6554 Federal Register / Vol. 76, No. 25 / Monday, February 7, 2011 / Rules and Regulations 

held by a taxpayer with certain 

specified exclusions. Section 1221(a)(1) 

excludes from the definition of a capital 

asset inventory property or property 

held by a taxpayer primarily for sale to 

customers in the ordinary course of the 

taxpayer’s trade or business. Section 

1221(a)(3) excludes from the definition 

of a capital asset certain property—a 

copyright; a literary, musical, or artistic 

composition; a letter or memorandum; 

or similar property—held by a taxpayer 

whose personal efforts created the 

property (or held by a taxpayer whose 

basis in the property is determined by 

reference to the basis of such property 

in the hands of the taxpayer whose 

personal efforts created the property). 

Section 1221(b)(3) of the Code, added 

by section 204 of the Tax Increase 

Prevention and Reconciliation Act of 

2005, Public Law 109–222 (120 Stat. 345 

(2005)), and amended by section 412 of 

the Tax Relief and Health Care Act of 

2006, Public Law 109–432 (120 Stat. 

2922 (2006)), provides that, at the 

election of a taxpayer, the section 

1221(a)(1) and (a)(3) exclusions from 

capital asset status will not apply to a 

musical composition or a copyright in a 

musical work sold or exchanged by a 

taxpayer described in section 1221(a)(3). 

Thus, if a taxpayer who owns a musical 

composition or copyright in a musical 

work created by the taxpayer (or 

transferred to the taxpayer by the 

composition or work’s creator in a 

transferred basis transaction) elects the 

application of this provision, gain or 

loss from the sale or exchange of the 

musical composition or copyright is 

treated as capital gain or loss. 

Explanation of Provisions 

This final regulation provides rules 

regarding the time and manner for 

electing under section 1221(b)(3) to treat 

gain or loss from the sale or exchange 

of certain musical compositions or 

copyrights in musical works as gain or 

loss from the sale or exchange of a 

capital asset. 

Effective/Applicability Date 

This regulation applies to elections 

under section 1221(b)(3) in taxable years 

beginning after May 17, 2006. 

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 

also has been determined that section 

553(b) of the Administrative Procedure 

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

to this regulation, and because the 

regulation does 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 Code, the notice 

of proposed rulemaking preceding this 

regulation 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 this regulation 

is Jamie Kim of the Office of Associate 

Chief Counsel (Income Tax & 

Accounting). However, other personnel 

from the IRS and the Treasury 

Department participated in its 

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 continues to read in part as 

follows: 

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

■ Par. 2. Section 1.1221–3 is added to 

read as follows: 

§ 1.1221–3 Time and manner for electing 

capital asset treatment for certain selfcreated musical works. 

(a) Description. Section 1221(b)(3) 

allows an electing taxpayer to treat the 

sale or exchange of a musical 

composition or a copyright in a musical 

work created by the taxpayer’s personal 

efforts (or having a basis determined by 

reference to the basis of such property 

in the hands of a taxpayer whose 

personal efforts created such property) 

as the sale or exchange of a capital asset. 

As a consequence, gain or loss from the 

sale or exchange is treated as capital 

gain or loss. 

(b) Time and manner for making the 

election. An election described in this 

section is made separately for each 

musical composition (or copyright in a 

musical work) sold or exchanged during 

the taxable year. An election must be 

made on or before the due date 

(including extensions) of the income tax 

return for the taxable year of the sale or 

exchange. The election is made on 

Schedule D, ‘‘Capital Gains and Losses,’’ 

of the appropriate income tax form (for 

example, Form 1040, ‘‘U.S. Individual 

Income Tax Return;’’ Form 1065, ‘‘U.S. 

Return of Partnership Income;’’ Form 

1120, ‘‘U.S. Corporation Income Tax 

Return’’) by treating the sale or exchange 

as the sale or exchange of a capital asset, 

in accordance with the form and its 

instructions. 

