Federal Register / Vol. 69, No. 200 / Monday, October 18, 2004 / Rules and Regulations 61309

Inspection To Determine Actuator Part and 

Serial Numbers 

(g) Within 50 flight hours after the effective 

date of this AD, do a one-time general visual 

inspection of the left and right aileron and 

elevator actuators to determine the part 

number (P/N) and serial number (S/N) of 

each actuator, in accordance with the 

applicable alert customer bulletin.

Note 2: For the purposes of this AD, a 

general visual inspection is: ‘‘A visual 

examination of an interior or exterior area, 

installation, or assembly to detect obvious 

damage, failure, or irregularity. This level of 

inspection is made from within touching 

distance unless otherwise specified. A mirror 

may be necessary to ensure visual access to 

all surfaces in the inspection area. This level 

of inspection is made under normally 

available lighting conditions such as 

daylight, hangar lighting, flashlight, or 

droplight and may require removal or 

opening of access panels or doors. Stands, 

ladders, or platforms may be required to gain 

proximity to the area being checked.’’

Initial and Repetitive Actuator Inspections 

and Corrective Action 

(h) For any actuator identified during the 

inspection required by paragraph (g) of this 

AD with a P/N and S/N listed in the 

applicable alert customer bulletin, and for 

actuators for which the P/N and/or S/N were 

missing or unreadable: Before further flight, 

do a detailed inspection of each identified 

actuator to detect a broken damper shaft, in 

accordance with the applicable alert 

customer bulletin.

Note 3: For the purposes of this AD, a 

detailed inspection is: ‘‘An intensive 

examination of a specific item, installation, 

or assembly to detect damage, failure, or 

irregularity. Available lighting is normally 

supplemented with a direct source of good 

lighting at an intensity deemed appropriate. 

Inspection aids such as mirror, magnifying 

lenses, etc., may be necessary. Surface 

cleaning and elaborate procedures may be 

required.’’

(1) If no damper shaft is found broken: 

Repeat the inspection required by paragraph 

(h) of this AD thereafter at intervals not to 

exceed 500 flight hours or 12 months, 

whichever occurs first. 

(2) If any damper shaft is found broken: 

Before further flight, do the action specified 

in paragraph (h)(2)(i) or (h)(2)(ii) of this AD, 

in accordance with the applicable alert 

customer bulletin. 

(i) Replace the actuator with a new or 

serviceable actuator having a P/N and S/N 

listed in the applicable alert customer 

bulletin, provided the new or serviceable 

actuator has been inspected in accordance 

with the requirements of paragraph (h) of this 

AD. Thereafter, repeat the inspection 

required by paragraph (h) of this AD at 

intervals not to exceed 500 flight hours or 12 

months, whichever occurs first. 

(ii) Replace the actuator with a new or 

serviceable actuator having a P/N and/or S/

N not listed in the applicable alert customer 

bulletin. This replacement terminates the 

requirements of this AD for that actuator 

only. 

Optional Terminating Action 

(i) Replacement of all suspect actuators 

with new or serviceable actuators having a P/

N and/or S/N not listed in the applicable 

alert customer bulletin terminates the 

requirements of this AD. 

Reporting Requirement 

(j) Submit a report of any broken damper 

shafts to the Manager, Atlanta Aircraft 

Certification Office (ACO), FAA, Small 

Airplane Directorate, One Crown Center, 

1895 Phoenix Boulevard, suite 450, Atlanta, 

Georgia 30349; fax (770) 703–6097. The 

report must be done at the applicable time 

specified in paragraph (j)(1) or (j)(2) of this 

AD. The report must include the inspection 

date, the airplane model and S/N, the 

actuator position (left or right aileron or 

elevator), and the actuator P/N and S/N. 

Information collection requirements 

contained in this AD have been approved by 

the Office of Management and Budget (OMB) 

under the provisions of the Paperwork 

Reduction Act of 1980 (44 U.S.C. 3501 et 

seq.) and have been assigned OMB Control 

Number 2120–0056. 

(1) If the inspection required by paragraph 

(h) of this AD was done after the effective 

date of this AD: Submit the report within 10 

days after the inspection. 

