2266 Federal Register / Vol. 62, No. 11 / Thursday, January 16, 1997 / Rules and Regulations

19 approach at Sawyer Airport, Gwinn,

MI. Controlled airspace extending

upward from 700 to 1200 feet above

ground level (AGL) is needed to contain

aircraft executing the approach. The

intended effect of this action is to

provide segregation of aircraft using

instrument approach procedures in

instrument conditions from other

aircraft operating in visual weather

conditions.

EFFECTIVE DATE: 0901 UTC, March 27,

1997.

FOR FURTHER INFORMATION CONTACT:

John A. Clayborn, Air Traffic Division,

Operations Branch, AGL–530, Federal

Aviation Administration, 2300 East

Devon Avenue, Des Plaines, Illinois

60018, telephone (847) 294–7568.

SUPPLEMENTARY INFORMATION:

History

On Thursday, November 21, 1996, the

FAA proposed to amend part 71 of the

Federal Aviation Regulations (14 CFR

part 71) to accommodate an ILS, DME,

and VOR to runway 01/19, Sawyer

Airport, Gwinn, MI (61 FR 59208). The

proposal was to add controlled airspace

extending upward from 700 to 1200 feet

AGL to contain Instrument Flight Rules

(IFR) operations in controlled airspace

during portions of the terminal

operation and while transiting between

the enroute and terminal environments.

Interested parties were invited to

participate in this rulemaking

proceeding by submitting written

comments on the proposal to the FAA.

No comments objecting to the proposal

were received. The notice inadvertently

listed incorrect coordinates and these

coordinates have been corrected in this

Final Rule. Class E5 airspace

designations for airspace areas

extending upward from 700 feet or more

above the surface of the earth are

published in paragraph 6005 of FAA

Order 7400.9D dated September 4, 1996,

and effective September 16, 1996, which

is incorporated by reference in 14 CFR

71.1. The Class E airspace designation

listed in this document will be

published subsequently in the Order.

The Rule

This amendment to part 71 of the

Federal Aviation Regulations (14 CFR

part 71) establishes Class E5 airspace to

accommodate an Instrument Landing

System (ILS), a Very High Frequency

Omnidirectional Range (VOR) and a

Distance Measuring Equipment (DME)

to serve runway 01/19 approach at

Sawyer Airport, Gwinn, MI. Controlled

airspace extending upward from 700 to

1200 feet AGL is needed to contain

aircraft executing the approach. The

area will be depicted on appropriate

aeronautical charts thereby enabling

pilots to circumnavigate the area or

otherwise comply with IFR procedures.

The FAA has determined that this

regulation only involves an established

body of technical regulations for which

frequent and routine amendments are

necessary to keep them operationally

current. Therefore, this regulation—(1)

is not a ‘‘significant regulatory action’’

under Executive Order 12866; (2) is not

a ‘‘significant rule’’ under DOT

Regulatory Policies and Procedures (44

FR 11034; February 26, 1979); and (3)

does not warrant preparation of a

Regulatory Evaluation as the anticipated

impact is so minimal. Since this is a

routine matter that will only affect air

traffic procedures and air navigation, it

is certified that this rule will not have

a significant economic impact on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference,

Navigation (air).

Adoption of the Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends 14 CFR part 71 as follows:

PART 71—[AMENDED]

1. The authority citation for 14 part 71

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389; 14 CFR 11.69.

§ 71.1 [Amended]

2. The incorporation by reference in

14 CFR 71.1 of the Federal Aviation

Administration Order 7400.9D, Airspace

Designations and Reporting Points,

dated September 4, 1996, and effective

September 16, 1996, is amended as

follows:

Paragraph 6005 The Class E airspace areas

extending upward from 700 feet or more

above the surface of the earth

* * * * *

AGL MI E5 Sawyer, MI [New]

Sawyer Airport, MI

(Lat. 46°21′13′′N, long. 87°23′43′′W)

That airspace extending upward from 700

feet above the surface within a 7.1-mile

radius of the Sawyer Airport, excluding that

airspace within the Marquette, MI, Class E

airspace area, and that airspace extending

upward from 1,200 feet above the surface

within a 34.8-mile radius of the Sawyer

Airport.