(c) Revocability of election. The 

election described in this section is 

revocable with the consent of the 

Commissioner. To seek consent to 

revoke the election, a taxpayer must 

submit a request for a letter ruling under 

the applicable administrative 

procedures. Alternatively, an automatic 

extension of 6 months from the due date 

of the taxpayer’s income tax return 

(excluding extensions) is granted to 

revoke the election, provided the 

taxpayer timely filed the taxpayer’s 

income tax return and, within this 6- 

month extension period, the taxpayer 

files an amended income tax return that 

treats the sale or exchange as the sale or 

exchange of property that is not a 

capital asset. 

(d) Effective/applicability date. This 

section applies to elections under 

section 1221(b)(3) in taxable years 

beginning after May 17, 2006. 

§ 1.1221–3T [Removed] 

■ Par. 3. Section 1.1221–3T is removed. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: January 28, 2011. 

Michael Mundaca, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2011–2549 Filed 2–4–11; 8:45 am] 

BILLING CODE 4830–01–P 

NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

36 CFR Part 1254 

[NARA–10–0005] 

RIN 3095–AB69 

Appeal Authority When Researcher 

Privileges Are Revoked 

AGENCY: National Archives and Records 

Administration. 

ACTION: Direct final rule. 

SUMMARY: The National Archives and 

Records Administration (NARA) is 

changing the appeal authority for 

researchers whose privileges have been 

revoked for specific behaviors, from the 

Archivist of the United States to the 

Deputy Archivist of the United States. 

This change will align the appeal 

authority for researchers whose research 

privileges have been revoked with the 

appeal authority for individuals who 

have been banned from NARA facilities 


wwoods2 on DSK1DXX6B1PROD with RULES_PART 1
Federal Register / Vol. 76, No. 25 / Monday, February 7, 2011 / Rules and Regulations 6555 

for prohibited activities. Researchers 

maintain the same rights of appeal. 

DATES: This rule is effective March 9, 

2011 without further action, unless 

adverse comment is received by March 

9, 2011. If adverse comment is received, 

NARA will publish a timely withdrawal 

of the rule in the Federal Register, and 

publish a notice of proposed 

rulemaking. 

ADDRESSES: NARA invites interested 

persons to submit comments on this 

direct final rule. Comments may be 

submitted by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: Submit comments by facsimile 

transmission to 301–837–0319. 

• Mail: Send comments to 

Regulations Comments Desk (NPOL), 

Room 4100, Policy and Planning Staff, 

National Archives and Records 

Administration, 8601 Adelphi Road, 

College Park, MD 20740–6001. 

• Hand Delivery or Courier: Deliver 

comments to 8601 Adelphi Road, 

College Park, MD. 

FOR FURTHER INFORMATION CONTACT: 

Stuart Culy on (301) 837–0970. 

SUPPLEMENTARY INFORMATION: NARA is 

authorized to revoke researchers’ 

privileges under certain circumstances 

by following the procedures outlined in 

36 CFR part 1254. The privileges may be 

revoked for the following behaviors: 

Refusing to follow the rules and 

regulations of a NARA facility; acting or 

speaking in a way that may be 

dangerous to documents held by NARA 

or NARA property; acting or speaking in 

a way that may be dangerous to other 

researchers, NARA or contractor 

employees, or volunteers; or verbally or 

physically harassing or annoying other 

researchers, NARA or contractor 

employees, or volunteers. This change 

will align the appeal authority for 

researchers whose research privileges 

have been revoked with the appeal 

authority for individuals who have been 

banned from NARA facilities for the 

following prohibited activities on NARA 

properties: Carrying or using guns or 

weapons, using or in possession of 

alcohol or illegal drugs; gambling; 

soliciting; stealing NARA property; 

willfully damaging or destroying NARA 

property; creating any hazard to persons 

or things; throwing anything from or at 

a NARA building; improperly disposing 

of rubbish; acting in a disorderly 

fashion; acting in a manner that creates 

a loud or unusual noise or a nuisance; 

acting in a manner that unreasonably 

obstructs the usual use of NARA 

facilities; acting in a manner that 

otherwise impedes or disrupts the 

performance of official duties by 

Government and contract employees; 

acting in a manner that prevents the 

general public from obtaining NARAprovided services in a timely manner; 

loitering; or threatening directly (e.g., 

in-person communications or physical 

gestures) or indirectly (e.g., via regular 

mail, electronic mail, or phone) any 

NARA employee, visitor, volunteer, 

contractor, other building occupants, or 

property, which is the Deputy Archivist 

of the United States. Researchers 

maintain the same rights of appeal. 

