22516 Federal Register / Vol. 77, No. 73 / Monday, April 16, 2012 / Proposed Rules 

meaning of § 1.381(a)–1(a)). Except as 

provided in § 1.312–10, in all other 

cases in which property is transferred 

from one corporation to another and no 

gain or loss is recognized (or is 

recognized only to the extent of the 

property received other than that 

permitted to be received without the 

recognition of gain), no allocation of the 

earnings and profits of the transferor is 

made to the transferee. 

* * * * * 

(e) Effective/Applicability date. 

Paragraph (a) of this section applies to 

transactions occurring on or after the 

date of publication of the Treasury 

decision adopting this rule as a final 

regulation in the Federal Register. 

§ 1.381(c)(2)–1(d) [Removed] 

Par. 3. Section 1.381(c)(2)–1(d) is 

removed. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2012–9003 Filed 4–13–12; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–139991–08] 

RIN 1545–BI84 

Certain Transfers of Property to 

Regulated Investment Companies 

[RICs] and Real Estate Investment 

Trusts [REITs] 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed amendments to regulations 

under section 337(d) of the Internal 

Revenue Code. The proposed 

regulations provide guidance 

concerning certain transfers of property 

from a C corporation to a Regulated 

Investment Company (RIC) or a Real 

Estate Investment Trust (REIT) and will 

affect the parties to such transactions. 

This document also invites comments 

from the public regarding these 

proposed regulations. 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by July 16, 2012. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–139991–08), room 

5205, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–139991– 

08), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW., 

Washington, DC, or sent electronically, 

via the Federal eRulemaking Portal at 

http://www.regulations.gov (IRS REG– 

139991–08). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Grid Glyer (202) 622–7930 or Maury 

Passman (202) 622–7750 with respect to 

the corporate issues, and David H. Kirk 

(202) 622–3060 with respect to the 

partnership issues; concerning 

submissions of comments, 

Oluwafunmilayo Taylor (202) 622–7180 

(not toll-free numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

Congress repealed the General 

Utilities doctrine in the Tax Reform Act 

of 1986 (Pub. L. 99–514, 100 Stat. 2085), 

as amended by the Technical and 

Miscellaneous Revenue Act of 1988 

(Pub. L. 100–647, 102 Stat. 3342), when 

sections 336 and 337 of the Internal 

Revenue Code were amended to require 

corporations to recognize gain or loss on 

the distribution of property in 

connection with complete liquidations 

other than certain subsidiary 

liquidations. Section 337(d)(1) directs 

the Secretary to prescribe regulations as 

may be necessary to carry out the 

purposes of General Utilities repeal, 

including rules to ‘‘ensure that such 

purposes may not be circumvented 

* * * through the use of a regulated 

investment company, a real estate 

investment trust, or tax-exempt entity 

* * *.’’ 

On March 18, 2003, regulations under 

§ 1.337(d)–7 (the regulations) were 

published in the Federal Register (TD 

9047, 68 FR 12817). The regulations 

generally provide (in paragraphs (a) and 

(b)(1)) that if property of a C corporation 

(the C corporation transferor) becomes 

the property of a RIC or REIT by the 

qualification of that C corporation as a 

RIC or REIT or by the transfer of assets 

of that C corporation to a RIC or REIT 

(a conversion transaction), then the RIC 

or REIT will be subject to tax on the net 

built-in gain in the converted property 

under the rules of section 1374 and the 

underlying regulations. This treatment, 

however, does not apply if the C 

corporation transferor elects to 

recognize gain and loss as if it sold the 

converted property to an unrelated party 

at fair market value (deemed sale 

treatment). 

Explanation and Summary of 

Comments 

This preamble first discusses the 

proposal as it relates to net built-in gain 

property acquired by a RIC or REIT 

either in a like-kind exchange (where 

the C corporation transferor’s gain is not 

recognized by reason of section 1031) or 

in an involuntary conversion (where 

such gain is not recognized by reason of 

section 1033). This preamble then 

discusses a proposed revision to the 

definition of a C corporation in the 

regulations, which provides that a 

transfer of property by a tax-exempt 

entity to a RIC or REIT is not treated as 

a conversion transaction unless the taxexempt entity would have been subject 

to tax if a deemed sale election had been 

made. 

