3814 Federal Register / Vol. 65, No. 16 / Tuesday, January 25, 2000 / Rules and Regulations

other market which the Secretary

determines has rules adequate to carry

out the purposes of section 1092 and

is—

(A) Substantially identical to the

equity options described in paragraph

(d)(1)(i) of this section; and

(B) Approved by the Securities and

Exchange Commission in a Securities

Exchange Act Release.

(2) Securities Exchange Act Release

means a release issued by the Securities

and Exchange Commission. To

determine identifying information for

releases referenced in paragraph (d)(1)

of this section, including release titles,

identification numbers, and issue dates,

contact the Office of the Secretary,

Securities and Exchange Commission,

450 5th Street, NW., Washington, DC

20549. To obtain a copy of a Securities

Exchange Act Release, submit a written

request, including the specific release

identification number, title, and issue

date, to Securities and Exchange

Commission, Attention Public

Reference, 450 5th Street, NW.,

Washington, DC 20549.

(e) Effective date. These regulations

apply to equity options with flexible

terms entered into on or after January

25, 2000.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

Approved: January 17, 2000.

Jonathan Talisman,

Acting Assistant Secretary of the Treasury.

[FR Doc. 00–1527 Filed 1–21–00; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8868]

RIN 1545–AV68

Termination of Puerto Rico and

Possession Tax Credit; New Lines of

Business Prohibited

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final and Temporary

regulations.

SUMMARY: This document amends the

Income Tax Regulations by removing

temporary regulations that provide

guidance regarding the addition of a

substantial new line of business by a

possessions corporation that is an

existing credit claimant and adding final

regulations. These regulations are

necessary to implement changes made

by the Small Business Job Protection

Act of 1996.

DATES: Effective Date. These regulations

are effective January 25, 2000.

FOR FURTHER INFORMATION CONTACT:

Daniel S. Karen, (202) 874–1490, or

Jacob Feldman, (202) 622–3830 (not tollfree numbers).

SUPPLEMENTARY INFORMATION:

Background

Section 1601(a) of the Small Business

Job Protection Act of 1996, Public Law

104–188, 110 Stat. 1755 (1996),

amended the Internal Revenue Code by

adding section 936(j). Section 936(j)

generally repeals the Puerto Rico and

possession tax credit for taxable years

beginning after December 31, 1995.

However, the section provides

grandfather rules under which a

corporation that is an existing credit

claimant would be eligible to claim

credits for a transition period. The

Puerto Rico and possession tax credit

and the Puerto Rico economic activity

credit phase out for these existing credit

claimants ending with the last taxable

year beginning before January 1, 2006.

For taxable years beginning after

December 31, 1995 and before January

1, 2006, the Puerto Rico and possession

tax credit and the Puerto Rico economic

activity credit apply only to a

corporation that qualifies as an existing

credit claimant (as defined in section

936(j)(9)(A)). The determination of

whether a corporation is an existing

credit claimant is made separately for

each possession. A possessions

corporation that adds a substantial new

line of business (other than in a

qualifying acquisition of all the assets of

a trade or business of an existing credit

claimant) after October 13, 1995, ceases

to be an existing credit claimant as of

the beginning of the taxable year during

which such new line of business is

added. Therefore, a possessions

corporation that ceases to be an existing

credit claimant either because it has

added a substantial new line of

business, or because a new line of

business becomes substantial, during a

taxable year may not claim the Puerto

Rico and possession tax credit or the

Puerto Rico economic activity credit for

that taxable year or any subsequent

taxable year.

On August 19, 1998, temporary

regulations were published in the

Federal Register (63 FR 44387). A cross

referenced Notice of Proposed

Rulemaking was also published in the

Federal Register (63 FR 44416) on the

same date. Three comments were

received with respect to the Notice. No

hearing was requested and none was

held. The temporary regulations are,

therefore, adopted as proposed with the

following changes, as explained, below.

Explanation of Revisions and Summary

of Comments

Minor and conforming changes were

made in these final regulations. Several

changes were also made in the final

regulations with regard to the three

comments that were received on the

Notice of Proposed Rulemaking.

