Federal Register / Vol. 77, No. 60 / Wednesday, March 28, 2012 / Rules and Regulations 18687 

December 31st testing date, S2 thus was a 

member of the P group for more than one-half 

of the number of days of its tax year ending 

on July 31, 2007, which days proceeded 

December 31st, 2007 (120 days (January 1– 

April 30 of 2007) out of 211 days (January 1– 

July 30 of 2007)). The allocation of the 15 

percent tax-bracket amount to the P group 

members is determined in the same manner 

as in Example 2 and, therefore, the bracket 

amounts allocated to P, S1, S2 and S3 are the 

same as determined in Example 2. The 

allocation of the bracket amounts would be 

the same if, at the time P sold all of the S2

stock, the parties had made a section 

338(h)(10) election. 

Example 4. Short tax year including a 

December 31st date. Corporation X owns all 

of the stock of corporations Y and Z. X, Y and 

Z each file separate returns. X and Y are on 

a calendar tax year and Z is on a fiscal tax 

year beginning October 1 and ending 

September 30. On January 2, 2007, Z 

liquidates. Because Z’s final tax year 

(beginning on October 1, 2006 and ending on 

January 2, 2007) includes a December 31st 

date, that is, December 31, 2006, it is 

therefore not subject to the short taxable year 

rule provided by section 1561(b) and 

paragraph (e) of this section. Accordingly, Z 

is a component member of the X–Y–Z group, 

for the group’s December 31st, 2006 testing 

date. Thus, the rules of this paragraph (e) do 

not limit the amount of any of the tax-benefit 

items of section 1561(a) available to Z or to 

this controlled group. 

(f) Effective/applicability date. This section 

applies to any tax year beginning on or after 

December 21, 2009. However, taxpayers may 

apply this section to any Federal income tax 

return filed on or after December 21, 2009. 

For tax years beginning before December 21, 

2009, see § 1.1561–2T as contained in 26 CFR 

part 1 in effect on April 1, 2009. 

[FR Doc. 2012–7533 Filed 3–27–12; 8:45 am] 

BILLING CODE 1505–01–D 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9564] 

RIN 1545–BJ93 

Guidance Regarding Deduction and 

Capitalization of Expenditures Related 

to Tangible Property: Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Temporary regulations; 

correcting amendment. 

SUMMARY: This document contains 

correcting amendments to temporary 

regulations (TD 9564), which were 

published in the Federal Register 

relating to guidance regarding deduction 

and capitalization of expenditures 

related to tangible property. 

DATES: Effective Date: March 28, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Merrill D. Feldstein (202) 622–4950 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The temporary regulations that are the 

subject of these corrections are under 

sections 162, 167, 168, and 263 of the 

Internal Revenue Code. 

Need for Correction 

As published on December 27, 2011 

(76 FR 81060), the temporary 

regulations (TD 9564), contain errors 

which may prove to be misleading and 

are in need of clarification. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Accordingly, 26 CFR Part 1 is 

corrected by making the following 

correcting 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 1.162–3 is revised to 

read as follows: 

§ 1.162–3 Materials and Supplies 

(a) through (k) [Reserved]. For further 

guidance, see § 1.163–3T(a) through (k). 

■ Par. 2. Section 1.162–3T is amended 

by: 

■ 1. Revising the third sentence of 

paragraph (d)(3). 

■ 2. Redesignating paragraphs (i) and (j) 

as (j) and (k), respectively. 

■ 3. Redesignating the second paragraph 

(h), ‘‘Accounting method changes’’ as 

paragraph (i). 

■ 4. In newly redesignated paragraph (j) 

the second sentence is revised. 

The revisions read as follows: 

§ 1.162–3T Materials and supplies 

(temporary). 

* * * * * 

(d) * * * 

(3) * * * See § 1.263(a)–2T for the 

treatment of amounts paid to acquire or 

produce real or personal tangible 

property. * * * 

* * * * * 

(j) * * * However, a taxpayer may 

apply § 1.162–3T(e) (the optional 

method of accounting for rotable and 

temporary spare parts) to taxable years 

beginning on or after January 1, 2012. 

* * * 

* * * * * 

■ Par. 3. Section 1.168(i)–1T is 

amended by: 

■ 1. In paragraph (e)(3)(ii)(B), 

redesignating Example 2(iii) as Example 

2(ii). 

■ 2. Adding a new sentence at the end 

of paragraph (m)(2). 

The addition reads as follows: 

§ 1.168(i)–1T General asset accounts 

(temporary). 

* * * * * 

(m) * * * 

(2) * * * This paragraph (m)(2) does 

not apply to a change to comply with 

paragraph (e)(3)(ii), (e)(3)(iii) or 

paragraph (l) of this section. 

