Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / Rules and Regulations 66987

CFR 558.58(d)(1)(iii) to reflect the

approval. The basis for approval is

discussed in the freedom of information

summary.

This approval is for use of three Type

A medicated articles to make

combination drug Type C medicated

feeds. One ingredient, roxarsone, is a

Category II drug as defined in 21 CFR

558.3(b)(1)(ii). As provided in 21 CFR

558.4(b), an approved form FDA 1900 is

required to make Type C medicated feed

from a Category II drug. Under section

512(m) of the Federal Food, Drug, and

Cosmetic Act (21 U.S.C. 360b(m)), as

amended by the Animal Drug

Availability Act of 1996 (Pub. L. 104–

250), medicated feed applications have

been replaced by a requirement for feed

mill licenses. Therefore, use of

amprolium plus ethopabate, bacitracin

zinc, and roxarsone Type A medicated

articles to make Type C medicated feeds

as provided in ANADA 200–217 is

limited to manufacture in a licensed

feed mill.

In accordance with the freedom of

information provisions of 21 CFR part

20 and 514.11(e)(2)(ii), a summary of

safety and effectiveness data and

information submitted to support

approval of this application may be seen

in the Dockets Management Branch

(HFA–305), Food and Drug

Administration, 12420 Parklawn Dr.,

rm. 1–23, Rockville, MD 20857, between

9 a.m. and 4 p.m., Monday through

Friday.

The agency has determined under 21

CFR 25.33(a)(1) that this action is of a

type that does not individually or

cumulatively have a significant effect on

the human environment. Therefore,

neither an environmental assessment

nor an environmental impact statement

is required.

List of Subjects in 21 CFR Part 558

Animal drugs, Animal feeds.

Therefore, under the Federal Food,

Drug, and Cosmetic Act and under

authority delegated to the Commissioner

of Food and Drugs and redelegated to

the Center for Veterinary Medicine, 21

CFR part 558 is amended as follows:

PART 558—NEW ANIMAL DRUGS FOR

USE IN ANIMAL FEEDS

1. The authority citation for 21 CFR

part 558 continues to read as follows:

Authority: 21 U.S.C. 360b, 371.

§ 558.58 [Amended]

2. Section 558.58 Amprolium and

ethopabate is amended in paragraph

(d)(1)(iii) in the table in the entry for

‘‘Bacitracin 5 to 35 plus roxarsone 34

(0.00375%)’’ in the column

‘‘Limitations’’ by removing ‘‘No.

000004’’ and adding in its place ‘‘Nos.

000004 and 046573’’.

Dated: October 30, 1997.

Stephen F. Sundlof,

Director, Center for Veterinary Medicine.

[FR Doc. 97–33488 Filed 12–22–97; 8:45 am]

BILLING CODE 4160–01–F

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 25 and 602

[TD 8743]

RIN 1545–AU12

Sale of Residence From Qualified

Personal Residence Trust

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations permitting the reformation

of a personal residence trust or a

qualified personal residence trust in

order to comply with the applicable

requirements for such trusts. The final

regulations also provide that the

governing instruments of such trusts

must prohibit the sale of a residence

held in the trust to the grantor of the

trust, the grantor’s spouse, or an entity

controlled by the grantor or the grantor’s

spouse.

DATES: The regulations are effective

December 23, 1997.

FOR FURTHER INFORMATION CONTACT:

Lane Damazo (202) 622–3090 (not a tollfree number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information

contained in these final regulations has

been reviewed and approved by the

Office of Management and Budget in

accordance with the Paperwork

Reduction Act (44 U.S.C. 3507) under

control number 1545–1485. Responses

to this collection of information are

required in order to ensure the proper

collection of the gift tax.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information

displays a valid control number.

The estimated annual burden per

respondent/recordkeeper varies from 3

hours to 3.25 hours, depending on

individual circumstances, with an

estimated average of 3.1 hours.

Comments concerning the accuracy of

this burden estimate and suggestions for

reducing this burden should be sent to

the Internal Revenue Service, Attn: IRS

Reports Clearance Officer T:FP,

Washington, DC 20224, and to the

Office of Management and Budget,

Attention: Desk Officer for the

Department of the Treasury, Office of

Information and Regulatory Affairs,

Washington, DC 20503.

Books or records relating to this

collection of information must be

retained as long as their contents may

become material in the administration

of any internal revenue law. Generally,

tax returns and tax return information

are confidential, as required by 26

U.S.C. 6103.