Revocation actions are taken by staff 

at the NARA facility where an infraction 

takes place. In turn, researchers have the 

right to appeal the revocation to a higher 

authority than the local NARA facility 

director; a process which is also 

described in 36 CFR part 1254. The 

current appeal authority is the Archivist 

of the United States, yet the appeal 

authority for the more severe penalty of 

banning individuals from NARA 

facilities under 36 CFR part 1280, is the 

Deputy Archivist of the United States. 

This direct final rule will only change 

the appeal authority for researchers 

whose privileges have been revoked, 

from the Archivist of the United States 

to the Deputy Archivist of the United 

States, aligning the two disciplinary 

appeal processes. Researchers retain 

their full right to appeal revocation 

decisions. 

NARA believes that a Notice of 

Proposed Rule Making is not necessary 

for ‘‘good cause’’ as permitted by the 

Administrative Procedures Act (5 U.S.C. 

553(b)(B)) as this rule is a nomenclature 

change only, and there are no changes 

to the public’s right to appeal revocation 

decisions. 

This direct final rule is not a 

significant regulatory action for the 

purposes of Executive Order 12866. As 

required by the Regulatory Flexibility 

Act, it is hereby certified that this direct 

final rule will not have a significant 

impact on small entities. 

List of Subjects in 36 CFR Part 1254 

Archives and records. 

For the reasons set forth in the 

preamble, NARA amends part 1254 of 

title 36, Code of Federal Regulations, as 

follows: 

PART 1254—USING RECORDS AND 

DONATED HISTORICAL MATERIALS 

■ 1. The authority citation for part 1254 

continues to read as follows: 

Authority: 44 U.S.C. 2101–2118. 

§ 1254.50 [Amended] 

■ 2. In § 1254.50, remove the word 

‘‘Archivist’’ and add, in its place, the 

words ‘‘Deputy Archivist’’ wherever it 

appears in the section. 

§ 1254.52 [Amended] 

■ 3. In § 1254.52, remove the word 

‘‘Archivist’’ and add, in its place, the 

words ‘‘Deputy Archivist’’ wherever it 

appears in the section. 

Dated: January 25, 2011. 

David S. Ferriero, 

Archivist of the United States. 

[FR Doc. 2011–2033 Filed 2–4–11; 8:45 am] 

BILLING CODE 7515–01–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 36 

RIN 2900–AN78 

Loan Guaranty Revised Loan 

Modification Procedures 

AGENCY: Department of Veterans Affairs. 

ACTION: Interim final rule. 

SUMMARY: This document amends a 

Department of Veterans Affairs (VA) 

Loan Guaranty regulation related to 

modification of guaranteed housing 

loans in default. Specifically, changes 

are made to requirements related to 

maximum interest rates on modified 

loans and to items that may be 

capitalized in a modified loan amount. 

In addition, we are revising the 

regulation to clarify that the holder of a 

loan may seek VA approval for a loan 

modification that does not otherwise 

meet prescribed conditions. The 

amendments are intended to liberalize 

the requirements for modification of 

VA-guaranteed loans and provide 

holders more options for working with 

veterans to avoid foreclosure. 

DATES: This interim final rule is 

effective February 7, 2011. Comments 

must be received on or before April 8, 

2011. 

ADDRESSES: Written comments may be 

submitted through http:// 

www.Regulations.gov; by mail or handdelivery to Director, Regulations 

Management (02REG), Department of 

Veterans Affairs, 810 Vermont Ave., 

NW., Room 1068, Washington, DC 

20420; or by fax to (202) 273–9026. 

Comments should indicate that they are 

submitted in response to ‘‘RIN 2900– 

AN78—Loan Guaranty Revised Loan 

Modification Procedures.’’ Copies of 

comments received will be available for 

public inspection in the Office of 


wwoods2 on DSK1DXX6B1PROD with RULES_PART 1