31078 Federal Register / Vol. 65, No. 95 / Tuesday, May 16, 2000 / Rules and Regulations

of Y in satisfaction of the deferred

compensation obligation.

(ii) In this Example 10, X is considered to

be the grantor of the trust, and, under section

677, X is also the owner of the trust. Any

income earned by the trust would be

reflected on X’s income tax return. Y is not

considered a grantor or owner of the trust

corpus at the time X transfers X stock to the

trust. In Year 5, when employees of Y receive

X stock in satisfaction of the deferred

compensation obligation, no gain or loss is

recognized on the deemed disposition of the

X stock by Y. Immediately before Y’s deemed

disposition of the X stock, Y is treated as

purchasing the X stock from X for fair market

value using cash contributed to Y by X.

Under section 358, X’s basis in its Y stock

increases by the amount of cash deemed

contributed.

(f) Effective date. This section applies

to transfers of stock or stock options of

the issuing corporation occurring on or

after May 16, 2000.

Par. 5. In § 1.1502–13, paragraph

(f)(6)(v) is amended by adding a

sentence after the first sentence to read

as follows:

§ 1.1502–13 Intercompany transactions.

* * * * *

(f) * * *

(6) * * *

(v) Effective date. * * * However,

paragraph (f)(6)(ii) of this section and

the last sentence of paragraph

(f)(6)(iv)(A) of this section do not apply

to dispositions of P stock or options

occurring on or after May 16, 2000.

* * * * *

Approved: May 5, 2000.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

Jonathan Talisman;

Assistant Secretary of the Treasury.

[FR Doc. 00–11900 Filed 5–11–00; 2:30 pm]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8882]

RIN 1545–AV86

Reorganizations; Nonqualified

Preferred Stock

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations relating to nonqualified

preferred stock and rights to acquire

nonqualified preferred stock. The

regulations are necessary to reflect

changes to the law concerning these

instruments that were made by the

Taxpayer Relief Act of 1997. The

regulations affect shareholders who

receive nonqualified preferred stock, or

rights to acquire such stock, in certain

corporate reorganizations and divisions.

EFFECTIVE DATE: These regulations are

effective May 16, 2000.

FOR FURTHER INFORMATION CONTACT:

Michael J. Danbury, (202) 622–7750 (not

a toll-free number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of

Provisions

On January 6, 1998, a temporary

regulation (TD 8753) was published in

the Federal Register (63 FR 411). A

notice of proposed rulemaking (REG–

121755–97) cross-referencing the

temporary regulation was published in

the Federal Register (63 FR 453) on the

same day.

The temporary regulation provided

that, notwithstanding

contemporaneously issued final

regulations treating certain rights to

acquire stock as securities that can be

received tax-free in corporate

reorganizations and divisions,

nonqualified preferred stock (as defined

in section 351(g)(2) of the Internal

Revenue Code) (NQPS), or a right to

acquire NQPS, will in some

circumstances not be treated as stock or

securities for purposes of sections 354,

355, and 356. The temporary regulation

added § 1.356–6T, and applied to NQPS

received in connection with a

transaction occurring on or after March

9, 1998 (other than certain

recapitalizations of family-owned

corporations and transactions described

in section 1014(f)(2) of the Taxpayer

Relief Act of 1997, Public Law 105–34,

111 Stat. 788, 921). No written

comments responding to the notice of

proposed rulemaking were received,

and no public hearing was requested or

held.

The regulation proposed by REG–

121755–97 is adopted by this Treasury

decision, and the corresponding

temporary regulation is removed. Crossreferences to the temporary regulation

in §§ 1.354–1(e), 1.355–1(c), and 1.356–

3(b) have been removed and replaced

with cross-references to the final

regulation at § 1.356–6.

Special Analyses

It has been determined that this

Treasury decision is not a significant

regulatory action as defined in

Executive Order 12866. Therefore, a

regulatory assessment is not required. It

has also been determined that section

553(b) of the Administrative Procedure

Act (5 U.S.C. chapter 5) does not apply

to these regulations. 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) of the Internal Revenue

Code, the notice of proposed rulemaking

preceding these regulations was

submitted to the Chief Counsel for

Advocacy of the Small Business

Administration for comment on its

impact on small business.

Drafting Information

The principal author of these

regulations is Michael J. Danbury of the

Office of Assistant Chief Counsel

(Corporate). However, other personnel

from the IRS and Treasury participated

in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by adding an entry

in numerical order to read in part as

follows:

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

Section 1.356–6 also issued under 26

U.S.C. 351(g)(4). * * *

§ 1.354–1 [Amended]

Par. 2. In § 1.354–1, paragraph (e),

first sentence, the language ‘‘§ 1.356–

6T’’ is removed and ‘‘§ 1.356–6’’ is

added in its place.

§ 1.355–1 [Amended]

Par. 3. In § 1.355–1, paragraph (c),

first sentence, the language ‘‘§ 1.356–

6T’’ is removed and ‘‘§ 1.356–6’’ is

added in its place.

§ 1.356–3 [Amended]

Par. 4. In § 1.356–3, paragraph (b),

first sentence, the language ‘‘§ 1.356–

6T’’ is removed and ‘‘§ 1.356–6’’ is

added in its place.

Par. 5. Section 1.356–6T is

redesignated as § 1.356–6 and the

section heading is revised to read as

follows:

Federal Register / Vol. 65, No. 95 / Tuesday, May 16, 2000 / Rules and Regulations 31079

§ 1.356–6 Rules for treatment of

nonqualified preferred stock as other

property.

* * * * *

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

Approved: May 5, 2000.