The first comment received addressed

the issue as to whether the leasing of

some of the assets of an existing credit

claimant would result in a new line of

business under section 936(j)(9)(B) with

respect to the leasing activity. In

response to the comment, the final

regulations provide that the leasing out

of assets by an existing credit claimant

(and the employees necessary to operate

the leased assets) will not be treated as

a new line of business provided that: (1)

The existing credit claimant used the

leased assets in an active trade or

business for at least five years; (2) the

existing credit claimant does not

through its own officers or staff of

employees perform management or

operational functions (but not including

operational functions performed

through leased employees) with respect

to the leased assets; and (3) the existing

credit claimant does not perform

marketing functions with respect to the

leasing of the assets. The income from

the leasing of assets will not be income

from the active conduct of a trade or

business, and therefore, the existing

credit claimant may not receive a

possession tax credit with respect to

such income.

A second comment asked for

clarification as to whether a taxpayer

seeking to be treated as an existing

credit claimant through the acquisition

of the assets of an existing credit

claimant pursuant to section

936(j)(9)(A)(ii) must acquire all the

assets of the acquired corporation even

in cases in which the existing credit

claimant has more than one trade or

business. The final regulations have

been clarified to conform to the

language of section 936(j)(9)(A)(ii) and

provide that an acquiring corporation

need only acquire all the assets of a

single trade or business to be treated as

an existing credit claimant.

The third comment asked for

clarification as to when the assets of a

trade or business are measured for

purposes of satisfying the requirement

that all the assets of a trade or business

must be acquired from an existing credit

claimant in order to satisfy section

936(j)(9)(A)(ii). Specifically, the

comment expressed concern that assets

Federal Register / Vol. 65, No. 16 / Tuesday, January 25, 2000 / Rules and Regulations 3815

of an existing credit claimant may be

sold or otherwise disposed of between

October 13, 1995, the date on which

existing credit claimant status is

established, and the date of acquisition.

In response to the comment, the final

regulations provide that the assets of a

trade or business of an existing credit

claimant are determined on the date of

acquisition provided that the transferee

actively conducts a trade or business in

the possession with the acquired assets.

Special Analyses

It has been determined that this final

regulation 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 Internal Revenue

Code, the preceding notice of proposed

rulemaking was submitted to the Chief

Counsel for Advocacy of the Small

Business Administration for comment

on its effect on small business.

Drafting Information

The principal author of this regulation

is Daniel S. Karen of the Office of the

Associate Chief Counsel (International),

within the office of Chief Counsel, IRS.

However, other personnel from the IRS

and the Department of the Treasury

participated in the development of this

regulation.

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 removing the

entry for 1.936–11T and by adding an

entry in numerical order to read as

follows:

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

1.936–11 also issued under 26 U.S.C. 936(j).

* * *

§ 1.936–11T

[Removed]

Par. 2. Section 1.936–11T is removed.

Par. 3. Section 1.936–11 is added to

read as follows:

§ 1.936–11 New lines of business

prohibited.

(a) In general. A possessions

corporation that is an existing credit

claimant, as defined in section

936(j)(9)(A) and this section, that adds

a substantial new line of business

during a taxable year, or that has a new

line of business that becomes

substantial during the taxable year, loses

its status as an existing credit claimant

for that year and all years subsequent.

(b) New line of business—(1) In

general. A new line of business is any

business activity of the possessions

corporation that is not closely related to

a pre-existing business of the

possessions corporation. The term

closely related is defined in paragraph

(b)(2) of this section. The term preexisting business is defined in

paragraph (b)(3) of this section.

(2) Closely related. To determine

whether a new activity is closely related

to a pre-existing business of the

possessions corporation all the facts and

circumstances must be considered,

including those set forth in paragraphs

(b)(2)(i)(A) through (G) of this section.

