314 Federal Register / Vol. 66, No. 2 / Wednesday, January 3, 2001 / Proposed Rules

PART 1501—FINANCIAL

SUBSIDIARIES

1. The authority citation for part 1501

continues to read as follows:

Authority: 12 U.S.C. 24a.

2. Section 1501.2, published in an

interim rule in this issue of the Federal

Register, is amended by adding new

paragraphs (b) and (c) to read as follows:

1501.2 What activities has the Secretary

determined to be financial in nature or

incidental to a financial activity?

(a) * * *

(b) Real estate brokerage.

(1) Providing real estate brokerage

services, including, among other things,

acting as an agent for a buyer, seller,

lessor, or lessee of real estate; listing and

advertising real estate; providing advice

in connection with a real estate

purchase, sale, exchange, lease, or rental

transaction; bringing together parties

interested in consummating such a real

estate transaction; and negotiating on

behalf of such parties a contract relating

to such a real estate transaction.

(2) In providing real estate brokerage

services, a financial subsidiary may not:

(i) Invest in or develop real estate as

principal; or

(ii) Take title to, acquire, or hold any

ownership interest in real estate

brokered by the financial subsidiary.

(c) Real estate management.

(1) Providing real estate management

services, including, among other things,

procuring tenants; negotiating leases;

maintaining security deposits; billing

and collecting rent payments; providing

periodic accountings for such payments;

making principal, interest, insurance,

tax, and utility payments; and generally

overseeing the inspection, maintenance,

and upkeep of real estate.

(2) In providing real estate

management services, a financial

subsidiary may not:

(i) Invest in or develop real estate as

principal;

(ii) Take title to, acquire, or hold any

ownership interest in real estate

managed by the financial subsidiary; or

(iii) Directly or indirectly maintain or

repair real estate managed by the

financial subsidiary (but may arrange for

a third party to provide these services).

Dated: December 26, 2000.

Gregory A. Baer,

Assistant Secretary for Financial Institutions,

Department of the Treasury.

[FR Doc. 01–43 Filed 1–2–01; 8:45 am]

BILLING CODE 6210–01–P

RAILROAD RETIREMENT BOARD

20 CFR Part 369

RIN 3220–AB49

Use of the Seal of the Railroad

Retirement Board

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

SUMMARY: The Railroad Retirement

Board (Board) proposes to amend its

regulations to add a part explaining

when use of the Board’s seal is

permitted. Federal law prohibits the use

of an agency seal except as authorized

by regulation. The Board currently has

no such regulation.

DATE: Comments should be submitted

on or before March 5, 2001.

ADDRESSES: Any comments should be

submitted to the Secretary to the Board,

Railroad Retirement Board, 844 North

Rush Street, Chicago, IL 60611.

FOR FURTHER INFORMATION CONTACT:

Marguerite P. Dabado, Assistant General

Counsel, Railroad Retirement Board,

(312) 751–4945, TDD (312) 751–4701.

SUPPLEMENTARY INFORMATION: The

Railroad Retirement Board is an

independent agency in the executive

branch of the United States Government

which is charged with the

administration of the Railroad

Retirement Act (45 U.S.C. 231 et seq.)

and the Railroad Unemployment

Insurance Act (45 U.S.C. 351 et seq.).

Use of agency seals is governed by 18

U.S.C. 701 which prohibits the use of

agency seals except as authorized under

regulations made pursuant to law. This

proscription is intended to protect the

public against the use of a recognizable

assertion of authority with intent to

deceive (U.S. v. Goeltz, 513 F.2d 193

(C.A. Utah 1975), cert. den. 423 U.S.

830). The regulations of the Railroad

Retirement Board do not include

provisions for the authorization of use

of the Agency’s seal. The Board

proposes to add Part 369 to its

regulations to explain when use of the

Board’s seal is permitted.