In addition, the proposed regulations 

also add definitions for the terms RIC, 

REIT, and S corporation. While these 

terms are not explicitly defined in the 

regulations, their meanings are both 

self-evident and unambiguous in that 

context. Nonetheless, for clarification 

and ease of use, the proposed 

regulations add explicit definitions. 

A. Like-Kind Exchanges and Involuntary 

Conversions 

The current regulations generally 

provide that if property of a C 

corporation becomes the property of a 

RIC or REIT in a conversion transaction, 

then, absent a deemed sale election, the 

RIC or REIT will be subject to tax on the 

net built-in gain in the converted 

property under the rules of section 1374 

and the underlying regulations (as 

modified in paragraph (b) of the 

regulations), as if the RIC or REIT were 

an S corporation. 

Commentators have expressed 

concern that the general rule may 

inappropriately expose property 

transferred in certain exchanged basis 

transactions—specifically, like-kind 

exchanges and involuntary 

conversions—to this treatment. In these 

transactions, the C corporation 

transferor replaces property it 

transferred to a RIC or REIT with 

property that has an equivalent basis 

and built-in gain, and as a result, the 

built-in gain remains subject to 

corporate tax in the hands of the 

transferor. Therefore, there would not be 

any circumvention of the purposes of 

General Utilities repeal. Section 

1.337(d)–4(b)(3) provides an exception 

in an analogous context (where a C 

corporation transfers all or substantially 

all of its assets to a tax-exempt entity) 

to the extent the transaction qualifies for 

nonrecognition treatment under section 

1031 or section 1033. 


emcdonald on DSK29S0YB1PROD with PROPOSALS
Federal Register / Vol. 77, No. 73 / Monday, April 16, 2012 / Proposed Rules 22517 

Accordingly, the proposed regulations 

provide an exception from the general 

rule of the current regulations for a 

transfer of property by a C corporation 

to a RIC or REIT to the extent that the 

transfer qualifies for non-recognition 

treatment under either section 1031 or 

1033. In such a transaction, the C 

corporation transferor’s basis in the 

property it receives is derived from its 

basis in the transferred property, and 

thus reflects the built-in gain. At the 

same time, the basis of the transferee 

RIC or REIT in the converted property 

has no relation to the C corporation 

transferor’s basis therein. 

Treasury and the IRS are not 

proposing to extend this treatment to all 

exchanged basis transactions, such as 

exchanges that would otherwise qualify 

for nonrecognition treatment under 

section 351 of the Code, out of a concern 

that such an exemption could create 

opportunities to avoid corporate-level 

tax on built-in gains and would give rise 

to administrative difficulties that could 

be addressed only through extensive 

rulemaking. 

B. Transfers by Tax-Exempt Entities 

The regulations apply to property 

transferred by a C corporation directly 

to a RIC or REIT, and indirectly through 

a partnership to the extent of any C 

corporation partner’s proportionate 

share of the transferred property (the 

partnership rule). The regulations state 

that if the partnership elects deemed 

sale treatment with respect to such 

transfer, then any net gain recognized by 

the partnership on the deemed sale 

must be allocated to the C corporation 

partner. 

Commentators have expressed 

concern that the partnership rule 

presents unintended effects when the 

partnership has multiple C corporation 

partners including both taxable and taxexempt entities. If such a partnership 

transfers built-in gain property to a RIC 

or REIT in a conversion transaction 

without making a deemed sale election 

(that is, section 1374 treatment applies), 

and if the transferee RIC or REIT sells 

the converted property during the 

recognition period, then the RIC or REIT 

is subject to a corporate-level tax on the 

net built-in gain, including the portion 

of the net built-in gain that otherwise 

would have been allocated to taxexempt C corporation partners had a 

deemed sale election been made. This is 

because the net recognized built-in gain 

is determined with reference to the 

amount of gain that would have been 

allocated to all C corporation partners, 

regardless of their taxable or tax-exempt 

status. In contrast, if the transferring 

partnership were to make a deemed sale 

election, the taxable C corporation 

partners would recognize gain that 

otherwise could have been deferred if 

section 1374 treatment had applied. 

