Federal Register / Vol. 72, No. 60 / Thursday, March 29, 2007 / Rules and Regulations 14675 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9318] 

RIN 1545–BE57 

Guidance Regarding the Simplified 

Service Cost Method and the 

Simplified Production Method 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document contains final 

regulations relating to the capitalization 

of costs under the simplified service 

cost method and the simplified 

production method provided by the 

Income Tax Regulations. For taxpayers 

that use the simplified service cost 

method or the simplified production 

method, the regulations clarify when 

self-constructed assets are produced on 

a routine and repetitive basis in the 

ordinary course of their businesses. 

DATES: Effective Date: These regulations 

are effective on March 29, 2007. 

Applicability Date: For dates of 

applicability, see §§ 1.263A–1(l) and 

1.263A–2(f). 

FOR FURTHER INFORMATION CONTACT: 

Steven J. Gee or Donna M. Crawford, 

(202) 622–4970 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains amendments 

to 26 CFR part 1. On August 2, 2005, the 

IRS and Treasury Department published 

in the Federal Register a notice of 

proposed rulemaking (REG–121584–05; 

70 FR 44535) by cross reference to 

temporary regulations (TD 9217; 70 FR 

44467) (collectively, the 2005 

regulations) under section 263A of the 

Internal Revenue Code (Code). These 

regulations provide that self-constructed 

tangible personal property is considered 

produced on a routine and repetitive 

basis in the ordinary course of a 

taxpayer’s trade or business for 

purposes of the simplified service cost 

method or the simplified production 

method when units of tangible personal 

property are mass-produced, that is, 

numerous substantially identical assets 

are manufactured within a taxable year 

using standardized designs and 

assembly line techniques, and the 

applicable recovery period of such 

assets under section 168(c) is not longer 

than 3 years. 

The IRS and Treasury Department 

issued Rev. Proc. 2006–11 (2006–3 IRB 

309), see § 601.601(d)(2)(ii)(b), which 

provides procedures by which a 

taxpayer changing its method of 

accounting to comply with § 1.263A–1T 

or § 1.263A–2T (issued under TD 9217) 

for its first taxable year ending on or 

after August 2, 2005, may request the 

consent of the Commissioner utilizing 

either the administrative procedures for 

requesting the advance consent of the 

Commissioner (for further guidance, for 

example, see Rev. Proc. 97–27 (1997–1 

CB 680), as modified and amplified by 

Rev. Proc. 2002–19 (2002–1 CB 696), as 

amplified and clarified by Rev. Proc. 

2002–54 (2002–2 CB 432), and 

§ 601.601(d)(2)(ii)(b)), or the 

administrative procedures for obtaining 

the automatic consent of the 

Commissioner (for further guidance, for 

example, see Rev. Proc. 2002–9 (2002–

1 CB 327), as modified and clarified by 

Announcement 2002–17 (2002–1 CB 

561), modified and amplified by Rev. 

Proc. 2002–19 (2002–1 CB 696), and 

amplified, clarified, and modified by 

Rev. Proc. 2002–54 (2002–2 CB 432), 

and § 601.601(d)(2)(ii)(b)). These final 

regulations have been revised to be 

consistent with the procedures provided 

in Rev. Proc. 2006–11. 

One written comment was received in 

response to the 2005 regulations. No 

requests to speak at a public hearing 

were received, and no hearing was held. 

After consideration of the comment, the 

proposed regulations under section 

263A are adopted by this Treasury 

decision. 

Summary of Comments 

A commentator expressed the belief 

that the categories of property, as 

described in Notice 88–86 (1988–2 CB 

401), see § 601.601(d)(2)(ii)(b), eligible 

for the simplified service cost method 

and the simplified production method 

represent a reasonable balance between 

technical accuracy and simplification. 

The commentator opposed the 

requirements in the 2005 regulations 

that, to qualify for the category of 

property ‘‘produced on a routine and 

repetitive basis,’’ the property must be 

mass-produced using standardized 

designs and assembly line techniques, 

and have an applicable recovery period 

of not longer than 3 years. The 

commentator argued that, with respect 

to electric utility companies, there is no 

sound tax policy to support limiting the 

application of the methods based on the 

manner in which self-constructed assets 

are produced or the number of years 

over which the self-constructed assets 

are depreciated. The commentator 

further stated that the preamble to the 

2005 regulations did not explain why 

there may be a distortion of income 

from the use of the simplified methods, 

and why such a distortion justified 

distinctions based on the method of 

manufacturing and the recovery lives of 

property. 

