Federal Register / Vol. 77, No. 60 / Wednesday, March 28, 2012 / Rules and Regulations 18685 

§ 230.500 Use of Regulation D. 

Users of Regulation D (§§ 230.500 et 

seq.) should note the following: 

(a) Regulation D relates to transactions 

exempted from the registration 

requirements of section 5 of the 

Securities Act of 1933 (the Act) (15 

U.S.C.77a et seq., as amended). Such 

transactions are not exempt from the 

antifraud, civil liability, or other 

provisions of the federal securities laws. 

Issuers are reminded of their obligation 

to provide such further material 

information, if any, as may be necessary 

to make the information required under 

Regulation D, in light of the 

circumstances under which it is 

furnished, not misleading. 

(b) Nothing in Regulation D obviates 

the need to comply with any applicable 

state law relating to the offer and sale of 

securities. Regulation D is intended to 

be a basic element in a uniform system 

of federal-state limited offering 

exemptions consistent with the 

provisions of sections 18 and 19(c) of 

the Act (15 U.S.C. 77r and 77(s)(c)). In 

those states that have adopted 

Regulation D, or any version of 

Regulation D, special attention should 

be directed to the applicable state laws 

and regulations, including those relating 

to registration of persons who receive 

remuneration in connection with the 

offer and sale of securities, to 

disqualification of issuers and other 

persons associated with offerings based 

on state administrative orders or 

judgments, and to requirements for 

filings of notices of sales. 

(c) Attempted compliance with any 

rule in Regulation D does not act as an 

exclusive election; the issuer can also 

claim the availability of any other 

applicable exemption. For instance, an 

issuer’s failure to satisfy all the terms 

and conditions of rule 506 (§ 230.506) 

shall not raise any presumption that the 

exemption provided by section 4(2) of 

the Act (15 U.S.C. 77d(2)) is not 

available. 

(d) Regulation D is available only to 

the issuer of the securities and not to 

any affiliate of that issuer or to any other 

person for resales of the issuer’s 

securities. Regulation D provides an 

exemption only for the transactions in 

which the securities are offered or sold 

by the issuer, not for the securities 

themselves. 

(e) Regulation D may be used for 

business combinations that involve 

sales by virtue of rule 145(a) 

(§ 230.145(a)) or otherwise. 

(f) In view of the objectives of 

Regulation D and the policies 

underlying the Act, Regulation D is not 

available to any issuer for any 

transaction or chain of transactions that, 

although in technical compliance with 

Regulation D, is part of a plan or scheme 

to evade the registration provisions of 

the Act. In such cases, registration 

under the Act is required. 

(g) Securities offered and sold outside 

the United States in accordance with 

Regulation S (§ 230.901 through 905) 

need not be registered under the Act. 

See Release No. 33–6863. Regulation S 

may be relied upon for such offers and 

sales even if coincident offers and sales 

are made in accordance with Regulation 

D inside the United States. Thus, for 

example, persons who are offered and 

sold securities in accordance with 

Regulation S would not be counted in 

the calculation of the number of 

purchasers under Regulation D. 

Similarly, proceeds from such sales 

would not be included in the aggregate 

offering price. The provisions of this 

paragraph (g), however, do not apply if 

the issuer elects to rely solely on 

Regulation D for offers or sales to 

persons made outside the United States. 

§ 230.501 [Amended] 

■ 6. In § 230.501 introductory text, 

remove the reference to ‘‘§§ 230.501– 

230.508’’ and add in its place ‘‘§ 230.500 

et seq. of this chapter’’. 

§ 230.502 [Amended] 

■ 7. In § 230.502 introductory text, 

remove the reference to ‘‘§§ 230.501– 

230.508’’ and add in its place ‘‘§ 230.500 

et seq. of this chapter’’. 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 8. The general authority citation for 

Part 240 continues to read, in part, as 

follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 

78j–1, 78k, 78k–1, 78l, 78m, 78n, 78n–1, 78o, 

78o–4, 78p, 78q, 78s, 78u–5, 78w, 78x, 78ll, 

78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– 

3, 80b–4, 80b–11, and 7201 et seq.; 18 U.S.C. 

1350, 12 U.S.C. 5221(e)(3), and Pub. L. 111– 

203, § 939A, 124 Stat. 1376, (2010) unless 

otherwise noted. 

* * * * * 

§ 240.15g–1 [Amended] 

■ 9. In § 240.15g–1(c), remove the 

reference to ‘‘17 CFR 230.501–230.508’’ 

and add in its place ‘‘17 CFR 230.500 et 

seq’’. 

PART 242—REGULATION M 

■ 10. The general authority citation for 

Part 242 continues to read, in part, as 

follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 

78j–1, 78k, 78k–1, 78l, 78m, 78n, 78n–1, 78o, 

78o–4, 78p, 78q, 78s, 78u–5, 78w, 78x, 78ll, 

78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– 

3, 80b–4, 80b–11, and 7201 et seq.; 18 U.S.C. 

