67726 Federal Register / Vol. 62, No. 249 / Tuesday, December 30, 1997 / Rules and Regulations

which the demolished structure was

located. The 1981 Act modified the

definition of certified historic structure

for purposes of section 280B from a

building or structure meeting certain

requirements to a building (or its

structural components) meeting certain

requirements. The 1984 Act substituted

‘‘any structure’’ for ‘‘certified historic

structure.’’

A notice of proposed rulemaking was

published in the Federal Register (61

FR 31473) on June 20, 1996. The one

written comment received supports the

position announced in the notice of

proposed rulemaking.

These final regulations define what

‘‘structure’’ means for purposes of

section 280B.

Explanation of Provisions

These final regulations define the

term ‘‘structure’’ for purposes of section

280B as a building and its structural

components as those terms are defined

in § 1.48–1(e) of the Income Tax

Regulations. Thus, under section 280B,

a structure will include only a building

and its structural components and not

other inherently permanent structures

such as oil and gas storage tanks, blast

furnaces, and coke ovens.

The final regulations rely on the

legislative history underlying the 1984

and 1986 Acts, which refer repeatedly to

buildings rather than to structures

generally. In addition, the legislative

history of the 1984 Act discusses the

difficulty of applying the intent test of

§ 1.165–3 of the regulations, which

applies to the demolition of buildings,

and indicates that the newly added

language is meant to eliminate this

difficulty.

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 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 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 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 Bernard P.

Harvey, Office of Assistant Chief

Counsel (Passthroughs and Special

Industries). 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 1.280B–1 is added to

read as follows:

§ 1.280B–1 Demolition of structures.

(a) In general. Section 280B provides

that, in the case of the demolition of any

structure, no deduction otherwise

allowable under chapter 1 of subtitle A

shall be allowed to the owner or lessee

of such structure for any amount

expended for the demolition or any loss

sustained on account of the demolition,

and that the expenditure or loss shall be

treated as properly chargeable to the

capital account with respect to the land

on which the demolished structure was

located.

(b) Definition of structure. For

purposes of section 280B, the term

structure means a building, as defined

in § 1.48–1(e)(1), including the

structural components of that building,

as defined in § 1.48–1(e)(2).

(c) Effective date. This section is

effective for demolitions commencing

on or after December 30, 1997.

Dated: December 8, 1997.

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

Approved:

Donald C. Lubick,

Acting Assistant Secretary of the Treasury.

[FR Doc. 97–33646 Filed 12–29–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8747]

RIN 1545–AU30

Empowerment Zone Employment

Credit

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations relating to the period

employers may use in computing the

empowerment zone employment credit

under section 1396 of the Internal

Revenue Code. The regulations reflect

and implement certain changes made by

the Omnibus Budget Reconciliation Act

of 1993 (OBRA ’93). They affect

employers of employees who live and

work in an empowerment zone

designated under the statute. The

regulations provide employers with the

guidance necessary to claim the credit.

DATES: These regulations are effective

December 30, 1997. For dates of

applicability, see § 1.1396–1(c) of these

regulations.

FOR FURTHER INFORMATION CONTACT:

Robert G. Wheeler, (202) 622–6060 (not

a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On December 16, 1996, a notice of

proposed rulemaking [REG–209834–96]

containing proposed regulations relating

to the period employers may use in

computing the empowerment zone

employment credit under section 1396

of the Internal Revenue Code was

published in the Federal Register (61

FR 66000).

No written comments responding to

this notice were received. No one

requested an opportunity to speak at a

public hearing. Therefore, no public

hearing was held. The regulations

proposed by REG–209834–96 are

adopted with minor clarifications by

this Treasury decision.

Explanation of Provisions

This document contains amendments

to the Income Tax Regulations (26 CFR

part 1) relating to the empowerment

zone employment credit under section

1396. Section 1396 was added to the

Internal Revenue Code by the Omnibus

Budget Reconciliation Act of 1993

(OBRA ’93). Section 1397D of the Code

authorizes the Secretary of the Treasury

to prescribe regulations that may be
Federal Register / Vol. 62, No. 249 / Tuesday, December 30, 1997 / Rules and Regulations 67727

necessary or appropriate to carry out the

purposes of section 1396.