Background

On April 16, 1996, the IRS published

in the Federal Register a notice of

proposed rulemaking (formerly PS–004–

96) at 61 FR 16623. The IRS received

written and oral comments on the

proposed regulations and held a public

hearing on July 24, 1996. This document

adopts final regulations with respect to

this notice of proposed rulemaking.

Comments with respect to § 25.2702–

5(a)(2) indicated that the procedure

permitting reformation of trust

instruments will be helpful to taxpayers

and practitioners. It was suggested that

an additional reformation period be

made available for trusts for which the

gift tax return due date had passed

before the regulations became effective.

Accordingly, under the final

regulations, the trustees of trusts created

before January 1, 1997, are granted a 90-

day period after these regulations

become final in which to reform the

trust.

Some of the comments concerning the

amendments to § 25.2702–5(b) and (c)

agreed that the restrictions in the

proposed regulations on the sale of the

personal residence after the termination

of the grantor’s retained interest in a

personal residence trust or a qualified

personal residence trust further the

intent of Congress in enacting section

2702(a)(3)(A)(ii). Other comments stated

that the restrictions were not supported

by the statute. Treasury and the IRS

continue to believe that these

regulations are consistent with the

intent of Congress and carry out the

purpose of the personal residence

exception to section 2702.

Other comments suggested that the

final regulations should contain an

exception permitting the sale of the

residence to the grantor if the need

arises. Treasury and the IRS believe,

however, that a rule of this nature is not

necessary, since a grantor may lease the

residence after the retained term from a

trust or individual to which the
66988 Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / Rules and Regulations

residence passes after the expiration of

the initial term. The right to lease the

residence may be expressly set forth in

the trust document creating the personal

residence trust. If the residence is leased

for its fair market value rental, the

grantor will not retain the economic

benefit of the property for purposes of

section 2036(a), since the grantor will be

paying adequate consideration for the

use of the property. However, if the

residence is leased from a trust that is

a grantor trust with respect to the

grantor, the IRS under some

circumstances may contend that the

grantor has retained the economic

benefit of the property.

Commentators raised a concern that

because the regulations prohibit the

transfer of the residence to the grantor,

or the grantor’s spouse, etc., the trust

could not provide for a reversionary

interest or a testamentary power of

disposition, taking effect at the grantor’s

death prior to the expiration of the trust

term, nor could the trust provide for a

remainder interest in fee for the

grantor’s spouse (e.g., remainder

outright to spouse, or remainder to

child, but if child predeceases

termination of the trust, then to spouse.)

The final regulations permit

dispositions to the spouse.

Finally, commentators objected to the

statement in the preamble to the

proposed regulations to the effect that if

the IRS finds a pre-effective date trust to

be inconsistent with the purposes of

section 2702, the IRS, by established

legal doctrines, may treat the trust as

non-qualifying. Treasury and the IRS

wish to clarify that the IRS will apply

these regulations only to post-effective

date trusts. Nevertheless, Treasury and

the IRS have the authority to apply

established legal doctrines to disqualify

a pre-effective date trust in cases where

the statutory purpose has clearly been

violated.

Special Analyses

It has been determined that this

Treasury decision is not a significant

regulatory action as defined in EO

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 these

regulations do not impose on small

entities, a collection of information

requirement, the Regulatory Flexibility

Act (5 U.S.C. chapter 6), does not apply.

Therefore, a Regulatory Flexibility

Analysis is not required. Pursuant to

section 7805(f) of the Internal Revenue

Code, the Notice of Proposed

Rulemaking preceding these regulations

was submitted to the Small Business

Administration for comment on their

impact on small business.

Drafting Information

The principal author of these

regulations is Dale Carlton, Office of the

Chief Counsel, IRS. Other personnel

from the IRS and Treasury Department

participated in their development.

List of Subjects

26 CFR Part 25

Gift taxes, Reporting and

recordkeeping requirements.

26 CFR Part 602

Reporting and recordkeeping

requirements.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 25 is

amended as follows:

PART 25—GIFT TAX; GIFTS MADE

AFTER DECEMBER 31, 1954

Paragraph 1. The authority citation

for part 25 continues to read in part as

follows:

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

Par. 2. Section 25.2702–5 is amended

as follows:

1. Paragraph (a) heading and text are

redesignated as paragraph (a)(1) heading

and text and paragraph (a)(2) is added.

2. In paragraph (b)(1), five sentences

are added after the third sentence.

