13058 Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Proposed Rules 

customer, and the benefit the service 

provider derives from the funds is in 

lieu of a fee for services, the transaction 

is a compensation-related loan under 

section 7872. H.R. Conf. Rep. No. 861, 

98th Cong., 2d Sess. 1019 (1984) (1984–

3 (Vol. 2) CB 272). Moreover, it was 

determined that exchange funds are not 

received in consideration for the sale or 

exchange of property (within the 

meaning of section 1274(c)(1)) or 

received as a deferred payment on 

account of a sale or exchange of 

property (within the meaning of section 

483). 

The industry survey indicates that 30 

percent of respondents closed at least 

half of their deferred like-kind exchange 

transactions within 60 days or less. 

Only eight percent completed at least 

half of their transactions in more than 

150 days. In addition, 42 percent of 

survey respondents reported that at least 

half of their transactions typically 

involve exchange funds of $250,000 or 

less, while about 8 percent of 

respondents reported that most of their 

transactions involve exchange funds in 

excess of $1 million. In light of this 

information, comments specifically are 

requested regarding the average 

duration of exchange transactions, the 

average dollar amount of exchange 

funds, and the appropriateness and 

nature of a de minimis rule that would 

except certain exchange transactions 

from the application of section 7872. 

If exchange funds are characterized as 

loaned by the taxpayer to the exchange 

facilitator, interest may be imputed if 

the exchange facilitator does not pay 

sufficient interest to the taxpayer. To 

reduce the administrative burden of 

determining imputed interest, the 2006 

proposed regulations provide a special 

AFR, equal to the investment rate on a 

182-day Treasury bill, in lieu of the 

short-term AFR (which applies to loans 

of 3 years or less), to qualify as 

sufficient interest for purposes of 

determining whether interest must be 

imputed. This special AFR was 

intended to be a more accurate measure 

of a market rate of interest for these 

loans than the short-term AFR, and was 

expected to result in characterization of 

fewer transactions as below-market 

loans than if the short-term AFR were 

used. Commentators have stated that the 

special AFR is significantly higher than 

the market rate paid on funds held for 

the periods of time that exchange funds 

typically are held by QIs. They state, for 

example, that few if any QIs that pay 

less than all the income to the taxpayer 

pay an amount that is equal to or greater 

than the special AFR provided in the 

2006 proposed regulations. Specific 

comments are requested identifying the 

rate of return typically earned by small 

business QIs on exchange funds, the 

interest rate QIs typically pay to 

taxpayers, and an appropriate rate for 

testing exchange facilitator loans for 

sufficient interest under section 7872. 

Duplicative, Overlapping, and 

Conflicting Rules 

The IRS and the Department of the 

Treasury are not aware of any 

duplicative, overlapping, or conflicting 

Federal rules. 

Kevin M. Brown, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. E7–4968 Filed 3–19–07; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–146247–06] 

RIN 1545–BG15 

Corporate Reorganizations; Guidance 

on the Measurement of Continuity of 

Interest 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

by cross-reference to temporary 

regulations. 

SUMMARY: In the Rules and Regulations 

section of this issue of the Federal 

Register, the IRS is issuing temporary 

regulations that provide guidance 

regarding the satisfaction of the 

continuity of interest requirement for 

corporate reorganizations. The text of 

those regulations also serves as the text 

of these proposed regulations. 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by June 18, 2007. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–146247–06), room 

5203, Internal Revenue Service, PO Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be handdelivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to CC:PA: LPD:PR (REG–146247–06), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, NW, 

Washington, DC, or sent electronically, 

via the Federal eRulemaking Portal at 

http://www.regulations.gov/ (IRS and 

REG–146247–06). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Lisa S. Dobson at (202) 622–7790; 

concerning submissions of comments 

and requests for a public hearing, Kelly 

Banks at (202) 622–0392 (not toll-free 

numbers). 

SUPPLEMENTARY INFORMATION: 

Background and Explanation of 

Provisions 

Temporary regulations in the Rules 

and Regulations section of this issue of 

the Federal Register amend the Income 

Tax Regulations (26 CFR part 1) relating 

to section 368, which provides for 

general nonrecognition treatment for 

reorganizations. In addition to 

complying with the statutory and 

certain other requirements, to qualify as 

a reorganization, a transaction generally 

must satisfy the continuity of interest 

(COI) requirement. COI requires that, in 

substance, a substantial part of the value 

of the proprietary interests in the target 

corporation be preserved in the 

reorganization. The text of those 

regulations also serves as the text of 

these proposed regulations. The 

preamble to the temporary regulations 

explains the amendments. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking 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, 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, this notice of proposed 

rulemaking will be submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comment 

on its impact on small business. 

Comments and Requests for Public 

Hearing 

Before the proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

written comments (a signed original and 

eight (8) copies) or electronic comments 

that are submitted timely to the IRS. 

Comments are requested on all aspects 

of the proposed regulations. All 

comments will be available for public 

inspection and copying. A public 

hearing will be scheduled if requested 

in writing by any person that timely 

submits written comments. If a public 

hearing is scheduled, notice of the date, 

time, and place for the public hearing 

will be published in the Federal 

Register. 


erjones on PRODPC74 with PROPOSALS
Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Proposed Rules 13059 

Drafting Information 

The principal author of these 

regulations is Lisa S. Dobson of the 

Office of the Associate Chief Counsel 

(Corporate). However, other personnel 

from the IRS and Treasury Department 

participated in their development. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 1 is 

proposed to be 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 1.368–1 is amended 

by: 

1. Revising paragraph (e)(2). 

2. Revising and redesignating the text 

of paragraph (e)(8) as paragraph (e)(8)(i). 

