $50x ($90x-$40x). Under paragraph (g)(3)(ii) of 
this section, X's CAMT basis in the Y stock received is its AFS basis, 
or $80x. Under paragraph (g)(3)(iii) of this section, X adjusts its 
CAMT retained earnings by the amount of AFSI resulting from the 
Exchange, or $50x. Because Y transfers only cash and stock to X in the 
Exchange, under paragraph (g)(5)(i) of this section, Y disregards any 
FSI resulting from the Exchange and instead determines AFSI using CAMT 
basis. Under paragraph (g)(5)(ii) of this section, Y determines its 
CAMT basis using its AFS basis in the property. Paragraph (g)(5)(iii) 
of this section does not apply. Under paragraph (g)(5)(iv) of this 
section, Y adjusts its CAMT retained earnings by the amount of AFSI 
recognized on the Exchange.
* * * * *
    96. On page 75202, in the third column, in paragraph 
(g)(6)(iii)(A):
    i. In the fourth line up from the bottom of the paragraph, the 
language ``X'' is corrected to read ``Z''.
    ii. The language ``Target'' is corrected to read ``Y'', everywhere 
it appears,
    97. On page 75202, in the third column, in paragraph 
(g)(6)(iii)(B):
    i. The language ``X'' is corrected to read ``Z'' everywhere it 
appears.
    ii. The language ``Acquiror'' is corrected to read ``X'' everywhere 
it appears.
    iii. The language ``Target'' is corrected to read ``Y'' everywhere 
it appears.
    98. On page 75202, in the third column, in paragraph (g)(6)(iv)(A):
    i. In the fourth line up from the bottom of the paragraph, the 
language ``Acquiror'' is corrected to read ``X''.
    ii. In the second line up from the bottom of the paragraph, the 
language ``Target'' is corrected to read ``Y''.
    99. On page 75202, in the third column, in paragraph (g)(6)(iv)(B):
    i. The second line down from the top of the paragraph is corrected 
to read ``transferred by Y to X in the''.
    ii. In the fifth line down from the top of the paragraph, the 
language ``Target'' is corrected to read ``Y''.
    iii. In the sixth line down from the top of the paragraph, the 
language ``Acquiror'' is corrected to read ``X''.
    iv. The last five lines of the page are corrected to read ``Y's 
CAMT basis in the assets received from X is determined under section 
362, using CAMT basis in lieu of AFS basis, increased by any gain 
recognized by X for regular tax purposes, or $45x ($40x + $5x).''.

[[Page 104914]]

    100. On page 75203, in the first column, the first two lines of the 
page are removed.


Sec.  1.56A-20  [Corrected]

    101. On page 75203, in the first column, in paragraph (a)(1), in 
the twelfth and thirteenth lines down from the top of the paragraph, 
the language ``sets forth the scope of this section and'' is removed.
    102. On page 75203, in the third column, in paragraph (c)(2)(i)(E), 
the eighth line down from the top of the paragraph is corrected to read 
``year and thus subject to depreciation or amortization in''.
    103. On page 75203, in the third column, the paragraph heading of 
paragraph (c)(2)(ii) is corrected to read ``(ii) Inclusion of deferred 
sale gain or loss upon a decrease in contributor's distributive share 
percentage--(A) In general.''.
    104. On page 75204, in the first column, in paragraph 
(c)(2)(ii)(A), the fifth line up from the bottom of the paragraph is 
corrected to read ``(c)(2)(ii) as a result of a decrease in the''.
    105. On page 75204, in the second column, the paragraph heading of 
paragraph (c)(2)(iv) is corrected to read ``(iv) Inclusion of deferred 
sale gain upon an acceleration or partial acceleration event described 
in Sec.  1.721(c)-4(b) or Sec.  1.721(c)-5(d).''.
    106. On page 75204, in the third column, in paragraph 
(c)(3)(ii)(B), the second and third lines of the paragraph are 
corrected to read ``causing the deferred sale gain or loss to be 
accelerated into AFSI in''.
    107. On page 75205, in the second column, in paragraph 
(d)(1)(ii)(C), in the fourth line down from the top of the page, the 
word ``sale'' is corrected to read ``distribution''.
    108. On page 75205, in the second column, in paragraph 
(d)(1)(ii)(D), in the second to last line of the paragraph, the word 
``sale'' is corrected to read ``distribution''.
    109. On page 75205, in the second column, in paragraph 
(d)(1)(ii)(E), in the fourth line up from the bottom of the paragraph, 
the word ``sale'' is corrected to read ``distribution''.
    110. On page 75206, in the third column, paragraph (g)(2)(i)(C) is 
corrected to read, ``(C) The date on which an acceleration event or 
partial acceleration event described in Sec.  1.721(c)-4(b) or Sec.  
1.721(c)-5(d), respectively, occurred; and''.
    111. On page 75207, in the third column, in paragraph 
(h)(3)(ii)(B), in the second line down from the top of the page, the 
number ``$437.5'' is corrected to read ``$437.5x''.
    112. On page 75207, in the third column, in paragraph (h)(5)(ii), 
in the second and tenth lines up from the bottom of the paragraph, the 
number ``$5,000'' is corrected to read ``$5,000x''.