Treasury and the IRS believe that the 

inclusion of direct or indirect transfers 

by tax-exempt entities in the scope of 

the final regulations furthers the 

purposes of General Utilities repeal only 

to the extent that those entities would 

have been subject to tax had a deemed 

sale election been made (for example, if 

a deemed sale election would have 

generated unrelated business taxable 

income or would have adversely 

affected the entity’s tax-exempt status). 

Accordingly, the proposed regulations 

would amend the final regulations to 

provide that the definition of a C 

corporation excludes tax-exempt 

entities within the meaning of 

§ 1.337(d)–4(c)(2). As a result, transfers 

of property by a tax-exempt entity to a 

RIC or REIT (or by a partnership to a RIC 

or REIT to the extent of a tax-exempt 

partner’s distributive share of the gain 

in the transferred property) generally 

will not be subject to section 1374 

treatment. For this purpose, however, an 

entity will not be considered to be taxexempt to the extent it would be subject 

to tax (such as under section 511) under 

Title 26 of the United States Code with 

respect to gain (if any) resulting from a 

deemed sale election if such an election 

were made under § 1.337(d)–7(c)(5) with 

respect to the transfer. Thus, for 

example, if a partnership in which a taxexempt C corporation described in 

§ 1.337(d)–4(c)(2) is a partner transfers 

property to a RIC or REIT in a 

conversion transaction, and the taxexempt entity would not have been 

subject to unrelated business income tax 

under section 511 or to tax under any 

other provision of the Code had the 

partnership made a deemed sale 

election in connection with the transfer, 

the transfer would be excluded from the 

scope of the final regulations (and the 

transferee RIC or REIT will not be 

subject to section 1374 treatment) to the 

extent of the tax-exempt entity’s 

distributive share of the built-in gain or 

loss in the converted property. 

However, to the extent the tax-exempt 

partner would have been subject to 

unrelated business income tax under 

section 511 or to tax under any other 

provision of the Code with respect to its 

distributive share of the built-in gain on 

the property, the transferee RIC or REIT 

would be subject to tax on the built-in 

gain on the property under the rules of 

section 1374 as if the RIC or REIT were 

an S corporation unless the transferring 

partnership elects deemed sale 

treatment. 

Section 1.337(d)–7(e) provides that 

the principles of § 1.337(d)–7 apply to 

property transferred by a partnership to 

a RIC or REIT to the extent of any C 

corporation partner’s distributive share 

of the gain or loss in the transferred 

property. The proposed regulations 

provide that § 1.337(d)–7(e) also applies 

to determine the distributive share of 

the gain or loss in the transferred 

property of a C corporation partner of a 

higher-tier partnership in a tiered 

partnership structure in which the 

transferor partnership is a lower-tier 

partnership. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866, as 

supplemented by Executive Order 

13565. Therefore, a regulatory 

assessment is not required. Pursuant to 

the Regulatory Flexibility Act (5 U.S.C. 

chapter 6), it is hereby certified that 

these proposed regulations would not 

have a significant economic impact on 

a substantial number of small entities 

because the proposed regulations limit 

the situations in which these regulations 

apply to all businesses, including small 

businesses. This certification is based 

on the fact that these proposed 

regulations do not create additional 

obligations for, or impose an economic 

impact on, small entities. Therefore, a 

regulatory flexibility analysis is not 

required. Pursuant to section 7805(f) of 

the Code, these proposed regulations 

will be submitted to the Chief Counsel 

for Advocacy of the Small Business 

Administration for comment on their 

impact on small business. 

Comments and Requests for a Public 

Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

written (a signed original and eight (8) 

copies) or electronic comments that are 

submitted timely to the IRS. Treasury 

and the IRS request comments on all 

aspects of the proposed rules. All 

comments will be available for public 

inspection and copying. A public 

hearing may be scheduled if requested 

in writing by any person that timely 

submits written or electronic comments. 

If a public hearing is scheduled, notice 

of the date, time, and place for the 

public hearing will be published in the 

Federal Register. 

