This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

33989 

Vol. 75, No. 115 

Wednesday, June 16, 2010 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Part 774 

[Docket No. 0907271167–0246–02] 

RIN 0694–AE69 

Export Administration Regulations: 

Technical Corrections 

AGENCY: Bureau of Industry and 

Security, Commerce. 

ACTION: Final rule; correcting 

amendments. 

SUMMARY: This rule corrects two 

typographical errors that appeared in a 

rule published on June 4, 2010. One 

error is in the License Requirements 

section of Export Control Classification 

Number 2B001 and the other is in the 

Technical Note on Adjusted Peak 

Performance (‘‘APP’’) found at the end of 

Category 4 on the Commerce Control 

List. 

DATES: This rule is effective June 16, 

2010. 

FOR FURTHER INFORMATION CONTACT: 

William H. Arvin, Regulatory Policy 

Division, e-mail warvin@bis.doc.gov, 

telephone (202) 482–2440. 

SUPPLEMENTARY INFORMATION: 

Background 

On June 4, 2010, the Bureau of 

Industry and Security published a final 

rule that, inter alia, clarified language 

regarding certain performance criteria of 

turning machines covered by Export 

Control Classification Number (ECCN) 

2B001 and replaced a subscript with a 

superscript to properly express 

exponentiation in the definition of 

Adjusted Peak Performance in a 

technical note at the end of Category 4 

on the Commerce Control List (75 FR 

31678, June 4, 2010). That notice 

contained two typographical errors. The 

first described the national security 

control for ECCN 2B001 as NS Column 

1 on the EAR Country Chart (15 CFR 

part 738, Supp. No. 1). The correct 

national security control for ECCN 

2B001 is NS Column 2. The second did 

not enclose the abbreviation ‘‘APP’’ in 

double quotation marks. This rule 

corrects both errors. 

Rulemaking Requirements 

1. This rule is not a significant rule for 

purposes of Executive Order 12866. 

2. Notwithstanding any other 

provision of law, no person is required 

to respond to, nor shall any person be 

subject to a penalty for failure to comply 

with a collection of information, subject 

to the requirements of the Paperwork 

Reduction Act, unless that collection of 

information displays a currently valid 

Office of Management and Budget 

Control Number. This rule involves a 

collection of information that has been 

approved by the OMB under control 

number 0694–0088, which carries a 

burden hour estimate of 58 minutes to 

prepare and submit form BIS–748. 

Miscellaneous and recordkeeping 

activities account for 12 minutes per 

submission. BIS believes that this rule 

will make no change to the number of 

submissions or to the burden imposed 

by this collection. 

3. This rule does not contain policies 

with Federalism implications as that 

term is defined in Executive Order 

13132. 

4. BIS finds that there is good cause 

under 5 U.S.C. 553(b)(3)(B) to waive the 

provisions of the Administrative 

Procedure Act requiring prior notice 

and the opportunity for public comment 

because these revisions are 

administrative in nature and do not 

affect the rights and obligations of the 

public; therefore allowing prior notice 

and comment on these rules is 

unnecessary. In addition, the 30-day 

delay in effectiveness required by 5 

U.S.C. 553(d) is not applicable here 

because this rule is not a substantive 

rule, but merely makes technical 

changes to the regulations. No other law 

requires that notice of proposed 

rulemaking and an opportunity for 

public comment be given for this rule; 

therefore, the analytical requirements of 

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

601 et seq.) are not applicable. 

List of Subjects in 15 CFR Part 774 

Exports, Reporting and recordkeeping 

requirements. 

■ Accordingly, the Export 

Administration Regulations (15 CFR 

parts 730–774) are amended as follows: 

PART 774—[AMENDED] 

■ 1. The authority citation for part 774 

continues to read as follows: 

Authority: 50 U.S.C. app. 2401 et seq.; 50 

U.S.C. 1701 et seq.; 10 U.S.C. 7420; 10 U.S.C. 

7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 

seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 

42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 

1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; 

22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 

13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 

228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 

Comp., p. 783; Notice of August 13, 2009 (74 

FR 41,325 (August 14, 2009)). 

■ 2. In Supplement No. 1 to part 774: 

■ a. In Category 2, Export Control 

Classification Number 2B001, revise the 

‘‘Controls’’ paragraph of the ‘‘License 

Requirements’’ section. 

■ b. In Category 4, the Technical Note 

on ‘‘Adjusted Peak Performance’’ (‘‘APP’’) 

that appears at the end of Category 4, 

revise the definition of ‘‘APP’’ that 

appears under the heading 

‘‘Abbreviations Used in This Technical 

Note’’. 

Supplement No. 1 to Part 774—The 

Commerce Control List 

* * * * * 

2B001 Machine tools and any combination 

thereof, for removing (or cutting) metals, 

ceramics or ‘‘composites’’, which, 

according to the manufacturer’s 

technical specifications, can be equipped 

with electronic devices for ‘‘numerical 

control’’; and specially designed 

components as follows (see List of Items 

Controlled). 