(2) If the inspection required by paragraph 

(h) of this AD was done before the effective 

date of this AD: Submit the report within 10 

days after the effective date of this AD. 

Parts Installation 

(k) As of the effective date of this AD, no 

person may install an aileron or elevator 

actuator having a P/N and S/N specified in 

the applicable alert customer bulletin, on any 

airplane, unless the actuator has been 

inspected according to paragraph (h) of this 

AD. 

Special Flight Permit 

(l) Special flight permits (14 CFR 21.197 

and 21.199) are not allowed. 

Alternative Methods of Compliance 

(AMOCs) 

(m) The Manager, Atlanta ACO, FAA, has 

the authority to approve AMOCs for this AD, 

if requested in accordance with the 

procedures found in 14 CFR 39.19. 

Material Incorporated by Reference 

(n) You must use the service information 

that is specified in Table 2 of this AD to 

perform the actions that are required by this 

AD, unless the AD specifies otherwise.

TABLE 2.—MATERIAL INCORPORATED BY REFERENCE

Alert customer bulletin— Revision— Dated—

Gulfstream GII/GIIB Alert Customer Bulletin 29A ............................................................................................... A August 23, 2004. 

Gulfstream GIII Alert Customer Bulletin 15A ....................................................................................................... A August 23, 2004. 

Gulfstream GIV Alert Customer Bulletin 32A ...................................................................................................... A August 23, 2004. 

Gulfstream G300 Alert Customer Bulletin 32A .................................................................................................... A August 23, 2004. 

Gulfstream G400 Alert Customer Bulletin 32A .................................................................................................... A August 23, 2004. 

The Director of the Federal Register 

approves the incorporation by reference of 

those documents in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. For copies of the 

service information, contact Gulfstream 

Aerospace Corporation, P.O. Box 2206, Mail 

Station D–10, Savannah, Georgia 31402–

9980. You can review copies at the Docket 

Management Facility, U.S. Department of 

Transportation, 400 Seventh Street SW., 

room PL–401, Nassif Building, Washington, 

DC; or at the National Archives and Records 

Administration (NARA). For information on 

the availability of this material at NARA, call 

(202) 741–6030, or go to http://

www.archives.gov/federal_register/

code_of_federal_regulations/

ibr_locations.html.

Issued in Renton, Washington, on October 

4, 2004. 

Kalene C. Yanamura, 

Acting Manager, Transport Airplane 

Directorate, Aircraft Certification Service.

[FR Doc. 04–23027 Filed 10–15–04; 8:45 am] 

BILLING CODE 4910–13–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service 

26 CFR Parts 1 and 602 

[TD 9144] 

RIN 1545–BA75 

Statutory Options; Correction

AGENCY: Internal Revenue Service (IRS), 

Treasury.

ACTION: Correcting amendment.

SUMMARY: This document corrects final 

regulations (TD 9144) that were 

61310 Federal Register / Vol. 69, No. 200 / Monday, October 18, 2004 / Rules and Regulations 

published in the Federal Register on 

Tuesday, August 3, 2004 (69 FR 46401). 

The document contains final 

regulations relating to statutory options. 

These final regulations affect certain 

taxpayers who participate in the transfer 

of stock pursuant to the exercise of 

incentive stock options and the exercise 

of options granted pursuant to an 

employee stock purchase plan (statutory 

options).

DATES: This document is effective on 

August 3, 2004.

FOR FURTHER INFORMATION CONTACT:

Erinn Madden, (202) 622–6030 (not a 

toll-free number).

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations (TD 9144) that is 

the subject of this correction are under 

sections 421, 422, and 424 of the 

Internal Revenue Code. 

Need for Correction 

As published, the final regulations 

(TD 9144) contains errors that may 

prove to be misleading and are in need 

of clarification.

List of Subjects 

26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

26 CFR Part 602 

Reporting and recordkeeping 

requirements.

Correction of Publication

■ Accordingly, 26 CFR parts 1 and 602 

are corrected by making the following 

correcting amendments:

PART 1—INCOME TAXES

■ Paragraph 1. The authority citation for 

part 1 continues to read in part as 

follows:

Authority: 26 U.S.C. 7805 * * *

§ 1.421–1 [Corrected]

■ 1. Section 1.421–1(g), fifth sentence, 

the language ‘‘See § 1.422–1(b)(3) 

Example 3.’’ is removed and the 

language ‘‘See § 1.422–1(b)(3) Example 

2.’’ is added in its place.

