746 Federal Register / Vol. 70, No. 3 / Wednesday, January 5, 2005 / Proposed Rules 

§ 357.950 Labeling of drug products for 

the relief of symptoms of upset stomach 

due to overindulgence in food and drink.

* * * * *

(b) * * *

(2) ‘‘For the relief of upset stomach 

associated with’’ (select one or more of 

the following: ‘‘nausea,’’ ‘‘heartburn,’’

‘‘fullness,’’ ‘‘belching,’’ and ‘‘gas’’) ‘‘due 

to overindulgence in food and drink.’’

* * * * *

Dated: December 15, 2004.

Jeffrey Shuren,

Assistant Commissioner for Policy.

[FR Doc. 05–154 Filed 1–4–05; 8:45 am]

BILLING CODE 4160–01–S

DEPARTMENT OF THE TREASURY

Internal Revenue Service 

26 CFR Part 1

[REG–117969–00] 

RIN 1545–BD76

Statutory Mergers and Consolidations

AGENCY: Internal Revenue Service (IRS), 

Treasury.

ACTION: Amendment of previously 

proposed regulations and notice of 

public hearing. 

SUMMARY: This document amends 

previously proposed regulations 

published in the Federal Register on 

January 24, 2003 (REG–126485–01, 

2003–9 I.R.B. 542, 68 FR 3477) by crossreference to temporary regulations. 

Those regulations define the term 

statutory merger or consolidation as that 

term is used in section 368(a)(1)(A). 

This notice of proposed rulemaking 

affects corporations engaging in mergers 

and consolidations and their 

shareholders. It is being issued 

concurrently with proposed regulations 

under sections 358, 367, and 884. (See

REG–125628–01 in the proposed 

rulemaking section of this issue of the 

Federal Register).

DATES: Written and electronic comments 

and requests to speak and outlines of 

topics to be discussed at the public 

hearing scheduled for May 19, 2005, to 

be held in the IRS Auditorium (7th 

floor) must be received by April 28, 

2005.

ADDRESSES: Send submissions to 

CC:PA:LPD:PR (REG–117969–00), Room 

5203, 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 4 p.m. 

to: CC:PA:LPD:PR (REG–117969–00), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the IRS Internet site 

at http://www.irs.gov/regs or via the 

Federal eRulemaking Portal at http://

www.regulations.gov (IRS–REG–

117969–00). The public hearing will be 

held in the IRS Auditorium (7th floor), 

Internal Revenue Building, 1111 

Constitution Avenue, NW., Washington, 

DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations, 

Vincent Daly, (202) 622–7770; 

concerning submissions, the hearing, or 

placement on the building access list to 

attend the hearing, Robin Jones, (202) 

622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of 

Provisions 

Before 1934, the term merger, as used 

in the reorganization provisions, 

included statutory mergers as well as 

other combinations of corporate entities. 

In 1934, congress amended the 

definition of a reorganization to provide 

separately for statutory mergers or 

consolidations and for the other types of 

transactions previously included in the 

definition of a merger. There is no 

indication in the legislative history of 

the 1934 changes to the definition of 

reorganization that Congress intended to 

exclude transactions effected under 

foreign law. 

In 1935, Treasury regulations 

interpreted the term statutory merger

under the revised provision to mean a 

merger or consolidation effected 

pursuant to the corporation laws of a 

State or Territory or the District of 

Columbia. The requirement that the 

transaction be effected under domestic 

law remains in place, with minor 

variations. The Treasury Department 

and IRS believe that this interpretation 

is reasonable; nevertheless, the Treasury 

Department and IRS believe that a 

reexamination is warranted in light of 

the purposes of the statute and changes 

in domestic and foreign law since 1935.

The states have revised their laws to 

offer a greater variety of business 

entities and greater flexibility in 

effecting business combinations. 

Accordingly, the Treasury Department 

and IRS thought it advisable to define a 

merger or consolidation functionally, to 

supplement the reference to State law. 

Accordingly, the Treasury Department 

and IRS developed and proposed such 

a functional definition in 2003. See 

Notice of Proposed Rulemaking (REG–

126485–01, 2003–9 I.R.B. 542, 68 FR 

3477), cross-referencing temporary 

regulations (TD 9038, 2003–9, I.R.B. 

524, 68 FR 3384) (January 24, 2003). 

