2064 Federal Register / Vol. 62, No. 10 / Wednesday, January 15, 1997 / Proposed Rules

consider all such production to be

undamaged and include it as production to

count.

12. Settlement Of Claim

(a) We will determine your loss on a unit

basis. In the event you are unable to provide

separate acceptable production records:

(1) For any optional unit, we will combine

all optional units for which such production

records were not provided; or

(2) For any basic unit, we will allocate any

commingled production to such units in

proportion to our liability on the harvested

acreage for each unit.

(b) In the event of loss or damage covered

by this policy, we will settle your claim by:

(1) Multiplying the insured acreage by its

respective production guarantee;

(2) Multiplying the result in section

12(b)(1) by the respective price election for

the variety;

(3) Totaling the results in section 12(b)(2);

(4) Multiplying the total production to be

counted of the variety (see section 12(c)) by

the respective price election;

(5) Totaling the results in section 12(b)(4);

(6) Subtracting the result of section 12(b)(5)

from the result in section 12(b)(3); and

(7) Multiplying the result of section

12(b)(6) by your share.

(c) The total production to count (in lugs)

from all insurable acreage on the unit will

include:

(1) All appraised production as follows:

(i) Not less than the production guarantee

per acre for acreage:

(A) That is abandoned;

(B) That is sold by direct marketing if you

fail to meet the requirements in section 11(b);

(C) That is damaged solely by uninsured

causes; or

(D) For which you fail to provide

acceptable production records;

(ii) Production lost due to uninsured

causes;

(iii) Unharvested production that meets, or

would meet if properly handled, the

California Department of Food and

Agriculture minimum standards for table

grapes; and

(iv) Potential production on insured

acreage that you intend to abandon or no

longer care for, if you and we agree on the

appraised amount of production. Upon such

agreement, the insurance period for that

acreage will end. If you do not agree with our

appraisal, we may defer the claim only if you

agree to continue to care for the crop. We will

then make another appraisal when you notify

us of further damage or that harvest is general

in the area unless you harvested the crop, in

which case we will use the harvested

production. If you do not continue to care for

the crop, our appraisal made prior to

deferring the claim will be used to determine

the production to count; and

(2) All harvested production from

insurable acreage regardless of condition or

disposition.

(d) The quantity of production to count for

table grape production damaged by insurable

causes within the insurance period and that

is marketed for any use other than table

grapes will be determined by multiplying the

greater of (1) the value of the table grapes per

ton or (2) $50, by the number of tons and

dividing that result by the highest price

election available for the insured unit. This

result will be the number of lugs to count.

13. Written Agreement

Designated terms of this policy may be

altered by written agreement in accordance

with the following:

(a) You must apply in writing for each

written agreement no later than the sales

closing date, except as provided in section

13(e);

(b) The application for a written agreement

must contain all variable terms of the

contract between you and us that will be in

effect if the written agreement is not

approved;

(c) If approved, the written agreement will

include all variable terms of the contract,

including, but not limited to, crop type or

variety, the guarantee, premium rate, and

price election;

(d) Each written agreement will only be

valid for one year (If the written agreement

is not specifically renewed the following

year, insurance coverage for subsequent crop

years will be in accordance with the printed

policy); and

(e) An application for a written agreement

submitted after the sales closing date may be

approved if, after a physical inspection of the

acreage, it is determined that no loss has

occurred and the crop is insurable in

accordance with the policy and written

agreement provisions.

Signed in Washington, DC, on January 10,

1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 97–1015 Filed 1–14–97; 8:45 am]

BILLING CODE 3410–FA–P

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1301 and 1304

[DEA–143C]

RIN 1117–AA36

Establishment of Freight Forwarding

Facilities for DEA Distributor

Registrants; Correction

AGENCY: Drug Enforcement

Administration (DEA), Justice.

ACTION: Correction to Notice of Proposed

Rulemaking.

SUMMARY: This document contains a

correction to the proposed rule (DEA–

143P) which was published Wednesday,

December 18, 1996 (61 FR 66637). The

proposed rule related to new regulations

to allow the establishment of freight

forwarding facilities by DEA distributor

registrants.

FOR FURTHER INFORMATION CONTACT:

G. Thomas Gitchel, Chief, Liaison and

Policy Section, Office of Diversion

Control, Drug Enforcement

Administration, Washington, D.C.