In order to comply with the

President’s June 1, 1998, memorandum

directing the use of plain language for

all proposed and final rulemaking, the

regulatory paragraphs introduced by the

above rule changes have been written in

plain language.

This rule concerns agency

management and is not a regulation as

defined in Executive Order 12866.

Therefore, no regulatory impact analysis

is required. There are no information

collections associated with this rule.

List of Subjects in 20 CFR Part 369

Railroad retirement, Seals and

insignia.

For the reasons set out in the

preamble, the Railroad Retirement

Board proposes to add part 369 to title

20, chapter II of the Code of the Federal

Regulations to read as follows:

PART 369—USE OF THE SEAL OF THE

RAILROAD RETIREMENT BOARD

Sec.

369.1 Unofficial use of the seal of the

Railroad Retirement Board.

369.2 Authority to grant written permission

for use of the seal.

369.3 Procedures for obtaining permission

to use the seal.

369.4 Inappropriate use of the seal.

369.5 Penalty for misuse of the seal.

Authority: 18 U.S.C. 701; 45 U.S.C. 231f.

§ 369.1 Unofficial use of the seal of the

Railroad Retirement Board.

Use of the seal of the Railroad

Retirement Board for non-agency

business is prohibited unless

permission for use of the seal has been

obtained in accordance with this part.

§ 369.2 Authority to grant written

permission for use of the seal.

The Board hereby delegates authority

to grant written permission for the use

of the seal of the Railroad Retirement

Board to the Director of Administration.

§ 369.3 Procedures for obtaining

permission to use the seal.

Requests for written permission to use

the seal of the Railroad Retirement

Board shall be in writing and shall be

directed to the Director of

Administration of the Railroad

Retirement Board. The request should,

at a minimum, contain the following

information:

(a) Name and address of the requester.

(b) A description of the type of

activity in which the requester is

engaged or proposes to engage.

(c) A statement of whether the

requester considers the proposed use or

imitation to be commercial or noncommercial, and why.

(d) A brief description and illustration

or sample of the proposed use, as well

as a description of the product or

service in connection with which it will

be used. This description will provide

sufficient detail to enable the Director of

Administration to determine whether

the intended use of the seal is consistent

with the interests of the government.

(e) In the case of a non-commercial

use, a description of the requesting

organization’s function and purpose

shall be provided.

Federal Register / Vol. 66, No. 2 / Wednesday, January 3, 2001 / Proposed Rules 315

§ 369.4 Inappropriate Use of the Seal.

The Railroad Retirement Board shall

not grant permission for use of the seal

in those instances where use of the seal

will give the unintended appearance of

Agency endorsement or authentication.

Situations where use of the seal of the

Railroad Retirement Board would be

inappropriate include, but are not

limited to, the following examples:

(a) A consulting firm makes

arrangements with a railroad to conduct

a retirement planning seminar for its

employees. Included in the material

distributed to the seminar attendees is a

booklet, prepared by the consulting

firm, which displays the seal of the

Railroad Retirement Board on the cover

and contains information regarding

benefits payable under the Railroad

Retirement Act.

(b) A former employee of the Railroad

Retirement Board owns a coffee and

donut shop, frequented by present and

past railroad workers. Many of the

shop’s customers know of the owner’s

prior employment with the Board and

frequently ask him questions related to

benefits payable under the Railroad

Unemployment Insurance and Railroad

Retirement Acts. The shop owner

prepares and distributes to his

customers a monthly flyer listing benefit

questions presented to him during the

month, as well as his answers to the

questions. The flyer displays the seal of

the Board.

(c) A retired railroad employee works

part-time in a train hobby shop. The

shop owner, at the former railroad

worker’s suggestion, develops and sells

items such as coffee mugs and computer

mouse pads with text relevant to

benefits paid by the Railroad Retirement

Board. The text is taken from

publications issued by the Railroad

Retirement Board. The merchandise also

bears the seal of the Railroad Retirement

Board.

