9262 Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Rules and Regulations 

§ 1.168(i)–6(b)(8)) of the acquired 

MACRS property and begins to 

depreciate the depreciable exchanged 

basis (as defined in § 1.168(i)–6(b)(9) of 

the acquired MACRS property in 

accordance with § 1.168(i)–6(c). The 

depreciable excess basis (as defined in 

§ 1.168(i)–6(b)(10)) of the acquired 

MACRS property continues to be 

depreciated by the taxpayer in 

accordance with the first sentence of 

this paragraph (f)(5)(v)(B). 

* * * * * 

(vi) * * * 

Example 1. (i) * * * Pursuant to paragraph 

(g)(3)(ii) of this section and § 1.168(i)–

6(k)(2)(i), EE decided to apply § 1.168(i)–6 to 

the involuntary conversion of Canopy V1 

with the replacement of Canopy W1, the 

acquired MACRS property. 

* * * * * 

Example 3. (i) * * * Pursuant to paragraph 

(g)(3)(ii) of this section and § 1.168(i)–

6(k)(2)(i), FF decided to apply § 1.168(i)–6 to 

the exchange of Computer X2 for Computer 

Y2, the acquired MACRS property. 

* * * * * 

Example 4. (i) * * * Pursuant to 

paragraph (g)(3)(ii) of this section and 

§ 1.168(i)–6(k)(2)(i), GG decided to apply 

§ 1.168(i)–6 to the exchange of Equipment X3 

for Equipment Y3, the acquired MACRS 

property. 

* * * * * 

Example 5. (i) * * * Pursuant to paragraph 

(g)(3)(ii) of this section and § 1.168(i)–

6(k)(2)(i), GG decided to apply § 1.168(i)–6 to 

the exchange of Equipment Y3 for Equipment 

Z1, the acquired MACRS property. 

* * * * * 

(g) * * * 

(3) * * * 

(ii) Paragraphs (f)(5)(ii)(F)(2) and 

(f)(5)(v) of this section apply to a likekind exchange or an involuntary 

conversion of MACRS property and 

computer software for which the time of 

disposition and the time of replacement 

both occur after February 27, 2004. For 

a like-kind exchange or an involuntary 

conversion of MACRS property for 

which the time of disposition, the time 

of replacement, or both occur on or 

before February 27, 2004, see § 1.168(i)–

6(k)(2)(ii). For a like-kind exchange or 

involuntary conversion of computer 

software for which the time of 

disposition, the time of replacement, or 

both occur on or before February 27, 

2004, a taxpayer may rely on prior 

guidance issued by the Internal Revenue 

Service for determining the depreciation 

deductions of the acquired computer 

software and the exchanged or 

involuntarily converted computer 

software (for further guidance, see 

§ 1.168(k)–1T(f)(5) published in the 

Federal Register on September 8, 2003 

(68 FR 53000)). In relying on such 

guidance, a taxpayer may use any 

reasonable, consistent method of 

determining depreciation in the year of 

disposition and the year of replacement. 

* * * * * 

Kevin M. Brown, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: February 23, 2007. 

Eric Solomon, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 07–922 Filed 2–26–07; 3:25 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9313] 

RIN 1545–BG29 

Corporate Reorganizations; Additional 

Guidance on Distributions Under 

Sections 368(a)(1)(D) and 354(b)(1)(B) 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Temporary regulations. 

SUMMARY: This document contains 

temporary regulations amending 

§ 1.368–2T(l), which provides guidance 

regarding the qualification of certain 

transactions as reorganizations 

described in section 368(a)(1)(D) where 

no stock and/or securities of the 

acquiring corporation are issued and 

distributed in the transaction. These 

regulations clarify that the rules in 

§ 1.368–2T(l) are not intended to affect 

the qualification of related party 

triangular asset acquisitions as 

reorganizations described in section 

368. These regulations affect 

corporations engaging in such 

transactions and their shareholders. The 

text of the temporary regulations also 

serves as the text of the proposed 

regulations set forth in the notice of 

proposed rulemaking on this subject in 

the Proposed Rules section in this issue 

of the Federal Register. 