20537, Telephone (202) 307–7297.

SUPPLEMENTARY INFORMATION:

Background

The proposed regulations that are

subject to this correction, make

amendments to Parts 1301 and 1304 of

Title 21 of the Code of Federal

Regulations to allow the establishment

of freight forwarding facilities by DEA

distributor registrants.

Need for Correction

As published, the proposed rule

contained an omission in the DATES

section which may prove to be

misleading and is in need of

clarification.

Correction of Publication

Accordingly, the publication on

December 18, 1996 of the proposed rule

(DEA–143P), which was the subject of

FR Doc. 96–32077, is corrected as

follows:

On Page 66637, in the first column, in

the DATES section, the entry ‘‘February

18, 1996’’ is corrected to read ‘‘Written

comments or objections must be

received on or before February 28,

1997’’.

* * * * *

Dated: January 9, 1997.

Gene R. Haislip,

Deputy Assistant Administrator, Office of

Diversion Control.

[FR Doc. 97–989 Filed 1–14–97; 8:45 am]

BILLING CODE 4410–09–M

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–209121–89]

RIN 1545–AN21

Certain Asset Transfers to a TaxExempt Entity

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUMMARY: This document contains

proposed regulations. The proposed

regulations effectuate provisions of the

Tax Reform Act of 1986 and the

Technical and Miscellaneous Revenue

Act of 1988. The proposed regulations

generally affect a taxable corporation

that transfers all or substantially all of

its assets to a tax-exempt entity or

converts from a taxable corporation to a
Federal Register / Vol. 62, No. 10 / Wednesday, January 15, 1997 / Proposed Rules 2065

tax-exempt entity, and generally require

the taxable corporation to recognize gain

or loss in such a transaction.

DATES: Written comments must be

received by April 15, 1997. Requests to

speak (with outlines of oral comments

to be discussed) at the public hearing

scheduled for May 6, 1997, at 10:00 a.m.

must be submitted by April 15, 1997.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–209121–89),

Room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions

also may be hand delivered between the

hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (REG–209121–89),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Ave. NW.,

Washington, DC. Alternatively,

taxpayers may submit comments

electronically via the Internet by

selecting the ‘‘Tax Regs’’ option on the

IRS Home Page, or by submitting

comments directly to the IRS Internet

site at http://www.irs.ustreas.gov/prod/

taxlregs/comments.html. The public

hearing will be held in the IRS

Auditorium, Internal Revenue Building,

1111 Constitution Avenue, NW.,

Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Stephen R.

Cleary (202) 622–7530; concerning

submissions and the hearing,

Evangelista Lee, (202) 622–7180, (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Income Tax

Regulations (26 CFR Part 1) relating to

the repeal of the General Utilities

doctrine in the Tax Reform Act of 1986.

Under the General Utilities doctrine,

which took its name from General

Utilities & Operating Co. v. Helvering,

296 U.S. 200 (1935), corporations were

not required to recognize gain or loss

when they distributed appreciated or

depreciated property to their

shareholders. The General Utilities

doctrine applied to distributions of

property in complete liquidation,

certain sales of property that were in

connection with a complete liquidation,

and nonliquidating distributions of

property. It was codified in former

sections 311, 336, and 337 of the

Internal Revenue Code of 1954.

The General Utilities doctrine was an

exception to the general rule that

income earned by a corporation is taxed

twice, once to the corporation when the

income is earned and a second time to

the corporation’s shareholders when the

earnings are distributed. The General

Utilities doctrine generally permitted

the permanent elimination of corporatelevel tax on the disposition of

appreciated assets because the

transferee received a fair market value

basis in the assets and the corporation

generally did not recognize any gain.

Thus, the appreciated assets left

corporate solution without any

corporate-level tax having been paid.

Beginning in 1969, the scope of the

General Utilities doctrine was restricted

by a series of amendments (initially

relating to nonliquidating distributions

governed by section 311), until

ultimately the General Utilities doctrine

was repealed, with limited exceptions,

in the Tax Reform Act of 1986. Sections

336 and 337 were amended to generally

require corporations to recognize gain or

loss when appreciated or depreciated

property is distributed in complete

liquidation or sold in connection with a

complete liquidation.