The simplified methods are less 

accurate and less precise than a facts 

and circumstances method and, thus, 

may capitalize more or less costs than 

a facts and circumstances method. 

Therefore, the simplified methods may 

cause distortions when compared to a 

more accurate facts and circumstances 

method. The amount of distortion may 

not be very large for assets that are mass 

produced, because the underlying 

assumption of the simplified methods 

that costs are incurred ratably across all 

the assets may be appropriate. 

Additionally, any distortion caused by 

the lack of precision quickly reverses if 

the assets to which the methods may be 

applied typically have a high turnover 

rate, that is, a short recovery period. 

Inventory production frequently meets 

one or both of these two criteria. The 

IRS and Treasury Department provided 

the simplified methods for inventory 

because the reduction in the burdens of 

complying with the uniform 

capitalization rules generally 

outweighed the possible distortion 

within the simplified methods. 

Under temporary regulations 

published in the Federal Register on 

March 30, 1987 (TD 8131, 1987–1 CB 

98, [52 FR 10052]) (1987 regulations), 

the simplified methods were available 

only to inventory and non-inventory 

property held by a taxpayer primarily 

for sale to customers in the ordinary 

course of the taxpayer’s trade or 

business. The preamble to the 1987 

regulations stated that the methods were 

‘‘designed to alleviate the administrative 

burdens of complying with [section 

263A] where mass production of assets 

occurs on a repetitive and routine basis, 

with a typically high ‘turnover’ rate for 

the produced assets.’’ The preamble to 

the 1987 regulations stated that the 

simplified methods could not be 

utilized with respect to self-constructed 

assets because the simplified methods 

were not appropriate for use ‘‘in 

accounting for casual or occasional 

production of property.’’

In response to comments suggesting 

that the categories of property eligible 

for the simplified service cost method 

and the simplified production method 

be expanded to include other categories 

of property with similar characteristics, 

Notice 88–86 expanded the availability 

of the methods, in relevant part, to 

‘‘property constructed by a taxpayer for 

use in its trade or business if, in the 

ordinary course of its production 

activities, the taxpayer produces such 


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14676 Federal Register / Vol. 72, No. 60 / Thursday, March 29, 2007 / Rules and Regulations 

property on a routine and repetitive 

basis (that is, the taxpayer produces 

numerous items of such property within 

a taxable year).’’ The final regulations 

published in the Federal Register on 

August 9, 1993 (TD 8482, 1993–2 CB 77, 

[58 FR 42198]) included the new 

category from Notice 88–86. The 

addition of certain self-constructed 

assets was merely intended to add 

another category of property with 

characteristics similar to inventory 

(mass produced or high turnover) and 

was not an indication that the 

application of the simplified methods to 

the production, whether or not casual or 

occasional, of all self-produced assets 

was considered appropriate. 

The IRS and Treasury Department 

continue to believe that to prevent 

distortion when applied to selfconstructed property, the simplified 

service cost method and simplified 

production method should be limited to 

property that is mass produced and has 

a typically high ‘‘turnover’’ rate. 

Accordingly, the final regulations do not 

incorporate the commentator’s 

suggestions. The regulations clarify, 

however, that property with a typically 

high ‘‘turnover’’ rate includes materials 

and supplies that are used and 

consumed within three years of being 

produced. 

The IRS and Treasury Department 

recognize that the application of the 

uniform capitalization requirements to 

self-constructed property can be 

burdensome, particularly to small 

taxpayers. The IRS and Treasury 

Department will consider proposing 

simplified methods for self-constructed 

property for small taxpayers in future 

guidance under section 263A. 