Many foreign jurisdictions now have 

merger or consolidation statutes that 

operate in material respects like those of 

the states, i.e., all assets and liabilities 

move by operation of law. The Treasury 

Department and IRS believe that 

transactions affected pursuant to these 

statutes should be treated as 

reorganizations if they satisfy the 

functional criteria applicable to 

transactions under domestic statutes. 

This document proposes a revised 

definition of a statutory merger or 

consolidation. The previously proposed 

definition of a statutory merger required 

that it be a transaction effected 

‘‘pursuant to the laws of the United 

States or a State or the District of 

Columbia.’’ See REG–126485–01 (2003–

9 I.R.B. 542, 68 FR 3477). The new 

proposed definition contained in this 

document replaces the quoted language 

with ‘‘pursuant to the statute or statutes 

necessary to effect the merger or 

consolidation.’’ This proposed change 

would allow a transaction effected 

pursuant to the statutes of a foreign 

jurisdiction or of a United States 

possession to qualify as a statutory 

merger or consolidation under section 

368(a)(1)(A), provided it otherwise 

qualifies as a reorganization. The phrase 

statute or statutes is not intended to 

prevent transactions effected pursuant 

to legislation from qualifying as mergers 

or consolidations where such legislation 

is supplemented by administrative or 

case law. 

This notice of proposed rulemaking 

also proposes to remove § 1.368–

2(b)(1)(iii) of the previously proposed 

regulations. That section imposes 

limitations on the use of disregarded 

entities in statutory mergers or 

consolidations when certain entities are 

not organized under the laws of the 

United States or a State or the District 

of Columbia. 

Although this document revises the 

terms of the proposed definition of a 

statutory merger or consolidation for 

purposes of section 368, the provisions 

of the temporary regulations will remain 

in effect until this proposal is 

incorporated in temporary or final 

regulations after notice and comment. 

Section 1.368–2(b)(1)(B)(iv), 

Examples 1 and 2 in the previously 

proposed regulations each specified that 

one of the parties to the transaction 

described in the example ‘‘is not treated 

as owning any assets of an entity that is 

disregarded as an entity separate from 

its owner for Federal tax purposes.’’ The 

results in those examples would be the 

same in each case whether or not a party 

to the transaction held such assets. See

Federal Register / Vol. 70, No. 3 / Wednesday, January 5, 2005 / Proposed Rules 747

§ 1.368–2(b)(1)(B)(iv), Example 3 in the 

previously proposed regulations. To 

avoid any possible implication to the 

contrary, the Treasury Department and 

IRS propose removal of the sentence 

specifying that condition from each 

example. The Treasury Department and 

IRS are continuing to study other 

comments received on the earlier 

proposed regulations.

A notice of proposed rulemaking 

proposing amendments to the 

regulations under sections 358, 367, and 

884 (including special rules for 

determining basis and holding period in 

certain transactions involving one or 

more foreign corporations) is being 

published simultaneously with the 

publication of this notice of proposed 

rulemaking. See REG–125628–01 in the 

proposed rulemaking section of this 

issue of the Federal Register. 

Proposed Effective Date 

These regulations are proposed to 

apply to transactions occurring after the 

date final regulations are published in 

the Federal Register. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations. 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) or electronic comments 

that are submitted timely to the IRS. The 

IRS and Treasury Department 

specifically request comments on the 

clarity of the proposed regulations and 

on how they can be made easier to 

understand. All comments will be 

available for public inspection and 

copying. 

A public hearing has been scheduled 

for May 19, 2005, beginning at 10 a.m. 

in the IRS Auditorium (7th floor), 

Internal Revenue Building, 1111 

Constitution Avenue, NW., Washington, 

DC. Due to building security 

procedures, visitors must enter at the 

Constitution Avenue entrance. In 

addition, all visitors must present photo 

identification to enter the building. 

Because of access restrictions, visitors 

will not be admitted beyond the 

immediate entrance area more than 30 

minutes before the hearing starts. For 

information about having your name 

placed on the building access list to 

attend the hearing, see the FOR FURTHER

INFORMATION CONTACT portion of this 

preamble. 

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

apply to the hearing. Persons who wish 

to present oral comments must submit 

written or electronic comments and an 

outline of the topics to be discussed and 

the time to be devoted to each topic 

(asigned original and eight (8) copies) by 

April 29, 2005. 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 Vincent Daly, Office of the 

Associate Chief Counsel (Corporate). 

However, other personnel from the IRS 

and 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 1—INCOME TAXES 

Paragraph 1. The authority citation 

for part 1 continues to read, in part, as 

follows:

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

Par. 2. Paragraph (b)(1) of § 1.368–2 as 

proposed on January 24, 2003, at 68 FR 

3477, is proposed to be revised to read 

as follows:

§ 1.368–2 Definition of terms.