Section 337(a) provides one of the

limited exceptions from the repeal of

the General Utilities doctrine by

allowing a subsidiary to liquidate into

its 80-percent distributee (a corporation

meeting the stock ownership

requirements of section 332(b) in the

liquidating corporation) without

recognizing gain or loss. The 80-percent

distributee takes a carryover basis in the

distributed property. However, under

section 337(b)(2), this nonrecognition

exception generally does not apply if

the 80-percent distributee is a taxexempt entity.

The Tax Reform Act of 1986 added

section 337(d), directing the Secretary to

prescribe regulations as may be

necessary to carry out the purposes of

the repeal of the General Utilities

doctrine. The legislative history of the

Tax Reform Act of 1986 indicates that

the General Utilities doctrine was

repealed because it tended to

undermine the corporate income tax by

allowing appreciated property to leave

corporate solution without imposition

of a corporate level tax. H.R. Rep. No.

99–426, 99th Cong., 1st Sess. 282 (1985).

The Technical and Miscellaneous

Revenue Act of 1988 amended section

337(d) to specify that the section

authorizes regulations to ‘‘ensure that

these purposes shall not be

circumvented * * * through the use of

a * * * tax-exempt entity.’’ The

legislative history concerning the 1988

amendment to section 337(d) explains:

The bill also clarifies in connection with

the built-in gain provisions of the Act that

the Treasury Department shall prescribe such

regulations as may be necessary or

appropriate to carry out those provisions

* * *. For example, this includes rules to

require the recognition of gain if appreciated

property of a C corporation is transferred to

a * * * tax-exempt entity [footnote 32] in a

carryover basis transaction that would

otherwise eliminate corporate level tax on

the built-in appreciation.

[footnote 32] The Act generally requires

recognition of gain if a C corporation

transfers appreciated assets to a tax exempt

entity in a section 332 liquidation. See Code

section 337(b)(2).

S. Rep. No. 145, 100th Cong., 2d Sess.

66 (1988).

Explanation of Provision

An acquisition by a tax-exempt entity

of all or substantially all of the assets of

a taxable corporation or a change in

status of a taxable corporation to a taxexempt entity, like a liquidation into an

80-percent tax-exempt distributee that is

taxable under section 337(b)(2), could

eliminate the corporate level tax on the

appreciation in the taxable corporation’s

assets. Accordingly, the proposed

regulations apply rules similar to

section 337(b)(2) to these transactions.

The proposed regulations generally do

not affect the tax treatment of the

taxable corporation’s shareholders or

the availability of any charitable

contribution deduction.

The proposed regulations provide that

a taxable corporation that transfers all or

substantially all of its assets to one or

more tax-exempt entities is required to

recognize gain or loss as if the assets

transferred were sold at their fair market

values. Like section 337(b)(2), the

proposed regulations provide that no

gain or loss will be recognized on any

of the assets transferred that are used by

the tax-exempt entity in an activity the

income from which is subject to the

unrelated business tax under section

511(a). However, gain on such assets

will later be recognized as unrelated

business taxable income if the taxexempt entity disposes of the assets or

ceases to use the assets in an unrelated

trade or business activity.

The proposed regulations generally

treat a taxable corporation that changes

its status to a tax-exempt entity as

having transferred all of its assets to a

tax-exempt entity immediately before

the change in status becomes effective,

irrespective of whether an actual

transfer of the assets has occurred. For

this purpose, if a state, a political

subdivision thereof, or an entity any

portion of whose income is excluded

from gross income under section 115,

acquires the stock of a taxable

corporation and thereafter any of the

taxable corporation’s income is

excluded from gross income under

section 115, the taxable corporation will

be treated as if it transferred all of its

assets to a tax-exempt entity
2066 Federal Register / Vol. 62, No. 10 / Wednesday, January 15, 1997 / Proposed Rules

immediately before the stock

acquisition.

Certain exceptions are provided to the

change in status rule for organizations

that are tax-exempt or are seeking taxexempt status under section 501(a).

