82160 Federal Register / Vol. 89, No. 197 / Thursday, October 10, 2024 / Rules and Regulations 

categorically excludes from further 

environmental impact review 

rulemaking actions that designate or 

modify classes of airspace areas, 

airways, routes, and reporting points 

(see 14 CFR part 71, Designation of 

Class A, B, C, D, and E Airspace Areas; 

Air Traffic Service Routes; and 

Reporting Points), and paragraph 5– 

6.5k, which categorically excludes from 

further environmental review the 

publication of existing air traffic control 

procedures that do not essentially 

change existing tracks, create new 

tracks, change altitude, or change 

concentration of aircraft on these tracks. 

As such, this action is not expected to 

result in any potentially significant 

environmental impacts. In accordance 

with FAA Order 1050.1F, paragraph 5– 

2 regarding Extraordinary 

Circumstances, the FAA has reviewed 

this action for factors and circumstances 

in which a normally categorically 

excluded action may have a significant 

environmental impact requiring further 

analysis. Accordingly, the FAA has 

determined that no extraordinary 

circumstances exist that warrant 

preparation of an environmental 

assessment or environmental impact 

study. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

amends 14 CFR part 71 as follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for 14 CFR 

part 71 continues to read as follows: 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of FAA Order JO 7400.11J, 

Airspace Designations and Reporting 

Points, dated July 31, 2024, and 

effective September 15, 2024, is 

amended as follows: 

Paragraph 6009(a) Green Federal Airways. 

* * * * * 

G–16 [Removed] 

* * * * * 

Paragraph 6009(c) Amber Federal Airways. 

* * * * * 

A–3 [Removed] 

* * * * * 

A–17 [Removed] 

* * * * * 

Issued in Washington, DC, on October 3, 

2024. 

Frank Lias, 

Manager, Rules and Regulations Group. 

[FR Doc. 2024–23201 Filed 10–9–24; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9994] 

RIN 1545–BP55 

Section 367(d) Rules for Certain 

Repatriations of Intangible Property 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final rule. 

SUMMARY: This document contains final 

regulations that terminate the continued 

application of certain tax provisions 

arising from a previous transfer of 

intangible property to a foreign 

corporation when the intangible 

property is repatriated to certain United 

States persons. The final regulations 

affect certain United States persons that 

previously transferred intangible 

property to a foreign corporation. 

DATES: 

Effective date: These regulations are 

effective on October 10, 2024. 

Applicability date: For dates of 

applicability, see §§ 1.367(d)–1(j)(2), 

1.904–(q)(3), 1.951A–7(e), and 1.6038B– 

1(g)(8). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the final regulations other 

than § 1.904–4, Brittany N. Dobi (202) 

317–6937; concerning § 1.904–4, Jeffrey 

L. Parry, (202) 317–6936 (not toll-free 

numbers). 

SUPPLEMENTARY INFORMATION: 

Authority 

This document contains final 

additions and amendments to 26 CFR 

part 1 (final regulations) under section 

367(d) of the Internal Revenue Code 

(Code) regarding the termination of the 

continued application of certain tax 

provisions arising from a previous 

transfer of intangible property to a 

foreign corporation when the intangible 

property is repatriated to certain United 

States persons. The primary provisions 

of the final regulations are issued 

pursuant to the express delegations of 

authority to the Secretary of the 

Treasury (or her delegate) provided 

under sections 367(d) and 6038B. The 

provisions of the final regulations 

related to foreign branch income are 

issued pursuant to the express 

delegations of authority provided under 

sections 904(d)(2)(J) and (d)(7). The final 

regulations are also issued under the 

express delegation of authority under 

section 7805(a). 

Background 

On May 3, 2023, the Department of 

the Treasury (Treasury Department) and 

the IRS published a notice of proposed 

rulemaking (REG–124064–19) in the 

Federal Register (88 FR 27819) under 

section 367 (the proposed regulations). 

The proposed regulations were intended 

to address simple, common fact patterns 

involving repatriations of intangible 

property by terminating the continued 

application of section 367(d) when a 

transferee foreign corporation 

repatriates intangible property subject to 

section 367(d) to a qualified domestic 

person when certain reporting 

requirements are satisfied. The 

proposed regulations also included a 

rule coordinating the application of 

section 367(d) and the provisions in 

§ 1.904–4(f)(2)(vi)(D) that apply the 

principles of section 367(d) to 

determine the appropriate amount of 

gross income attributable to a foreign 

branch. A ‘‘repatriation’’ denotes a 

subsequent transfer of intangible 

property to the U.S. transferor or a 

United States person (U.S. person) 

related to the U.S. transferor. 

Summary of Comments and 

Explanation of Revisions 

I. In General 

Five comments were submitted on the 

proposed regulations, which are 

available at https://www.regulations.gov 

or upon request. No public hearing on 

the proposed regulations was requested 

or held. 

This Summary of Comments and 

Explanation of Revisions describes 

those comments and the revisions made 

in response to those comments. The 

comments also made various requests 

for future guidance, which the Treasury 

Department and the IRS will consider as 

part of a potential future rulemaking 

addressing, among other things, general 

issues under section 367(d). 

II. Definition of Qualified Domestic 

Person 

A. In General 

To terminate the continued 

application of section 367(d) upon a 


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repatriation of intangible property, the 

proposed regulations required the 

recipient of the intangible property to be 

a qualified domestic person. The 

proposed regulations defined a qualified 

domestic person by reference to an 

‘‘initial U.S. transferor,’’ a ‘‘qualified 

successor,’’ or a U.S. person that is 

either an individual or ‘‘qualified 

corporation’’ related to either the initial 

U.S. transferor or qualified successor. 

See proposed § 1.367(d)–1(f)(4)(iii). 

As the preamble to the proposed 

regulations explained in part I.C of the 

Explanation of Provisions, the definition 

of qualified domestic person was based 

on the principle that it is generally 

appropriate to terminate the continued 

application of section 367(d) only when 

all the income produced by the 

intangible property during its useful 

life, and all gain recognized on a 

disposition of the intangible property, 

will be subject to current tax in the 

United States as to the qualified 

domestic person while that person 

holds the property. See 88 FR 27819, 

27824. The proposed regulations further 

described how, in the case of a 

repatriation to an initial U.S. transferor, 

the repatriation restored the 

circumstances that existed at the time of 

the original section 367(d) transfer. See 

Id. 

B. Partnerships 

The proposed regulations neither 

treated a domestic partnership as a 

qualified domestic person, nor adopted 

an approach that would treat a 

partnership as an aggregate of its 

partners (aggregate approach) for 

purposes of determining qualified 

domestic person status. One comment 

suggested that the Treasury Department 

and the IRS modify the definition of 

qualified domestic person to include 

partnerships in which all of the partners 

in the partnership would themselves be 

qualified domestic persons, or 

partnerships that made the original 

outbound transfer of the intangible 

property subject to section 367(d) when 

there is substantial continuity of 

ownership of that partnership during 

the period beginning on the date of the 

initial section 367(d) transfer and 

ending on the date of the repatriation of 

the intangible property. As part of the 

modification, the comment also 

described various approaches for 

addressing the concerns identified in 

the proposed regulations regarding, for 

example, the potential for postrepatriation changes to partnership 

allocations or liquidation rights to 

frustrate the purposes of the proposed 

regulations if a partnership, or a partner 

in the partnership, were permitted as a 

qualified domestic person in certain 

cases. See 88 FR 27819, 27824 for a 

discussion of those concerns. 

Specifically, the comment suggested 

that the final regulations, in adopting 

the modification, could limit its 

application by requiring a specific 

period after the repatriation during 

which the ownership or interests in the 

partnership could not change. 

Additionally, the comment suggested 

that, to provide flexibility while 

protecting against the concerns outlined 

in the proposed regulations, the final 

regulations could allow the 

Commissioner to exercise discretion at a 

taxpayer’s request to determine that a 

post-distribution change in the 

ownership of the partnership, or in the 

economic rights of the partners with 

respect to the intangible property, 

would not taint the partnership’s status 

as a qualified domestic person. Finally, 

the comment also described more 

general, long-standing issues under 

section 367(d) related to the treatment of 

partnerships within the section 367(d) 

regime, and ultimately suggested that 

resolution of those issues should not 

impede finalizing the proposed 

regulations. 

The final regulations do not adopt this 

comment and therefore adopt the 

definition of qualified domestic person 

from the proposed regulations without 

change. The issues identified by the 

comment, along with potential solutions 

to those issues, were acknowledged in 

the preamble to the proposed 

regulations, and the Treasury 

Department and the IRS have 

determined that the approach outlined 

in the proposed regulations continues to 

strike the appropriate balance between 

implementing the general purpose and 

scope of the proposed regulations 

(ensuring that only appropriate 

repatriations terminate the continued 

application of section 367(d)) and 

concerns regarding administrability and 

compliance. The solutions described in 

the comment, like the alternatives 

described in the proposed regulations, 

would not achieve this balance because 

the solutions would either expand the 

scope of the proposed regulations in an 

inappropriate manner (that is, by 

expanding the basic principle upon 

which the proposed regulations rests), 

or the solutions would, given the 

relatively narrow scope of the proposed 

regulations, impose an undue burden on 

taxpayers and the IRS. See 88 FR 27819, 

27824 (describing, with respect to the 

latter, an approach modeled off of the 

rules in §§ 1.367(a)–3 and 1.367(a)–8 

regarding gain recognition agreements 

and noting that approach would be 

‘‘unworkable due to the compliance and 

administrative burden.’’). 