Section 1396 provides employers with

a credit for certain wages (qualified zone

wages) paid or incurred by an employer

for services performed by a qualified

zone employee. The amount of the

empowerment zone employment credit

under section 1396 is equal to a

specified percentage of the qualified

zone wages paid or incurred by the

employer during the calendar year that

ends with or within the taxable year of

the employer. Questions have arisen

about the definition of a ‘‘qualified zone

employee’’ in section 1396(d). In

particular, questions have been raised

about the appropriate period under

section 1396(d)(1)(A) during which

substantially all of the services

performed by an employee for his or her

employer must be performed within an

empowerment zone in a trade or

business of the employer.

Under the regulations, an employer

may use either each pay period of the

calendar year or the entire calendar year

as the relevant period in determining

whether a particular employee

performed substantially all of his or her

services within an empowerment zone

(the ‘‘location-of-services’’ requirement).

For each taxable year the employer must

use the same method for all its

employees, but the employer may

change methods from one taxable year

to the next. The description of the pay

period method has been revised slightly

to clarify that the relevant pay periods

are those for the calendar year with

respect to which the credit is being

claimed (i.e., the calendar year ending

with or within the employer’s taxable

year).

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 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 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, the notice of proposed rulemaking

preceding 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 Robert G.

Wheeler, Office of Associate Chief

Counsel, Employee Benefits and Exempt

Organizations. However, other

personnel from the IRS and Treasury

Department participated in their

development.

List of Subjects in 26 CFR Part 1

Income taxes

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 is amended by adding an entry

in numerical order to read as follows:

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

Section 1.1396–1 also issued under 26

U.S.C. 1397D.

Par. 2. A new undesignated center

heading and § 1.1396–1 are added to

read as follows:

Empowerment Zone Employment

Credit

§ 1.1396–1 Qualified zone employees.

(a) In general. A qualified zone

employee of an employer is an

employee who satisfies the location-ofservices requirement and the abode

requirement with respect to the same

empowerment zone and is not otherwise

excluded by section 1396(d).

(1) Location-of-services requirement.

The location-of-services requirement is

satisfied if substantially all of the

services performed by the employee for

the employer are performed in the

empowerment zone in a trade or

business of the employer.

(2) Abode requirement. The abode

requirement is satisfied if the

employee’s principal place of abode

while performing those services is in the

empowerment zone.

(b) Period for applying location-ofservices requirement. In applying the

location-of-services requirement, an

employer may use either the pay period

method described in paragraph (b)(1) of

this section or the calendar year method

described in paragraph (b)(2) of this

section. For each taxable year of an

employer, the employer must either use

the pay period method with respect to

all of its employees or use the calendar

year method with respect to all of its

employees. The employer may change

the method applied to all of its

employees from one taxable year to the

next.

(1) Pay period method—(i) Relevant

period. Under the pay period method,

the relevant period for applying the

location-of-services requirement is each

pay period in which an employee

provides services to the employer

during the calendar year with respect to

which the credit is being claimed (i.e.,

the calendar year that ends with or

within the relevant taxable year). If an

employer has one pay period for certain

employees and a different pay period for

other employees (e.g., a weekly pay

period for hourly wage employees and

a bi-weekly pay period for salaried

employees), the pay period actually

applicable to a particular employee is

the relevant pay period for that

employee under this method.

(ii) Application of method. Under this

method, an employee does not satisfy

the location-of-services requirement

during a pay period unless substantially

all of the services performed by the

employee for the employer during that

pay period are performed within the

empowerment zone in a trade or

business of the employer.

(2) Calendar year method—(i)

Relevant period. Under the calendar

year method, the relevant period for an

employee is the entire calendar year

with respect to which the credit is being

claimed. However, for any employee

who is employed by the employer for

less than the entire calendar year, the

relevant period is the portion of that

calendar year during which the

employee is employed by the employer.