These exceptions provide relief for

corporations needing a brief start-up

period to establish their tax-exempt

status and for those that temporarily

lose their tax-exempt status. Under the

proposed regulations, the change in

status rule does not apply to a

corporation that is tax-exempt within

three taxable years of the taxable year of

its formation, or to a corporation that

regains its tax-exempt status within

three years after either a final adverse

adjudication on its tax-exempt status or

filing a tax return as a taxable

corporation. The change in status rule

also does not apply to an organization

that before publication of these

proposed regulations was exempt or

unsuccessfully applied for exemption, if

the organization is tax-exempt within

three years after the date of publication

of final regulations. An organization that

files for recognition of its exempt status

during one of the three-year periods will

be deemed to have or regain tax-exempt

status if the application ultimately

results in recognition as of a date during

the three-year period. An anti-abuse rule

makes all these exceptions unavailable

to a taxable corporation that acquires all

or substantially all of the assets of

another taxable corporation and then

changes its status with a principal

purpose of avoiding the gain or loss

recognition rule made applicable by

these regulations.

The proposed regulations disallow the

recognition of loss if assets are acquired

by the taxable corporation in a section

351 transaction or a contribution to

capital, or if assets are distributed by the

taxable corporation to a shareholder,

with a principal purpose to recognize

loss by the taxable corporation on the

transfer of its assets to a tax-exempt

entity (loss limitation rule). For

example, the loss limitation rule may

apply if (a) a loss asset is contributed to

a taxable corporation and then is

transferred with substantially all of the

taxable corporation’s assets to a taxexempt entity; (b) loss assets not

constituting substantially all of a taxable

corporation’s assets are contributed to a

new subsidiary and then the new

subsidiary transfers the loss assets

which are its only assets to a tax-exempt

entity, or (c) assets are distributed by a

taxable corporation to its parent and

then the taxable corporation transfers

loss assets now constituting

substantially all of its assets to a taxexempt entity. For purposes of the loss

limitation rule, the principles of section

336(d)(2) apply.

Under the proposed regulations, a

‘‘taxable corporation’’ is any corporation

that is not a tax-exempt entity as

defined in the proposed regulations.

Thus, taxable corporations include all S

corporations whether or not subject to

tax on built-in gain under section 1374.

After the repeal of the General Utilities

doctrine, an S corporation like a C

corporation is required to recognize gain

or loss when it liquidates. This gain or

loss passes through to the S

corporation’s shareholders under

section 1366. The proposed regulations

parallel this treatment.

Under the proposed regulations, a

‘‘tax-exempt entity’’ includes

organizations exempt from tax under

section 501, section 527, section 528, or

section 529; Federal, state, and local

governments; Indian tribal governments

and federally chartered Indian tribal

corporations; foreign governments and

international organizations; and entities

any portion of whose income is

excluded from gross income under

section 115. The term does not,

however, include a cooperative

described in section 521, paralleling the

exception to section 337(b)(2).

A transaction conveying all or

substantially all of the assets of a taxable

corporation to an Indian tribal

government or a corporation organized

under section 17 of the Indian

Reorganization Act (IRA) or section 3 of

the Oklahoma Welfare Act (OWA) will

be covered by these regulations. Rev.

Rul. 94–16, 1994–1 C.B. 19, held that an

unincorporated Indian tribe or a

corporation organized under section 17

of the IRA is not subject to federal

income tax, but a corporation wholly

owned by an Indian tribe and organized

under state law is subject to federal

income tax. Rev. Rul. 94–65, 1994–2

C.B. 14, held that a corporation

organized under section 3 of the OWA

also was not subject to federal income

tax. In that ruling, the Service

announced that an Indian tribe seeking

to dissolve a corporation organized

under state law and organized into a

federally chartered corporation

(corporation organized under either

section 17 of the IRA or section 3 of the

OWA) will be granted relief under

section 7805(b) of the Code upon

application for such relief provided it

demonstrates to the Service that it has

acted reasonably and in good faith to

achieve the dissolution and

organization. The relief described in

that ruling applied to taxes on income

earned after September 30, 1994, by a

corporation organized by an Indian tribe

under state law from income earned

within the boundaries of the reservation

(including gain or loss properly

allocable to such activities from the sale

or exchange of assets). The Service

intends to provide similar relief from

tax resulting from any gain or loss

recognized under the rules provided in

these regulations. The relief will be

available to state law corporations

wholly owned by Indian tribes that have

acted reasonably and in good faith to

dissolve and reorganize as federally

chartered corporations.

Proposed Effective Date

These regulations are proposed to be

applicable for transfers of assets as

described in the regulations occurring

after [date that is 30 days after

publication in the Federal Register of

these regulations as final regulations],

unless the transfer is pursuant to a

written agreement which is (subject to

customary conditions) binding on or

before [date that is 30 days after

publication in the Federal Register of

these regulations as final regulations].