Another comment described general, 

long-standing issues under section 

367(d) related to the treatment of 

partnerships. These issues were 

generally identified in the proposed 

regulations. See id. For example, the 

comment pointed to §§ 1.367(a)– 

1T(c)(3)(i) and 1.367(d)–1T(a), which 

apply an aggregate approach upon an 

initial outbound transfer. The comment 

did not include any explicit suggestion 

for change regarding the proposed 

regulations, but the Treasury 

Department and the IRS may consider 

these issues as part of future 

rulemaking. 

C. S Corporations 

As described in part I.A of this 

Summary of Comments and Explanation 

of Revisions, the proposed regulations 

limited qualified domestic person status 

to ‘‘qualified corporations’’ in the case 

of a qualified successor or in the case of 

a U.S. person related to either the initial 

U.S. transferor or qualified successor. 

See proposed § 1.367(d)–1(f)(4)(iii). A 

qualified corporation, in relevant part, 

did not include an S corporation (as 

defined in section 1361(a)). See Id. 

One comment suggested that the final 

regulations allow S corporations as 

qualified corporations. The comment 

noted that the shareholders of an S 

corporation must generally be U.S. 

individuals subject to U.S. taxation, 

which ensures that income attributable 

to intangible property held by an S 

corporation would be subject to U.S. 

taxation (though the comment noted 

that the limitation is not absolute, as 

certain plans described in section 401(a) 

may be shareholders of an S 

corporation). 

Section 512(e)(3) excludes a nonindividual shareholder that is an 

employee stock ownership plan (ESOP) 

(as defined in section 4975(e)(7) from 

the scope of section 512(e)(1), which 

provides that, in the case of certain nonindividual shareholders of the S 

corporation, any item of income, gain, 

loss, or deduction, and any gain or loss 

on the disposition of stock in the S 

corporation, is taken into account by 

such non-individual shareholders as 

unrelated business taxable income 

(UBTI). As a result, the pro rata share of 

an S corporation’s items of income 

taken into account by an ESOP 

shareholder is not subject to current 

taxation as UBTI. As noted in part I.A 

of this Summary of Comments and 

Explanation of Revisions, a principle for 

the definition of qualified domestic 

person is that termination of the 

continued application of section 367(d) 


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should occur only when all the income 

produced by the intangible property, as 

well as gain recognized on a disposition 

of the intangible property, is subject to 

current tax in the United States. In the 

case of an S corporation, that result is 

not guaranteed. 

The final regulations, therefore, do 

not adopt this comment and retain the 

definition of qualified domestic person 

from the proposed regulations without 

change. The Treasury Department and 

the IRS considered alternative 

approaches to address this comment— 

such as an aggregate approach, with 

prohibitions applicable to S corporation 

shareholders that are ESOPs—but 

determined that such approaches were 

effectively unworkable due to the 

compliance and administrative burden 

discussed in part II.B of this Summary 

of Comment and Explanation of 

Revisions in connection with the 

comment on partnerships. 

III. Qualified Domestic Person’s 

Adjusted Basis in Repatriated Intangible 

Property 

Proposed § 1.367(d)–1(f)(4)(iv) 

provided rules regarding a qualified 

domestic person’s adjusted basis in the 

intangible property it receives in a 

repatriation. The proposed regulations 

described how these rules were 

intended to achieve an appropriate 

result regarding a qualified domestic 

person’s adjusted basis in intangible 

property upon a repatriation, but that 

general rules regarding adjusted basis 

under section 367(d) (and not in the 

context of a repatriation of intangible 

property to a qualified domestic person) 

would be addressed in future 

rulemaking. See 88 FR 27819, 27824, 

and 27825. 

One comment described how existing 

uncertainty regarding the treatment of 

adjusted basis of intangible property 

subject to section 367(d) may be 

implicated when that intangible 

property is repatriated. The comment 

noted that any solution would 

necessarily represent a broad solution to 

existing section 367(d) issues, instead of 

one limited to the proposed regulations, 

so the comment recommended the 

Treasury Department and the IRS 

address this issue in future rulemaking. 

Another comment suggested that, when 

a transferee foreign corporation incurs 

expenditures with respect to repatriated 

intangible property after the initial 

outbound transfer, proposed § 1.367(d)– 

1(f)(4)(iv) should be modified to allow a 

qualified domestic person’s adjusted 

basis in repatriated intangible property 

to reflect those expenditures, reduced 

by any attributable amortization allowed 

or allowable to the transferee foreign 

corporation. 

As noted in the proposed regulations, 

proposed § 1.367(d)–1(f)(4)(iv) operated 

‘‘in a manner intended to reach an 

appropriate result regarding a qualified 

domestic person’s basis in repatriated 

intangible property’’ until future 

rulemaking is issued that can address 

general basis rules under section 367(d). 

See id. The Treasury Department and 

the IRS, in agreement with the first 

comment, continue to believe that any 

resolution of these issues necessarily 

implicates broader issues under section 

367(d) and, as such, is beyond the scope 

of this rulemaking. Proposed § 1.367(d)– 

1(f)(4)(iv) is therefore finalized without 

change, though the Treasury 

Department and the IRS may revisit 

these issues as part of future 

rulemaking. 

IV. Required Adjustments Related to an 

Annual Section 367(d) Inclusion 

The proposed regulations provided 

that the deemed annual payment under 

section 367(d) by the transferee foreign 

corporation is treated as an allowable 

deduction that must be allocated and 

apportioned to the transferee foreign 

corporation’s classes of gross income in 

accordance with §§ 1.882–4(b)(1), 

1.954–1(c), and 1.960–1(c) and (d) (as 

applicable). See proposed § 1.367(d)– 

1(c)(2)(ii) and (e)(2)(ii). These 

provisions, described as ‘‘minor 

clarifications’’ in the preamble to the 

proposed regulations, clarified ‘‘that the 

allowable deduction is allocated and 

apportioned under the provisions cited 

in the previous sentence potentially to 

any class (or classes) of gross income (as 

appropriate) rather than solely to gross 

income subject to subpart F in all 

circumstances.’’ See 88 FR 27819, 

27822, and 27825. 

One comment suggested that the 

proposed regulations were unclear as to 

whether the allowable deduction 

described in proposed § 1.367(d)– 

1(c)(2)(ii) and (e)(2)(ii) was limited to 

the listed provisions (§§ 1.882–4(b)(1), 

1.954–1(c), and 1.960–1(c) and (d)) or 

whether such deduction was more 

generally available (for example, as a 

deduction under section 162). The 

comment posited that the latter 

approach was more appropriate and 

requested that the final regulations 

clarify that the allowable deduction may 

be allowed as a deduction under section 

162. In support, the comment described 

how, in the case of certain transfers of 

intangible property to a U.S. person that 

is not a qualified domestic person, 

‘‘excessive U.S. taxation’’ could result if 

the allowable deduction were limited to 

the listed provisions, which are 

provisions relevant to determinations 

with respect to foreign corporations. 

The final regulations do not adopt this 

comment. The proposed regulations 

terminated the continued application of 

section 367(d) upon certain, rather than 

all, subsequent transfers of intangible 

property to a U.S. person (that is, upon 

a repatriation to a qualified domestic 

person if certain reporting requirements 

are met). See 88 FR 27819, 27821, and 

27822. The comment, if adopted, would 

effectively terminate the continued 

application of section 367(d) by, for 

example, providing a deduction under 

section 162 corresponding to each 

annual inclusion under section 367(d). 

Indeed, as the proposed regulations 

explained, the solution contained in the 

proposed regulations was premised, in 

relevant part, on the fact that ‘‘the 

deemed (substituted) transferee foreign 

corporation is not allowed a deduction 

that could reduce taxable income, even 

though that deemed transferee foreign 

corporation is the U.S. transferor or a 

related U.S. person.’’ See id. Thus, a 

fundamental premise underlying the 

proposed regulations, and the existing 

section 367(d) regulations, is that an 

allowable deduction, instead of being 

generally available, is limited to the 

provisions listed in the proposed 

regulations (§§ 1.882–4(b)(1), 1.954–1(c), 

and 1.960–1(c) and (d)). To adopt the 

comment’s suggestion would therefore 

be inconsistent with the proposed 

regulations and section 367(d) generally. 

The comment also suggested that, 

when a subsequent transfer of intangible 

property results in treating the same 

entity as U.S. transferor and transferee 

foreign corporation under the section 

367(d) regulations, the continued 

application of section 367(d) should 

terminate by reason of that convergence. 

As support, the comment cited to a case 

and guidance involving circumstances 

in which a taxpayer acquired its own 

debt. The Treasury Department and the 

IRS do not agree with this suggestion for 

the reasons described in the preceding 

paragraph, and references to cases or 

guidance involving a taxpayer acquiring 

its own debt are not instructive for, nor 

consistent with, the statutory and 

regulatory framework of section 367(d). 

Section 367(d) relies upon a statutory 

fiction that imposes a notional regime 

with a prescribed payor and payee, and 

the regulations describe cases in which 

a successor succeeds to the notional 

payment on both sides of the construct. 