3. Adding paragraph (e)(8)(ii). 

The revisions and addition read as 

follows: 

§ 1.368–1 Purpose and scope of exception 

of reorganization exchanges. 

[The text of the proposed amendment 

to § 1.368–1(e)(2) and (e)(8) is the same 

as the text of § 1.368–1T(e)(2) and (e)(8) 

published elsewhere in this issue of the 

Federal Register]. 

Kevin M. Brown, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. E7–5045 Filed 3–19–07; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 70 

[Docket No. EPA–R02–OAR–2006–0963; 

FRL–8289–4] 

Clean Air Act Title V Operating Permit 

Program Revision; New Jersey 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is proposing to approve a 

revision to the New Jersey title V 

Operating Permit Program submitted by 

the New Jersey Department of 

Environmental Protection (NJDEP) on 

October 4, 2006. The New Jersey 

Operating Permit Program is 

implemented through its Operating 

Permits Rule, codified at Subchapter 22 

of Chapter 27 of Title 7 of the New 

Jersey Administrative Code. The 

October 4, 2006 revision changes the 

title V fee program that funds the New 

Jersey Operating Permit Program, and 

various sections of the Operating 

Permits Rule relating to definitions, 

general provisions, general application 

procedures, operating permit 

application contents and completeness 

review. These changes resulted in both 

substantial and nonsubstantial revisions 

to New Jersey’s Operating Permit 

Program. EPA is proposing to approve 

these revisions. The intended affect of 

this action is to improve the State’s 

Operating Permit Program. 

DATES: Comments must be received on 

or before April 19, 2007. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–R02–

OAR–2006–0963, by one of the 

following methods: 

• www.regulations.gov: Follow the 

on-line instructions for submitting 

comments. 

• E-mail: Werner.Raymond@epa.gov 

• Fax: 212–637–3901. 

• Mail: Raymond Werner, Chief, Air 

Programs Branch, Environmental 

Protection Agency, Region 2 Office, 290 

Broadway, 25th Floor, New York, New 

York 10007–1866. 

• Hand Delivery: Raymond Werner, 

Chief, Air Programs Branch, 

Environmental Protection Agency, 

Region 2 Office, 290 Broadway, 25th 

Floor, New York, New York 10007–

1866. Such deliveries are only accepted 

during the Regional Office’s normal 

hours of operation. The Regional 

Office’s official hours of business are 

Monday through Friday, 8:30 to 4:30 

excluding Federal holidays. 

Instructions: Direct your comments to 

Docket ID No. EPA–R02–OAR–2006–

0963. EPA’s policy is that all comments 

received will be included in the public 

docket without change and may be 

made available online at 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through www.regulations.gov 

or e-mail. The www.regulations.gov Web 

site is an ‘‘anonymous access’’ system, 

which means EPA will not know your 

identity or contact information unless 

you provide it in the body of your 

comment. If you send an e-mail 

comment directly to EPA without going 

through www.regulations.gov your email address will be automatically 

captured and included as part of the 

comment that is placed in the public 

docket and made available on the 

Internet. If you submit an electronic 

comment, EPA recommends that you 

include your name and other contact 

information in the body of your 

comment and with any disk or CD–ROM 

you submit. If EPA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

EPA may not be able to consider your 

comment. Electronic files should avoid 

the use of special characters, any form 

of encryption, and be free of any defects 

or viruses. For additional information 

about EPA’s public docket visit the EPA 

Docket Center homepage at http://www.

epa.gov/epahome/dockets.htm. 

FOR FURTHER INFORMATION CONTACT: 

Suilin Chan, Air Programs Branch, 

Environmental Protection Agency, 290 

Broadway, 25th Floor, New York, New 

York 10007–1866, (212) 637–4019. 

SUPPLEMENTARY INFORMATION: This 

section provides additional information 

by addressing the following questions: 

I. Background 

The Clean Air Act (the Act) 

Amendments of 1990 required all states 

to develop Operating Permit Programs 

pursuant to title V of the Act, 42 U.S.C. 

7661–7661f, and the regulations 

promulgated under title V, which are 

found at 40 CFR part 70. EPA granted 

interim approval (effective June 17, 

1996) of the Operating Permit Program 

submitted by New Jersey in response to 

this directive. 61 FR 24715 (May 16, 

1996); 40 CFR part 70, Appendix A. 

Effective November 30, 2001, EPA 

granted full approval to New Jersey’s 

title V Operating Permit Program. 66 FR 

63168 (December 5, 2001). 

The current revision to the Operating 

Permits Rule adjusts the title V fee 

schedules to conform with the Omnibus 

Legislation adopted by the New Jersey 

state legislature in 2002, and ensures 

that requisite funding needs of the New 

Jersey Operating Permit Program are 

met. The revised Operating Permits Rule 

also includes changes that improve New 

Jersey’s Operating Permit Program. New 

Jersey submitted its program revision 

request to the EPA on October 4, 2006. 

The revision request describes the 

specific changes made to New Jersey’s 

Operating Permits Rule. 

II. What Is Being Addressed in This 

Action? 

In today’s action, EPA is proposing to 

approve revisions to N.J.A.C. 7:27–22, as 

identified below, which NJDEP adopted 


erjones on PRODPC74 with PROPOSALS