Sec.  1.56A-21  [Corrected]

    113. On page 75209, in the third column, in paragraph (b)(3)(iii):
    i. The last line of the introductory text is corrected to read 
``indebtedness of the CAMT entity that results from--``.
    ii. Paragraph (b)(3)(iii)(A) is removed.
    iii. Paragraph (b)(3)(iii)(B) is redesignated as new paragraph 
(b)(3)(iii)(A) and the first line of the newly redesignated paragraph 
is corrected to read ``(A) The satisfaction''.
    iv. Paragraph (b)(3)(iii)(C) is redesignated as new paragraph 
(b)(3)(iii)(B) and the first line of the newly redesignated paragraph 
is corrected to read ``(B) The satisfaction''.
    114. On page 75210, in the third column, in the first partial 
paragraph, paragraph (c)(4)(iv)(A), in the last line of the paragraph, 
the language ``See Sec.  1.56A-1(d)(3).'' is removed.
    115. On page 75211, in the first column, paragraph (c)(6) is 
redesignated as paragraph (c)(7) and new paragraph (c)(6) is added to 
read as follows:
* * * * *
    (c) * * *
    (6) Exclusion from AFSI. For purposes of determining the AFSI of a 
CAMT entity, the CAMT entity disregards the total amount of income 
reflected in its FSI resulting solely from the discharge of 
indebtedness of the CAMT entity to the extent that payment of the 
liability would have given rise to a direct reduction in AFSI.
* * * * *
    116. On page 75211, in the first column, in newly redesignated 
paragraph (c)(7), the last line of the introductory text is corrected 
to read ``of a tax consolidated group, and the exclusion in paragraph 
(c)(6) of this section does not apply.''.
    117. On page 75211, in the first column, in newly redesignated 
paragraph (c)(7)(i)(A), the third line up from the bottom of the 
paragraph is corrected to read ``the discharge of indebtedness. X has 
no other items of income, gain, deduction, or loss for its 2024 taxable 
year. Y''.
    118. On page 75211, in the second column, in newly redesignated 
paragraph (c)(7)(ii)(A), in the fourth line down from the top of the 
paragraph, the language ``paragraph (c)(6)(i)(A)'' is corrected to read 
``paragraph (c)(7)(i)(A)''.
    119. On page 75211, in the third column, in newly redesignated 
paragraph (c)(7)(iv)(A), in the fifth line down from the top of the 
paragraph, the language ``(c)(6)(iii)(A)'' is corrected to read 
``(c)(7)(iii)(A)''.
    120. On page 75211, in the third column, in newly redesignated 
paragraph (c)(7)(iv)(B), the tenth line down from the top of the 
paragraph is corrected to read ``of computing its AFSI. See id. X then 
uses its FSNOL to reduce its AFSI by $120x. See Sec.  1.56A-23(c). 
X's''
    121. On page 75211, in the third column, in paragraph (d)(2)(i), 
the last line on the page is corrected to read ``General rule. Solely 
with regard to the''.
    122. On page 75212, in the first column, in paragraph (d)(2)(i), 
the first five lines of the page are corrected to read ``emergence from 
bankruptcy by a CAMT entity, the CAMT entity determines its CAMT 
consequences resulting from that emergence (and not as the result of a 
discharge of indebtedness or covered recognition transaction, as 
provided in paragraphs (d)(2)(ii) and (iii) of this section) by--''.