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It has also

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) does not apply to these

regulations and because the regulations

do not impose a collection of

information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

Chapter 6) does not apply. Pursuant to

section 7805(f) of the Internal Revenue

Code, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Comments and Public Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

written comments (a signed original and

eight (8) copies) that are submitted

timely to the IRS. All comments will be

available for public inspection and

copying.

A public hearing has been scheduled

for Tuesday, May 6, 1997, at 10 a.m. in

the IRS Auditorium, Internal Revenue

Building, 1111 Constitution Avenue,

NW., Washington, DC. Because of access

restrictions, visitors will not be

admitted beyond the Internal Revenue

Service Building lobby more than 15

minutes before the hearing starts.

The rules of 26 CFR 601.601(a)(3)

apply to the hearing.
Federal Register / Vol. 62, No. 10 / Wednesday, January 15, 1997 / Proposed Rules 2067

Persons that wish to present oral

comments at the hearing must submit

written comments by April 15, 1997,

and submit an outline of the topics to

be discussed and the time to be devoted

to each topic (signed original and eight

(8) copies) by April 15, 1997.

A period of 10 minutes will be

allotted to each person for making

comments.

An agenda showing the scheduling of

the speakers will be prepared after the

deadline for receiving outlines has

passed. Copies of the agenda will be

available free of charge at the hearing.

Drafting Information: The principal author

of these regulations is Stephen R. Cleary of

the Office of Assistant Chief Counsel

(Corporate), IRS. However, other personnel

from the IRS and the Treasury Department

participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR Part 1 is

proposed to be amended as follows:

PART I—INCOME TAXES

Paragraph 1. The authority citation

for 26 CFR Part 1 is amended by adding

an entry in numerical order to read as

follows:

Authority: 26 U.S.C. 7805 * * *.

Section 1.337(d)–4 also issued under

26 U.S.C. 337 * * *.

Par. 2. Section 1.337(d)–4 is added to

read as follows:

§1.337(d)–4 Taxable to tax-exempt.

(a) Gain or loss recognition—(1)

General rule. If a taxable corporation

transfers all or substantially all of its

assets to one or more tax-exempt

entities, the taxable corporation must

recognize gain or loss immediately

before the transfer as if the assets

transferred were sold at their fair market

values. But see section 267 and

paragraph (d) of this section concerning

limitations on the recognition of loss.

(2) Change in corporation’s tax status

treated as asset transfer. Except as

provided in paragraph (a)(3) of this

section, a taxable corporation’s change

in status to a tax-exempt entity will be

treated as if it transferred all of its assets

to a tax-exempt entity immediately

before the change in status becomes

effective in a transaction to which

paragraph (a)(1) of this section applies.

For purposes of this paragraph (a), if a

state, a political subdivision thereof, or

an entity any portion of whose income

is excluded from gross income under

section 115, acquires the stock of a

taxable corporation and thereafter any of

the taxable corporation’s income is

excluded from gross income under

section 115, the taxable corporation will

be treated as if it transferred all of its

assets to a tax-exempt entity

immediately before the stock

acquisition.

(3) Exceptions for certain changes in

status—(i) To whom available.

Paragraph (a)(2) of this section does not

apply to the following corporations—

(A) A corporation previously exempt

under section 501(a) which regains its

tax-exempt status under section 501(a)

within three years from the later of a

final adverse adjudication on the

corporation’s tax exempt status, or the

filing by the corporation, or by the

Secretary or his delegate under section

6020(b), of a federal income tax return

of the type filed by a taxable

corporation;

(B) A newly-formed corporation that

is tax-exempt under section 501(a)

within three taxable years from the end

of the taxable year in which it was

formed;

(C) A corporation previously exempt

under section 501(a) or that applied for

but did not receive recognition of

exemption under section 501(a), before

January 15, 1997, if such corporation is

tax-exempt under section 501(a) within

three years from [date of publication of

these regulations in the Federal Register

as final regulations].

(ii) Application for recognition. An

organization is deemed to have or regain

tax-exempt status within one of the

three-year periods described in

paragraph (a)(3)(i) of this section if it

files an application for recognition of

exemption with the Commissioner

within the three-year period and the

application either results in a

determination by the Commissioner or a

final adjudication that the organization

is tax-exempt under section 501(a)

during any part of the three-year period.