(ii) Application of method. Under this

method, an employee does not satisfy

the location-of-services requirement

during any part of a calendar year

unless substantially all of the services

performed by the employee for the

employer during that calendar year (or,

if the employee is employed by the

employer for less than the entire

calendar year, the portion of that

calendar year during which the

employee is employed by the employer)

are performed within the empowerment

zone in a trade or business of the

employer.

(3) Examples. This paragraph (b) may

be illustrated by the following

examples. In each example, the

following assumptions apply. The

employees satisfy the abode

requirement at all relevant times and all

services performed by the employees for

their employer are performed in a trade

or business of the employer. The

employees are not precluded from being

qualified zone employees by section

1396(d)(2) (certain employees

ineligible). No portion of the employees’

wages is precluded from being qualified

zone wages by section 1396(c)(2) (only

first $15,000 of wages taken into

account) or section 1396(c)(3)

(coordination with targeted jobs credit

and work opportunity credit). The

examples are as follows:
67728 Federal Register / Vol. 62, No. 249 / Tuesday, December 30, 1997 / Rules and Regulations

Example 1. (i) Employer X has a weekly

pay period for all its employees. Employee A

works for X throughout 1997. During each of

the first 20 weekly pay periods in 1997,

substantially all of A’s work for X is

performed within the empowerment zone in

which A resides. A also works in the zone

at various times during the rest of the year,

but there is no other pay period in which

substantially all of A’s work for X is

performed within the empowerment zone.

Employer X uses the pay period method.

(ii) For each of the first 20 pay periods of

1997, A is a qualified zone employee, all of

A’s wages from X are qualified zone wages,

and X may claim the empowerment zone

employment credit with respect to those

wages. X cannot claim the credit with respect

to any of A’s wages for the rest of 1997.

Example 2. (i) Employer Y has a weekly

pay period for its factory workers and a biweekly pay period for its office workers.

Employee B works for Y in various factories

and Employee C works for Y in various

offices. Employer Y uses the pay period

method.

(ii) Y must use B’s weekly pay periods to

determine the periods (if any) in which B is

a qualified zone employee. Y may claim the

empowerment zone employment credit with

respect to B’s wages only for the weekly pay

periods for which B is a qualified zone

employee, because those are B’s only wages

that are qualified zone wages. Y must use C’s

bi-weekly pay periods to determine the

periods (if any) in which C is a qualified zone

employee. Y may claim the credit with

respect to C’s wages only for the bi-weekly

pay periods for which C is a qualified zone

employee, because those are C’s only wages

that are qualified zone wages.

Example 3. (i) Employees D and E work for

Employer Z throughout 1997. Although some

of D’s work for Z in 1997 is performed

outside the empowerment zone in which D

resides, substantially all of it is performed

within that empowerment zone. E’s work for

Z is performed within the empowerment

zone in which E resides for several weeks of

1997 but outside the zone for the rest of the

year so that, viewed on an annual basis, E’s

work is not substantially all performed

within the empowerment zone. Employer Z

uses the calendar year method.

(ii) D is a qualified zone employee for the

entire year, all of D’s 1997 wages from Z are

qualified zone wages, and Z may claim the

empowerment zone employment credit with

respect to all of those wages, including the

portion attributable to work outside the zone.

Under the calendar year method, E is not a

qualified zone employee for any part of 1997,

none of E’s 1997 wages are qualified zone

wages, and Z cannot claim any

empowerment zone employment credit with

respect to E’s wages for 1997. Z cannot use

the calendar year method for D and the pay

period method for E because Z must use the

same method for all employees. For 1998,

however, Z can switch to the pay period

method for E if Z also switches to the pay

period method for D and all of Z’s other

employees.

(c) Effective date. This section applies

with respect to wages paid or incurred

on or after December 21, 1994.

Dated: December 11, 1997.

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

Approved:

Donald C. Lubick,

Acting Assistant Secretary of the Treasury.