(i) Factors. The following factors will

help to establish that a new activity is

closely related to a pre-existing business

activity of the possessions corporation—

(A) The new activity provides

products or services very similar to the

products or services provided by the

pre-existing business;

(B) The new activity markets products

and services to the same class of

customers;

(C) The new activity is of a type that

is normally conducted in the same

business location;

(D) The new activity requires the use

of similar operating assets;

(E) The new activity’s economic

success depends on the success of the

pre-existing business;

(F) The new activity is of a type that

would normally be treated as a unit

with the pre-existing business’ in the

business accounting records; and

(G) The new activity and the preexisting business are regulated or

licensed by the same or similar

governmental authority.

(ii) Safe harbors. An activity is not a

new line of business if—

(A) If the activity is within the same

six-digit North American Industry

Classification System (NAICS) code (or

four-digit Standard Industrial

Classification (SIC) code). The similarity

of the NAICS or SIC codes may not be

relied upon to determine whether the

activity is closely related to a preexisting business where the code

indicates a miscellaneous category;

(B) If the new activity is within the

same five-digit NAICS code (or threedigit SIC code) and the facts relating to

the new activity also satisfy at least

three of the factors listed in paragraphs

(b)(2)(i)(A) through (G) of this section; or

(C) If the pre-existing business is

making a component product or endproduct form, as defined in § 1.936–

5(a)(1),Q&A1, and the new business

activity is making an integrated product,

or an end-product form with fewer

excluded components, that is not within

the same six-digit NAICS code (or fourdigit SIC code) as the pre-existing

business solely because the component

product and the integrated product (or

two end-product forms) have different

end-uses.

(3) Pre-existing business—(i) In

general. Except as provided in

paragraph (b)(3)(ii) of this section, a

business activity is a pre-existing

business of the existing credit claimant

if—

(A) The existing credit claimant was

actively engaged in the activity within

the possession on or before October 13,

1995; and

(B) The existing credit claimant had

elected the benefits of the Puerto Rico

and possession tax credit pursuant to an

election which was in effect for the

taxable year that included October 13,

1995.

(ii) Acquisition of an existing credit

claimant. (A) If all the assets of one or

more trades or businesses of a

corporation of an existing credit

claimant are acquired by an affiliated or

non-affiliated existing credit claimant

which carries on the business activity of

the predecessor existing credit claimant,

the acquired business activity will be

treated as a pre-existing business of the

acquiring corporation. A non-affiliated

acquiring corporation will not be bound

by any section 936(h) election made by

the predecessor existing credit claimant

with respect to that business activity.

(B) Where all of the assets of one or

more trades or businesses of a

corporation of an existing credit

claimant are acquired by a corporation

that is not an existing credit claimant,

the acquiring corporation may make a

section 936(e) election for the taxable

year in which the assets are acquired

with the following effects—

(1) The acquiring corporation will be

treated as an existing credit claimant for

the year of acquisition;

( 2) The activity will be considered a

pre-existing business of the acquiring

corporation;

(3) The acquiring corporation will be

deemed to satisfy the rules of section

936(a)(2) for the year of acquisition; and

3816 Federal Register / Vol. 65, No. 16 / Tuesday, January 25, 2000 / Rules and Regulations

(4) After making an election under

section 936(e), a non-affiliated acquiring

corporation will not be bound by

elections under sections 936(a)(4) and

(h) made by the predecessor existing

credit claimant.

(C) For purposes of this section the

assets of a trade or business are

determined at the time of acquisition

provided that the transferee actively

conducts the trade or business acquired.

(D) A mere change in the stock

ownership of a possessions corporation

will not affect its status as an existing

credit claimant for purposes of this

section.

(4) Leasing of Assets.—(i) The leasing

of assets (and employees to operate

leased assets) will not, for purposes of

this section, be considered a new line of

business of the existing credit claimant

if—

(A) the existing credit claimant used

the leased assets in an active trade or

business for at least five years;

(B) the existing credit claimant does

not through its own officers or staff of

employees perform management or

operational functions (but not including

operational functions performed

through leased employees) with respect

to the leased assets; and

(C) the existing credit claimant does

not perform marketing functions with

respect to the leasing of the assets.

(ii) Any income from the leasing of

assets not considered a new line of

business pursuant to paragraph (b)(4)(i)

of this section will not be income from

the active conduct of a trade or business

(and, therefore, the existing credit

claimant may not receive a possession

tax credit with respect to such income).