DATES: Effective Date: These regulations 

are effective on March 1, 2007. 

Applicability Date: For dates of 

applicability, see § 1.368–2T(l)(4)(i). 

FOR FURTHER INFORMATION CONTACT: 

Bruce A. Decker at (202) 622–7550 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

On December 19, 2006, the IRS and 

Treasury Department published 

temporary regulations (TD 9303) under 

§ 1.368–2T(l) in the Federal Register (71 

FR 75879) providing guidance regarding 

the qualification of certain transactions 

as reorganizations described in section 

368(a)(1)(D) where no stock and/or 

securities of the acquiring corporation 

are issued and distributed in the 

transaction. Under the temporary 

regulations, in cases where it is 

determined that the same person or 

persons own, directly or indirectly, all 

of the stock of the transferor and 

transferee corporations in identical 

proportions, the distribution 

requirement under sections 368(a)(1)(D) 

and 354(b)(1)(B) will be treated as 

satisfied even though no stock is 

actually issued in the transaction. 

In each case where it is determined 

that the same person or persons own all 

of the stock of the transferor and 

transferee corporations in identical 

proportions, a nominal share of stock of 

the transferee corporation will be 

deemed issued in addition to the actual 

consideration exchanged in the 

transaction. The nominal share of stock 

in the transferee corporation will then 

be deemed distributed by the transferor 

corporation to its shareholders and, in 

appropriate circumstances, further 

transferred to the extent necessary to 

reflect the actual ownership of the 

transferor and transferee corporations. 

The IRS and Treasury Department 

have become aware that the temporary 

regulations may have unintended 

consequences regarding related party 

triangular asset acquisitions otherwise 

qualifying under section 368. 

Specifically, the temporary regulations 

may cause certain related party asset 

acquisitions that would otherwise 

qualify as tax-free triangular 

reorganizations to be treated as 

reorganizations described in section 

368(a)(1)(D) with boot. 

For example, the temporary 

regulations may cause a related party 

transaction that would otherwise qualify 

as a tax-free reorganization described in 

section 368(a)(1)(C) in which 

substantially all of the target 

corporation’s properties are acquired 

solely in exchange for voting stock of 

the corporation in control of the 

acquiring corporation to also be 

described in section 368(a)(1)(D). If so, 

section 368(a)(2)(A) would preclude the 

transaction from being treated as 

described in section 368(a)(1)(C). 

Accordingly, the transaction would be 

treated as described only in section 

368(a)(1)(D), and the voting stock of the 

corporation in control of the acquiring 

corporation would be treated as boot. 

Further, the temporary regulations may 

cause a related party transaction that 


rwilkins on PROD1PC63 with RULES
Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Rules and Regulations 9263 

would otherwise qualify as a tax-free 

reorganization described in section 

368(a)(1)(A) by reason of section 

368(a)(2)(D) from so qualifying because 

the deemed issuance of a nominal share 

of stock of the acquiring corporation 

would violate the requirements of 

section 368(a)(2)(D)(i). If so, the 

transaction would be treated as 

described only in section 368(a)(1)(D), 

and the stock of the corporation in 

control of the acquiring corporation 

would be treated as boot. 

The IRS and Treasury Department did 

not intend for the temporary regulations 

to apply to such transactions. 

Explanation of Provisions 

These temporary regulations clarify 

and amend the temporary regulations 

(TD 9303) under § 1.368–2T(l) by 

providing that the deemed issuance of 

the nominal share of stock of the 

transferee corporation in a transaction 

otherwise described in section 

368(a)(1)(D) does not apply if the 

transaction otherwise qualifies as a 

triangular reorganization described in 

§ 1.358–6(b)(2) or section 368(a)(1)(G) by 

reason of section 368(a)(2)(D). 

Accordingly, if a transaction qualifies as 

a triangular reorganization described in 

§ 1.358–6(b)(2) or section 368(a)(1)(G) by 

reason of section 368(a)(2)(D) without 

regard to the temporary regulations, it 

will not be treated as a reorganization 

described in section 368(a)(1)(D). 