Additionally, a commentator 

indicated that for taxpayers that have 

both property that is eligible for the 

simplified methods and property that is 

ineligible for the simplified methods, 

the regulations do not provide specific 

procedures to determine how to allocate 

service costs and other indirect costs 

between the eligible property and the 

ineligible property. The IRS and 

Treasury Department agree that service 

costs and other indirect costs must be 

allocated to ineligible property as well 

as eligible property. However, 

prescribing specific procedures and 

methods for these allocations is beyond 

the scope of these regulations. The IRS 

and Treasury Department may address 

this issue in future guidance. 

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, and because the 

regulations do 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 that preceded 

these regulations 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 these 

regulations is Scott Rabinowitz of the 

Office of Associate Chief Counsel 

(Income Tax and Accounting). 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. 

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 1.263A–1 is amended 

by revising paragraphs (h)(2)(i)(D), (k) 

and (l) to read as follows: 

§ 1.263A–1 Uniform capitalization of costs. 

* * * * * 

(h) * * * 

(2) * * * 

(i) * * * 

(D) Self-constructed tangible personal 

property produced on a routine and 

repetitive basis—(1) In general. Selfconstructed tangible personal property 

produced by the taxpayer on a routine 

and repetitive basis in the ordinary 

course of the taxpayer’s trade or 

business. Self-constructed tangible 

personal property is produced by the 

taxpayer on a routine and repetitive 

basis in the ordinary course of the 

taxpayer’s trade or business when units 

of tangible personal property (as defined 

in § 1.263A–10(c)) are mass-produced, 

that is, numerous substantially identical 

assets are manufactured within a taxable 

year using standardized designs and 

assembly line techniques, and either the 

applicable recovery period of the 

property determined under section 

168(c) is not longer than 3 years or the 

property is a material or supply that will 

be used and consumed within 3 years of 

being produced. For purposes of this 

paragraph (h)(2)(i)(D), the applicable 

recovery period of the assets will be 

determined at the end of the taxable 

year in which the assets are placed in 

service for purposes of § 1.46–3(d). 

Subsequent changes to the applicable 

recovery period after the assets are 

placed in service will not affect the 

determination of whether the assets are 

produced on a routine and repetitive 

basis for purposes of this paragraph 

(h)(2)(i)(D). 

(2) Examples. The following examples 

illustrate this paragraph (h)(2)(i)(D): 

Example 1. Y is a manufacturer of 

automobiles. During the taxable year Y 

produces numerous substantially identical 

dies and molds using standardized designs 

and assembly line techniques. The dies and 

molds have a 3-year applicable recovery 

period for purposes of section 168(c). Y uses 

the dies and molds to produce or process 

particular automobile components and does 

not hold them for sale. The dies and molds 

are produced on a routine and repetitive 

basis in the ordinary course of Y’s business 

for purposes of this paragraph because the 

dies and molds are both mass-produced and 

have a recovery period of not longer than 3 

years. 

Example 2. Z is an electric utility that 

regularly manufactures and installs identical 

poles that are used in transmitting and 

distributing electricity. The poles have a 20- 

year applicable recovery period for purposes 

of section 168(c). The poles are not produced 

on a routine and repetitive basis in the 

ordinary course of Z’s business for purposes 

of this paragraph because the poles have an 

applicable recovery period that is longer than 

3 years. 

* * * * * 

(k) Change in method of accounting—

(1) In general. A change in a taxpayer’s 

treatment of mixed service costs to 

comply with paragraph (h)(2)(i)(D) of 

this section is a change in method of 

accounting to which the provisions of 

sections 446 and 481 and the 

regulations under those sections apply. 

See § 1.263A–7. For a taxpayer’s first 

taxable year ending on or after August 

2, 2005, the taxpayer is granted the 

consent of the Commissioner to change 

its method of accounting to comply with 

paragraph (h)(2)(i)(D) of this section, 

provided the taxpayer follows the 

administrative procedures, as modified 

by paragraphs (k)(2) through (4) of this 

section, issued under § 1.446–1(e)(3)(ii) 

for obtaining the Commissioner’s 

automatic consent to a change in 

accounting method (for further 

guidance, for example, see Rev. Proc. 