1350, 12 U.S.C. 5221(e)(3), and Pub. L. 111– 

203, § 939A, 124 Stat. 1376, (2010) unless 

otherwise noted. 

* * * * * 

§ 242.101 [Amended] 

■ 11. In § 242.101(b)(10)(i), remove the 

reference to ‘‘§ 230.501 through 

§ 230.508’’ and add in its place 

‘‘§ 230.500 et seq’’. 

§ 242.102 [Amended] 

■ 12. In § 242.102(b)(7)(i), remove the 

reference to ‘‘§ 230.501 through 

§ 230.508’’ and add in its place 

‘‘§ 230.500 et seq’’. 

§ 242.104 [Amended] 

■ 13. In § 242.104(j)(2)(i), remove the 

reference to ‘‘§ 230.501 through 

§ 230.508’’ and add in its place 

‘‘§ 230.500 et seq’’. 

Dated: March 23, 2012. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–7446 Filed 3–27–12; 8:45 am] 

BILLING CODE 8011–01–P 

HEALTH AND HUMAN SERVICES 

DEPARTMENT 

Food and Drug Administration 

21 CFR Part 516 

New Animal Drugs for Minor Use and 

Minor Species 

CFR Correction 

In Title 21 of the Code of Federal 

Regulations, Parts 500 to 599, revised as 

of April 1, 2011, on page 96, in § 516.20, 

(b)(2) is revised to read as follows: 

§ 516.20 Content and format of a request 

for MUMS-drug designation. 

* * * * * 

(b) * * * 

(2) The name and address of the 

sponsor; the name of the sponsor’s 

primary contact person and/or 

permanent-resident U.S. agent including 

title, address, and telephone number; 

the established name (and proprietary 

name, if any) of the active 

pharmaceutical ingredient of the drug; 

and the name and address of the source 


pmangrum on DSK3VPTVN1PROD with RULES
18686 Federal Register / Vol. 77, No. 60 / Wednesday, March 28, 2012 / Rules and Regulations 

of the active pharmaceutical ingredient 

of the drug. 

* * * * * 

[FR Doc. 2012–7532 Filed 3–27–12; 8:45 am] 

BILLING CODE 1505–01–D 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

Apportionment of Tax Items Among 

the Members of a Controlled Group of 

Corporations 

CFR Correction 

In Title 26 of the Code of Federal 

Regulations, Part 1(§ 1.1551 to End of 

Part 1), revised as of April 1, 2011, on 

page 24, in § 1.1561–2, paragraphs (c) 

through (f) are added to read as follows: 

§ 1.1561–2 Special rules for allocating 

reductions of certain section 1561(a) taxbenefit items. 

* * * * * 

(c) Accumulated earnings credit. The 

component members of a controlled 

group of corporations are permitted to 

allocate the amount of the accumulated 

earnings credit unequally if they have 

an apportionment plan in effect. 

(d) [Reserved] 

(e) Short taxable years not including 

a December 31st date—(1) General rule. 

If a corporation has a short taxable year 

not including a December 31st date and, 

after applying the rules of section 

1561(b) and paragraph (e)(2)(i) of this 

section, it qualifies as a component 

member of the group with respect to its 

short taxable year (short-year member), 

then, for purposes of subtitle A of the 

Internal Revenue Code, the amount of 

any tax-benefit item described in section 

1561(b) allocated to that component 

member’s short taxable year shall be the 

amount specified in section 1561(a) for 

that item, divided by the number of 

corporations which are component 

members of that group on the last day 

of that component member’s short 

taxable year. The component members 

of such group may not apportion, by an 

apportionment plan, an amount of such 

tax-benefit item to any short-year 

member that differs from equal 

apportionment of that item. 

(2) Additional rules. For purposes of 

paragraph (e)(1) of this section— 

(i) Section 1563(b) shall be applied as 

if the last day of the taxable year of a 

short-year member were substituted for 

December 31st; and 

(ii) The term short taxable year does 

not refer to any portion of a tax year of 

a corporation for which its income is 

required to be included in a 

consolidated return pursuant to 

§ 1.1502–76(b). 

(3) Calculation of the additional tax. 

A short-year member (as defined in 

paragraph (e)(1) of this section) for its 

short taxable year calculates its 

additional tax liability imposed by 

section 11(b)(1) only on its own income, 

and therefore the subsequent calculation 

of the additional tax liability with 

regard to the remaining members of the 

group will not include the income of 

this short-year member. 

(4) Calculation of the alternative 

minimum tax. If a component member 

has a tax year of less than 12 months, 

whether or not such tax year includes a 

December 31st date, see section 443(d) 

for the annualization method required 

for calculating the alternative minimum 

tax. 

(5) Examples. The provisions of this 

paragraph (e) may be illustrated by the 

following examples: 

Example 1. Formation of a new member of 

a controlled group— (i) Facts. On January 2, 

2007, corporation X transfers cash to newly 

formed corporation Y (which begins business 

on that date) and receives all of the stock of 

Y in return. X also owns all of the stock of 

corporation Z on each day of 2006 and 2007. 