For example, § 1.367(d)–1T(e)(1) 

provides that a related person can 

succeed an initial U.S. transferor for 

purposes of including income under 

section 367(d), and § 1.367(d)–1T(f)(3) 

provides that a related person can 


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succeed to the payor side of the deemed 

payment fiction. Where intangible 

property is returned to the original U.S. 

transferor, that U.S. transferor is also the 

successor transferee under the statutory 

and regulatory framework of section 

367(d), and, under the express language 

of § 1.367(d)–1T(f)(3), the annual 

inclusion under section 367(d) 

continues. This is precisely the issue the 

proposed regulations were intended to 

address, and new regulations providing 

a rule for terminating an annual 

inclusion stream would have been 

largely unnecessary if the deemed 

payment construct collapsed 

automatically in such cases. Instead, 

this Treasury Decision provides the 

exclusive means by which the 

continued application of section 367(d) 

may be terminated by reason of a 

subsequent transfer of intangible 

property to a U.S. person. 

V. Multiple Transfers Before 

Repatriation 

One comment suggested changes to 

the proposed regulations to 

accommodate repatriations preceded by 

certain transfers of intangible property 

subject to section 367(d) between 

related foreign corporations. To 

illustrate this suggestion, the comment 

posited an example pursuant to which 

a repatriation was first preceded by a 

distribution under section 311 of the 

intangible property (first section 311 

distribution) from one CFC (original 

transferee foreign corporation, or TFC) 

to another CFC (successor TFC). The 

successor TFC then distributes the 

intangible property under section 311 to 

a qualified domestic person (second 311 

distribution) in a transaction with 

respect to which the successor TFC did 

not recognize gain or loss (under the 

theory that successor TFC’s adjusted 

basis in the intangible property equaled 

the intangible property’s fair market 

value). 

On those modified facts, the comment 

described how the original TFC could 

recognize gain subject to U.S. taxation 

by reason of the first section 311 

distribution (not under section 367(d), 

but rather under, for example, section 

951A(a) as to a United States 

shareholder), and the qualified domestic 

person could recognize that same 

amount of gain upon the repatriation 

after the second 311 distribution under 

the proposed regulations (by reason of 

the application of the gain recognition 

rule in proposed § 1.367(d)–1(f)(4)(ii)(B), 

under which gain is determined by 

reference to the U.S. transferor’s former 

adjusted basis in the property). And, 

because the successor TFC is the TFC at 

the time of the repatriation (that is, at 

the time of the second section 311 

distribution), the required adjustments 

described in proposed § 1.367(d)–1(f)(2) 

would apply by reference to the 

successor TFC, which did not recognize 

gain or loss on the repatriation under 

the theory described above, rather than 

to the original TFC, which recognized 

gain on the first section 311 

distribution. To address this concern, 

the comment suggested modifying the 

proposed regulations in a manner that 

would effectively negate a prior transfer 

that was subject to tax under a separate 

regime (for example, section 951A). 

The example provided in the 

comment highlights significant potential 

interactions between the operation of 

section 367(d) and other generally 

operative provisions in the Code and 

regulations. For example, § 1.367(d)– 

1T(f)(3) explicitly provides that the 

ongoing annual royalty construct is 

unaffected by the taxable distribution of 

intangible property from the original 

TFC to the successor TFC in the first 

section 311 distribution, and § 1.367(d)– 

1T(d)(1) and (f)(1) are clear that the 

amount of income recognized by the 

U.S. transferor upon a later indirect or 

direct disposition of intangible property 

to an unrelated person is determined 

using the transferor’s original basis in 

the property. However, the distribution 

of the intangible property from the 

original TFC to the successor TFC 

described in the comment’s example 

might result in taxable gain to the 

original TFC that would be treated as 

tested income under section 951A, 

notwithstanding the lack of an 

acceleration of income under section 

367(d). Similarly, the successor TFC 

might take the intangible property with 

a fair market value basis under section 

301(d), even though that increased basis 

would not be available to reduce gain 

under section 367(d). Essentially, the 

example posited in the comment 

highlights that it may be possible to 

recognize income under both sections 

951A and 367(d) with respect to the 

same property in some fact patterns 

where separate transactions occur in 

separate foreign corporations, 

notwithstanding that that result would 

not occur in cases where the property is 

not transferred among multiple foreign 

corporations. Coordinating potential 

disparities between income recognition 

under section 367(d) as compared to 

other generally applicable provisions of 

the Code, and potential disparities in 

tax basis for purposes of section 367(d) 

as compared to adjusted basis for other 

purposes, is beyond the scope of this 

rulemaking. The request for additional 

guidance addressing multiple related 

transfers, therefore, is not adopted. 

VI. Reporting 

As a condition for terminating the 

application of section 367(d) with 

respect to repatriated intangible 

property, proposed § 1.367(d)– 

1(f)(4)(i)(B) would have required a U.S. 

transferor to provide the information 

described in proposed § 1.6038B– 

1(d)(2)(iv). If a U.S. transferor failed to 

provide that information, the 

repatriation was subject to proposed 

§ 1.367(d)–1(f)(3) such that the section 

367(d) regulations, including the 

requirement to take an annual inclusion 

into account over the useful life of the 

intangible property, continued to apply. 

However, a U.S. transferor was eligible 

for relief under the proposed regulations 

if proposed § 1.367(d)–1(f)(4)(i)(B)(2) 

would have applied to the subsequent 

transfer of intangible property but for 

the fact that the required information 

was not provided and the U.S. 

transferor, upon becoming aware of the 

failure, promptly provided the required 

information, explained its failure to 

comply, and met certain other 

requirements (if applicable). 

One comment requested clarifications 

of the reporting and relief provisions. 

First, the comment requested that the 

final regulations clarify whether relief 

for a failure to comply is, in relevant 

part, also conditioned on the U.S. 

transferor timely filing one or more 

amended returns for the taxable year in 

which the subsequent transfer occurred 

and succeeding years, and, if the U.S. 

transferor is under examination when 

an amended return is filed, providing a 

copy of the amended return(s) to the IRS 

personnel conducting the examination. 

The Treasury Department and the IRS 

adopt this comment by revising of 

§ 1.367(d)–1(f)(5) to clarify that the relief 

for a failure to comply is conditioned 

upon the requirements listed in the 

previous sentence (if applicable). 

The comment also requested that the 

Treasury Department and the IRS 

consider prescribing in the future a 

particular form for filing the required 

information under proposed § 1.367(d)– 

1(f)(5). The Treasury Department and 

the IRS will consider prescribing a 

particular form as part of future 

improvements to reporting with respect 

to section 367(d) generally. However, to 

provide taxpayers with additional 

guidance on the manner for providing a 

U.S. transferor’s explanation for its 

failure to comply to the IRS, the final 

regulations provide an eFax number for 

such purpose (and, if a taxable year of 

the U.S. transferor is under 

examination, that information should 


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instead be provided to the IRS 

personnel conducting the examination). 

Finally, the comment suggested 

clarifications or modifications to the 

requirements in proposed § 1.367(d)– 

1(f)(5) that a U.S. transferor ‘‘promptly’’ 

address its failure to file and to the way 

the U.S. transferor provides the 

remedial information (that is, to the 

Director of Field Operations, Cross 

Border Activities Practice Area of Large 

Business & International, or any 

successor to that role). The comment 

suggested that ‘‘promptly’’ does not 

provide sufficient guidance to taxpayers 

(the comment requested a prescribed 

period) and the comment asserted that 

it is unusual for regulations to require 

a taxpayer to provide information 

directly to a specified official within the 

IRS. The final regulations do not adopt 

these suggestions. The Treasury 

Department and the IRS believe that 

‘‘promptly’’ requiring the U.S. transferor 

to address its failure to comply, rather 

than providing a specific period, allows 

flexibility so that the relief may apply as 

appropriate to a taxpayer’s particular 

facts and circumstances. Additionally, 

proposed § 1.367(d)–1(f)(5) is modeled 

on similar relief provisions in other 

contexts (for example, §§ 1.367(a)–8(p) 

and 1.721(c)–6(f)). 

The Treasury Department and the IRS 

clarify proposed § 1.367(d)–1(f)(5) by 

striking the last clause that appeared in 

the second sentence. That sentence 

described the consequences of a failure 

to comply, namely the continued 

application of the annual inclusion 

stream pursuant to proposed § 1.367(d)– 

1(f)(3) and application of the gain 

recognition rule of proposed § 1.367(d)– 

1(f)(4)(i)(A). If the failure to comply is 

remedied, the rules of the proposed 

regulations are treated as satisfied as of 

the date of the repatriation (so, the 

repatriation terminates the continued 

application of section 367(d) and the 

U.S. transferor, if applicable, would take 

a partial annual inclusion into account 

pursuant to proposed § 1.367(d)– 

1(f)(4)(i)(B)(1)). 

VII. Clarification to Example 3 

Proposed § 1.367(d)–1(f)(6)(ii)(C) 

(Example 3) illustrated the 

determination of a qualified domestic 

person’s adjusted basis in intangible 

property under the proposed 

regulations. In that example, TFC 

transferred the intangible property to 

USS (a qualified domestic person as 

defined in proposed § 1.367(d)– 

1(f)(4)(iii)) in an exchange described in 

section 351(b) pursuant to which TFC 

recognized $50x of gain and USP 

recognized $50x of gain under proposed 

§ 1.367(d)–1(f)(4)(i)(A). The analysis 

under proposed § 1.367(d)– 

1(f)(6)(ii)(C)(2) was, and remains in this 

Treasury decision, limited to the 

determination of USS’s adjusted basis in 

the intangible property. 

One comment requested, in relevant 

part, that the final regulations clarify 

that TFC’s earnings and profits and 

gross income arising by reason of the 

repatriation are reduced by the amount 

of gain recognized by USP under 

proposed § 1.367(d)–1(f)(4)(i)(A) ($50x). 