(5) Timing rule. The tests for a new

line of business in this paragraph

(whether the new activity is closely

related to a pre-existing business) are

applied only at the end of the taxable

year during which the new activity is

added.

(c) Substantial—(1) In general. A new

line of business is considered to be

substantial as of the earlier of—

(i) The taxable year in which the

possessions corporation derives more

than 15 percent of its gross income from

that new line of business (gross income

test); or

(ii) The taxable year in which the

possessions corporation directly uses in

that new line of business more than 15

percent of its assets (assets test).

(2) Gross income test. The

denominator in the gross income test is

the amount that is the gross income of

the possessions corporation for the

current taxable year, while the

numerator is the amount that is the

gross income of the new line of business

for the current taxable year. The gross

income test is applied at the end of each

taxable year. For purposes of this test,

if a new line of business is added late

in the taxable year, the income is not to

be annualized in that year. In the case

of a new line of business acquired

through the purchase of assets, the gross

income of such new line of business for

the taxable year of the acquiring

corporation that includes the date of

acquisition is determined from the date

of acquisition through the end of the

taxable year. In the case of a

consolidated group election made

pursuant to section 936(i)(5), the test

applies on a company by company basis

and not on a consolidated basis.

(3) Assets test—(i) Computation. The

denominator is the adjusted tax basis of

the total assets of the possessions

corporation for the current taxable year.

The numerator is the adjusted tax basis

of the total assets utilized in the new

line of business for the current taxable

year. The assets test is computed

annually using all assets including cash

and receivables.

(ii) Exception. A new line of business

of a possessions corporation will not be

treated as substantial as a result of

meeting the assets test if an event that

is not reasonably anticipated causes

assets used in the new line of business

of the possessions corporation to exceed

15 percent of the adjusted tax basis of

the possessions corporation’s total

assets. For example, an event that is not

reasonably anticipated would include

the destruction of plant and equipment

of the pre-existing business due to a

hurricane or other natural disaster, or

other similar circumstances beyond the

control of the possessions corporation.

The expiration of a patent is not such

an event and will not permit use of this

exception.

(d) Examples. The following examples

illustrate the rules described in

paragraphs (a), (b), and (c) of this

section. In the following examples, X

Corp. is an existing credit claimant

unless otherwise indicated:

Example 1. X Corp. is a pharmaceutical

corporation which manufactured bulk

chemicals (a component product). In March

1997, X Corp. began to also manufacture pills

(e.g., finished dosages or an integrated

product). The new activity provides products

very similar to the products provided by the

pre-existing business. The new activity is of

a type that is normally conducted in the same

business location as the pre-existing

business. The activity’s economic success

depends on the success of the pre-existing

business. The manufacture of bulk chemicals

is in NAICS code 325411, Medicinal and

Botanical Manufacturing, while the

manufacture of the pills is in NAICS code

325412, Pharmaceutical Preparation

Manufacturing. Although the products have

a different end-use, may be marketed to a

different class of customers, and may not use

similar operating assets, they are within the

same five-digit NAICS code and the activity

also satisfies paragraphs (b)(2)(i)(A), (C), and

(E) of this section. The manufacture of the

pills by X Corp. will be considered closely

related to the manufacture of the bulk

chemicals. Therefore, X Corp. will not be

considered to have added a new line of

business for purposes of paragraph (b) of this

section because it falls within the safe harbor

rule of (b)(2)(ii)(B).

Example 2. X Corp. currently manufactures

printed circuit boards in a possession. As a

result of a technological breakthrough, X

Corp. could produce the printed circuit

boards more efficiently if it modified its

existing production methods. Because

demand for its products was high, X Corp.

expanded when it modified its production

methods. After these modifications to the

facilities and production methods, the

products produced through the new

technology were in the same six-digit NAICS

code as products produced previously by X

Corp. See paragraph (b)(2)(ii)(A) of this

section. Therefore, X Corp. will not be

considered to have added a new line of

business for purposes of paragraph (b) of this

section because it falls within the safe harbor

rule of (b)(2)(ii)(A).

