Federal Register / Vol. 66, No. 9 / Friday, January 12, 2001 / Proposed Rules 2851

Specialist, Airspace Branch, AEA–520

F.A.A. Eastern Region, 1 Aviation Plaza,

Jamaica, NY 11434–4809; telephone:

(718) 553–4521.

SUPPLEMENTARY INFORMATION:

Comments Invited

Interested parties are invited to

participate in this proposed rulemaking

by submitting such written data, views,

or arguments as they may desire.

Comments that provide the factual basis

supporting the views and suggestions

presented are particularly helpful in

developing reasoned regulatory

decisions on the proposal. Comments

are specifically invited on the overall

regulatory, economic, environmental,

and energy-related aspects of the

proposal. Communications should

identify the airspace docket number and

be submitted in triplicate to the address

listed above. Commenters wishing the

FAA to acknowledge receipt of their

comments on this notice must submit

with those comments a self-addressed,

stamped postcard on which the

following statement is made:

‘‘Comments to Airspace Docket No. 00–

AEA–14’’. The postcard will be date/

time stamped and returned to the

commenter. All communications

received on or before the closing date

for comments will be considered before

taking action on the proposed rule. The

proposal contained in this notice may

be changed in light of comments

received. All comments submitted will

be available for examination in the

Rules Docket both before and after the

closing date for comments. A report

summarizing each substantive public

contact with the FAA personnel

concerned with this rulemaking will be

filed in the docket.

Availability of NPRMs

Any person may obtain a copy of this

Notice of Proposed Rulemaking (NPRM)

by submitting a request to the Office of

the Regional Counsel, AEA–7, F.A.A.

Eastern Region, 1 Aviation Plaza,

Jamaica, NY, 11434–4809.

Communications must identify the

notice number of this NPRM. Persons

interested in being placed on a mailing

list for future NPRMs should also

request a copy of Advisory Circular No.

11–2A, which describes the application

procedure.

The Proposal

The FAA is considering an

amendment to Part 71 of the Federal

Aviation Regulations (14 CFR Part 71) to

establish Class E airspace area at

Waynesboro, VA. An RNAV Point Space

Approach has been developed for

Augusta Medical Center Heliport,

Waynesboro, VA. Controlled airspace

extending upward from 700 feet AGL is

needed to accommodate the approach.

Class E airspace designations for

airspace areas extending upward from

700 feet or more above the surface are

published in Paragraph 6005 of FAA

Order 74009.9H, dated September 1,

2000, and effective September 16, 2000,

which is incorporated by reference in 14

CFR 71.1. The Class E airspace

designation listed in this document

would be published subsequently in the

Order.

The FAA has determined that this

proposed regulation only involves an

established body of technical

regulations for which frequent and

routine amendments are necessary to

keep them operationally current.

Therefore, this proposed 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 would affect air

traffic procedures and air navigation, it

is certified that this proposed rule

would not have 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).

The Proposed Amendment

In consideration of the foregoing, the

Federal Aviation Administration

proposes to amend 14 CFR Part 71 as

follows:

PART 71—[AMENDED]

1. The authority citation for 14 CFR

Part 71 continues to read as follows:

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

40120; EO 10854, 24 FR 9656, 3 CFR, 1959–

1963 Comp., p. 389.

§ 71.1 [Amended]

2. The incorporation by reference in

14 CFR 71.1 of Federal Aviation

Administration order 7400.9F dated

September 10, 2000, and effective

September 16, 2000, is proposed to be

amended as follows:

Paragraph 6005 Class E airspace areas

extending upward from 700 feet or more

above the surface of the earth.

* * * * *

AEA VA E5, Waynesboro, VA

Augusta Medical Center Heliport

(Lat. 3806.495N, long 07859.204W).

That airspace extending upward from 700

feet above the surface within a 6 mile radius

of Augusta Medical Center Heliport.

* * * * *

Issued in Jamaica, New York on December

18, 2000.