Drafting Information 

The principal authors of these 

regulations are Grid Glyer and Maury 

Passman of the Office of Associate Chief 


emcdonald on DSK29S0YB1PROD with PROPOSALS
22518 Federal Register / Vol. 77, No. 73 / Monday, April 16, 2012 / Proposed Rules 

Counsel (Corporate). Other personnel 

from Treasury Department and the IRS 

participated in their development. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 1 is 

proposed to be 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 * * * 

Section 1.337(d)–7 is also issued under 26 

U.S.C. 337(d) * * * 

Par. 2. Section 1.337(d)–7 is amended 

by: 

1. Revising paragraphs (a)(2), (d)(1), 

(e) and (f) 

2. Adding paragraph (d)(3), 

The revisions and addition read as 

follows: 

§ 1.337(d)–7 Tax on property owned by a C 

corporation that becomes property of a RIC 

or REIT. 

(a) * * * 

(2) Definitions. For purposes of this 

section: 

(i) C corporation. The term C 

corporation has the meaning provided 

in section 1361(a)(2) except that the 

term does not include a RIC, a REIT, or 

a tax-exempt entity within the meaning 

of paragraph (a)(2)(vi) of this section. 

(ii) Conversion transaction. The term 

conversion transaction means the 

qualification of a C corporation as a RIC 

or REIT or the transfer of property 

owned by a C corporation to a RIC or 

REIT. 

(iii) RIC. The term RIC means a 

regulated investment company within 

the meaning of section 851(a). 

(iv) REIT. The term REIT means a real 

estate investment trust within the 

meaning of section 856(a). 

(v) S corporation. The term S 

corporation has the meaning provided 

in section 1361(a)(1). 

(vi) Tax-exempt entity. The term taxexempt entity, with respect to a 

conversion transaction, means an 

entity— 

(A) Described in § 1.337(d)–4(c)(2), 

and 

(B) That would not be subject to tax 

under Title 26 of the United States Code 

with respect to gain (if any) resulting 

from a deemed sale election if such an 

election were made under paragraph 

(c)(5) of this section with respect to the 

conversion transaction. 

* * * * * 

(d) Exceptions—(1) Gain otherwise 

recognized. Paragraph (a) of this section 

does not apply to any conversion 

transaction to the extent that gain or loss 

otherwise is recognized on such 

conversion transaction by the C 

corporation that either qualifies as a RIC 

or a REIT or that transfers property to 

a RIC or REIT. See, for example, sections 

311(b), 336(a), 351(b), 351(e), 356, 

357(c), 367, 368(a)(2)(F), 1001, 1031(b), 

and 1033(b). 

* * * * * 

(3) Special rules for like-kind 

exchanges and involuntary 

conversions—(i) In general. Paragraph 

(a) of this section does not apply to a 

conversion transaction to the extent that 

a C corporation transfers property with 

a built-in gain to a RIC or REIT and the 

C corporation’s gain is not recognized 

by reason of either section 1031 or 1033. 

(ii) Clarification regarding exchanged 

property previously subject to section 

1374 treatment. Notwithstanding 

paragraph (d)(3)(i) of this section, if, in 

a transaction described in paragraph 

(d)(3)(i) of this section, a RIC or REIT 

surrenders property that was subject to 

section 1374 treatment immediately 

prior to the transaction, the rules of 

section 1374(d)(6) will apply to 

continue section 1374 treatment to the 

replacement property acquired by the 

RIC or REIT in the transaction. 

(iii) Examples. The rules of this 

paragraph (d)(3) are illustrated by the 

following examples. In each of the 

examples, X is a REIT, Y is a C 

corporation, and X and Y are not 

related. 

Example 1. Section 1031(a) exchange. (i) 

Facts. X owned a building that it leased for 

commercial use (Property A). Y owned a 

building leased for commercial use (Property 

B). On January 1, Year 3, Y transferred 

Property B to X in exchange for Property A 

in a transaction that qualified for 

nonrecognition treatment under section 

1031(a). Immediately before the exchange, 

Properties A and B each had a value of $100, 

X had an adjusted basis of $60 in Property 

A, Y had an adjusted basis of $70 in Property 

B, and X was not subject to section 1374 

treatment with respect to Property A. 