The preceding sentence does not require

the filing of an application for

recognition of exemption by any

organization not otherwise required,

such as by § 1.501(a)–1, § 1.505(c)–1T,

and § 1.508–1(a), to apply for

recognition of exemption.

(iii) Anti-abuse rule. This paragraph

(a)(3) does not apply to a corporation

that, with a principal purpose of

avoiding the application of paragraphs

(a)(1) and (a)(2) of this section, acquires

all or substantially all of the assets of

another taxable corporation and then

changes its status to that of a tax-exempt

entity.

(4) Related transactions. This section

applies to any series of related

transactions having an effect similar to

any of the transactions to which this

section applies.

(b) Exceptions. Paragraph (a) of this

section does not apply to—

(1) Any assets transferred to a taxexempt entity if the assets are used in

an activity the income from which is

subject to tax under section 511(a).

However, if assets on which no gain or

loss was recognized by reason of the

preceding sentence are disposed of by

the tax-exempt entity, then,

notwithstanding any other provision of

law, any gain (not in excess of the

amount not recognized by reason of the

preceding sentence) shall be included in

the tax-exempt entity’s unrelated

business taxable income. If the taxexempt entity ceases to use the assets in

an activity the income from which is

subject to tax under section 511(a), the

entity will be treated for purposes of

this subparagraph as having disposed of

the assets on the date of the cessation;

(2) Any transfer of assets to the extent

gain or loss otherwise is recognized by

the taxable corporation on the transfer.

See, for example, sections 336,

337(b)(2), 367, and 1001;

(3) Any forfeiture of a taxable

corporation’s assets in a criminal or

civil action to the United States, the

government of a possession of the

United States, a state, the District of

Columbia, the government of a foreign

country, or a political subdivision of

any of the foregoing; or any

expropriation of a taxable corporation’s

assets by the government of a foreign

country; and

(4) Any transfer of assets to a

cooperative described in section 521.

(c) Definitions. For purposes of this

section—

(1) Taxable corporation. A taxable

corporation is any corporation that is

not a tax-exempt entity as defined in

paragraph (c)(2) of this section.

(2) Tax-exempt entity. A tax-exempt

entity is—

(i) Any entity that is exempt from tax

under section 501(a), section 527,

section 528, or section 529;

(ii) A charitable remainder annuity

trust or charitable remainder unitrust as

defined in section 664(d);

(iii) The United States, the

government of a possession of the

United States, a state, the District of

Columbia, the government of a foreign

country, or a political subdivision of

any of the foregoing;

(iv) An Indian Tribal Government as

defined in section 7701(a)(40), a

subdivision of an Indian tribal

government determined in accordance

with section 7871(d), or an agency or
2068 Federal Register / Vol. 62, No. 10 / Wednesday, January 15, 1997 / Proposed Rules

instrumentality of an Indian tribal

government or subdivision thereof;

(v) An Indian Tribal Corporation

organized under section 17 of the Indian

Reorganization Act of 1934, 25 U.S.C.

477, or section 3 of the Oklahoma

Welfare Act, 25 U.S.C. 503;

(vi) An international organization as

defined in section 7701(a)(18);

(vii) An entity any portion of whose

income is excluded under section 115;

or

(viii) An entity that would not be

taxable under the Internal Revenue

Code for reasons substantially similar to

those applicable to any entity listed in

this paragraph (c)(2) unless otherwise

explicitly made exempt from the

application of this section by statute or

by action of the Commissioner.

(3) Substantially all. The term

substantially all has the same meaning

as under section 368(a)(1)(C).

(d) Loss limitation rule. For purposes

of determining the amount of loss

recognized by a taxable corporation on

the transfer of its assets to a tax-exempt

entity under paragraph (a) of this

section, if assets are acquired by the

taxable corporation in a transaction to

which section 351 applied or as a

contribution to capital, or assets are

distributed from the taxable corporation

to a shareholder or another member of

the taxable corporation’s affiliated

group, and in either case as part of a

plan a principal purpose of which is to

recognize loss by the taxable

corporation on the transfer of its assets

to the tax-exempt entity, the losses

recognized by the taxable corporation

on the assets transferred to the taxexempt entity will be disallowed. For

purposes of the preceding sentence, the

principles of section 336(d)(2) apply.