* * * * * 

■ Par. 4. Section 1.168(i)–8T is 

amended by: 

■ 1. Redesignating the second paragraph 

(c)(4)(ii)(E) as paragraph (c)(4)(ii)(F). 

■ 2. Revising the first sentence of 

paragraph (g)(3). 

The revision reads as follows: 

§ 1.168(i)–8T Dispositions of MACRS 

property (temporary). 

* * * * * 

(g) * * * 

(3) * * * This paragraph (g)(3) 

applies only to a taxpayer that uses a 

reasonable, consistent method to treat 

each of the asset’s components as the 

asset in accordance with paragraph 

(c)(4)(ii)(F) of this section. * * * 

* * * * * 

■ Par. 5. Section 1.263(a)–2T is 

amended by: 

■ 1. Revising the eighth sentence of 

paragraph (g)(8) Example 2. 

■ 2. Revising the last sentence of 

paragraph (k). 

The revisions read as follows: 

§ 1.263(a)–2T Amounts paid to improve 

tangible property (temporary). 

* * * * * 

(g) * * * 

* * * * * 

(8) Examples. * * * 

* * * * * 

Example 2. * * * Thus, in order to meet 

the criteria of paragraph (g)(1)(iv) of this 

section for Year 1, the total aggregate 

amounts paid and not capitalized by X under 

paragraphs (g)(1)(i), (ii), and (iii) of this 

section must be less than or equal to the 

greater of $125,000 (0.1 percent of X’s total 

gross receipts of $125,000,000) or $140,000 (2 

percent of X’s total depreciation and 

amortization of $7,000,000). * * * 

* * * * * 

(k) * * * For the applicability of 

regulations to taxable years beginning 

before January 1, 2012, see § 1.263(a)–2 

in effect prior to January 1, 2012 

(§ 1.263(a)–2 as contained in 26 CFR 

part 1 edition revised as of April 1, 

2011). 

* * * * * 


pmangrum on DSK3VPTVN1PROD with RULES
18688 Federal Register / Vol. 77, No. 60 / Wednesday, March 28, 2012 / Rules and Regulations 

■ Par. 6. Section 1.263(a)–3T is 

amended by: 

■ 1. Revising paragraph (b). 

■ 2. Revising the sixth sentence of 

paragraph (e)(6), Example 17. 

■ 3. Revising the seventh sentence of 

paragraph (i)(5), Example 20. 

■ 4. Revising the third sentence of 

paragraph (i)(5), Example 22 paragraph 

(ii). 

■ 5. Revising the last sentence of 

paragraph (i)(5), Example 23. 

■ 6. Revising paragraph (q). 

The revisions read as follows: 

§ 1.263(a)–3T Amounts paid to improve 

tangible property (temporary). 

* * * * * 

(b) * * * For purposes of this section, 

the following definitions apply: 

* * * * * 

(e) * * * 

(6) Examples. * * * 

* * * * * 

Example 17. * * * In year 7, X changed its 

method of accounting to use a 15-year 

recovery period for the improvement. * * * 

* * * * * 

(i) * * * 

(5) * * * 

* * * * * 

Example 20. * * * The plumbing fixtures 

in all the restrooms perform a discrete and 

critical function in the operation of the 

plumbing system and comprise a large 

portion of the physical structure of the 

plumbing system. * * * 

* * * * * 

Example 22. (i) * * * 

(ii) * * * All the bathtubs, toilets, sinks, 

and plumbing fixtures in the hotel building 

perform a discrete and critical function in the 

operation of the plumbing system and 

comprise a large portion of the physical 

structure of the plumbing system. * * * 

Example 23. * * * Accordingly, X is not 

required to treat the amount paid to replace 

the windows as a restoration of a building 

system under paragraph (i)(1)(iv) of this 

section. 

* * * * * 

(q) * * * The applicability of this 

section expires on December 23, 2014. 

■ Par. 7. Section 1.263(a)–6T is 

amended by revising paragraphs (b)(13) 

and (d) to read as follows: 

§ 1.263(a)–6T Election to deduct or 

capitalize certain expenditures (temporary). 

* * * * * 

(b) * * * 

(13) Section 193 (tertiary injectants); 

* * * * * 

(d) Expiration date. The applicability 

of this section expires on December 23, 

2014. 

■ Par. 8. Section 1.1016–3T is amended 

by revising the second sentence of 

paragraph (j)(3) to read as follows: 

§ 1.1016–3T Exhaustion, wear and tear, 

obsolescence, amortization, and depletion 

for periods since February 13, 1913 

(temporary). 