Example 3. X Corp. has manufactured

Device A in Puerto Rico for a number of years

and began to manufacture Device B in Puerto

Rico in 1997. Device A and Device B are both

used to conduct electrical current to the heart

and are both sold to cardiologists. There is

no significant change in the type of activity

conducted in Puerto Rico after the transfer of

the manufacturing of Device B to Puerto Rico.

Similar manufacturing equipment,

manufacturing processes and skills are used

in the manufacture of both devices. Both are

regulated and licensed by the Food and Drug

Administration. The economic success of

Device B is dependent upon the success of

Device A only to the extent that the liability

and manufacturing prowess with respect to

one reflects favorably on the other.

Depending upon the heart abnormality, the

cardiologist may choose to use Device A,

Device B or both on a patient. The

manufacture of Device B is treated as a unit

with the manufacture of Device A in X

Corp.’s accounting records. The manufacture

of Device A is in the six-digit NAICS code

339112, Surgical and Medical Instrument

Manufacturing. The manufacture of Device B

is in the six-digit NAICS code 334510,

Electromedical and Electrotherapeutic

Apparatus Manufacturing. (The manufacture

of Device A is in the four-digit SIC code

3845, Electromedical and Electrotherapeutic

Apparatus. The manufacture of Device B is

in the four-digit SIC code 3841, Surgical and

Medical Instruments and Apparatus.) The

safe harbor of paragraph (b)(2)(ii)(B) of this

section applies because the two activities are

within the same three-digit SIC code and

Corp. X satisfies paragraphs (b)(2)(i)(A), (B),

(C), (D), (F), and (G) of this section.

Example 4. X Corp. has been

manufacturing house slippers in Puerto Rico

since 1990. Y Corp. is a U.S. corporation that

Federal Register / Vol. 65, No. 16 / Tuesday, January 25, 2000 / Rules and Regulations 3817

is not affiliated with X Corp. and is not an

existing credit claimant. Y Corp. has been

manufacturing snack food in the United

States. In 1997, X Corp. purchased the assets

of Y Corp. and began to manufacture snack

food in Puerto Rico. House slipper

manufacturing is in the six-digit NAICS code

316212 (Four-digit SIC code 3142, House

Slippers). The manufacture of snack foods

falls under the six-digit NAICS code 311919,

Other Snack Food Manufacturing (four-digit

SIC code 2052, Cookies and Crackers

(pretzels)). Because these activities are not

within the same five or six digit NAICS code

(or the same three or four-digit SIC code), and

because snack food is not an integrated

product that contains house slippers, the safe

harbor of paragraph (b)(2)(ii) of this section

cannot apply. Considering all the facts and

circumstances, including the seven factors of

paragraph (b)(2)(i) of this section, the snack

food manufacturing activity is not closely

related to the manufacture of house slippers,

and is a new line of business, within the

meaning of paragraph (b) of this section.

Example 5. X Corp., a calendar year

taxpayer, is an existing credit claimant that

has elected the profit-split method for

computing taxable income. P Corp. was not

an existing credit claimant and manufactured

a product in a different five-digit NAICS code

than the product manufactured by X Corp. In

1997, X Corp. acquired the stock of P Corp.

and liquidated P Corp. in a tax-free

liquidation under section 332, but continued

the business activity of P Corp. as a new

business segment. Assume that this new

business segment is a new line of business

within the meaning of paragraph (c) of this

section. In 1997, X Corp. has gross income

from the active conduct of a trade or business

in a possession computed under section

936(a)(2) of $500 million and the adjusted tax

basis of its assets is $200 million. The new

business segment had gross income of $60

million, or 12 percent of the X Corp. gross

income, and the adjusted basis of the new

segment’s assets was $20 million, or 10

percent of the X Corp. total assets. In 1997,

X Corp. does not derive more than 15 percent

of its gross income, or directly use more that

15 percent of its total assets, from the new

business segment. Thus, the new line of

business acquired from P Corp. is not a

substantial new line of business within the

meaning of paragraph (c) of this section, and

the new activity will not cause X Corp. to

lose its status as an existing credit claimant

during 1997. In 1998, however, the gross

income of X Corp. grew to $750 million

while the gross income of the new line of

business grew to $150 million, or 20% of the

X Corp. 1998 gross income. Thus, in 1998,

the new line of business is substantial within

the meaning of paragraph (c) of this section,

and X Corp. loses its status as an existing

credit claimant for 1998 and all years

subsequent.