§ 396.5 Penalty for misuse of the seal of

the Railroad Retirement Board.

Unauthorized use of the seal of the

Railroad Retirement Board may result in

criminal prosecution under applicable

law.

Dated: December 14, 2000.

By Authority of the Board.

For the Board.

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 01–137 Filed 1–2–01; 8:45 am]

BILLING CODE 7905–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–106702–00]

RIN 1545–AX94

Determination of Basis of Partner’s

Interest; Special Rules

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUMMARY: This document contains

proposed regulations relating to special

rules on determination of basis of

partner’s interest under section 705 of

the Internal Revenue Code. The

proposed regulations are necessary to

coordinate sections 705 and 1032. This

document also provides a notice of

public hearing on these proposed

regulations.

DATES: Written comments must be

received by April 3, 2001. Outlines of

topics to be discussed at the public

hearing scheduled for May 3, 2001, also

must be received by April 3, 2001.

ADDRESSES: Send submissions to:

CC:M&SP:RU (REG–106702–00), room

5226, Internal Revenue Service, POB

7604, Ben Franklin Station, Washington,

DC 20044. Submissions may be hand

delivered Monday through Friday

between the hours of 8 a.m. and 5 p.m.

to: CC:M&SP:RU (REG–106702–00),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue,

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/

reglist.html. The public hearing will be

held in room 6718, Internal Revenue

Building, 1111 Constitution Avenue,

NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Barbara

MacMillan, (202) 622–3050; concerning

submissions, the hearing, and/or to be

placed on the building access list to

attend the hearing, Sonya Cruse, (202)

622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

In Rev. Rul. 99–57 (1999–51 I.R.B.

678), the IRS issued guidance with

respect to the tax consequences for a

partnership and a corporate partner

where the corporate partner contributes

its own stock to the partnership, and the

partnership later exchanges the stock

with a third party in a taxable

transaction. Under that ruling, section

1032 will protect a corporate partner

from recognizing gain or loss (to the

extent allocated to such partner) when

the partnership exchanges stock of the

corporate partner in a taxable

transaction. The ruling also concludes

that, under section 705, the corporate

partner increases its basis in its

partnership interest by an amount equal

to its share of the gain resulting from the

partnership’s sale or exchange of the

stock.

In situations where a corporation

acquires an interest in a partnership that

holds stock in that corporation, a

section 754 election is not in effect with

respect to the partnership for the taxable

year in which the corporation acquires

the interest, and the partnership later

sells or exchanges the stock, it may be

inconsistent with the intent of section

705 to increase the basis of the

corporation’s partnership interest by the

full amount of the gain that is not

recognized.

For instance, assume that a

corporation (A) purchases a 50 percent

interest in a partnership for $100,000.

The partnership’s only asset is A stock

with a basis of $100,000 and a value of

$200,000. If the partnership had not

made a section 754 election, then when

the partnership disposes of the property

for $200,000, A would be allocated

$50,000 of gain. Under section 1032, the

gain allocated to A would not be subject

to tax. If A’s basis in the partnership

interest were increased to $150,000

under section 705(a)(1), A would

recognize a corresponding $50,000 loss

(or reduced gain) upon a subsequent

sale of the partnership interest. In this

situation, it would be inconsistent with

the intent of section 705 to increase the

basis of A’s partnership interest for the

gain that is not recognized. To do so

would create a recognizable loss (or

reduced gain) in a situation where no

economic loss was incurred and no

offsetting gain had previously been

recognized.

Accordingly, in Notice 99–57 (1999–

51 I.R.B. 692), the IRS announced that

it intended to promulgate regulations

under section 705 to address certain

situations where a corporation acquires

an interest in a partnership that holds

stock in that corporation, and a section

754 election is not in effect with respect

to the partnership for the taxable year in

which the corporation acquired the

interest. The IRS announced that rules

regarding tiered-entity structures also

would be included in the regulations.

The IRS requested comments as to the