(ii) Analysis. The transfer of property 

(Property B) by Y (a C corporation) to X (a 

REIT) is a conversion transaction within the 

meaning of paragraph (a)(2)(ii) of this section. 

The conversion transaction qualified for 

nonrecognition treatment under section 

1031(a) as to Y; thus, Y did not recognize any 

of its $30 gain. Therefore, the conversion 

transaction is not subject to paragraph (a) of 

this section by reason of paragraph (d)(3)(i) 

of this section. 

Example 2. Section 1031(a) exchange of 

section 1374 property. (i) Facts. The facts are 

the same as in Example 1, except that X had 

acquired Property A in a conversion 

transaction in Year 2, and immediately before 

the Year 3 exchange X was subject to section 

1374 treatment with respect to $25 of net 

built-in gain in Property A. 

(ii) Analysis. The Year 3 transfer of 

Property B by Y to X is a conversion 

transaction within the meaning of paragraph 

(a)(2)(ii) of this section. The conversion 

transaction qualified for nonrecognition 

treatment under section 1031(a) as to Y; thus, 

Y did not recognize any of its $30 gain. 

Therefore, the Year 3 transfer is not subject 

to paragraph (a) of this section by reason of 

paragraph (d)(3)(i) of this section. However, 

X had been subject to section 1374 treatment 

with respect to $25 of net built-in gain in 

Property A immediately before the Year 3 

transfer, and X’s basis in Property B is 

determined (in whole or in part) by reference 

to its adjusted basis in Property A. 

Accordingly, the rules of section 1374(d)(6) 

apply and X is subject to section 1374 

treatment on Property B with respect to the 

$25 net built-in gain. See paragraph (d)(3)(ii) 

of this section. 

Example 3. Section 1031(b) exchange. (i) 

Facts. The facts are the same as in Example 

1, except that immediately before the Year 3 

exchange Property A had a value of $92, and 

X transferred Property A and $8 to Y in 

exchange for Property B in a transaction that 

qualified for nonrecognition treatment under 

section 1031(b). 

(ii) Analysis. The transfer of Property B by 

Y to X is a conversion transaction within the 

meaning of paragraph (a)(2)(ii) of this section. 

The conversion transaction qualified for 

nonrecognition treatment as to Y under 

section 1031(b) (resulting from the receipt of 

$8 in money or other property in addition to 

the replacement property); as a result, Y 

recognized $8 of its $30 gain, and did not 

recognize the remaining $22 of gain. 

Paragraph (a) of this section does not apply 

to the transaction to the extent of the $8 gain 

recognized by Y by reason of paragraph (d)(1) 

of this section, or to the extent of the $22 gain 

realized but not recognized by Y by reason 

of paragraph (d)(3)(i) of this section. 

Example 4. Section 1033(a) involuntary 

conversion of property held by a C 

corporation transferor. (i) Facts. Y owned 

uninsured, improved property (Property 1) 

that was involuntarily converted (within the 

meaning of section 1033(a)) in a fire. Y sold 

Property 1 for $100 to X, which owned an 

adjacent property and wanted Property 1 for 

use as a parking lot. Y had a $70 basis in 

Property 1 immediately before the sale. Y 

elected to defer gain recognition under 

section 1033(a)(2), and purchased qualifying 

replacement property (Property 2) for $100 

from an unrelated party prior to the 

expiration of the period described in section 

1033(a)(2)(B). 

(ii) Analysis. The transfer of Property 1 by 

Y to X is a conversion transaction within the 

meaning of paragraph (a)(2)(ii) of this section. 

The conversion transaction (combined with 

Y’s purchase of Property 2) qualified for 

nonrecognition treatment under section 

1033(a) as to Y; thus, Y did not recognize any 

of its $30 gain. Therefore, the conversion 

transaction is not subject to paragraph (a) of 

this section by reason of paragraph (d)(3)(i) 

of this section. 