The Treasury and the IRS adopt the 

comment by clarifying in the facts of the 

example that, under § 1.367(d)–1(f)(2)(i), 

TFC will reduce its earnings and profits 

and gross income by $50x, the amount 

arising by reason of the repatriation and 

the amount of gain recognized by USP 

under § 1.367(d)–1(f)(4)(i)(A). 

VIII. Section 904(d) Foreign Branch 

Income Rules 

Proposed § 1.904–4(f)(2)(vi)(D)(4) 

described the application of the 

principles of section 367(d) to 

subsequent transfers of intangible 

property in determining adjustments to 

the amount of gross income attributable 

to a foreign branch under § 1.904– 

4(f)(2)(vi)(D). Specifically, the proposed 

regulations would have provided that 

each transfer to which § 1.904– 

4(f)(2)(vi)(D) applies is considered 

independently from any other preceding 

or subsequent transfer of the intangible 

property, with the result that the 

subsequent transfer rules in the 

regulations under section 367(d), 

including the rules for repatriations 

provided in the proposed regulations, 

do not apply in determining gross 

income attributable to a foreign branch 

under § 1.904–4(f)(2)(vi)(D). See 88 FR 

27819, 27825, and 27826. 

One comment requested that the 

Treasury Department and the IRS 

finalize the provisions of the proposed 

regulations without finalizing proposed 

§ 1.904–4(f)(2)(vi)(D)(4). The comment 

suggested that such an approach could 

allow for further consideration of ways 

to simplify the application of section 

367(d) principles in § 1.904– 

4(f)(2)(vi)(D). The comment suggested 

that instead of finalizing proposed 

§ 1.904–4(f)(2)(vi)(D)(4), that provision 

could be adopted as a temporary 

regulation, or alternatively, this 

preamble could state that, until the 

implementation of final regulations 

addressing this issue, the Treasury 

Department and the IRS intend that 

rules related to section 367(d) and 

subsequent transfer will not apply for 

purposes of section 904(d). 

A broader reconsideration of the 

application of section 367(d) principles 

in § 1.904–4(f)(2)(vi)(D) is beyond the 

scope of these final regulations. The 

Treasury Department and the IRS 

believe it is necessary to finalize 

proposed § 1.904–4(f)(2)(vi)(D)(4) to 

ensure the proper application of the 

foreign branch income rules under 

§ 1.904–4(f)(2)(vi)(D) as those rules 

currently stand. This is because, as 

explained in the preamble to the 

proposed regulations, while § 1.904– 

4(f)(2)(vi)(D) relies on the principles of 

section 367(d) to determine the 

appropriate amount of gross income that 

is attributable to a foreign branch, the 

purposes of section 367(d) and § 1.904– 

4(f)(2)(vi)(D) are different. See 88 FR 

27819, 27825 (providing that, with 

respect to § 1.904–4(f)(2)(vi)(D), ‘‘[i]f 

there are multiple transfers of an item of 

intangible property over time, each 

transfer must be separately evaluated 

and could result in differing amounts of 

deemed annual payments depending on 

any interim changes in the value of the 

intangible property between successive 

transfers . . . these proposed 

regulations provide that each successive 

transfer to which § 1.904–4(f)(2)(vi)(D) 

applies is considered independently 

from any other preceding or subsequent 

transfers.’’). Accordingly, the final 

regulations do not adopt this comment 

and proposed § 1.904–4(f)(2)(vi)(D) is 

finalized without change. 

IX. Applicability Dates 

The proposed regulations were 

generally proposed to apply to 

subsequent dispositions of intangible 

property occurring on or after the date 

of publication of the Treasury decision 

adopting these rules as final regulations 

in the Federal Register. See proposed 

§§ 1.367(d)–1(j)(2), 1.904–4(q)(3), and 

1.6038B–1(g). Comments recommended 

that the proposed regulations apply 

retroactively. 

The Treasury Department and the IRS 

generally consider several factors when 

evaluating whether a rule should apply 

retroactively on an elective basis. For 

example, and as relevant to the 

proposed regulations, retroactive 

application may be more compelling 

where the regulations are issued with 

respect to new legislation, or where 

retroactive application is necessary to 

achieve certain policy objectives. The 

Treasury Department and the IRS also 

evaluate the additional administrative 

burden likely to result from retroactive 

application. Finally, where the 

regulations represent a change in 

existing regulations, consideration is 

given to whether retroactive application 

could advantage certain taxpayers over 

similarly situated taxpayers, based on 

whether the relevant taxable year 

remains open for the taxpayer to amend 


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their return to take advantage of the 

change. The Treasury Department and 

the IRS have determined that, on 

balance, these factors, though not 

representing an exhaustive list of 

factors, weigh against permitting the 

retroactive application of the final 

regulations and therefore do not adopt 

these comments. 

Special Analyses 

I. Regulatory Planning and Review— 

Economic Analysis 

Pursuant to the Memorandum of 

Agreement, Review of Treasury 

Regulations under Executive Order 

12866 (June 9, 2023), tax regulatory 

actions issued by the IRS are not subject 

to the requirements of section 6 of 

Executive Order 12866, as amended. 

Therefore, a regulatory impact 

assessment is not required. 

II. Paperwork Reduction Act 

The collection of information 

contained in these regulations has been 

reviewed and approved by the Office of 

Management and Budget in accordance 

with the Paperwork Reduction Act of 

1995 (44 U.S.C. 3507(d)) under control 

number 1545–0026. The collection of 

information in these final regulations is 

in § 1.6038B–1(d)(2)(iv). This 

information is necessary to ensure that 

proposed § 1.367(d)–1(f)(4) is 

appropriately applied to the subsequent 

transfer. The collection of information is 

required to comply with section 367(d). 

The likely respondents are domestic 

corporations. Burdens associated with 

these requirements will be reflected in 

the burden for Form 926, Return by a 

U.S. Transferor of Property to a Foreign 

Corporation. 

Estimated total annual reporting 

burden is 1,601 hours. 

Estimated average annual burden per 

respondent is 2.4 hours. 

Estimated number of respondents is 

667. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. Books or 

records relating to a collection of 

information must be retained if their 

contents may become material in the 

administration of any Internal Revenue 

law. Generally, tax returns and tax 

return information are confidential, as 

required by section 6103. 

III. Regulatory Flexibility Act 

Pursuant to the Regulatory Flexibility 

Act (5 U.S.C. chapter 6), it is hereby 

certified that these final regulations will 

not have a significant economic impact 

on a substantial number of small 

entities. 

The Treasury Department and the IRS 

do not have data readily available to 

assess the number of small entities 

potentially affected by the final 

regulations. However, entities 

potentially affected by these proposed 

regulations are generally not small 

entities, because of the resources and 

investment necessary to develop 

intangible property and, once so 

developed, transfer the intangible 

property to a foreign corporation. 

Therefore, the Treasury Department and 

the IRS have determined that there will 

not be a substantial number of domestic 

small entities affected by the final 

regulations. Consequently, the Treasury 

Department and the IRS certify that the 

final regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

IV. Section 7805(f) 

Pursuant to section 7805(f) of the 

Code, the proposed regulations (REG– 

113839–22) preceding these final 

regulations were submitted to the Chief 

Counsel for Advocacy of the Small 

Business Administration for comment 

on its impact on small business, and no 

comments were received. 

V. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 requires 

that agencies assess anticipated costs 

and benefits and take certain other 

actions before issuing a final rule that 

includes any Federal mandate that may 

result in expenditures in any one year 

by a State, local, or Tribal government, 

in the aggregate, or by the private sector, 

of $100 million in 1995 dollars, updated 

annually for inflation. These final 

regulations do not include any Federal 

mandate that may result in expenditures 

by State, local, or Tribal governments, or 

by the private sector in excess of that 

threshold. 

VI. Executive Order 13132: Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either imposes 

substantial, direct compliance costs on 

State and local governments, and is not 

required by statute, or preempts State 

law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive order. 

These final regulations do not have 

federalism implications and do not 

impose substantial direct compliance 

costs on State and local governments or 

preempt State law within the meaning 

of the Executive order. 

Drafting Information 

The principal author of these 

regulations is Brittany N. Dobi, of the 

Office of Associate Chief Counsel 

(International). However, other 

personnel from the Treasury 

Department and the IRS 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, the Treasury Department 

and the IRS amend 26 CFR part 1 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 1.367(d)–1 also issued under 26 

U.S.C. 367(d). 

* * * * * 

§ 1.367(a)–1 [Amended] 

■ Par. 2. Section 1.367(a)–1 is amended 

by removing the language ‘‘section 

936(h)(3)(B)’’ in paragraphs (d)(5) and 

(6) and adding the language ‘‘section 

367(d)(4)’’ in its place. 

■ Par. 3. Section 1.367(d)–1 is amended 

by: 

■ a. Removing reserved paragraphs 

(c)(1) through (2). 

■ b. Adding paragraph (c) heading and 

paragraphs (c)(1) and (2). 

■ c. Removing reserved paragraphs 

(c)(4) through (g)(2) (introductory text). 

■ d. Adding paragraphs (c)(4) and (d) 

through (f). 

■ e. Removing paragraph (g)(2)(i), 

reserved paragraphs (g)(2)(ii) through 

(iii)(D), paragraph (g)(2)(iii)(E), and 

reserved paragraph (g)(2)(iii) 

undesignated concluding paragraph. 

■ f. Adding paragraph (g) heading and 

paragraphs (g)(1) and (2). 