Sec.  1.56A-22  [Corrected]

    123. On page 75214, in the first column, in paragraph (c)(2)(ii), 
in the eleventh line up from the bottom of the paragraph, the word 
``section'' is removed.


Sec.  1.56A-23  [Corrected]

    124. On page 75215, in the third column, paragraph (e)(2)(i) is 
corrected to read ``(i) A transaction described in section 381(a) of 
the Code; or''.
    125. On page 75216, in the first column, in paragraph (e)(3)(i)(B), 
the last line of the paragraph is corrected to read ``section and the 
exceptions in paragraph (e)(3)(v) of this section.''.
    126. On page 75216, in the third column, the paragraph heading of 
paragraph (e)(4)(i) is corrected to read ``(i) Example 1: Acquisition 
of Target stock followed by contribution--''.
    127. On page 75216, in the third column, in paragraph (e)(4)(i)(A):
    i. In the seventh line up from the bottom of the paragraph, the 
language ``assets'' is corrected to read ``assets that do not 
constitute a line of business''.
    ii. In the sixth line up from the bottom of the paragraph, the 
language ``(Expansion)'' is corrected to read ``(Contribution)''.
    iii. In the fifth line up from the bottom of the paragraph, the 
language ``Expansion'' is corrected to read ``Contribution''.
    128. On page 75218, in the second column, in paragraph (f)(4)(iii), 
in the third line up from the bottom of the paragraph, the language 
``RBIL'' is

[[Page 104915]]

corrected to read ``recognized built-in loss''.
    129. On page 75218, in the second column, in paragraph (f)(5)(i);
    i. In the eighth line up from the bottom of the paragraph, the 
language ``an unrealized loss'' is corrected to read ``a built-in 
loss''.
    ii. In the sixth line up from the bottom of the paragraph, the 
language ``an unrealized gain'' is corrected to read ``a built-in 
gain''.


Sec.  1.56A-26  [Corrected]

    130. On page 75221, in the third column, in paragraph (d)(1), the 
fourth and fifth lines up from the bottom of the paragraph are 
corrected to read, ``CAMT entity must adjust its AFSI with respect to 
that transaction to reflect''.


Sec.  1.59-2  [Corrected]