F.D. Hatfield,

Manager, Air Traffic Division, Eastern Region.

[FR Doc. 01–1093 Filed 1–11–01; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 203

[Docket No. FR–4469–N–02]

RIN 2502–AH38

Withdrawal of Proposed Rule on

Sources of Homeowner Downpayment

Pursuant to Section 203 of the National

Housing Act

AGENCY: Office of the Assistant

Secretary for Housing-Federal Housing

Commissioner, HUD.

ACTION: Withdrawal of proposed rule.

SUMMARY: This Notice withdraws a

proposed rule that would have

prohibited gifts from non-profit

organizations being used for the

mortgagor’s investment in a mortgaged

property if the organization received the

funds for the gift either directly or

indirectly from the seller.

DATES: This notice is effective January

12, 2001.

FOR FURTHER INFORMATION CONTACT:

Vance Morris, Director, Home Mortgage

Insurance Division, Room 9266,

Department of Housing and Urban

Development, 451 Seventh Street, SW,

Washington, DC 20410–8000, (202) 708–

2700 (this is not a toll-free number). For

hearing-and speech-impaired persons,

this number may be accessed via TTY

(text telephone) by calling the Federal

Information Relay Service at 1–800–

877–8339.

SUPPLEMENTARY INFORMATION:

Background

On September 14, 1999, HUD

published in the Federal Register a

proposed rule to establish standards for

the use of gifts provided by non-profit

organizations as a source of the

mortgagor’s investment in the

mortgaged property. The regulation

would have permitted certain gifts by

non-profit corporations for use as the

mortgagor’s investment, but would have

prohibited them whenever they were

directly or indirectly derived from the

seller of the property, or if the seller

2852 Federal Register / Vol. 66, No. 9 / Friday, January 12, 2001 / Proposed Rules

paid other consideration or

reimbursement to the nonprofit for

making the gift.

The comment period closed on

November 15, 1999. By the time of the

close of the comment period, HUD

received 1,871 comments. Only 21 of

these comments favored the rule. The

overwhelming majority of comments

opposed the rule.

Based on these public comments,

HUD has determined to withdraw this

proposed rule on sources of homeowner

downpayment.

Dated: January 2, 2001.

William C. Apgar,

Assistant Secretary for Housing-Federal

Housing Commissioner.

[FR Doc. 01–1000 Filed 1–11–01; 8:45 am]

BILLING CODE 4210–27–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–125237–00]

RIN 1545–AY60

Debt Instruments With Original Issue

Discount; Annuity Contracts

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUMMARY: This document contains

proposed regulations relating to the

federal income tax treatment of annuity

contracts issued by certain insurance

companies. These proposed regulations

provide guidance on whether certain

annuity contracts are excluded from the

definition of a debt instrument under

the original issue discount provisions of

the Internal Revenue Code. This

document also provides a notice of

public hearing on the proposed

regulations.

DATES: Written or electronically

generated comments must be received

by April 12, 2001. Requests to speak

(with outlines of oral comments to be

discussed) at the public hearing

scheduled for May 30, 2001, at 10 a.m.

must be submitted by May 9, 2001.

ADDRESSES: Send submission to:

CC:M&SP:RU (REG–125237–00), room

5226, Internal Revenue Service, POB

7604, Ben Franklin Station, Washington,

DC 20044. Submissions may be hand

delivered between the hours of 8 a.m.

and 5 p.m. to: CC:M&SP:RU (REG–

125237–00), 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.gov/tax_regs/

regslist.html. The public hearing will be

held in room 4718, 1111 Constitution

Ave., NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Patrick E.

White, (202) 622–3920; concerning

submissions of comments, the hearing,

and/or to be placed on the building

access list to attend the hearing, contact

LaNita VanDyke, (202) 622–7180 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Sections 163(e) and 1271 through

1275 of the Internal Revenue Code

(Code) provide rules for the treatment of

debt instruments with original issue

discount (OID). Section 1275(a)(1)(A)

defines the term ‘‘debt instrument’’ to

include a bond, debenture, note or

certificate or other evidence of

indebtedness. Sections 1275(a)(1)(B)(i)

and (ii), however, exclude certain

annuity contracts from the definition of

a debt instrument.