2002–9 (2002–1 CB 327), as modified 

and clarified by Announcement 2002–

17 (2002–1 CB 561), modified and 


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Federal Register / Vol. 72, No. 60 / Thursday, March 29, 2007 / Rules and Regulations 14677 

amplified by Rev. Proc. 2002–19 (2002–

1 CB 696), and amplified, clarified, and 

modified by Rev. Proc. 2002–54 (2002–

2 CB 432), and § 601.601(d)(2)(ii)(b) of 

this chapter). For purposes of Form 

3115, ‘‘Application for Change in 

Accounting Method,’’ the designated 

number for the automatic accounting 

method change authorized by this 

paragraph (k) is ‘‘95.’’ If Form 3115 is 

revised or renumbered, any reference in 

this section to that form is treated as a 

reference to the revised or renumbered 

form. Alternatively, notwithstanding the 

provisions of any administrative 

procedures that preclude a taxpayer 

from requesting the advance consent of 

the Commissioner to change a method 

of accounting that is required to be 

made pursuant to a published automatic 

change procedure, for its first taxable 

year ending on or after August 2, 2005, 

a taxpayer may request the advance 

consent of the Commissioner to change 

its method of accounting to comply with 

paragraph (h)(2)(i)(D) of this section, 

provided the taxpayer follows the 

administrative procedures, as modified 

by paragraphs (k)(2) through (5) of this 

section, for obtaining the advance 

consent of the Commissioner (for further 

guidance, for example, see Rev. Proc. 

97–27 (1997–1 CB 680), as modified and 

amplified by Rev. Proc. 2002–19 (2002–

1 CB 696), as amplified and clarified by 

Rev. Proc. 2002–54 (2002–2 CB 432), 

and § 601.601(d)(2)(ii)(b) of this 

chapter). For the taxpayer’s second and 

subsequent taxable years ending on or 

after August 2, 2005, requests to secure 

the consent of the Commissioner must 

be made under the administrative 

procedures, as modified by paragraphs 

(k)(3) and (4) of this section, for 

obtaining the Commissioner’s advance 

consent to a change in accounting 

method. 

(2) Scope limitations. Any limitations 

on obtaining the automatic consent or 

advance consent of the Commissioner 

do not apply to a taxpayer seeking to 

change its method of accounting to 

comply with paragraph (h)(2)(i)(D) of 

this section for its first taxable year 

ending on or after August 2, 2005. 

(3) Audit protection. A taxpayer that 

changes its method of accounting in 

accordance with this paragraph (k) to 

comply with paragraph (h)(2)(i)(D) of 

this section does not receive audit 

protection if its method of accounting 

for mixed service costs is an issue under 

consideration at the time the application 

is filed with the national office. 

(4) Section 481(a) adjustment. A 

change in method of accounting to 

conform to paragraph (h)(2)(i)(D) of this 

section requires a section 481(a) 

adjustment. The section 481(a) 

adjustment period is two taxable years 

for a net positive adjustment for an 

accounting method change that is made 

to conform to paragraph (h)(2)(i)(D) of 

this section. 

(5) Time for requesting change. 

Notwithstanding the provisions of 

§ 1.446–1(e)(3)(i) and any contrary 

administrative procedure, a taxpayer 

may submit a request for advance 

consent to change its method of 

accounting to comply with paragraph 

(h)(2)(i)(D) of this section for its first 

taxable year ending on or after August 

2, 2005, on or before the date that is 30 

days after the end of the taxable year for 

which the change is requested. 

(l) Effective date. Paragraphs 

(h)(2)(i)(D), (k), and (l) of this section 

apply for taxable years ending on or 

after August 2, 2005. 

§ 1.263A–1T [Removed] 

■ Par. 3. Section 1.263A–1T is removed. 

■ Par. 4. Section 1.263A–2 is amended 

by revising paragraphs (b)(2)(i)(D), (e) 

and (f) to read as follows: 

§ 1.263A–2 Rules relating to property 

produced by the taxpayer. 