* * * * *

(b)(1)(i) Definitions. The following 

definitions apply for purposes of this 

paragraph (b)(1): 

(A) Disregarded entity. A disregarded 

entity is a business entity (as defined in 

§ 301.7701–2(a) of this chapter) that is 

disregarded as an entity separate from 

its owner for Federal tax purposes. 

Examples of disregarded entities 

include a domestic single member 

limited liability company that does not 

elect to be classified as a corporation for 

Federal tax purposes, a corporation (as 

defined in § 301.7701–2(b) of this 

chapter) that is a qualified REIT 

subsidiary (within the meaning of 

section 856(i)(2)), and a corporation that 

is a qualified subchapter S subsidiary 

(within the meaning of section 

1361(b)(3)(B)). 

(B) Combining entity. A combining 

entity is a business entity that is a 

corporation (as defined in § 301.7701–

2(b) of this chapter) that is not a 

disregarded entity. 

(C) Combining unit. A combining unit 

is composed solely of a combining 

entity and all disregarded entities, if 

any, the assets of which are treated as 

owned by such combining entity for 

Federal tax purposes. 

(ii) Statutory merger or consolidation 

generally. For purposes of section 

368(a)(1)(A), a statutory merger or 

consolidation is a transaction effected 

pursuant to the statute or statutes 

necessary to effect the merger or 

consolidation, in which transaction, as 

a result of the operation of such statute 

or statutes, the following events occur 

simultaneously at the effective time of 

the transaction—

(A) All of the assets (other than those 

distributed in the transaction) and 

liabilities (except to the extent satisfied 

or discharged in the transaction) of each 

member of one or more combining units 

(each a transferor unit) become the 

assets and liabilities of one or more 

members of one other combining unit 

(the transferee unit); and 

(B) The combining entity of each 

transferor unit ceases its separate legal 

existence for all purposes; provided, 

however, that this requirement will be 

satisfied even if, under applicable law, 

after the effective time of the 

transaction, the combining entity of the 

transferor unit (or its officers, directors, 

or agents) may act or be acted against, 

or a member of the transferee unit (or its 

officers, directors, or agents) may act or 

be acted against in the name of the 

combining entity of the transferor unit, 

provided that such actions relate to 

assets or obligations of the combining 

entity of the transferor unit that arose, 

or relate to activities engaged in by such 

entity, prior to the effective time of the 

transaction, and such actions are not 

inconsistent with the requirements of 

paragraph (b)(1)(ii)(A) of this section.

(iii) Examples. The following 

examples illustrate the rule of paragraph 

(b)(1) of this section. In each of the 

examples, except as otherwise provided, 

each of V, Y, and Z is a C corporation. 

X is a limited liability company. Except

748 Federal Register / Vol. 70, No. 3 / Wednesday, January 5, 2005 / Proposed Rules 

as otherwise provided, X is wholly 

owned by Y and is disregarded as an 

entity separate from Y for Federal tax 

purposes. The examples are as follows:

Example 1. Divisive transaction pursuant 

to a merger statute. (i) Under State W law, 

Z transfers some of its assets and liabilities 

to Y, retains the remainder of its assets and 

liabilities, and remains in existence following 

the transaction. The transaction qualifies as 

a merger under State W corporate law. 

(ii) The transaction does not satisfy the 

requirements of paragraph (b)(1)(ii)(A) of this 

section because of all the assets and 

liabilities of Z, the combining entity of the 

transferor unit, do not become the assets and 

liabilities of Y, the combining entity and sole 

member of the transferee unit. In addition, 

the transaction does not satisfy the 

requirements of paragraph (b)(1)(ii)(B) of this 

section because the separate legal existence 

of Z does not cease for all purposes. 

Accordingly, the transaction does not qualify 

as a statutory merger or consolidation under 

section 368(a)(1)(A).

Example 2. Merger of a target corporation 

into a disregarded entity in exchange for 

stock of the owner. (i) Under State W law, Z 

merges into X. Pursuant to such law, the 

following events occur simultaneously at the 

effective time of the transaction: All of the 

assets and liabilities of Z become the assets 

and liabilities of X and Z’s separate legal 

existence ceases for all purposes. In the 

merger, the Z shareholders exchange their 

stock of Z for stock of Y. 