■ 2. Section 1.421–1(j)(2), third sentence, 

the language ‘‘For statutory options 

granted after June 9, 2003, and before the 

earlier of January 1, 2006, or the first 

regularly scheduled stockholders 

meeting on the granting corporation 

occurring 6 month after August 3, 2004, 

taxpayers may rely on either the REG–

122917–02 or this section.’’ is removed 

and the language ‘‘For statutory options 

granted after June 9, 2003, and before the 

earlier of January 1, 2006, or the first 

regularly scheduled stockholders 

meeting of the granting corporation 

occurring at least 6 months after August 

3, 2004, taxpayers may rely on either the 

REG–122917–02 or this section.’’ is 

added in its place.

§ 1.421–2 [Corrected]

■ 3. Section 1.421–2(f)(2), second 

sentence, the language ‘‘For statutory 

options granted after June 9, 2003, and 

before the earlier of January 1, 2006, or 

the first regularly scheduled 

stockholders meeting of the granting 

corporation occurring 6 months after 

August 3, 2004, taxpayers may rely on 

either the REG–122917–02 or this 

section.’’ is removed and the language 

‘‘For statutory options granted after June 

9, 2003, and before the earlier of January 

1, 2006, or the first regularly scheduled 

stockholders meeting of the granting 

corporation at least 6 months after 

August 3, 2004, taxpayers may rely on 

either the REG–122917–02 or section.’’ is 

added in its place.

§ 1.422–1 [Corrected]

■ 4. Section 1.422–1(b)(3), example 2, 

fourth sentence, the language 

‘‘Additionally, at the time of the 

disposition, section 422 and § 1.422–1(a) 

no longer apply, and thus, section 83(a) 

is used to measure the consequences of 

the disposition.’’ is removed and the 

language ‘‘Additionally, at the time of 

the disposition, section 422 and § 1.422–

1a) no longer apply, and thus, section 

83(a) is used to measure the 

consequences of the disposition and the 

holding period for capital gain purposes 

begin on the vesting date, six months 

after exercise.’’ is added in its place.

§ 1.422–5 [Corrected]

■ 5. Section 1.422–5(e), tenth sentence, 

the language ‘‘Under the rules of 

paragraph (b)(3) of this section, A has 

sold all 60 of the non-section-1036 shares 

and 15 of the 40 section-1036 shares.’’ is 

removed and the language ‘‘Under the 

rules of paragraph (b)(2) and (b)(3) of this 

section, A has sold all 60 of the nonsection-1036 shares and 15 of the 40 

section-1036 shares.’’ is added in its 

place.

■ 6. Section 1.422–5(f)(2), third 

sentence, the language ‘‘For statutory 

options granted after June 9, 2003, and 

before the earlier of January 1, 2006, or 

the first regularly scheduled 

stockholders meeting of the granting 

corporation occurring 6 months after 

August 3, 2004, taxpayers may rely on 

either the REG–122917–02 or this 

section.’’ is removed and the language 

‘‘For statutory options granted after June 

9, 2003, and before the earlier of January 

1, 2006, or the first regularly scheduled 

stockholders meeting of the granting 

corporation occurring at least 6 months 

after August 3, 2004, taxpayers may rely 

on either the REG–122917–02 or this 

section.’’ is added in its place.

§ 1.424–1 [Corrected]

■ 7. Section 1.424–1(a)(3)(ii), first 

sentence, the language ‘‘A distribution 

(excluding an ordinary dividend or a 

stock split or stock dividend described in 

§ 1.424–1(e)(v)) or change in the terms or 

number of outstanding shares of such 

corporation; and’’ is removed and the 

language ‘‘A distribution (excluding an 

ordinary dividend or a stock split or 

stock dividend described in § 1.424–

1(e)(4)(v)) or change in the terms or 

number of outstanding shares of such 

corporation; and’’ is added in its place.