■ g. Removing reserved paragraphs 

(g)(4) through (i). 

■ h. Adding paragraphs (g)(4) through 

(6), (h), and (i). 

■ i. Revising paragraph (j). 

The additions and revision read as 

follows: 

§ 1.367(d)–1 Transfers of intangible 

property to foreign corporations. 

* * * * * 

(c) Deemed payments upon transfer of 

intangible property to foreign 


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82166 Federal Register / Vol. 89, No. 197 / Thursday, October 10, 2024 / Rules and Regulations 

corporation—(1) In general. For further 

guidance, see § 1.367(d)–1T(c)(1). 

(2) Required adjustments. For further 

guidance, see § 1.367(d)–1T(c)(2) 

introductory text and (c)(2)(i). 

(i) [Reserved] 

(ii) The deemed payment is treated as 

an allowable deduction (whether or not 

that amount is paid) of the transferee 

foreign corporation properly allocated 

and apportioned to the appropriate 

classes of gross income in accordance 

with §§ 1.882–4(b)(1), 1.951A–2(c)(3), 

1.954–1(c), and 1.960–1(c) and(d), as 

applicable. 

* * * * * 

(4) Blocked income. For further 

guidance, see § 1.367(d)–1T(c)(4). 

(d) Subsequent transfer of stock of 

transferee corporation to unrelated 

person. For further guidance, see 

§ 1.367(d)–1T(d). 

(e) Subsequent transfer of stock of 

transferee foreign corporation to related 

person—(1) Transfer to related U.S. 

person treated as disposition of 

intangible property. For further 

guidance, see § 1.367(d)–1T(e)(1). 

(2) Required adjustments. For further 

guidance, see § 1.367(d)–1T(e)(2) 

introductory text and (e)(2)(i). 

(i) [Reserved] 

(ii) The deemed payment is treated as 

an allowable deduction (whether or not 

that amount is paid) of the transferee 

foreign corporation properly allocated 

and apportioned to the appropriate 

classes of gross income in accordance 

with §§ 1.882–4(b)(1), 1.951A–2(c)(3), 

1.954–1(c), and 1.960–1(c) and(d), as 

applicable. 

(iii) For further guidance, see 

§ 1.367(d)–1T(e)(2)(iii) through (e)(4). 

(iv) [Reserved] 

(3) through (4) [Reserved] 

(f) Subsequent disposition of 

transferred intangible property by 

transferee foreign corporation—(1) In 

general. For further guidance, see 

§ 1.367(d)–1T(f)(1). 

(2) Required adjustments. If a U.S. 

transferor is required to recognize gain 

under paragraph (f)(4)(i)(A) of this 

section or § 1.367(d)–1T(f)(1), then, in 

addition to the adjustments described in 

paragraph (c)(2)(ii) of this section and 

§ 1.367(d)–1T(c)(2) with respect to the 

deemed payment described in 

§ 1.367(d)–1T(f)(1)(ii)— 

(i) For purposes of chapter 1 of the 

Code, the transferee foreign corporation 

reduces (but not below zero) the portion 

of its earnings and profits and gross 

income arising by reason of the 

subsequent disposition of the intangible 

property by the amount of gain 

recognized by the U.S. transferor under 

paragraph (f)(4)(i)(A) of this section or 

§ 1.367(d)–1T(f)(1); and 

(ii) The U.S. transferor may establish 

an account receivable from the 

transferee foreign corporation equal to 

the amount of gain recognized under 

paragraph (f)(4)(i)(A) of this section or 

§ 1.367(d)–1T(f)(1) in accordance with 

§ 1.367(d)–1T(g)(1). 

(3) Subsequent transfer of intangible 

property to related person. Except as 

provided in paragraph (f)(4)(i)(B) of this 

section, a U.S. person’s requirement to 

recognize income under § 1.367(d)– 

1T(c) or (e) is not affected by the 

transferee foreign corporation’s 

subsequent disposition of the 

transferred intangible property to a 

related person. For purposes of any 

required adjustments, and of any 

accounts receivable created under 

§ 1.367(d)–1T(g)(1), the related person 

that receives the intangible property is 

treated as the transferee foreign 

corporation. 

(4) Subsequent transfer of intangible 

property to qualified domestic person— 

(i) In general. Except as provided in 

paragraph (f)(4)(v) of this section, if a 

U.S. person transfers intangible property 

subject to section 367(d) and the rules 

of this section and § 1.367(d)–1T to a 

foreign corporation in an exchange 

described in section 351 or 361 and, 

within the useful life of the intangible 

property, that transferee foreign 

corporation subsequently disposes of 

the intangible property to a qualified 

domestic person, then— 

(A) The U.S. transferor of the 

intangible property (or any person 

treated as such pursuant to § 1.367(d)– 

1T(e)(1)) is required to recognize gain, 

as applicable, equal to the amount 

described in paragraph (f)(4)(ii) of this 

section; and 

(B) If the U.S. transferor provides the 

information described in § 1.6038B– 

1(d)(2)(iv), then— 

(1) The U.S. transferor is required to 

recognize a deemed payment as 

provided in § 1.367(d)–1T(f)(1)(ii); and 

(2) The intangible property is no 

longer subject to section 367(d), this 

section, or § 1.367(d)–1T after applying 

paragraphs (f)(4)(i)(A) and (f)(4)(i)(B)(1) 

of this section. 

(ii) Gain recognition for U.S. 

transferor. The amount of gain a U.S. 

transferor must recognize under 

paragraph (f)(4)(i)(A) of this section is 

determined as follows— 

(A) If the intangible property is 

transferred basis property (as defined in 

section 7701(a)(43)) by reason of the 

subsequent disposition (determined 

without regard to section 367(d), this 

section, and § 1.367(d)–1T), the amount 

of gain, if any, the transferee foreign 

corporation would recognize if its 

adjusted basis in the intangible property 

were equal to the U.S. transferor’s 

former adjusted basis in the property; or 

(B) If the intangible property is not 

transferred basis property by reason of 

the subsequent disposition (determined 

without regard to section 367(d), this 

section, and § 1.367(d)–1T), the excess, 

if any, of the fair market value of the 

intangible property on the date of the 

subsequent disposition over the U.S. 

transferor’s former adjusted basis in that 

property. 

(iii) Qualified domestic person. For 

purposes of this paragraph (f)(4), a 

qualified domestic person means— 

(A) The U.S. transferor that initially 

transferred intangible property subject 

to section 367(d); 

(B) A U.S. person treated as a U.S. 

transferor under § 1.367(d)–1T(e)(1), 

provided such person is an individual 

or a corporation other than a 

corporation exempt from tax under 

section 501(a), a regulated investment 

company (as defined in section 851(a)), 

a real estate investment trust (as defined 

in section 856(a)), a DISC (as defined in 

section 992(a)(1)), or an S corporation 

(as defined in section 1361(a)); 

(C) A U.S. person that is an individual 

related, within the meaning of 

paragraph (h)(2)(ii) of this section and 

§ 1.367(d)–1T(h), to the person 

described in paragraph (f)(4)(iii)(A) or 

(B) of this section; or 

(D) A U.S. person that is a corporation 

related, within the meaning of 

paragraph (h)(2)(ii) of this section and 

§ 1.367(d)–1T(h), to the person 

described in paragraph (f)(4)(iii)(A) or 

(B) of this section, other than a 

corporation exempt from tax under 

section 501(a), a regulated investment 

company (as defined in section 851(a)), 

a real estate investment trust (as defined 

in section 856(a)), a DISC (as defined in 

section 992(a)(1)), or an S corporation 

(as defined in section 1361(a)). 

(iv) Qualified domestic person’s basis 

in the intangible property. The qualified 

domestic person’s adjusted basis in the 

intangible property is— 

(A) In the case of a subsequent 

disposition of intangible property 

described in paragraph (f)(4)(ii)(A) of 

this section, and subject to any 

applicable limitations that may apply 

under the Code, the lesser of the U.S. 

transferor’s former adjusted basis in the 

intangible property or the transferee 

foreign corporation’s adjusted basis in 

the intangible property (as determined 

immediately before the subsequent 

disposition), in each case increased by 

the greater of the amount of gain (if any) 

described in paragraph (f)(4)(ii)(A) of 

this section and recognized by the U.S. 

transferor or the amount of gain (if any) 

recognized by the transferee foreign 


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Federal Register / Vol. 89, No. 197 / Thursday, October 10, 2024 / Rules and Regulations 82167 

corporation as to the intangible property 

by reason of the subsequent disposition; 

or 

(B) In the case of a subsequent 

disposition of intangible property 

described in paragraph (f)(4)(ii)(B) of 

this section, the fair market value of the 

intangible property (as determined on 

the date of the subsequent disposition). 

(v) Special rule for related 

transactions. If the transferee foreign 

corporation subsequently disposes of 

the transferred intangible property to a 

person that would, absent this 

paragraph (f)(4)(v), be a qualified 

domestic person (initial transferee) and, 

as part of a series of related transactions, 

the intangible property is subsequently 

disposed of to any other person, 

including by reason of multiple 

dispositions, then the initial transferee 

is treated as a qualified domestic person 

only if the ultimate recipient of the 

intangible property is a qualified 

domestic person. See paragraphs 

(f)(6)(ii)(D) and (E) of this section 

(Examples 4 and 5) for illustrations of 

the application of this paragraph 

(f)(4)(v). 