On February 2, 1994, the IRS and

Treasury published in the Federal

Register (59 FR 4799) final regulations

concerning a variety of issues under the

OID provisions. On January 8, 1998, the

IRS and Treasury published in the

Federal Register (63 FR 1054) final

regulations concerning the life annuity

exception of section 1275(a)(1)(B)(i).

This document contains proposed rules

concerning the exception for annuities

described in section 1275(a)(1)(B)(ii).

Explanation of Provisions

In general, the OID provisions apply

to issuers and holders of debt

instruments. The term debt instrument

generally means any instrument or

contractual arrangement that constitutes

indebtedness under general principles

of income tax law. See section

1275(a)(1)(A) and § 1.1275–1(d).

If a contract is a debt instrument with

OID, section 1272 generally requires the

holder of the contract to include OID in

income currently on a constant yield

basis, regardless of the holder’s overall

method of accounting. By contrast, the

holder of an annuity contract to which

section 72 applies generally is allowed

to defer recognizing economically

earned income until distributions are

made on the contract.

Section 1275(a)(1)(B) excepts two

types of annuity contracts from the

definition of a debt instrument. First,

section 1275(a)(1)(B)(i) excepts an

annuity contract to which section 72

applies if the contract ‘‘depends (in

whole or in substantial part) on the life

expectancy of 1 or more individuals.’’

Second, section 1275(a)(1)(B)(ii) excepts

an annuity contract to which section 72

applies under certain circumstances if

the contract ‘‘is issued by an insurance

company subject to tax under

subchapter L (or by an entity described

in section 501(c) and exempt from tax

under section 501(a) which would be

subject to tax under subchapter L were

it not so exempt).’’

The legislative history of section

1275(a)(1)(B)(ii) is limited. This

exception to the OID rules first appeared

when the bill emerged from the

Conference Committee in 1984. H.R.

4170, 98th Cong., 2d Sess. § 41 (1984).

At that time, section 1275(a)(1)(B)(ii)

applied to certain annuity contracts

issued by an insurance company subject

to tax under subchapter L. The 1984

Conference Report does not elaborate on

the meaning of the phrase ‘‘an insurance

company subject to tax under

subchapter L,’’ nor does it explain the

purpose of the provision. H.R. Conf.

Rep. No. 861, 98th Cong., 2d Sess. 802–

05 (1984), 1984–3 (Vol. 2) C.B. 56–59. In

2000, a technical correction to section

1275(a)(1)(B)(ii) was enacted. The

technical correction clarified that

section 1275(a)(1)(B)(ii) also applied to

annuity contracts issued by ‘‘an entity

described in section 501(c) and exempt

from tax under section 501(a) which

would be subject to tax under

subchapter L were it not so exempt.’’

Consolidated Appropriations Act, 2001,

Public Law 106–554 (114 Stat. 2763).

In 1998, the IRS and Treasury

promulgated § 1.1275–1(j), interpreting

the life annuity exception of section

1275(a)(1)(B)(i). Commentators had also

requested guidance on the scope of the

section 1275(a)(1)(B)(ii) exception,

particularly with regard to foreign

insurers not engaged in a trade or

business in the U.S.

The proposed regulations provide that

an annuity contract issued by a foreign

insurance company is treated as issued

by an insurance company subject to tax

under subchapter L if the insurance

company is subject to tax under

subchapter L with respect to income

earned on the annuity contract. The IRS

and Treasury believe that this is the

most natural application of the language

of section 1275(a)(1)(B)(ii) and is

consistent with the use of that phrase

elsewhere in the Code and regulations.

See, e.g., sections 953(e)(3)(C) and

1297(b)(2)(B); § 1.848–2(h). The IRS and

Treasury also believe that the exception