Jonathan Talisman,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 00–11899 Filed 5–15–00; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and

Firearms

27 CFR Part 275

[T.D. ATF–424a]

RIN 1512–AB92

Implementation of Public Law 105–33,

Section 9302, Relating to the

Imposition of Permit Requirements on

the Manufacturer of Roll-Your-Own

Tobacco (98R–370P)

ACTION: Temporary rule; correction.

SUMMARY: This document corrects a

section of regulations that was

erroneously revised in a temporary rule

(T.D. ATF–424) published in the

Federal Register of December 22, 1999,

regarding the imposition of permit

requirements on manufacturers of rollyour-own tobacco.

DATES: This rule is effective May 16,

2000.

FOR FURTHER INFORMATION CONTACT:

Robert Ruhf, Regulations Division,

Bureau of Alcohol, Tobacco and

Firearms, 650 Massachusetts Avenue

NW, Washington, DC 20226 (202–927–

8210).

SUPPLEMENTARY INFORMATION: The

Bureau of Alcohol, Tobacco and

Firearms (ATF) published a document

in the Federal Register of December 22,

1999 (64 FR 71929). We erroneously

revised § 275.117(e). This document

corrects that error.

In rule FR Doc. 99–32602 published

on December 22, 1999, on page 71932,

in the third column, remove the

instruction and amendatory text in

paragraph 25.

Signed: May 9, 2000.

Bradley A. Buckles,

Director.

[FR Doc. 00–12160 Filed 5–15–00; 8:45 am]

BILLING CODE 4810–31–P

DEPARTMENT OF DEFENSE

Department of the Navy

32 CFR Part 767

RIN 0703–AA57

Application Guidelines for

Archeological Research Permits on

Ship and Aircraft Wrecks Under the

Jurisdiction of the Department of the

Navy

AGENCY: Department of the Navy, DOD.

ACTION: Final rule.

SUMMARY: This final rule adds

guidelines for obtaining Department of

the Navy (DON) archeological research

permits for those applying for

permission to conduct research on, and/

or recover, ship or aircraft wrecks under

the jurisdiction of the DON. This permit

process will assist the DON in managing

and protecting its historic ship and

aircraft wrecks. This rule will provide

clear guidance on the permit application

requirements to conduct research on,

and/or recover, DON ship and aircraft

wrecks.

DATES: Effective May 16, 2000.

FOR FURTHER INFORMATION CONTACT: Dr.

Robert S. Neyland, Underwater

Archeologist, or Barbara A. Voulgaris,

202–433–2210.

SUPPLEMENTARY INFORMATION: On

November 19, 1999 (64 FR 63263), the

Department of the Navy (DON)

published a notice of proposed

rulemaking on the application

guidelines for archeological research

permits on Submerged Cultural

Resources under the jurisdiction of

DON. The comment period closed on

January 18, 2000. Interested persons

have been afforded the opportunity to

participate in the making of this rule.

Seven comments were submitted in

response to the notice of proposed

rulemaking. The comments from

cultural resource professionals focused

on the meaning of several definitions. In

particular, there was a concern that the

term ‘‘submerged cultural resources’’

would include more than ship and

aircraft wrecks and the term would

exclude ship and aircraft wrecks on

land. As a result, a change was made to

replace the terms ‘‘submerged cultural

resources’’ and ‘‘underwater cultural

resources’’ with ‘‘ship and aircraft

wrecks’’. Also adopted were suggestions

that provide additional time in the

permit review process, to increase the

permit duration, and to clarify guidance

on state participation when a DON

resource is on a State bottomland.

Comments from those representing

salvage interests were generally against

restrictions. These comments and

suggestions were carefully considered,

but most were not adopted since they

were in opposition to our goal of

protecting DON cultural resources.

As background, in 1993, DON

initiated an archeological management

program for its historic ship and aircraft

wreck sites. This was aided in part by

the U.S. Department of Defense (DoD)

Legacy Resource Management Program

that was established by Congress in

1991, 10 U.S.C. 114, to provide DoD

with an opportunity to enhance the

management of DoD stewardship

resources. The U.S. Naval Historical

Center’s (NHC) Office of Underwater

Archeology is the DON command

responsible for managing the DON’s

ship and aircraft wrecks under the

guidelines of the Federal Archeological

Program. Under the National Historic

Preservation Act of 1966 as amended

(NHPA), 16 U.S.C. 470 (1999), DON is

obligated to protect historic properties,

including ship and aircraft wrecks, for

which it has custodial responsibilities.

The NHPA directs federal agencies to

manage their cultural resource

properties in a way that emphasizes

preservation and minimizes the impact

of undertakings that might adversely

affect such properties. Management of

DON cultural resources such as ship

and aircraft wrecks is not only a matter

of preservation. The issues of gravesites,

unexploded ordnance, and potential

military usage of recovered weapons

systems must also be addressed in

wrecksite management.

Custody and Management of DON Ship

and Aircraft Wrecksites

a. DON ship and aircraft wrecks are

government property in the custody of

DON. These seemingly abandoned

wrecks remain government property

until specific formal action is taken to

dispose of them. DON custody of its

wrecks is based on the property clause

of the U.S. Constitution and

international maritime law, and is

consistent with Articles 95 and 96 of the

Law of the Sea Convention. These laws

establish that right, title, or ownership

of Federal property is not lost to the

government due to the passage of time.

Department of the Navy ships and

aircraft cannot be abandoned without

formal action as authorized by Congress.

Aircraft and ships stricken from the

active inventory list are not considered

formally disposed of or abandoned.

Through the sovereign immunity

provisions of admiralty law, DON

retains custody of all its naval vessels

and aircraft, whether lost in U.S.,

foreign, or international boundaries.