(e) Effective date. This section is

applicable for transfers of assets as

described in paragraph (a) of this

section occurring after [date that is 30

days after publication in the Federal

Register of these regulations as final

regulations], unless the transfer is

pursuant to a written agreement which

is (subject to customary conditions)

binding on or before [date that is 30

days after publication in the Federal

Register of these regulations as final

regulations].

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 97–771 Filed 1–10–97; 8:45 am]

BILLING CODE 4830–01–U

26 CFR Parts 1 and 301

[REG–209803–95]

RIN 1545–AU18

Magnetic Media Filing Requirements

for Information Returns; Hearing

AGENCY: Internal Revenue Service,

Treasury.

ACTION: Change of location of public

hearing.

SUMMARY: This document changes the

location of the public hearing on

proposed regulations relating to the

requirements for filing information

returns on magnetic media or in other

machine-readable form under section

6011(e) of the Internal Revenue Code.

DATES: The public hearing is being held

on Wednesday, February 5, 1997,

beginning at 10:00 a.m.

ADDRESSES: The public hearing

originally scheduled in the IRS

Commissioner’s Conference Room, room

3313, Internal Revenue Building, 1111

Constitution Avenue, NW, Washington,

DC. is changed to room 2615, Internal

Revenue Building, 1111 Constitution

Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Mike Slaughter of the Regulations Unit,

Assistant Chief Counsel (Corporate),

(202) 622–7190 (not a toll-free number).

SUPPLEMENTARY INFORMATION: A notice

of proposed rulemaking and notice of

public hearing appearing in the Federal

Register on Thursday, October 10, 1996

(61 FR 53161), announced that a public

hearing relating to proposed regulations

under sections 6011(e) and 6045 of the

Internal Revenue Code will be held

Wednesday, February 5, 1997,

beginning at 10:00 a.m. in the IRS

Commissioner’s Conference Room, room

3313, Internal Revenue Building, 1111

Constitution Avenue NW, Washington,

DC and that requests to speak and

outlines of oral comments should be

received by Wednesday, January 15,

1997.

The location of the public hearing has

changed. The hearing is being held in

room 2615 on Wednesday, February 5,

1997, beginning at 10:00 a.m. The

requests to speak and outlines of oral

comments should be received by

Wednesday, January 15, 1997. Because

of controlled access restrictions,

attenders cannot be admitted beyond

the lobby of the Internal Revenue

Building until 9:45 a.m.

Copies of the agenda are available free

of charge at the hearing.

Cynthia E. Grigsby,

Chief, Regulations Unit, Assistant Chief

Counsel (Corporate).

[FR Doc. 97–894 Filed 1–14–97; 8:45 am]

BILLING CODE 4830–01–U

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 53 and 58

[AD–FRL–5675–9]

RIN 2060–AH09

Proposed Requirements for

Designation of Reference and

Equivalent Methods for PM2.5 and

Ambient Air Quality Surveillance for

Particulate Matter

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule: correction.

SUMMARY: The EPA is correcting

production errors in the printing of the

proposed revisions to 40 CFR parts 53

and 58 (61 FR 65780) for particulate

matter monitoring published on

December 13, 1996.

FOR FURTHER INFORMATION CONTACT: Neil

H. Frank at (919) 541–5560.

SUPPLEMENTARY INFORMATION: The EPA

proposed revisions to 40 CFR parts 53

and 58 (61 FR 65780) on December 13,

1996 to establish requirements for

designation of reference and equivalent

methods of PM2.5 and to establish

ambient air quality monitoring

requirements for particulate matter. A

review of the notice resulted in the

identification of a missing figure from

§ 58.13 of part 58, text that was omitted,

and two difficult to read figures from

Appendix D to part 58. In addition,

some minor errors were identified

elsewhere. This notice presents the

missing figure and text, reprints several

hard to read figures, and makes the

other corrections.

Dated: January 7, 1997.

Richard D. Wilson,

Acting Assistant Administrator for Air and

Radiation.

The following corrections are made to

FRL–5659–2, ‘‘Proposed Requirements

for Designation of Reference and

Equivalent Methods for PM2.5 and

Ambient Air Quality Surveillance for

Particulate Matter’’ published on

December 13, 1996 (61 FR 65780).

1. On page 65800, column 1, §53.9,

revise ‘‘Designation of a candidate

method as a reference method or

equivalent method shall be conditioned