* * * * * 

(b) * * * 

(2) * * * 

(i) * * * 

(D) Self-constructed tangible personal 

property produced on a routine and 

repetitive basis—(1) In general. Selfconstructed tangible personal property 

produced by the taxpayer on a routine 

and repetitive basis in the ordinary 

course of the taxpayer’s trade or 

business. Self-constructed tangible 

personal property is produced by the 

taxpayer on a routine and repetitive 

basis in the ordinary course of the 

taxpayer’s trade or business when units 

of tangible personal property (as defined 

in § 1.263A–10(c)) are mass-produced, 

that is, numerous substantially identical 

assets are manufactured within a taxable 

year using standardized designs and 

assembly line techniques, and either the 

applicable recovery period of the 

property determined under section 

168(c) is not longer than 3 years or the 

property is a material or supply that will 

be used and consumed within 3 years of 

being produced. For purposes of this 

paragraph (b)(2)(i)(D), the applicable 

recovery period of the assets will be 

determined at the end of the taxable 

year in which the assets are placed in 

service for purposes of § 1.46–3(d). 

Subsequent changes to the applicable 

recovery period after the assets are 

placed in service will not affect the 

determination of whether the assets are 

produced on a routine and repetitive 

basis for purposes of this paragraph 

(b)(2)(i)(D). 

(2) Examples. The following examples 

illustrate this paragraph (b)(2)(i)(D): 

Example 1. Y is a manufacturer of 

automobiles. During the taxable year Y 

produces numerous substantially identical 

dies and molds using standardized designs 

and assembly line techniques. The dies and 

molds have a 3-year applicable recovery 

period for purposes of section 168(c). Y uses 

the dies and molds to produce or process 

particular automobile components and does 

not hold them for sale. The dies and molds 

are produced on a routine and repetitive 

basis in the ordinary course of Y’s business 

for purposes of this paragraph because the 

dies and molds are both mass-produced and 

have a recovery period of not longer than 3 

years. 

Example 2. Z is an electric utility that 

regularly manufactures and installs identical 

poles that are used in transmitting and 

distributing electricity. The poles have a 20- 

year applicable recovery period for purposes 

of section 168(c). The poles are not produced 

on a routine and repetitive basis in the 

ordinary course of Z’s business for purposes 

of this paragraph because the poles have an 

applicable recovery period that is longer than 

3 years. 

* * * * * 

(e) Change in method of accounting—

(1) In general. A change in a taxpayer’s 

treatment of additional section 263A 

costs to comply with paragraph 

(b)(2)(i)(D) of this section is a change in 

method of accounting to which the 

provisions of sections 446 and 481 and 

the regulations under those sections 

apply. See § 1.263A–7. For a taxpayer’s 

first taxable year ending on or after 

August 2, 2005, the taxpayer is granted 

the consent of the Commissioner to 

change its method of accounting to 

comply with paragraph (b)(2)(i)(D) of 

this section, provided the taxpayer 

follows the administrative procedures, 

as modified by paragraphs (e)(2) through 

(4) of this section, issued under § 1.446–

1(e)(3)(ii) for obtaining the 

Commissioner’s automatic consent to a 

change in accounting method (for 

further guidance, for example, see Rev. 

Proc. 2002–9 (2002–1 CB 327), as 

modified and clarified by 

Announcement 2002–17 (2002–1 CB 

561), modified and amplified by Rev. 

Proc. 2002–19 (2002–1 CB 696), and 

amplified, clarified, and modified by 

Rev. Proc. 2002–54 (2002–2 CB 432), 

and § 601.601(d)(2)(ii)(b) of this 

chapter). For purposes of Form 3115, 

‘‘Application for Change in Accounting 

Method,’’ the designated number for the 

automatic accounting method change 

authorized by this paragraph (e) is ‘‘95.’’

If Form 3115 is revised or renumbered, 

any reference in this section to that form 

is treated as a reference to the revised 

or renumbered form. Alternatively, 


cprice-sewell on PROD1PC61 with RULES
14678 Federal Register / Vol. 72, No. 60 / Thursday, March 29, 2007 / Rules and Regulations 

notwithstanding the provisions of any 

administrative procedures that preclude 

a taxpayer from requesting the advance 

consent of the Commissioner to change 

a method of accounting that is required 

to be made pursuant to a published 

automatic change procedure, for its first 

taxable year ending on or after August 

2, 2005, a taxpayer may request the 

advance consent of the Commissioner to 

change its method of accounting to 

comply with paragraph (b)(2)(i)(D) of 

this section, provided the taxpayer 

follows the administrative procedures, 

as modified by paragraphs (e)(2) through 

(5) of this section, for obtaining the 

advance consent of the Commissioner 

(for further guidance, for example, see 

Rev. Proc. 97–27 (1997–1 CB 680), as 

modified and amplified by Rev. Proc. 