X, Y and Z have an apportionment plan in 

effect, apportioning the 15 percent taxbracket 

amount as follows: 40% ($20,000) to each of 

X and Y and 20% ($10,000) to Z. X, Y and 

Z each file a separate return with respect to 

the group’s December 31st, 2007 testing date. 

X is on a calendar tax year and Z is on a 

fiscal tax year ending on March 31. Y adopts 

a fiscal year ending on June 30 and timely 

files a tax return for its short taxable year 

beginning on January 2, 2007, and ending on 

June 30, 2007. 

(ii) Y’s short taxable year. On June 30, 

2007, Y is a component member of a 

parentsubsidiary controlled group of 

corporations composed of X, Y and Z. 

Pursuant to paragraph (e)(1) of this section, 

the group may not apportion any amount of 

the 15 percent tax bracket to Y’s short taxable 

year ending on June 30, 2007. Rather, Y is 

entitled to exactly 1⁄3 of such bracket amount, 

or $16,667. 

(iii) The members’ subsequent tax years. 

On December 31st, 2007, X, Y and Z are 

component members of a parent-subsidiary 

controlled group of corporations. For their 

tax years that include December 31st, 2007 

(X’s calendar year ending December 31st, 

2007, Z’s fiscal year ending March 31, 2008 

and Y’s fiscal year ending June 30, 2008), X, 

Y and Z apportion among themselves the full 

amount of all of the applicable tax brackets 

pursuant to their apportionment plan. For 

example, 40% of the 15 percent tax-bracket 

amount, or $20,000, was apportioned to each 

of X and Y, and the remaining 10%, or 

$10,000, was apportioned to Z. 

Example 2. Allocating a tax bracket to the 

short taxable year of a liquidated member of 

a controlled group— (i) Facts. On January 1, 

2007, corporation P owns all of the stock of 

corporations S1, S2 and S3 (the P group). Each 

of these four component members of the P 

group, with respect to the group’s December 

31st, 2007 testing date, files its separate 

return on a calendar year basis. These 

members have an apportionment plan in 

effect (the P group plan) under which S1 and 

S2 are each entitled to 40% of the 15 percent 

tax-bracket amount ($20,000), and P and S3

are each entitled to 10% of the 15 percent 

tax-bracket amount ($5,000). On May 31, 

2007, S1 liquidates and therefore files a 

return for the short taxable year beginning on 

January 1, 2007, and ending on May 31, 2007. 

On July 31, 2007, S2 liquidates and therefore 

files a return for the short taxable year 

beginning on January 1, 2007 and ending on 

July 31, 2007. P and S3 each file a return for 

their 2007 calendar tax years. 

(ii) Apportionment of the 15 percent tax 

bracket to S1 for its short taxable year. On 

May 31, 2007, S1 is a component member of 

the P group composed of P, S1, S2 and S3. 

Pursuant to paragraph (e)(1) of this section, 

the group may not apportion any amount of 

the 15 percent tax bracket to S1’s short 

taxable year ending on June 30, 2007. Rather, 

S1 is entitled to exactly 1⁄4 of such bracket 

amount, or $12,500. 

(iii) Apportionment of the 15 percent tax 

bracket to S2 for its short taxable year. On 

July 31, 2007, S2 is a component member of 

the P group composed of P, S2 and S3.

Pursuant to paragraph (e)(1) of this section, 

the group may not apportion any amount of 

the 15 percent tax bracket to S2’s short 

taxable year ending on June 30, 2007. Rather, 

S2 is entitled to exactly 1⁄4 of such bracket 

amount, or $16,667. 

(iv) Apportionment of the 15 percent tax 

bracket to P and S3 for each of their calendar 

tax years. On December 31st, 2007, P and S3

are component members of the P group. 

Accordingly, for P and S3’s 2007 calendar tax 

year, they are each apportioned $25,000 of 

the 15 percent tax bracket, pursuant to the 

applicable P group plan. 

Example 3. Liquidation of member after its 

transfer to another controlled group— (i) 

Facts. The facts are the same as in Example 

2, except that P, on April 30, 2007, sold all 

of the stock of S2 to the M–N controlled 

group. At the time of the sale, M and N are 

both unrelated to any members of the P 

group. As in Example 2, S2 liquidates on July 

31, 2007, and therefore files a tax return for 

its short taxable year beginning on January 1, 

2007, and ending on July 31, 2007. Pursuant 

to the sales agreement, the N–M group timely 

notified P that S2 had liquidated. 

(ii) Controlled group analysis. On April 30, 

2007, the date of the sale of S2, the P group 

reasonably expected that S2 would be treated 

as an excluded member with respect to its 

December 31st, 2007 testing date. On that 

April 30th date, S2 had been a member of the 

P group for less than one-half the number of 

days of what it expected would be a full 2007 

calendar tax year preceding December 31st, 

2007 (120 days (January 1–April 30) out of 

364 days (January 1–December 30)). Yet, as 

a result of S2’s subsequent liquidation by the 

M–N group prior to December 31st, 2007, S2

became a component member of the P group 

with respect to the P group’s December 31st, 

2007 testing date. With respect to that 


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