* * * * *

Issued in Des Plaines, Illinois on January

8, 1997.

Maureen Woods,

Manager, Air Traffic Division.

[FR Doc. 97–1114 Filed 1–15–97; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 165

Beverages

CFR Correction

In Title 21 of the Code of Federal

Regulations, parts 100 to 169, revised as

of April 1, 1996, § 165.110 is corrected

by transferring paragraph (b)(5) from

page 531 and inserting text immediately

following the note in the second column

on page 526.

§ 165.110 Bottled water.

* * * * *

(b) * * *

(5) Radiological quality. (i) Bottled

water shall, when a composite of

analytical units of equal volume from a

sample is examined by the methods

described in paragraph (b((5)(ii) of this

section, meet standards of radiological

quality as follows:

(A) The bottled water shall not

contain a combined radium–226 and

radium–228 activity in excess of 5

picocuries per liter of water.

(B) The bottled water shall not

contain a gross alpha particle activity

(including radium–226, but excluding

radon and uranium) in excess of 15

picocuries per liter of water.

(C) The bottled water shall not

contain beta particle and photon

radioactivity from manmade

radionuclides in excess of that which

would produce an annual dose

equivalent to the total body or any

internal organ of 4 millirems per year

calculated on the basis of an intake of

2 liters of the water per day. If two or

more beta or photon–emitting

radionuclides are present, the sum of

their annual dose equivalent to the total

body or to any internal organ shall not

exceed 4 millirems per year.

(ii) Analyses conducted to determine

compliance with paragraph (b)(5)(i) of

this section shall be made in accordance

with the methods described in the

applicable sections of ‘‘Standard

Methods for the Examination of Water

and Wastewater,’’ 15th Ed. (1980), and

‘‘Interim Radiochemical Methodology

for Drinking Water,’’ U.S. EPA, EMSL,

EPA–600/4–75–008 (Revised), March
Federal Register / Vol. 62, No. 11 / Thursday, January 16, 1997 / Rules and Regulations 2267

1976, both of which are incorporated by

reference. The availability of these

incorporations by reference is given in

paragraph (b)(2) of this section.

* * * * *

[FR Doc. 97–55572 Filed 1-15-97; 8:45 am]

BILLING CODE 1505-01-D

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8711]

RIN 1545–AU82

Intangibles Under Sections 1060 and

338

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final and temporary

regulations.

SUMMARY: This document amends the

temporary regulations under sections

1060 and 338(b) of the Internal Revenue

Code (Code) relating to purchase price

allocations in taxable asset acquisitions

and deemed asset purchases. The

amendments revise the treatment of

intangible assets in such acquisitions to

take into account the enactment of

section 197 by the Omnibus Budget

Reconciliation Act of 1993. This

document also makes conforming

amendments to the final regulations

under section 338. The regulations

provide guidance regarding taxable asset

acquisitions and deemed asset

purchases resulting from elections

under section 338. The text of the

temporary regulations herein also serves

as the text of the proposed regulations

set forth in the notice of proposed

rulemaking on this subject in the

Proposed Rules section of this issue of

the Federal Register.

EFFECTIVE DATE: These regulations are

effective February 14, 1997.

For dates of applicability, see

§§ 1.338(b)–2T(c)(4) and 1.1060–

1T(a)(2)(ii).

FOR FURTHER INFORMATION CONTACT:

Brendan P. O’Hara, Office of Assistant

Chief Counsel (Corporate), (202) 622–

7530 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

These regulations amend the current

temporary regulations under sections

1060 (§ 1.1060–1T) and 338(b)

(§§ 1.338(b)–2T and 1.338(b)–3T) (the

current regulations) with respect to the

treatment of acquired intangible assets.

They also amend related examples in

the final regulations under section 338.

Section 1060 provides for the allocation

of purchase price among the assets of a

trade or business under regulations.