3. Paragraph (c)(5)(ii)(C) is revised.

4. Paragraph (c)(9) is added.

The additions and revisions read as

follows:

§ 25.2702–5 Personal residence trusts.

(a) * * *

(2) Modification of trust. A trust that

does not comply with one or more of the

regulatory requirements under

paragraph (b) or (c) of this section will,

nonetheless, be treated as satisfying

these requirements if the trust is

modified, by judicial reformation (or

nonjudicial reformation if effective

under state law), to comply with the

requirements. In the case of a trust

created after December 31, 1996, the

reformation must be commenced within

90 days after the due date (including

extensions) for the filing of the gift tax

return reporting the transfer of the

residence under section 6075 and must

be completed within a reasonable time

after commencement. If the reformation

is not completed by the due date

(including extensions) for filing the gift

tax return, the grantor or grantor’s

spouse must attach a statement to the

gift tax return stating that the

reformation has been commenced or

will be commenced within the 90-day

period. In the case of a trust created

before January 1, 1997, the reformation

must be commenced within 90 days

after December 23, 1997 and must be

completed within a reasonable time

after commencement.

(b) * * * (1) * * * In addition, the

trust does not meet the requirements of

this section unless the governing

instrument prohibits the trust from

selling or transferring the residence,

directly or indirectly, to the grantor, the

grantor’s spouse, or an entity controlled

by the grantor or the grantor’s spouse, at

any time after the original duration of

the term interest during which the trust

is a grantor trust. For purposes of the

preceding sentence, a sale or transfer to

another grantor trust of the grantor or

the grantor’s spouse is considered a sale

or transfer to the grantor or the grantor’s

spouse; however, a distribution (for no

consideration) upon or after the

expiration of the original duration of the

term interest to another grantor trust of

the grantor or the grantor’s spouse

pursuant to the express terms of the

trust will not be considered a sale or

transfer to the grantor or the grantor’s

spouse if such other grantor trust

prohibits the sale or transfer of the

property to the grantor, the grantor’s

spouse, or an entity controlled by the

grantor or the grantor’s spouse. In the

event the grantor dies prior to the

expiration of the original duration of the

term interest, this paragraph (b)(1) does

not apply to the distribution (for no

consideration) of the residence to any

person (including the grantor’s estate)

pursuant to the express terms of the

trust or pursuant to the exercise of a

power retained by the grantor under the

terms of the trust. Further, this

paragraph (b)(1) does not apply to any

outright distribution (for no

consideration) of the residence to the

grantor’s spouse after the expiration of

the original duration of the term interest

pursuant to the express terms of the

trust. For purposes of this paragraph

(b)(1), a grantor trust is a trust treated as

owned in whole or in part by the grantor

or the grantor’s spouse pursuant to

sections 671 through 678, and control is

defined in § 25.2701–2(b)(5)(ii) and (iii).

* * *

* * * * *

(c) * * *

(5) * * *

(ii) * * *

(C) Sale proceeds. The governing

instrument may permit the sale of the

residence (except as set forth in

paragraph (c)(9) of this section) and may

permit the trust to hold proceeds from
Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / Rules and Regulations 66989

the sale of the residence, in a separate

account.

* * * * *

(9) Sale of residence to grantor,

grantor’s spouse, or entity controlled by

grantor or grantor’s spouse. The

governing instrument must prohibit the

trust from selling or transferring the

residence, directly or indirectly, to the

grantor, the grantor’s spouse, or an

entity controlled by the grantor or the

grantor’s spouse during the retained

term interest of the trust, or at any time

after the retained term interest that the

trust is a grantor trust. For purposes of

the preceding sentence, a sale or transfer

to another grantor trust of the grantor or

the grantor’s spouse is considered a sale

or transfer to the grantor or the grantor’s

spouse; however, a distribution (for no

consideration) upon or after the

expiration of the retained term interest

to another grantor trust of the grantor or

the grantor’s spouse pursuant to the

express terms of the trust will not be

considered a sale or transfer to the

grantor or the grantor’s spouse if such

other grantor trust prohibits the sale or

transfer of the property to the grantor,

the grantor’s spouse, or an entity

controlled by the grantor or the grantor’s

spouse. In the event the grantor dies

prior to the expiration of the retained

term interest, this paragraph (c)(9) does

not apply to the distribution (for no

consideration) of the residence to any

person (including the grantor’s estate)

pursuant to the express terms of the

trust or pursuant to the exercise of a

power retained by the grantor under the

terms of the trust. Further, this

paragraph (c)(9) does not apply to an

outright distribution (for no

consideration) of the residence to the

grantor’s spouse after the expiration of

the retained trust term pursuant to the

express terms of the trust. For purposes

of this paragraph (c)(9), a grantor trust

is a trust treated as owned in whole or

in part by the grantor or the grantor’s

spouse pursuant to sections 671 through

678, and control is defined in

§ 25.2701–2(b)(5)(ii) and (iii).