(e) Loss of status as existing credit

claimant. An existing credit claimant

that adds a substantial new line of

business in a taxable year, or that has a

new line of business that becomes

substantial in a taxable year, loses its

status as an existing credit claimant for

that year and all years subsequent.

(f) Effective date—(1) General rule.

This section applies to taxable years of

a possessions corporation beginning on

or after January 25, 2000.

(2) Election for retroactive

application. Taxpayers may elect to

apply retroactively all the provisions of

this section for any open taxable year

beginning after December 31, 1995.

Such election will be effective for the

year of the election and all subsequent

taxable years. This section will not

apply to activities of pre-existing

businesses for taxable years beginning

before January 1, 1996.

David Mader,

Acting Deputy Commissioner of Internal

Revenue.

Approved: January 12, 2000.

Jonathan Talisman,

Acting Assistant Secretary of the Treasury.

[FR Doc. 00–1528 Filed 1–21–00; 8:45 am]

BILLING CODE 4831–01–U

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8867]

RIN 1545–AW69

Passive Foreign Investment

Companies; Definition of Marketable

Stock

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations under section 1296 relating

to the new mark-to-market election for

stock of a passive foreign investment

company (PFIC). The final regulations

interpret changes made by the Taxpayer

Relief Act of 1997. The final regulations

affect persons holding PFIC stock that is

regularly traded on certain U.S. or

foreign exchanges or markets or holding

stock in certain PFICs comparable to

U.S. regulated investment companies

(RICs).

DATES: Effective Date: January 25, 2000.

Applicability Dates: For dates of

applicability see section 1.1296(e)–1(g)

of these regulations.

FOR FURTHER INFORMATION CONTACT:

Robert Laudeman, (202) 622–3840 (not

a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On February 2, 1999, the IRS

published in the FEDERAL REGISTER

proposed regulations (REG–113744–98,

64 FR 5014) regarding the taxation of

U.S. holders of PFIC stock. Three

written comments regarding the

proposed regulations were received.

Because no one requested to speak at a

public hearing, no hearing was held.

After consideration of all of the

comments received, the proposed

regulations under section 1296 are

adopted as final regulations with some

changes. The changes are discussed

below.

The preamble to the proposed

regulations (64 FR 5014) provides a

detailed discussion of the mark-tomarket election for shareholders of PFIC

stock and the proposed regulations.

Summary of Public Comments and

Changes

Exchange or Other Market

The proposed regulations require that

a foreign exchange or market be

regulated or supervised by a

governmental authority of the country

in which the market is located. The

proposed regulations also list additional

characteristics that the foreign exchange

or market must have for stock that is

regularly traded on the exchange or

market to be marketable stock for

purposes of section 1296. Specifically,

the proposed regulations require that

the exchange have trading volume,

listing, financial disclosure and other

requirements designed to prevent fraud,

perfect the mechanism of a free and

open market, and protect investors.

The final regulations add a

surveillance requirement and add the

concept of perfecting a fair and orderly

market to the requirements for

exchanges. These changes are intended

to clarify the characteristics that an

exchange or other market must have in

order to be a qualified exchange or

market for purposes of section 1296 and

to more closely represent common

characteristics of foreign markets. See

International Federation of Stock

Exchanges (FIBV), 1998 Market

Principles, available by request from

secretariat@fibv.com, and International

Organization of Securities Commissions

(IOSCO), Supervisory Framework for

Markets, Report by the Technical

Committee, May 1999 (visited Oct. 5,

1999) <http://www.iosco.org/

iosco.html>.

Stock in Certain PFICs

The proposed regulations provide that

stock in certain PFICs is marketable

stock if the PFIC both is a corporation

described in section 1296(e)(1)(B)

(foreign corporations comparable to

RICs) and offers for sale or has

outstanding stock of which it is the