(5) Relief for certain failures to 

comply. This paragraph (f)(5) provides 

relief if paragraph (f)(4)(i)(B)(2) of this 

section would apply but for the U.S. 

transferor’s failure to provide the 

information required by paragraph 

(f)(4)(i)(B) of this section (a ‘‘failure to 

comply’’). When a failure to comply 

occurs, the subsequent disposition of 

the transferred intangible property is 

generally subject to paragraphs (f)(3) 

and (f)(4)(i)(A) of this section. 

Nevertheless, a failure to comply is 

deemed not to have occurred (regardless 

of whether the U.S. transferor continued 

to include amounts in gross income 

under § 1.367(d)–1T(c) or (e) after the 

subsequent disposition), and the 

requirements of paragraph (f)(4)(i)(B) of 

this section are treated as satisfied as of 

the date of the subsequent disposition 

if— 

(i) Promptly after the U.S. transferor 

becomes aware of the failure, the U.S. 

transferor provides such information 

and provides a reasonable explanation 

for its failure to comply to the Director 

of Field Operations, Cross Border 

Activities Practice Area of Large 

Business & International (or any 

successor to the roles and 

responsibilities of such position, as 

appropriate), by eFax at (855) 582–4842 

(or as otherwise directed on irs.gov), or, 

if any taxable year of the U.S. transferor 

is under examination when the 

discovery is made, to the Internal 

Revenue Service personnel conducting 

the examination; 

(ii) The U.S. transferor timely files an 

amended return for the taxable year in 

which the subsequent disposition 

occurred (and, if applicable, for each 

taxable year starting with the taxable 

year immediately after the taxable year 

in which the subsequent disposition 

occurred and ending with the taxable 

year in which the U.S. transferor seeks 

relief under this paragraph (f)(5)) that 

includes the information required by 

paragraph (f)(4)(i)(B) of this section; and 

(iii) If any taxable year of the U.S. 

transferor is under examination when 

an amended return is filed, the U.S. 

transferor provides a copy of the 

amended return (or, if applicable, 

amended returns) to the Internal 

Revenue Service personnel conducting 

the examination. 

(6) Examples—(i) Assumed facts. For 

purposes of the examples in paragraph 

(f)(6)(ii) of this section, and except 

where otherwise indicated, the 

following facts are assumed. 

(A) USP and USS are domestic 

corporations that each use a calendar 

taxable year. 

(B) TFC is a foreign corporation 

whose functional currency is the U.S. 

dollar. 

(C) In year 1, USP transfers intangible 

property, as defined in section 

367(d)(4), with a $0 adjusted basis, to 

TFC in a section 351 exchange (the 

transferred IP), and such transfer is 

subject to section 367(d). 

(D) Each annual inclusion (including 

any amount described in § 1.367(d)– 

1T(f)(1)(ii)) is taken into account under 

section 367(d)(2)(A)(ii)(I) and 

§ 1.367(d)–1T(c)(1). 

(E) Any subsequent transfer or 

disposition of stock of TFC or the 

transferred IP occurs within the useful 

life of the transferred IP. 

(F) All transactions are respected 

under general principles of tax law. 

(ii) Examples. The following 

examples illustrate the application of 

paragraph (f)(4) of this section and other 

paragraphs of this section that relate to 

paragraph (f)(4). 

(A) Example 1: Complete liquidation 

of transferee foreign corporation into a 

qualified domestic person—(1) Facts. In 

year 2, USP transfers all the stock of 

TFC to USS, a related person within the 

meaning of § 1.367(d)–1T(h) and 

paragraph (h)(2)(ii) of this section, in a 

section 351 exchange to which 

§ 1.367(d)–1T(e)(1) applies (the year 2 

transfer). In year 3, TFC distributes all 

its property (including the transferred 

IP) to USS pursuant to a complete 

liquidation to which sections 332 and 

337 apply (the year 3 liquidation). The 

all earnings and profits amount 

determined under § 1.367(b)–2(d) with 

respect to the stock of TFC held by USS 

is $0. The information described in 

§ 1.6038B–1(d)(2) is provided by USS 

for the taxable year in which the year 3 

liquidation occurs. 

(2) Analysis—(i) The year 2 transfer. 

Because the year 2 transfer involves a 

transfer of all the stock of TFC by USP 

(the initial U.S. transferor) to a related 

U.S. person (USS), under § 1.367(d)– 

1T(e)(1)(i) USS (a successor U.S. 

transferor) is treated as receiving the 

right to receive a proportionate share of 

the contingent annual payments that 

USP would have otherwise taken into 

account under § 1.367(d)–1T(c). As 

determined under § 1.367(d)–1T(e)(4), 

USS’s proportionate share of such 

payments is 100 percent. Accordingly, 

USS will annually include in its gross 

income the full amount of each of the 

annual payments that USP would 

otherwise have taken into account 

under § 1.367(d)–1T(c) over the useful 

life of the transferred IP, and USP will 

not recognize any gain upon the year 2 

transfer. See § 1.367(d)–1T(e)(1)(ii) and 

(iii). 

(ii) The year 3 liquidation. The year 3 

liquidation results in a subsequent 

disposition of the transferred IP to USS. 

USS, a U.S. person treated as the U.S. 

transferor pursuant to § 1.367(d)– 

1T(e)(1), is a qualified domestic person 

within the meaning of paragraph 

(f)(4)(iii) of this section. Pursuant to 

paragraph (f)(4)(i)(A) of this section, 

USS must recognize the amount of gain 

described in paragraph (f)(4)(ii) of this 

section. Because the year 3 liquidation 

is a complete liquidation to which 

sections 332 and 337 apply, the 

intangible property is transferred basis 

property (as defined in section 

7701(a)(43) and determined without 

regard to section 367(d), this section, 

and § 1.367(d)–1T), and therefore 

paragraph (f)(4)(ii)(A) of this section 

applies to determine the amount of any 

gain USS must recognize. Because TFC 

does not recognize gain with respect to 

the transferred IP (regardless of the 

adjusted basis in the intangible 

property) by reason of the year 3 

liquidation, the amount of gain 

described in paragraph (f)(4)(ii)(A) of 

this section is $0. Accordingly, USS 

does not recognize gain pursuant to 

paragraph (f)(4)(i)(A) of this section by 

reason of the year 3 liquidation. 

Additionally, because USS provides the 

information described in § 1.6038B– 

1(d)(2), paragraph (f)(4)(i)(B) of this 

section applies to the year 3 liquidation. 

USS therefore recognizes a deemed 

payment representing the part of USS’s 

taxable year during which TFC held the 

transferred IP pursuant to paragraph 

(f)(4)(i)(B)(1) of this section, and the 


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82168 Federal Register / Vol. 89, No. 197 / Thursday, October 10, 2024 / Rules and Regulations 

required adjustments described in 

paragraph (c)(2)(ii) of this section and 

§ 1.367(d)–1T(c)(2)(i) apply as to the 

deemed payment. Also, because USS 

does not recognize gain pursuant to 

paragraph (f)(4)(i)(A) of this section, the 

required adjustments described in 

paragraph (f)(2) of this section do not 

apply. Pursuant to paragraph 

(f)(4)(i)(B)(2) of this section, after taking 

the deemed payment into account, the 

transferred IP is no longer subject to 

section 367(d), this section, and 

§ 1.367(d)–1T. Finally, pursuant to 

paragraph (f)(4)(iv)(A) of this section, 

USS’s adjusted basis in the transferred 

IP is $0, which is equal to USP’s former 

adjusted basis in the transferred IP ($0), 

increased by the greater of the amount 

of gain recognized by USS under 

paragraph (f)(4)(i)(A) of this section ($0) 

or the amount of gain recognized by 

TFC upon the year 3 liquidation ($0). 

(B) Example 2: Taxable distribution of 

the transferred intangible property to a 

qualified domestic person—(1) Facts. 

The facts are the same as in paragraph 

(f)(6)(ii)(A) of this section (Example 1), 

except that, instead of in year 3 TFC 

distributing all its property to USS 

pursuant to a complete liquidation, in 

year 3 TFC distributes the transferred IP 

to USS in a distribution described in 

section 311(b) when the fair market 

value of the transferred IP is $100x (the 

year 3 distribution). TFC’s adjusted 

basis in the transferred IP immediately 

before the distribution is $0. 

(2) Analysis. The consequence of the 

year 2 transfer is the same as described 

in paragraph (f)(6)(ii)(A)(2)(i) of this 

section (Example 1). Like the 

consequences described in paragraph 

(f)(6)(ii)(A)(2) of this section (Example 

1), the year 3 distribution is a 

subsequent disposition of the 

transferred IP to USS, a qualified 

domestic person. Pursuant to paragraph 

(f)(4)(i)(A) of this section, USS must 

recognize the amount of gain described 

in paragraph (f)(4)(ii) of this section. 

Because the year 3 distribution is 

described in section 311(b) the 

intangible property is not transferred 

basis property (as defined in section 

7701(a)(43) and determined without 

regard to section 367(d), this section, 

and § 1.367(d)–1T), and therefore USS 

must recognize $100x gain under 

paragraph (f)(4)(ii)(B) of this section. 

The $100x gain amount equals the 

excess of the fair market value of the 

transferred IP on the date of the year 3 

distribution ($100x) over USP’s former 

adjusted basis in the property ($0). TFC, 

because of USS’s gain recognition under 

paragraph (f)(4)(i)(A) of this section, 

reduces (but not below zero) the portion 

of its earnings and profits and gross 

income arising by reason of the year 3 

distribution by the amount of such gain 

under paragraph (f)(2)(i) of this section. 