* * * * *

Par. 3. Section 25.2702–7 is amended

as follows:

1. The first sentence is revised.

2. A sentence is added at the end of

the section.

The revision and addition read as

follows:

§ 25.2702–7 Effective dates.

Except as provided in this section,

§§ 25.2702–1 through 25.2702–6 apply

as of January 28, 1992. * * * The fourth

through eighth sentences of § 25.2702–

5(b)(1) and § 25.2702–5(c)(9) apply with

respect to trusts created after May 16,

1996.

PART 602—OMB CONTROL NUMBERS

UNDER THE PAPERWORK

REDUCTION ACT

Par. 4. The authority citation for part

602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 5. In § 602.101, paragraph (c) is

amended by adding an entry in

numerical order to the table to read as

follows:

§ 602.101 OMB Control numbers.

* * * * *

(c) * * *

CFR part or section where

identified and described

Current

OMB control No.

* * * * *

25.2702–5 ................................. 1545–1485

* * * * *

Michael P. Dolan,

Acting Commissioner of Internal Revenue.

Approved: December 4, 1997.

Donald C. Lubick,

Acting Assistant Secretary of the Treasury.

[FR Doc. 97–33356 Filed 12–22–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR 199

[DoD 6010.8–R]

RIN 0720–AA40

Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS);

TRICARE Selected Reserve Dental

Program

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

SUMMARY: This final rule establishes the

TRICARE Selected Reserve Dental

Program (TSRDP) to provide dental care

to members of the Selected Reserves of

the Ready Reserve. The final rule details

operation of the program.

EFFECTIVE DATE: This final rule is

effective January 22, 1998.

ADDRESSES: Office of Health Services

Financing, Department of Defense,

Room 1B657, Pentagon, Washington, DC

20301–1200.

FOR FURTHER INFORMATION CONTACT:

Cynthia P. Speight, Office of the

Assistant Secretary of Defense (Health

Affairs), (703) 697–8975.

SUPPLEMENTARY INFORMATION:

I. Overview of the Final Rule

Implementation of the TRICARE

Selected Reserve Dental Program

(TSRDP) was directed by Congress in

section 705 of the National Defense

Authorization Act for Fiscal Year 1996,

Public Law 104–106, which amended

title 10, United States Code, by adding

section 1076b. This law directed the

implementation of a dental program for

members of the Selected Reserve of the

Ready Reserve, providing for voluntary

enrollment and premium sharing

between DoD and the enrollee. Section

702 of the 1997 National Defense

Authorization Act, Pub. L. 104–201

amended 10 U.S.C. 1076b, by revising

the program’s start date and also

changing several operational

requirements.

Included in the program are the 50

United States and the District of

Columbia, Puerto Rico, Guam, and the

U.S. Virgin Islands. Enrollment in the

TSRDP will be voluntary and

accomplished via an enrollment

application submitted to the contractor.

Initial enrollment shall be for a period

of 12 months followed by month-tomonth enrollment as long as the

enrollee chooses to continue

enrollment. The costs of the program

will be shared between the government

and the enrollee. The premium payment

shall be collected pursuant to

procedures established by the Assistant

Secretary of Defense (Health Affairs).

Dental coverage under the TSRDP will

consist of basic dental care, to include

diagnostic services, preventive services,

basic restorative services, and

emergency oral examinations. Enrollees

will be limited to an annual maximum

of $1,000 of paid allowable charges per

year. Minor administrative changes have

been made in the benefits plan section

in order to correct outdated codes.

Under this final rule, where possible,

Reservists may make use of

participating dental providers in their

areas and may benefit from reduced out

of pocket costs and provider submission

of claims and acceptance of contractor

allowances and arrangements. Enrollees

using non-network providers may be

balance billed amounts in excess of

allowable charges. Dental claims under

the TSRDP will be paid at the lower of

the billed charges or the Usual,

Customary and Reasonable (UCR) level,

in which the customary rate is

calculated at the 85th percentile or

higher of billed charges.