■ 8. Section 1.424–1(a)(10), Example 8, 

sixth sentence, the language ‘‘Based on 

these facts, a new option to purchase 200 

shares of Y at an option price of $25 per 

share could be granted to E in complete 

substitution of E’s old option.’’ is 

removed and the language ‘‘Based on 

these facts, and new option to purchase 

200 shares of Y at an option price of $25 

per share could be granted to E in 

complete substitution of E’s old option. 

In the alternative, it would also be 

permissible in connection with the spin 

off, to grant E a new option to purchase 

100 shares of Y, at an option price of $25 

per share, and E retains an option to 

purchase 100 shares of X under the old 

option, with the option price adjusted to 

$25. However, because X is no longer a 

related corporation with respect to Y, E 

must exercise the option for 100 shares 

of X within three months from the date 

of the spin off for the option to be treated 

as a statutory option. See § 1.421–1(h).’’

is added in its place.

■ 9. Section 1.424–1(a)(10), paragraph 

(iii) of Example 9, third sentence, the 

language ‘‘Because the amendment of the 

plan to allow options on a different stock 

is considered the adoption of a new plan 

under § 1.422–2(b)(2)(iii), the 

stockholders of X must approve the plan 

within 12 months before or after the date 

of the amendment of the plan.’’ is 

removed and the language ‘‘Because the 

amendment of the plan to allow options 

on a different stock is considered the 

adoption of a new plan under § 1.422–

2(b)(2)(iii), the stockholders of Y must 

approve the plan within 12 months 

before or after the date of the amendment 

of the plan.’’ is added in its place.

■ 10. Section 1.424–1(a)(10), paragraph 

(iii) of Example 9, fourth sentence, the 

language ‘‘If the stockholders of X timely 

approve the plan, the future grants to 

acquire Y stock will be incentive stock 

options (assuming the other 

Federal Register / Vol. 69, No. 200 / Monday, October 18, 2004 / Rules and Regulations 61311

requirements of § 1.422–2 have been 

met).’’ is removed and the language ‘‘If 

the stockholders of Y timely approve the 

plan, the future grants to acquire Y stock 

will be incentive stock options 

(assuming the other requirements of 

§ 1.422–2 have been met).’’ is added in 

its place.

■ 11. Section 1.424–1(c)(4)(vi), the last 

sentence is removed.

■ 12. Section 1.424–1(c)(4)(viii), second 

sentence, the language ‘‘Thus, for 

example, if the terms of an option are 

inadvertently changed on March 1 to 

extend the exercise period and the 

change is removed on November, then if 

the option is not exercised prior to 

November 1, the option is not considered 

modified under this paragraph (e).’’ is 

removed and the language ‘‘Thus for 

example, if the terms of an option are 

inadvertently changed on March 1 to 

extend the exercise period and the 

change is removed on November 1, then 

if the option is not exercised prior to 

November 1, the option is not considered 

modified under this paragraph (e).’’ is 

added in its place.

■ 13. Section 1.424–1(g)(2), third 

sentence, the language ‘‘For statutory 

options granted after June 9, 2003, and 

before the earlier of January 1, 2006, or 

the first regularly scheduled 

stockholders meeting of the granting 

corporation occurring 6 months after 

August 3, 2004, taxpayers may rely on 

either the REG–122917–02 or this 

section.’’ is removed and the language 

‘‘For statutory options granted after June 

9, 2003, and before the earlier of January 

1, 2006, or the first regularly scheduled 

stockholders meeting of the granting 

corporation occurring at least 6 months 

after August 3, 2004, taxpayers may rely 

on either the REG–122917–02 or this 

section.’’ is added in its place.

§ 1.6039–1 [Corrected]

■ 14. Section 1.6039–1(g)(2), second 

sentence, the language ‘‘For statutory 

options transferred after June 9, 2003, 

and before the earlier of January 1, 2006, 

or the first regularly scheduled 

stockholders meeting of the granting 

corporation occurring 6 months after 

August 3, 2004, taxpayers may rely on 

either REG–122917–02 or this section.’’

is removed and the language ‘‘For 

statutory options transferred after June 9, 

2003, and before the earlier of January 1, 

2006, or the first regularly scheduled 

stockholders meeting of the granting 

corporation occurring at least 6 months 

after August 3, 2004, taxpayers may rely 

on either REG–122917–02 or this 

section.’’ is added in its place.