Specifically, because the year 3 

distribution requires USS to recognize 

$100x of gain, TFC reduces the portion 

of its earnings and profits and gross 

income that arise by reason of the year 

3 distribution, which is $100x (the 

excess of the fair market value of the 

transferred IP ($100x) over TFC’s 

adjusted basis in the transferred IP ($0)), 

by $100x (the amount of gain USS 

recognizes pursuant to paragraph 

(f)(4)(i)(A) of this section). As a result, 

after taking into account the reduction, 

TFC has no earnings and profits or gross 

income that arise by reason of the year 

3 distribution. Furthermore, USS may 

establish an account receivable from 

TFC equal to $100x under paragraph 

(f)(2)(ii) of this section. Additionally, 

and as described in paragraph 

(f)(6)(ii)(A)(2) of this section (Example 

1), pursuant to paragraph (f)(4)(i)(B)(1) 

of this section, USS recognizes a 

deemed payment for the portion of 

USS’s taxable year during which TFC 

held the transferred IP, and the required 

adjustments described in paragraph 

(c)(2)(ii) of this section and § 1.367(d)– 

1T(c)(2) apply to this deemed payment. 

After taking these consequences into 

account, pursuant to paragraph 

(f)(4)(i)(B)(2) of this section, the 

transferred IP is no longer subject to 

section 367(d), this section, and 

§ 1.367(d)–1T. Finally, pursuant to 

paragraph (f)(4)(iv)(B) of this section, 

USS’s adjusted basis in the transferred 

IP is $100x, which is the fair market 

value of the transferred IP on the date 

of the year 3 distribution. 

(C) Example 3: Qualified domestic 

person’s basis in intangible property 

when intangible property is repatriated 

in an exchange described in section 

351(b)—(1) Facts. The facts are the same 

as in paragraph (f)(6)(ii)(A) of this 

section (Example 1), except that the 

transfer of stock of TFC to USS in year 

2 does not occur and instead of the year 

3 liquidation, in year 3 TFC transfers the 

intangible property to USS (a qualified 

domestic person as defined in paragraph 

(f)(4)(iii) of this section) in an exchange 

described in section 351(b) pursuant to 

which TFC recognizes $50x of gain and 

USP recognizes $50x of gain under 

paragraph (f)(4)(i)(A) of this section (the 

year 3 exchange), which amount will 

reduce TFC’s earnings and profits and 

gross income by $50x under paragraph 

(f)(2)(i) of this section. 

(2) Analysis. Pursuant to paragraph 

(f)(4)(iv)(A) of this section, USS’s 

adjusted basis in the intangible property 

is $50x, which is the amount equal to 

the lesser of USP’s former adjusted basis 

in the property ($0) or TFC’s adjusted 

basis in the property ($0), increased by 

the greater of the amount of gain 

recognized by USP under paragraph 

(f)(4)(i)(A) of this section ($50x) or the 

amount of gain recognized by TFC upon 

the year 3 exchange ($50x). 

(D) Example 4: Repatriation as part of 

a series of related transactions 

culminating in transfer to a foreign 

corporation—(1) Facts. The facts are the 

same as in paragraph (f)(6)(ii)(A)(1) of 

this section (Example 1), except that the 

year 3 liquidation occurs as part of a 

series of related transactions pursuant to 

which USS transfers the transferred IP 

that it receives from TFC to a related 

foreign corporation (FC1) in exchange 

for stock in FC1. 

(2) Analysis. Because the year 3 

liquidation occurs as part of a series of 

related transactions pursuant to which 

the transferred IP is ultimately 

contributed to a FC1, a foreign 

corporation, and because a foreign 

corporation is not a qualified domestic 

person pursuant to paragraph (f)(4)(iii) 

of this section, then, under paragraph 

(f)(4)(v) of this section, the year 3 

liquidation is not treated as a 

subsequent disposition described in 

paragraph (f)(4)(i) of this section, but is 

instead treated as a subsequent 

disposition described in paragraph (f)(3) 

of this section. 

(E) Example 5: Repatriation as part of 

a series of related transactions 

culminating in transfer to a qualified 

domestic person—(1) Facts. The facts 

are the same as in paragraph 

(f)(6)(ii)(B)(1) of this section (Example 

2), except that the year 3 distribution 

occurs as part of a series of related 

transactions pursuant to which USS 

disposes of the transferred IP that it 

receives from TFC to USP. 

(2) Analysis. Because the year 3 

distribution occurs as part of a series of 

related transactions pursuant to which 

the transferred IP is distributed to USP, 

and because USP is a qualified domestic 

person pursuant to paragraph (f)(4)(iii) 

of this section, paragraph (f)(4)(v) of this 

section does not prevent paragraph 

(f)(4)(i) of this section from applying to 

the year 3 distribution. Accordingly, the 

consequences under section 367(d) of 

the year 3 distribution are the same as 

those described in paragraph 

(f)(6)(ii)(B)(2) of this section (Example 

2), and the consequences of the 

subsequent disposition of the 

transferred IP by USS to USP are 

determined after applying paragraph 

(f)(4) of this section to the transfer of the 

transferred IP by TFC to USS. 

(g) Special rules—(1) Establishment of 

accounts receivable. For further 

guidance, see § 1.367(d)–1T(g)(1). 


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Federal Register / Vol. 89, No. 197 / Thursday, October 10, 2024 / Rules and Regulations 82169 

(2) Election to treat transfer as sale. 

For further guidance, see § 1.367(d)– 

1T(g)(2) introductory text. 

(i) The intangible property transferred 

constitutes an operating intangible, as 

defined in § 1.367(a)–1(d)(6). 

(ii) For further guidance, see § 1.367– 

1T(g)(2)(ii) through (g)(2)(iii)(D). 

(iii)(A) through (D) [Reserved] 

(E) The transferred intangible 

property will be used in the active 

conduct of a trade or business outside 

of the United States within the meaning 

of § 1.367(a)–2 and will not be used in 

connection with the manufacture or sale 

of products in or for use or consumption 

in the United States. 

(F) For further guidance, see 

§ 1.367(d)–1T(g)(2)(iii)(F). 

* * * * * 

(4) Coordination with section 482. For 

further guidance, see § 1.367(d)–1T(g)(4) 

(5) Determination of fair market 

value. For further guidance, see 

§ 1.367(d)–1T(g)(5). 

(6) Anti-abuse rule. For further 

guidance, see § 1.367(d)–1T(g)(6). 

(h) Related person. For further 

guidance, see § 1.367(d)–1T(h) 

introductory text through (h)(1). 

(1) [Reserved] 

(2) For further guidance, see 

§ 1.367(d)–1T(h)(2) introductory text 

and (h)(2)(i). 

(i) [Reserved] 

(ii) Section 1563 applies (for purposes 

of section 267(f)) without regard to 

section 1563(b)(2). 

(i) Effective date. For further 

guidance, see § 1.367(d)–1T(i). 

(j) Applicability dates—(1) In general. 

This section applies to transfers 

occurring on or after September 14, 

2015, and to transfers occurring before 

September 14, 2015, resulting from 

entity classification elections made 

under § 301.7701–3 of this chapter that 

are filed on or after September 14, 2015. 

For transfers occurring before this 

section is applicable, see § 1.367(d)–1T 

as contained in 26 CFR part 1 revised as 

of April 1, 2016. 

(2) Certain subsequent dispositions of 

intangible property. Paragraphs (c)(2)(ii), 

(e)(2)(ii), (f)(2) through (5), and (h)(2)(ii) 

of this section apply to subsequent 

dispositions of intangible property 

occurring on or after October 10, 2024. 

For subsequent dispositions of 

intangible property occurring before 

October 10, 2024, see § 1.367(d)–1T as 

contained in 26 CFR part 1 revised as of 

April 1, 2022. 

■ Par. 4. Section 1.367(d)–1T is 

amended by: 

■ a. Revising paragraph (c)(2)(ii). 

■ b. Removing the undesignated 

paragraph following paragraph (c)(2)(ii). 

■ d. Revising paragraphs (e)(2)(ii) and 

(f)(2). 

■ e. Removing and reserving paragraph 

(f)(3) and adding reserved paragraphs 

(f)(4) through (6). 

■ f. Designating the undesignated 

paragraph following paragraph 

(g)(2)(iii)(E) as paragraph (g)(2)(iii)(F). 

■ g. Revising paragraph (h)(2)(ii). 

The revisions read as follows: 

§ 1.367(d)–1T Transfers of intangible 

property to foreign corporations 

(temporary). 

* * * * * 

(c) * * * 

(2) * * * 

(ii) For further guidance, see 

§ 1.367(d)–1(c)(2)(ii). 

* * * * * 

(e) * * * 

(2) * * * 

(ii) For further guidance, see 

§ 1.367(d)–1(e)(2)(ii); 

* * * * * 

(f) * * * 

(2) Required adjustments. For further 

guidance, see § 1.367(d)–1(f)(2) through 

(6). 

(3) through (6) [Reserved] 

* * * * * 

(h) * * * 

(2) * * * 

(ii) For further guidance, see 

§ 1.367(d)–1(h)(2)(ii). 

* * * * * 

§ 1.367(e)–2 [Amended] 

■ Par. 5. Section 1.367(e)–2 is amended 

by removing the language ‘‘section 

936(h)(3)(B)’’ in the last sentence of 

paragraph (b)(2)(i)(B) and adding the 

language ‘‘section 367(d)(4)’’ in its 

place. 