[FR Doc. 97–33645 Filed 12–29–97; 8:45 am]

BILLING CODE 4830–01–U

PENSION BENEFIT GUARANTY

CORPORATION

29 CFR Chapters XXVI and XL

RIN 1212–AA75

Finding Aids; Terminology; Benefits

Payable in Terminated SingleEmployer Plans; Allocation of Assets

in Single-Employer Plans

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Correction.

SUMMARY: On July 1, 1996, the Pension

Benefit Guaranty Corporation published

in the Federal Register (at 61 FR 34001,

FR Doc. 96–16398) a final rule

reorganizing, renumbering, and

reinventing its regulations. This

document contains corrections to 29

CFR Parts 4000, 4001, 4022, and 4044 as

so published.

EFFECTIVE DATE: July 1, 1996.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General

Counsel, or Marc L. Jordan, Attorney,

Office of the General Counsel, Suite 340,

Pension Benefit Guaranty Corporation,

1200 K Street, NW., Washington, DC

20005–4026; 202–326–4024. (For TTY/

TDD, call the Federal relay service tollfree at 1–800–877–8339 and ask to be

connected to 202–326–4024.)

SUPPLEMENTARY INFORMATION: As

published, 29 CFR Parts 4000, 4001,

4022, and 4044 contain errors that call

for correction. This document corrects

those errors.

List of Subjects in 29 CFR Chapter XL

Part 4000

Administrative practice and

procedure, Authority delegations

(Government agencies), Blind, Business

and industry, Civil rights, Claims,

Conflict of interests, Deaf, Disabled,

Discrimination against handicapped,

Equal employment opportunity, Federal

buildings and facilities, Freedom of

information, Government employees,

Handicapped, Nondiscrimination,

Organization and functions

(Government agencies), Penalties,

Pension insurance, Pensions, Physically

handicapped, Political activities

(Government employees), Privacy,

Production and disclosure of

information, Reporting and

recordkeeping requirements, Small

businesses, Testimony.

Parts 4022 and 4041

Pension insurance, Pensions,

Reporting and recordkeeping

requirements.

Parts 4044

Pension insurance, Pensions.

Accordingly, 29 CFR Parts 4000, 4001,

4022, and 4044 are corrected as follows:

PART 4000—FINDING AIDS

1. The authority citation for Part 4000

continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3).

§ 4000.1 [Corrected]

2. In § 4000.1, in the table headed

‘‘Subchapter C—Single-Employer

Plans’’, the reference to ‘‘§ 2621.23(b)’’

is corrected to read ‘‘§ 2621.3(b)’’.

§ 4000.2 [Corrected]

3. In § 4000.2, in the table headed

‘‘Subchapter D—Coverage and

Benefits’’, the reference to

‘‘§ 2621.23(b)’’ is corrected to read

‘‘§ 2621.3(b)’’.

PART 4001—TERMINOLOGY

4. The authority citation for Part 4001

continues to read as follows:

Authority: 29 U.S.C. 1301, 1302(b)(3).

§ 4000.2 [Corrected]

5. In § 4001.2, the definition of

‘‘Basic-type benefit’’ is corrected to read

as follows:

Basic-type benefit means a benefit that

is guaranteed under part 4022 of this

chapter or that would be guaranteed if

the guarantee limits in §§ 4022.22

through 4022.27 of this chapter did not

apply.

PART 4022—BENEFITS PAYABLE IN

TERMINATED SINGLE-EMPLOYER

PLANS

6. The authority citation for Part 4022

continues to read as follows:

Authority: 29 U.S.C. 1302, 1322, 1322B,

1341(c)(3)(D), and 1344.

§ 4022.1 [Corrected]

7. In § 4022.1, the second sentence is

corrected by removing the term, ‘‘basictype’’.

§ 4022.24 [Corrected]

8. In § 4022.24(e), the words ‘‘this

subpart’’ are corrected to read

‘‘§§ 4022.22 through 4022.27’’.