Example 5. Section 1033(a) involuntary 

conversion of property held by a REIT. (i) 


emcdonald on DSK29S0YB1PROD with PROPOSALS
Federal Register / Vol. 77, No. 73 / Monday, April 16, 2012 / Proposed Rules 22519 

Facts. X owned property (Property 1). On 

January 1, Year 2, Property 1 had a fair 

market value of $100 and a basis of $70, and 

X was not subject to section 1374 treatment 

with respect to Property 1. On that date, 

when Property 1 was under a threat of 

condemnation, X sold Property 1 to an 

unrelated party for $100 (First Transaction). 

X elected to defer gain recognition under 

section 1033(a)(2), and purchased qualifying 

replacement property (Property 2) for $100 

from Y (Second Transaction) prior to the 

expiration of the period described in section 

1033(a)(2)(B). 

(ii) Analysis. The transfer of Property 2 by 

Y to X in the Second Transaction is a 

conversion transaction within the meaning of 

paragraph (a)(2)(ii) of this section. The 

Second Transaction (combined with the First 

Transaction) qualified for nonrecognition 

treatment under section 1033(a) as to X, but 

not as to Y. Assume no nonrecognition 

provision applied to Y; thus, Y recognized 

gain or loss on its sale of Property 2 in the 

Second Transaction, and the Second 

Transaction is not subject to paragraph (a) of 

this section by reason of paragraph (d)(3)(i) 

of this section. 

(e) Special rule for partnerships—(1) 

In general. The principles of this section 

apply to property transferred by a 

partnership to a RIC or REIT to the 

extent of any gain or loss in the 

converted property that would be 

allocated directly or indirectly, through 

one or more partnerships, to a C 

corporation if the partnership sold the 

converted property to an unrelated party 

at fair market value on the deemed sale 

date (as defined in paragraph (c)(3) of 

this section). If the partnership were to 

elect deemed sale treatment under 

paragraph (c) of this section in lieu of 

section 1374 treatment under paragraph 

(b) of this section with respect to such 

transfer, then any net gain recognized by 

the partnership on the deemed sale 

must be allocated to the C corporation 

partner, but does not increase the 

capital account of any partner. Any 

adjustment to the partnership’s basis in 

the RIC or REIT stock as a result of 

deemed sale treatment under paragraph 

(c) of this section shall constitute an 

adjustment to the basis of that stock 

with respect to the C corporation 

partner only. The principles of section 

743 apply to such basis adjustment. 

(2) Example. Transfer by partnership of 

property to REIT. (i) Facts. PRS, a partnership 

for Federal income tax purposes, has three 

partners: TE, a tax-exempt entity (within the 

meaning of § 1.337(d)–7(a)(2)(vi)), owns 50 

percent of the capital and profits of PRS; A, 

an individual, owns 30 percent of the capital 

and profits of PRS; and Y, a C corporation 

(within the meaning of § 1.337(d)–7(a)(2)(i)), 

owns the remaining 20 percent. PRS owns a 

building that it leases for commercial use 

(Property 1). On January 1, Year 2, when PRS 

has an adjusted basis in Property 1 of $100 

and Property 1 has a fair market value of 

$500, PRS transfers Property 1 to X, a REIT, 

in exchange for stock of X in an exchange 

described in section 351. PRS does not elect 

deemed sale treatment under paragraph (c) of 

this section. 

(ii) Analysis. The transfer of Property 1 by 

PRS to X is a conversion transaction within 

the meaning of paragraph (a)(2)(ii) of this 

section to the extent of any gain or loss that 

would be allocated to any C corporation 

partner if PRS sold Property 1 at fair market 

value to an unrelated party on the deemed 

sale date. Y is a C corporation, but neither 

TE nor A is a C corporation within the 

meaning of paragraph (a)(2)(i) of this section. 

Therefore, the transfer of Property 1 by PRS 

to X is a conversion transaction within the 

meaning of paragraph (a)(2)(ii) of this section 

to the extent of Y’s share of any such gain 

of PRS in Property 1. If PRS were to sell 

Property 1 to an unrelated party at fair 

market value on the deemed sale date, PRS 

would allocate $80 of built-in gain to Y. 