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 these regulations. For the 

applicability of the Regulatory 

Flexibility Act, please refer to the crossreference notice of proposed rulemaking 

published elsewhere in this issue of the 

Federal Register. Pursuant to section 

7805(f) of the Internal Revenue Code, 

these regulations were submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comment 

on their impact on small business. 

Drafting Information 

The principal author of these 

regulations is Bruce A. Decker of the 

Office of the Associate Chief Counsel 

(Corporate). 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

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 as follows: 

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

■ Par. 2. Section 1.368–2T is amended 

by adding paragraph (l)(2)(iv) to read as 

follows: 

§ 1.368–2T Definition of terms (temporary). 

* * * * * 

(l) * * * 

(2) * * * 

(iv) Exception. Paragraph (l)(2) of this 

section does not apply to a transaction 

otherwise described in § 1.358–6(b)(2) 

or section 368(a)(1)(G) by reason of 

section 368(a)(2)(D). 

* * * * * 

Kevin M. Brown, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: February 21, 2007. 

Eric Solomon, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. E7–3534 Filed 2–28–07; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[R08–ND–2006–0001; FRL–8274–6] 

Approval and Promulgation of Air 

Quality Implementation Plans; Revised 

Format for Materials Being 

Incorporated by Reference for North 

Dakota 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule; notice of 

administrative change. 

SUMMARY: EPA is revising the format of 

40 CFR part 52 for materials submitted 

by the State of North Dakota that are 

incorporated by reference (IBR) into its 

State Implementation Plan (SIP). The 

regulations affected by this format 

change have all been previously 

submitted by North Dakota and 

approved by EPA. 

DATES: Effective Date: This action is 

effective March 1, 2007. 

ADDRESSES: SIP materials which are 

incorporated by reference into 40 CFR 

part 52 are available for inspection 

Monday through Friday, 8 a.m. to 4 

p.m., excluding Federal holidays, at the 

Air and Radiation Program, 

Environmental Protection Agency 

(EPA), Region 8, 1595 Wynkoop Street, 

Denver, Colorado 80202–1129. EPA 

requests that, if at all possible, you 

contact the individual listed in the FOR

FURTHER INFORMATION CONTACT section to 

arrange a time to view the hard copy of 

the North Dakota SIP compilation. An 

electronic copy of the North Dakota 

regulations we have approved for 

incorporation into the SIP are also 

available by accessing http:// 

www.epa.gov/region8/air/sip.html. A 

hard copy of the regulatory and sourcespecific portions of the compilation will 

also be maintained at the Air and 

Radiation Docket and Information 

Center, EPA West Building, Room 3334, 

1301 Constitution Ave., NW., 

Washington, DC 20460 and the National 

Archives and Records Administration 

(NARA). If you wish to obtain materials 

from a docket in the EPA Headquarters 

Library, please call the Office of Air and 

Radiation (OAR) Docket/Telephone 

number (202) 566–1742. 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. 

FOR FURTHER INFORMATION CONTACT: 

Amy Platt, EPA Region 8, at (303) 312–

6449, or Platt.Amy@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document, wherever 

‘‘we’’ or ‘‘our’’ is used it means the EPA. 

Table of Contents 

I. Change of IBR Format 

A. Description of a SIP 

B. How EPA Enforces the SIP 

C. How the State and EPA Update the SIP 

D. How EPA Compiles the SIP 

E. How EPA Organizes the SIP Compilation 

F. Where You Can Find a Copy of the SIP 

Compilation 

G. The Format of the New Identification of 

Plan Section 

H. When a SIP Revision Becomes Federally 

Enforceable 

I. The Historical Record of SIP Revision 

Approvals 

II. What EPA is Doing in This Action 

III. Good Cause Exemption 

IV. Statutory and Executive Order Review 

I. Change in IBR Format 

This format revision will affect the 

‘‘Identification of plan’’ section of 40 

CFR part 52, as well as the format of the 

SIP materials that will be available for 

public inspection at the National 

Archives and Records Administration 

(NARA); the Air and Radiation Docket 

and Information Center located at EPA 


rwilkins on PROD1PC63 with RULES