[Federal Register Volume 72, Number 53 (Tuesday, March 20, 2007)]
[Proposed Rules]
[Pages 13058-13059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5045]


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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.

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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 hand-delivered 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.

[[Page 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:


Sec.  1.368-1  Purpose and scope of exception of reorganization 
exchanges.

    [The text of the proposed amendment to Sec.  1.368-1(e)(2) and 
(e)(8) is the same as the text of Sec.  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