    131. On page 75223, in the third column, in paragraph 
(c)(2)(ii)(B), in the sixth line down from the top of the paragraph, 
the language ``(c)(2)(i)(C)'' is corrected to read ``(c)(2)(ii)(C)''.
    132. On page 75226, in the first and second columns, paragraph 
(f)(2)(i) is corrected to read as follows:
* * * * *
    (f) * * *
    (2) * * *
    (i) In general--(A) Corporation experiencing ownership change. For 
purposes of paragraph (f)(1) of this section, if a corporation 
experiences a change in ownership during a taxable year that results in 
the corporation and a person no longer being treated as related under 
the relevant relationship criteria, then following the change in 
ownership--
    (1) The corporation retains its AFSI for any relevant period prior 
to the change in ownership to determine whether the corporation meets 
the average annual AFSI test (as described in paragraph (c) of this 
section) for the taxable year in which the change in ownership occurs 
or for any subsequent taxable year; but
    (2) The corporation does not include that person's AFSI in the 
corporation's AFSI for any period prior to the change in ownership 
(notwithstanding that the corporation and the person were treated as 
related under the relevant relationship criteria during some, or all, 
of that period) to determine whether the corporation meets the average 
annual AFSI test for the taxable year in which the change in ownership 
occurs or for any subsequent taxable year in which the corporation and 
the person are not treated as related under the relevant relationship 
criteria.
    (B) Person related to corporation following ownership change. 
Following a corporation's change in ownership, each person treated as 
related to the corporation under the relevant relationship criteria 
determines whether it meets the average annual AFSI test (if 
applicable) for the taxable year in which the change in ownership 
occurs or for any subsequent taxable year by separately applying the 
rules in this paragraph (f). For example, such person does not include 
the corporation's AFSI in the person's AFSI for any relevant period 
prior to the corporation's change in ownership if the corporation and 
the person were never previously related under the relevant 
relationship criteria. For the avoidance of doubt, such person includes 
the corporation's AFSI in its AFSI for any relevant period following 
the change in ownership during which the parties are related under the 
relevant relationship criteria, unless paragraph (f)(2)(i)(A) of this 
section applies.
    (C) Change in ownership. For purposes of paragraphs (f)(2)(i)(A) 
and (B) of this section, a corporation experiences a change in 
ownership during a taxable year of the corporation if--
    (1) The corporation is not a test group parent (as defined in 
paragraph (b)(7) of this section);
    (2) The corporation is treated as related to a test group parent 
under the relevant relationship criteria as of the first day of the 
taxable year; and
    (3) As a result of a transaction (or series of related 
transactions) the corporation and the test group parent no longer 
satisfy the relevant relationship criteria as of the last day of the 
taxable year.
* * * * *
    133. On page 75227, in the first, second, and third columns, in 
paragraphs (f)(3)(i)(D) and (E) and (f)(3)(ii)(C), the reference 
``(b)(6)'' is corrected to read, ``(b)(7)'', everywhere it appears.
    134. On page 75228, in the first column, in paragraph 
(g)(2)(iii)(B), the second and third lines down from the top of the 
paragraph are corrected to read, ``than the AFSI adjustments in 
Sec. Sec.  1.56A-8(b), 1.56A-14, and, solely for purposes of''.


Sec.  1.1502-56A  [Corrected]

    135. On page 75238, in the second column, in paragraph (d)(3)(i):
    i. The fifth and sixth lines up from the bottom of the paragraph 
are corrected to read, ``beginning after December 31, 2019. For each 
share of stock of a''.
    ii. The second line up from the bottom of the paragraph is 
corrected to read ``(shareholder member) on the first day of the first 
taxable year beginning after December 31, 2019, the CAMT basis of such 
share equals the sum''.
    136. On page 75238, in the second column, in paragraph (d)(3)(ii):
    i. In the fifth line up from the bottom of the paragraph, the 
language ``The CAMT basis in a'' is corrected to read ``For each''.
    ii. The last line of the paragraph is corrected to read 
``consolidated group after the first day of the first taxable year 
beginning after December 31, 2019, the CAMT basis of such share equals 
the sum of:''.
    137. On page 75238, in the second column, in paragraph 
(d)(3)(iii)(A), in the fourth line up from the bottom of the page, the 
word ``including'' is corrected to read ``incorporating''.
    138. On page 75239, in the first column, in paragraph (e)(4)(i)(B), 
the third line up from the bottom of the paragraph is corrected to read 
``elimination)). Accordingly, the P Group's''.
    139. On page 75240, in the third column, in paragraph (f)(6)(ii), 
the sixth and fifth lines up from the bottom of the paragraph are 
corrected to read ``apportioned to M2 (($20x/($20x + $40x + $5x)) x 
$55x = $16.9x). See''.
    140. On page 75243, in the first column, in paragraph (j)(3)(ii), 
the second to last and last lines of the paragraph are corrected to 
read ``is apportioned to T (($200x/($200x + $1,000x)) x $165x = 
$27.5x).''.

Kalle L. Wardlow,
Federal Register Liaison, Publications & Regulations Section, Associate 
Chief Counsel, (Procedure and Administration).
[FR Doc. 2024-29958 Filed 12-23-24; 8:45 am]
BILLING CODE 4830-01-P