* * * * * 

(j) * * * 

(3) * * * For the applicability of 

§ 1.1016–3(a)(1)(ii) to taxable years 

beginning before January 1, 2012, see 

§ 1.1016–3(a)(1)(ii) in effect prior to 

January 1, 2012 (§ 1.1016–3(a)(1)(ii) as 

contained in 26 CFR part 1 edition 

revised as of April 1, 2011). 

* * * * * 

Guy R. Traynor, 

Federal Register Liaison, Legal Processing 

Division, Publications & Regulations Br., 

Associate Chief Counsel, (Procedure & 

Administration). 

[FR Doc. 2012–7263 Filed 3–27–12; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket No. USCG–2012–0199] 

RIN 1625–AA00 

Safety Zone; Chicago Harbor, Navy 

Pier Southeast, Chicago, IL 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of enforcement of 

regulation. 

SUMMARY: The Coast Guard will enforce 

the Navy Pier Southeast Safety Zone in 

Chicago Harbor during various periods 

from May 19, 2012 through June 30, 

2012. This action is necessary and 

intended to ensure safety of life on the 

navigable waters of the United States 

immediately prior to, during, and 

immediately after fireworks events. 

Enforcement of this safety zone will 

establish restrictions upon, and control 

movement of, vessels in a specified area 

immediately prior to, during, and 

immediately after various fireworks 

events. During the enforcement period, 

no person or vessel may enter the safety 

zones without permission of the Captain 

of the Port, Sector Lake Michigan. 

DATES: The regulations in 33 CFR 

165.931 will be enforced at various 

times between 9 p.m. on May 19, 2012 

through 10:30 p.m. on June 30, 2012. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this notice, call 

or email MST2 Rebecca Stone, 

Prevention Department, Coast Guard 

Sector Lake Michigan, Milwaukee, WI at 

414–747–7154, email 

Rebecca.R.Stone@uscg.mil. 

SUPPLEMENTARY INFORMATION: The Coast 

Guard will enforce the Safety Zone; 

Chicago Harbor, Navy Pier Southeast, 

Chicago, IL listed in 33 CFR 165.931 for 

the following events: 

(1) Navy Pier Fireworks; on May 19, 

2012 from 9 p.m. through 11 p.m.; on 

May 26, 2012 from 10 p.m. through 

10:30 p.m.; on May 30, 2012 from 9:15 

p.m. through 9:45 p.m.; on June 2, 2012 

from 10 p.m. through 10:30 p.m.; on 

June 6, 2012 from 9:15 p.m. through 

9:45 p.m.; on June 9, 2012 from 10 p.m. 

through 10:30 p.m.; on June 13, 2012 

from 9:15 p.m. through 9:45 p.m.; on 

June 16, 2012 from 10 p.m. through 

10:30 p.m.; on June 20, 2012 from 9:15 

p.m. through 9:45 p.m.; on June 23, 

2012 from 10 p.m. through 10:30 p.m.; 

on June 27, 2012 from 9:15 p.m. through 

9:45 p.m.; and on June 30, 2012 from 

10:00 through 10:30. 

All vessels must obtain permission 

from the Captain of the Port, Sector Lake 

Michigan, or his or her on-scene 

representative to enter, move within or 

exit the safety zone. Vessels and persons 

granted permission to enter the safety 

zone shall obey all lawful orders or 

directions of the Captain of the Port, 

Sector Lake Michigan, or his or her onscene representative. While within a 

safety zone, all vessels shall operate at 

the minimum speed necessary to 

maintain a safe course. 

This notice is issued under authority 

of 33 CFR 165.931 and 5 U.S.C. 552 (a). 

In addition to this notice in the Federal 

Register, the Coast Guard will provide 

the maritime community with advance 

notification of these enforcement 

periods via broadcast Notice to Mariners 

or Local Notice to Mariners. The 

Captain of the Port, Sector Lake 

Michigan, will issue a Broadcast Notice 

to Mariners notifying the public when 

enforcement of the safety zone 

established by this section is suspended. 

If the Captain of the Port, Sector Lake 

Michigan, determines that the safety 

zone need not be enforced for the full 

duration stated in this notice, he or she 

may use a Broadcast Notice to Mariners 

to grant general permission to enter the 

safety zone. The Captain of the Port, 

Sector Lake Michigan, or his or her onscene representative may be contacted 

via VHF Channel 16. 

Dated: March 14, 2012. 

M.W. Sibley, 

Captain, U.S. Coast Guard, Captain of the 

Port, Lake Michigan. 

[FR Doc. 2012–7388 Filed 3–27–12; 8:45 am] 

BILLING CODE 9110–04–P 


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