PART 602—OMB CONTROL NUMBERS 

UNDER THE PAPERWORK 

REDUCTION ACT

■ Par. 2. The authority citation for part 

602 continues to read as follows:

Authority: 26 U.S.C. 7805.

§ 602.101 [Corrected]

■ 15. Section 602.101(b) is amended by 

adding the entry ‘‘1.422–1 * * * 1545–

0820’’ to the table in numerical order.

Cynthia E. Grigsby, 

Acting Chief, Publications and Regulations 

Branch, Legal Processing Division, Associate 

Chief Counsel, (Procedures and 

Administration).

[FR Doc. 04–22858 Filed 10–15–04; 8:45 am] 

BILLING CODE 4830–01–P

DEPARTMENT OF DEFENSE

Department of the Navy 

32 CFR Part 706

Certifications and Exemptions Under 

the International Regulations for 

Preventing Collisions at Sea, 1972

AGENCY: Department of the Navy, DoD.

ACTION: Final rule.

SUMMARY: The Department of the Navy 

is amending its certifications and 

exemptions under the International 

Regulations for Preventing Collisions at 

Sea, 1972 (72 COLREGS), to reflect that 

the Deputy Assistant Judge Advocate 

General (Admiralty and Maritime Law) 

has determined that USS VIRGINIA 

(SSN 774) is a vessel of the Navy which, 

due to its special construction and 

purpose, cannot fully comply with 

certain provisions of the 72 COLREGS 

without interfering with its special 

function as a naval ship. The intended 

effect of this rule is to warn mariners in 

waters where 72 COLREGS apply.

DATES: Effective January 12, 2004.

FOR FURTHER INFORMATION CONTACT:

Commander Scott A. Kenney, JAGC, 

U.S. Navy, Deputy Assistant Judge 

Advocate General (Admiralty and 

Maritime Law), Office of the Judge 

Advocate General, Department of the 

Navy, 1322 Patterson Ave., SE., Suite 

3000, Washington Navy Yard, DC 

20374–5066, Telephone number: (202) 

685–5040.

SUPPLEMENTARY INFORMATION: Pursuant 

to the authority granted in 33 U.S.C. 

1605, the Department of the Navy 

amends 32 CFR part 706. This 

amendment provides notice that the 

Deputy Assistant Judge Advocate 

General (Admiralty) of the Navy, under 

authority delegated by the Secretary of 

the Navy, has certified that USS 

VIRGINIA (SSN 774) is a vessel of the 

Navy which, due to its special 

construction and purpose, cannot 

comply fully with the following specific 

provisions of 72 COLREGS without 

interfering with its special function as a 

naval ship: Rule 21(c), pertaining to the 

arc of visibility of the sternlight; Annex 

I, section 2(a)(i), pertaining to the height 

of the masthead light; Annex I, section 

2(k), pertaining to the height and 

relative positions of the anchor lights; 

and Annex I, section 3(b), pertaining to 

the location of the sidelights. The 

Deputy Assistant Judge Advocate 

General (Admiralty) has also certified 

that the aforementioned lights are 

located in closest possible compliance 

with the applicable 72 COLREGS 

requirements. 

Moreover, it has been determined, in 

accordance with 32 CFR parts 296 and 

701, that publication of this amendment 

for public comment prior to adoption is 

impracticable, unnecessary, and 

contrary to public interest since it is 

based on technical findings that the 

placement of lights on this vessel in a 

manner differently from that prescribed 

herein will adversely affect the vessel’s 

ability to perform its military functions.

List of Subjects in 32 CFR Part 706

Marine safety, Navigation (water), and 

Vessels.

■ Accordingly, 32 CFR part 706 is 

amended as follows:

PART 706—[AMENDED]

■ 1. The authority citation for 32 CFR 

part 706 continues to read as follows:

Authority: 33 U.S.C. 1605.

■ 2. Table One of § 706.2 is amended by 

adding, in numerical order, the following 

entry for the USS VIRGINIA:

§ 706.2 Certifications of the Secretary of 

the Navy under Executive Order 11964 and 

33 U.S.C. 1605.

* * * * *