Thus, X is subject to section 1374 treatment 

on Property 1 with respect to $80 of built-in 

gain. 

(f) Effective/Applicability date—(1) In 

general. Except as provided in paragraph 

(f)(2) of this section, this section applies to 

conversion transactions that occur on or after 

January 2, 2002. For conversion transactions 

that occurred on or after June 10, 1987, and 

before January 2, 2002, see §§ 1.337(d)–5 and 

1.337(d)–6. 

(2) Special rule. Paragraphs (a)(2), (d)(1), 

(d)(3) and (e) of this section apply to 

conversion transactions that occur on or after 

[INSERT DATE OF PUBLICATION OF THE 

TREASURY DECISION ADOPTING THESE 

RULES AS FINAL REGULATIONS IN THE 

FEDERAL REGISTER]. However, 

taxpayers may apply paragraphs (a)(2), (d)(1), 

(d)(3) and (e) of this section to conversion 

transactions that occurred before [INSERT 

DATE OF PUBLICATION OF THE 

TREASURY DECISION ADOPTING THESE 

RULES AS FINAL REGULATIONS IN THE 

FEDERAL REGISTER]. For conversion 

transactions that occurred on or after January 

2, 2002 and before [INSERT DATE OF 

PUBLICATION OF THE TREASURY 

DECISION ADOPTING THESE RULES AS 

FINAL REGULATIONS IN THE FEDERAL 

REGISTER], see § 1.337(d)–7 as contained 

in 26 CFR part 1 in effect on April 1, 2011. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2012–8995 Filed 4–13–12; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF LABOR 

Wage and Hour Division 

29 CFR Part 825 

RIN 1215–AB76 and RIN 1235–AA03 

The Family and Medical Leave Act 

AGENCY: Wage and Hour Division, 

Department of Labor. 

ACTION: Extension of comment period. 

SUMMARY: This document extends the 

period for filing written comments until 

April 30, 2012 on the proposed 

revisions to certain regulations of the 

Family and Medical Leave Act of 1993 

(FMLA). On February 15, 2012, the 

Department published a Notice of 

Proposed Rulemaking to revise certain 

regulations the FMLA, primarily to 

implement recent statutory amendments 

to the Act. The comment period is 

scheduled to close on April 16, 2012. 

The Department of Labor (Department) 

is taking this action in order to provide 

interested parties additional time to 

submit comments. 

DATES: The agency must receive 

comments on or before April 30, 2012. 

The period for public comments, which 

was to close on April 16, 2012, will be 

extended to April 30, 2012. 

ADDRESSES: You may submit comments, 

identified by Regulatory Information 

Number (RIN) 1235–AA03, by electronic 

submission through the Federal 

eRulemaking Portal http:// 

www.regulations.gov. Follow 

instructions for submitting comments. 

You may also submit comments by mail. 

Address written submissions to Mary 

Ziegler, Director of the Division of 

Regulations, Legislation, and 

Interpretation, Wage and Hour Division, 

U.S. Department of Labor, Room S– 

3510, 200 Constitution Avenue NW., 

Washington, DC 20210. 

Instructions: Please submit only one 

copy of your comments by only one 

method. All submissions must include 

the agency name and RIN, identified 

above, for this rulemaking. Please be 

advised that comments received will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided, and 

should not include any individual’s 

personal medical information. Mailed 

written submissions commenting on 

these provisions must be received by the 

date indicated for consideration in this 

rulemaking. For questions concerning 

the application of the FMLA provisions, 

individuals may contact the Wage and 

Hour Division (WHD) local district 

offices. Locate the nearest office by 

calling the WHD’s toll-free help line at 

(866) 4US–WAGE ((866) 487–9243) 

between 8 a.m. and 5 p.m. in your local 

time zone, or log onto the WHD’s Web 

site for a nationwide listing of WHD 

district and area offices at http:// 

www.dol.gov/whd/america2.htm. For 

additional information on submitting 

comments and the rulemaking process, 

see the ‘‘Public Participation’’ heading 

of the SUPPLEMENTARY INFORMATION

section of this document. 


emcdonald on DSK29S0YB1PROD with PROPOSALS