License Requirements 

Reason for Control: NS, NP, AT 

Control(s) Country Chart 

NS applies to entire entry NS Column 2 

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33990 Federal Register / Vol. 75, No. 115 / Wednesday, June 16, 2010 / Rules and Regulations 

Control(s) Country Chart 

NP applies to 2B001.a, .b, 

.c, and .d, EXCEPT: (1) 

Turning machines 

under 2B001.a with a 

capacity no greater than 

35 mm diameter; (2) bar 

machines (Swissturn), 

limited to machining 

only bar feed through, if 

maximum bar diameter 

is equal to or less than 

42 mm and there is no 

capability of mounting 

chucks. (Machines may 

have drilling and/or 

milling capabilities for 

machining parts with 

diameters less than 42 

mm); or (3) milling machines under 

2B001.b.with x-axis 

travel greater than two 

meters and overall ‘‘positioning accuracy’’ on 

the x-axis more (worse) 

than 0.030 mm 

NP Column 1 

AT applies to entire entry AT Column 1 

* * * * * 

Category 4—Computers 

* * * * * 

Technical Note on ‘‘Adjusted Peak 

Performance’’ (‘‘APP’’) 

* * * * * 

Abbreviations Used in This Technical Note 

* * * * * 

‘‘APP’’ is expressed in Weighted 

TeraFLOPS (WT) in units of 1012 adjusted 

floating point operations per second. 

* * * * * 

Bernard Kritzer, 

Director, Office of Exporter Services. 

[FR Doc. 2010–14432 Filed 6–15–10; 8:45 am] 

BILLING CODE 3510–33–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9487] 

RIN 1545–BG03 

Built-in Gains and Losses Under 

Section 382(h) 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document contains final 

regulations that apply to loss 

corporations that have undergone an 

ownership change within the meaning 

of section 382. These regulations 

provide guidance regarding the 

treatment of prepaid income under the 

built-in gain provisions of section 

382(h). 

DATES: Effective Date: These regulations 

are effective on June 11, 2010. 

Applicability Date: For dates of 

applicability see § 1.382–7(b). 

FOR FURTHER INFORMATION CONTACT: 

Keith E. Stanley, (202) 622–7750 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains amendments 

to 26 CFR part 1. On June 14, 2007, 

temporary regulations (TD 9330; 72 FR 

32792) regarding the treatment of 

prepaid income under the built-in gain 

provisions of section 382(h) were 

published in the Federal Register. A 

notice of proposed rulemaking (NPRM) 

(REG–144540–06) cross-referencing to 

temporary regulations was published in 

the Federal Register for the same day 

(72 FR 32828). The temporary 

regulations provided that prepaid 

income is not recognized built-in gain 

(‘‘RBIG’’) for purposes of section 382(h). 

They further provided that prepaid 

income means any amount received 

prior to the change date that is 

attributable to performance occurring on 

or after the change date. Examples of 

prepaid income include, but are not 

limited to, income received prior to the 

change date that is deferred until the 

five year section 382 recognition period 

under section 455, § 1.451–5, or Rev. 

Proc. 2004–34 (2004–1 CB 991 (June 1, 

2004)) (or any successor revenue 

procedure) (see § 601.601(d)(2)(ii)(b)). 

These prepaid income provisions permit 

deferral in order to better match the 

taxpayer’s income with the expenses 

incurred to earn that income and, as a 

result, to more clearly reflect the 

taxpayer’s income both in the year of 

receipt and in the year of performance. 

The IRS and the Treasury Department 

therefore view such income to be 

properly attributable to the period when 

included in gross income, which may be 

within the recognition period. 

Accordingly, such income is not 

‘‘attributable to periods before the 

change date’’ and so is not RBIG under 

section 382(h)(6)(A). 

One comment was received and no 

public hearing was requested or held. 

The public comment focused on 

companies in the business of providing 

extended warranty coverage for 

automobiles or other products. The 

commenter presented an example under 

the facts of which the commenter 

argued that a portion of the prepaid 

income deferred to the recognition 

period should be treated as RBIG. 

After giving consideration to the 

comment, the IRS and Treasury 

continue to believe that none of the 

prepaid income taken into account 

during the recognition period in the 

example should be RBIG. As noted 

above, where prepaid income is 

properly deferred from gross income 

under a permissible method of 

accounting, such deferral reflects a 

judgment that the income has not been 

earned, or, in the parlance of section 

382(h)(6)(A), is not ‘‘attributable to’’ 

prior performance. The premise of this 

Treasury decision is that, for purposes 

of section 382, there is not a compelling 

policy underlying section 382(h) that 

warrants a different timing answer for 

the treatment of properly deferred 

prepaid income. 

Accordingly, the proposed regulations 

set forth in the NPRM (REG–144540– 

06), which cross-referenced to the 

temporary regulations for their 

substance, are adopted with no 

substantive change by this Treasury 

decision, and the corresponding 

temporary regulations are removed. 

Special Analyses 

It has been determined that this 

regulation is not a significant regulatory 

action as defined in Executive Order 

12866. Therefore, a regulatory 

assessment is not required. Pursuant to 

5 U.S.C. 553(d)(3), it has been 

determined that good cause exists to 

dispense with a delayed effective date 

on grounds that this regulation, which 

is substantively identical to currently 

effective temporary regulations, merely 

continues to provide necessary guidance 

to taxpayers with respect to the 

treatment of prepaid income under the 

built-in gain provisions of section 

382(h). It is hereby certified that these 

regulations will not have a significant 

economic impact on a substantial 

number of small entities. These 

regulations only apply in the rare 

circumstance in which a qualifying loss 

corporation that uses a particular 

accounting method undergoes an 

ownership change. Therefore, a 

Regulatory Flexibility Analysis under 

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

chapter 6) is not required. Pursuant to 

section 7805(f) of the Internal Revenue 

Code, the notice of proposed rulemaking 

preceding these final regulations was 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small business. 

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