■ Par. 6. Section 1.904–4 is amended by 

adding paragraph (f)(2)(vi)(D)(4) and 

revising paragraph (q)(3) to read as 

follows: 

§ 1.904–4 Separate application of section 

904 with respect to certain categories of 

income. 

* * * * * 

(f) * * * 

(2) * * * 

(vi) * * * 

(D) * * * 

(4) Multiple transfers of intangible 

property. If the same intangible property 

is transferred in a series of transfers 

described in paragraph (f)(2)(vi)(D)(1) of 

this section, each successive transfer is 

separately subject to the provisions of 

paragraph (f)(2)(vi)(D)(1) and will not 

terminate or otherwise affect the 

application of paragraph (f)(2)(vi)(D)(1) 

to a prior transfer described in 

paragraph (f)(2)(vi)(D)(1). 

* * * * * 

(q) * * * 

(3) Except as provided in the 

following sentence, paragraph (f) of this 

section applies to taxable years that 

begin after December 31, 2019, and end 

on or after November 2, 2020. Paragraph 

(f)(2)(vi)(D)(4) of this section applies to 

taxable years that begin on or after 

October 10, 2024. 

■ Par. 7. Section 1.951A–2 is amended 

by revising paragraph (c)(2) to read as 

follows: 

§ 1.951A–2 Tested income and tested loss. 

* * * * * 

(c) * * * 

(2) Determination of gross income and 

allowable deductions. For purposes of 

determining tested income and tested 

loss, the gross income and allowable 

deductions of a controlled foreign 

corporation for a CFC inclusion year are 

determined under the rules of § 1.952– 

2 for determining the subpart F income 

(as defined in section 952) of the 

controlled foreign corporation, except, 

for a controlled foreign corporation 

which is engaged in the business of 

reinsuring or issuing insurance or 

annuity contracts and which, if it were 

a domestic corporation engaged only in 

such business, would be taxable as an 

insurance company to which subchapter 

L of chapter 1 of the Code applies, the 

text ‘‘the principles of §§ 1.953–4 and 

1.953–5’’ means ‘‘the rules of sections 

953 and 954(i)’’ in § 1.952–2(b)(2). 

* * * * * 

■ Par. 8. Section 1.951A–7 is amended 

by adding a paragraph (e) to read as 

follows: 

§ 1.951A–7 Applicability dates. 

* * * * * 

(e) Determination of gross income and 

allowable deductions. Section 1.951A– 

2(c)(2) applies to taxable years of foreign 

corporations ending on or after October 

10, 2024, and to taxable years of United 

States shareholders in which or with 

which such taxable years end. For 

taxable years of foreign corporations 

ending before October 10, 2024, and to 

taxable years of United States 

shareholders in which or with which 

such taxable years end, see § 1.951A– 

2(c)(2)(i) and (ii) as contained in 26 CFR 

part 1, revised as of April 1, 2022. 

■ Par. 9. Section 1.6038B–1 is amended 

by: 

■ a. Removing reserved paragraphs 

(d)(1) through (1)(iii). 

■ b. Adding paragraphs (d) heading and 

(d)(1) introductory text and reserved 

paragraphs (d)(1)(i) through (iii). 

■ c. Removing reserved paragraphs 

(d)(1)(viii) through (d)(2). 

■ d. Adding paragraphs (d)(1)(viii), 

(d)(2), and (g)(8). 


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82170 Federal Register / Vol. 89, No. 197 / Thursday, October 10, 2024 / Rules and Regulations 

The additions read as follows: 

§ 1.6038B–1 Reporting of certain transfers 

to foreign corporations. 

* * * * * 

(d) Transfers subject to section 

367(d)—(1) Initial transfer. For further 

guidance, see § 1.6038B–1T(d)(1) 

introductory text through (d)(1)(iii). 

(i) through (iii) [Reserved] 

* * * * * 

(viii) Other intangibles. For further 

guidance, see § 1.6038B–1T(d)(1)(viii). 

(2) Subsequent transfers. For 

additional, see § 1.6038B–1T(d)(2) 

introductory text through (d)(2)(ii). 

(i) through (ii) [Reserved] 

(iii) Subsequent transfer. Except for a 

subsequent transfer described in 

paragraph (d)(2)(iv) of this section, 

provide the following information 

concerning the subsequent transfer: 

(A) For further guidance, see 

§ 1.6038B–1T(d)(2)(iii)(A) through (C). 

(B) through (C) [Reserved] 

(iv) Subsequent transfer of intangible 

property to a qualified domestic person. 

Provide the following information 

concerning a subsequent transfer of 

intangible property described in 

§ 1.367(d)–1(f)(4)(i): 

(A) A statement providing that 

§ 1.367(d)–1(f)(4)(i)(B) applies to the 

subsequent transfer; 

(B) A general description of the 

subsequent transfer and any wider 

transaction of which it forms a part, 

including the U.S. transferor’s former 

adjusted basis in the intangible property 

and the transferee foreign corporation’s 

adjusted basis in the intangible property 

(as determined immediately before the 

subsequent transfer), the amount and 

computation of any gain recognized by 

the U.S. transferor under § 1.367(d)– 

1(f)(4)(i)(A), and a description of 

whether the intangible property was, or 

is expected to be, subsequently 

transferred to one or more other persons 

(as described in § 1.367(d)–1(f)(4)(v)); 

(C) A description of the intangible 

property; 

(D) A copy of the Form 926 with 

respect to the original transfer of the 

intangible property and any attachments 

identifying the intangible property as 

within the scope of section 367(d); 

(E) The name, address, and taxpayer 

identification number of the qualified 

domestic person that receives the 

intangible property, including a 

statement describing the relationship 

between the U.S. transferor and the 

qualified domestic person, and, if 

applicable, such information regarding 

any other persons described in 

§ 1.367(d)–1(f)(4)(v); and 

(F) Any other information as may be 

prescribed by the Commissioner in 

publications, forms, instructions, or 

other guidance. 

* * * * * 

(g) * * * 

(8) Paragraphs (d)(2)(iii) introductory 

text and (d)(2)(iv) of this section apply 

to transfers occurring on or after October 

10, 2024. 

■ Par. 10. Section 1.6038B–1T is 

amended by revising paragraph 

(d)(2)(iii) introductory text to read as 

follows: 

§ 1.6038B–1T Reporting of certain 

transactions to foreign corporations 

(temporary). 

* * * * * 

(d) * * * 

(2) * * * 

(iii) Subsequent transfer. For further 

guidance, see § 1.6038B–1T(d)(2)(iii) 

introductory text: 

* * * * * 

Douglas W. O’Donnell, 

Deputy Commissioner. 

Approved: September 23, 2024. 

Aviva Aron-Dine, 

Deputy Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2024–23132 Filed 10–9–24; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket Number USCG–2024–0908] 

RIN 1625–AA87 

Security Zone; Corpus Christi Ship 

Channel, Corpus Christi, TX 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing temporary, 500-yard radius, 

moving security zones within the 

navigable waters of the Corpus Christi 

Ship Channel and the La Quinta 

Channel. The security zone is needed to 

protect certain vessels carrying cargo 

which poses risks such that it requires 

an elevated level of security to protect 

the cargo itself and the surrounding 

waterway from terrorist acts, sabotage, 

or other subversive acts, accidents, or 

events of a similar nature. Entry of 

vessels or persons into these zones is 

prohibited unless specifically 

authorized by the Captain of the Port, 

Sector Corpus Christi or a designated 

representative. 

DATES: This rule is effective from 

October 7, 2024 through October 17, 

2024. 

ADDRESSES: To view documents 

mentioned in this preamble as being 

available in the docket, go to https://

www.regulations.gov, type USCG–2024– 

0908 in the search box and click 

‘‘Search.’’ Next, in the Document Type 

column, select ‘‘Supporting & Related 

Material.’’ 

FOR FURTHER INFORMATION CONTACT: If 

you have questions about this rule, call 

or email Lieutenant Tim Cardenas, 

Sector Corpus Christi Waterways 

Management Division, U.S. Coast 

Guard; telephone 361–939–5130, 

emailTim.J.Cardenas@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

I. Table of Abbreviations 

CFR Code of Federal Regulations 

COTP Captain of the Port, Sector Corpus 

Christi 

DHS Department of Homeland Security 

FR Federal Register 

NPRM Notice of proposed rulemaking 

§ Section 

U.S.C. United States Code 

II. Background Information and 

Regulatory History 

The Coast Guard is issuing this 

temporary rule under the authority in 5 

U.S.C. 553(b)(B). This statutory 

provision authorizes an agency to issue 

a rule without prior notice and 

opportunity to comment when the 

agency for good cause finds that those 

procedures are ‘‘impracticable, 

unnecessary, or contrary to the public 

interest.’’ Under 5 U.S.C. 553(b)(B), the 

Coast Guard finds that good cause exists 

for not publishing a notice of proposed 

rulemaking (NPRM) with respect to this 

rule because it is impracticable. The 

Coast Guard must establish this security 

zone by October 7, 2024, to ensure 

security of certain vessels and the 

surrounding area and lacks sufficient 

time to request public comments and 

respond to these comments before the 

safety zone must be established. As 

such, it is impracticable to publish an 

NPRM. 

Additionally, under 5 U.S.C. 

553(d)(3), the Coast Guard finds that 

good cause exists for making this rule 

effective less than 30 days after 

publication in the Federal Register. 

Delaying the effective date of this rule 

would be contrary to the public interest 

because prompt action is needed to 

provide for the security of these vessels 

while they are in transit and carrying 

potentially dangerous cargo in need of 

elevated security. 


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