Section 338(b) provides for a similar

allocation, also under regulations, for a

deemed purchase of assets under

section 338. The current regulations

employ a residual method of allocation.

The legislative history of section 1060,

adopted in 1986, noted with approval

the use of the residual method under the

section 338(b) regulations and required

that the same method be used pursuant

to regulations to be prescribed under

section 1060. S. Rep. No. 99–313, 99th

Cong., 2d Sess. 253, 254 (1986); 1986–

3 C.B. Vol. 3, 253–54.

The current regulations place each

acquired asset into one of four asset

classes. The purchase price is allocated

among the classes in priority order. No

asset in any class except for the last

class is allocated more than its fair

market value. If the aggregate purchase

price allocable to a particular class is

less than the aggregate fair market value

of the assets within the class, each asset

is allocated an amount in proportion to

its fair market value and nothing is

allocated to any junior class.

The four classes under the current

regulations are as follows:

Class I—Cash and cash equivalents;

Class II—Certificates of deposit, U.S.

government securities, readily

marketable stock or securities, and

foreign currency;

Class III—All assets not in Class I, II, or

IV; and

Class IV—Intangible assets in the nature

of goodwill and going concern

value.

Section 197 was enacted as part of the

Omnibus Budget Reconciliation Act of

1993, Public Law 103–66, 107 Stat. 312

(1993) (the 1993 Act). Prior to the 1993

Act, acquired goodwill and going

concern value were not amortizable, but

other acquired intangible assets were

amortizable if they could be separately

identified and their useful lives

determined with reasonable accuracy.

Section 197 responded to policy and

administrative concerns regarding the

treatment of acquired intangibles by

providing similar treatment for

goodwill, going concern value, and

certain other intangible assets acquired

in a taxable acquisition and held in

connection with a trade or business. The

1993 Act allows taxpayers to amortize

certain acquired intangible assets

(amortizable section 197 intangibles)

over 15 years, subject to certain

exceptions.

The report of the House Committee on

Ways and Means accompanying the

1993 Act states that:

It is expected that the present [regulations

under sections 338 and 1060] will be

amended to reflect the fact that [section 197]

allows an amortization deduction with

respect to intangible assets in the nature of

goodwill and going concern value. It is

anticipated that the residual method

specified in the regulations will be modified

to treat all amortizable section 197

intangibles as Class IV assets and that this

modification will apply to any acquisition of

property to which [section 197] applies.

H.R. Rep. 111, 103d Cong., 1st Sess. 760, 776

(May 23, 1993), 1993–3 C.B. 336, 352.

The current regulations have not yet

been amended in accordance with the

legislative history of section 197. These

new temporary regulations accomplish

that change, with slight modifications,

as discussed below.

Explanation of Provisions

The temporary and final regulations

are amended to conform to the

legislative history of the 1993 Act by

placing all amortizable section 197

intangibles other than goodwill and

going concern value in Class IV.

However, the new regulations also

include nonamortizable section 197

intangibles in Class IV. Some section

197 intangibles are amortizable by the

buyer though they were not amortizable

by the seller. Other section 197

intangibles may not be amortizable

because of the application of the antichurning rules of section 197(f)(9).

Although sections 338(b) and 1060 do

not require conformity between the

buyer and seller on purchase price

allocations, they reflect strong policies

encouraging conformity, including

mandatory application of the rule of

Commissioner v. Danielson, 378 F.2d

771 (3d Cir. 1967), cert. denied, 389 U.S.

858 (1967), in cases where the parties

have agreed to an allocation, and a

reporting system designed to reveal

situations where the parties’ allocations

are inconsistent. These policies favoring

conformity are best served by requiring

both parties to include the same assets

in each class. Moreover, this rule is also

more consistent with section 1060(b) as

amended by the 1993 Act. Section

1060(b)(1) requires the parties to report,

under regulations, ‘‘the amount of

consideration received for the assets

which is allocable to section 197

intangibles.’’ The term section 197

intangibles is more inclusive than

amortizable section 197 intangibles. The

goals of consistency, simplification, and

administrability will be better achieved

with respect to allocations to section