2002–19 (2002–1 CB 696), as amplified 

and clarified by Rev. Proc. 2002–54 

(2002–2 CB 432), and 

§ 601.601(d)(2)(ii)(b) of this chapter). 

For the taxpayer’s second and 

subsequent taxable years ending on or 

after August 2, 2005, requests to secure 

the consent of the Commissioner must 

be made under the administrative 

procedures, as modified by paragraphs 

(e)(3) and (4) of this section, for 

obtaining the Commissioner’s advance 

consent to a change in accounting 

method. 

(2) Scope limitations. Any limitations 

on obtaining the automatic consent or 

advance consent of the Commissioner 

do not apply to a taxpayer seeking to 

change its method of accounting to 

comply with paragraph (b)(2)(i)(D) of 

this section for its first taxable year 

ending on or after August 2, 2005. 

(3) Audit protection. A taxpayer that 

changes its method of accounting in 

accordance with this paragraph (e) to 

comply with paragraph (b)(2)(i)(D) of 

this section does not receive audit 

protection if its method of accounting 

for additional section 263A costs is an 

issue under consideration at the time 

the application is filed with the national 

office. 

(4) Section 481(a) adjustment. A 

change in method of accounting to 

conform to paragraph (b)(2)(i)(D) of this 

section requires a section 481(a) 

adjustment. The section 481(a) 

adjustment period is two taxable years 

for a net positive adjustment for an 

accounting method change that is made 

to conform to paragraph (b)(2)(i)(D) of 

this section. 

(5) Time for requesting change. 

Notwithstanding the provisions of 

§ 1.446–1(e)(3)(i) and any contrary 

administrative procedure, a taxpayer 

may submit a request for advance 

consent to change its method of 

accounting to comply with paragraph 

(b)(2)(i)D) of this section for its first 

taxable year ending on or after August 

2, 2005, on or before the date that is 30 

days after the end of the taxable year for 

which the change is requested. 

(f) Effective date. Paragraphs 

(b)(2)(i)(D), (e), and (f) of this section 

apply for taxable years ending on or 

after August 2, 2005. 

§ 1.263A–2T [Removed] 

■ Par. 5. Section 1.263A–2T is removed. 

Kevin M. Brown, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: March 20, 2007. 

Eric Solomon, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. E7–5732 Filed 3–28–07; 8:45 am] 

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); 

Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correcting amendment. 

SUMMARY: This document contains 

correction to temporary regulations (TD 

9313) that were published in the 

Federal Register on Thursday, March 1, 

2007 (72 FR 9262) 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. 

DATES: This amendment is effective 

March 29, 2007. 

FOR FURTHER INFORMATION CONTACT: 

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

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The temporary regulations that are the 

subjects of this correction are under 

section 368 of the Internal Revenue 

Code. 

Need for Correction 

As published, temporary regulations 

(TD 9313) contain an error that may 

prove to be misleading and is in need 

of clarification. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Correction of Publication 

■ Accordingly, 26 CFR part 1 is 

corrected by making the following 

amendments: 

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 1.368–2T is amended 

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

follows: 

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

* * * * * 

(l) * * * 

(2) * * * 

(iv) Exception. This 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). 

* * * * * 

LaNita Van Dyke, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel, (Procedure and Administration). 

[FR Doc. E7–5603 Filed 3–28–07; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R05–OAR–2006–0774; FRL–8284–5] 

Approval and Promulgation of Air 

Quality Implementation Plans; Indiana 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Direct final rule. 

SUMMARY: The EPA is approving 

revisions to Indiana’s State 

Implementation Plan (SIP) submitted on 

August 25, 2006, revising its existing 

emission reporting rule to be consistent 

with the emission statement program 

requirements for stationary sources in 

the Clean Air Act (CAA). The rationale 

for approval and other information are 

provided in this rulemaking action. 

DATES: This direct final rule will be 

effective May 29, 2007, unless EPA 

receives adverse comments by April 30, 

2007. If adverse comments are received, 

EPA will publish a timely withdrawal of 


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