(ii) The transaction satisfies the 

requirements of paragraph (b)(1)(ii) of this 

section because the transaction is effected 

pursuant to State W law and the following 

events occur simultaneously at the effective 

time of the transaction: All of the assets and 

liabilities of Z, the combining entity and sole 

member of the transferor unit, become the 

assets and liabilities of one or more members 

of the transferee unit that is comprised of Y, 

the combining entity of the transferee unit, 

and X, a disregarded entity the assets of 

which Y is treated as owning for Federal tax 

purposes, and Z ceases its separate legal 

existence for all purposes. Accordingly, the 

transaction qualifies as a statutory merger or 

consolidation for purposes of section 

368(a)(1)(A).

Example 3. Merger of a target S corporation 

that owns a QSub into a disregarded entity.

(i) The facts are the same as in Example 2,

except that Z is an S corporation and owns 

all of the stock of U, a QSub. 

(ii) The deemed formation by Z of U 

pursuant to § 1.1361–5(b)(1) (as a 

consequence of the termination of U’s QSub 

election) is disregarded for Federal income 

tax purposes. The transaction is treated as a 

transfer of the assets of U to X, followed by 

X’s transfer of these assets to U in exchange 

for stock of U. See § 1.1361–5(b)(3), Example 

9. The transaction will, therefore, satisfy the 

requirements of paragraph (b)(1)(ii) of this 

section because the transaction is effected 

pursuant to State W law and the following 

events occur simultaneously at the effective 

time of the transaction: all of the the assets 

and liabilities of Z and U, the sole members 

of the transferor unit, become the assets and 

liabilities of one or more members of the 

transferee unit that is comprised of Y, the 

combining entity of the transferee unit, and 

X, a disregarded entity the assets of which Y 

is treated as owning for Federal tax purposes, 

and Z ceases its separate legal existence for 

all purposes. Moreover, the deemed transfer 

of the assets of U in exchange for U stock 

does not cause the transaction to fail to 

qualify as a statutory merger or 

consolidation. See section 368(a)(2)(C). 

Accordingly, the transaction qualifies as a 

statutory merger or consolidation for 

purposes of section 368(a)(1)(A).

Example 4. Triangular merger of a target 

corporation into a disregarded entity. (i) The 

facts are the same as in Example 2, except 

that V owns 100 percent of the outstanding 

stock of Y and, in the merger of Z into X, the 

Z shareholders exchange their stock of Z for 

stock of V. In the transaction, Z transfers 

substantially all of its properties to X. 

(ii) The transactions is not prevented from 

qualifying as a statutory merger or 

consolidation under section 368(a)(1)(A), 

provided the requirements of section 

368(a)(2)(D) are satisfied. Because the assets 

of X are treated for Federal tax purposes as 

the assets of Y, Y will be treated as acquiring 

substantially all of the properties of Z in the 

merger for purposes of determining whether 

the merger satisfies the requirements of 

section 368(a)(2)(D). As a result, the Z 

shareholders that receive stock of V will be 

treated as receiving stock of a corporation 

that is in control of Y, the combining entity 

of the transferee unit that is the acquiring 

corporation for purposes of section 

368(a)(2)(D). Accordingly, the merger will 

satisfy the requirements of section 

368(a)(2)(D).

Example 5. Merger of a target corporation 

into a disregarded entity owned by a 

partnership. (i) The facts are the same as in 

Example 2, except that Y is organized as a 

partnership under the laws of State W and is 

classified as a partnership for Federal tax 

purposes. 

(ii) The transaction does not satisfy the 

requirements of paragraph (b)(1)(ii)(A) of this 

section. All of the assets and liabilities of Z, 

the combining entity and sole member of the 

transferor unit, do not become the assets and 

liabilities of one or more members of a 

transferee unit because neither X nor Y 

qualifies as a combining entity. Accordingly, 

the transaction cannot qualify as a statutory 

merger or consolidation for purposes of 

section 368(a)(1)(A).

Example 6. Merger of a disregarded entity 

into a corporation. (i) Under State W law, X 

merges into Z. Pursuant to such law, the 

following events occur simultaneously at the 

effective time of the transaction: All of the 

assets and liabilities of X (but not the assets 

and liabilities of Y other than those of X) 

become the assets and liabilities of Z and X’s 

separate legal existence ceases for all 

purposes. 

(ii) The transaction does not satisfy the 

requirements of paragraph (b)(1)(ii)(A) of this 

section because all of the assets and 

liabilities of a transferor unit do not become 

the assets and liabilities of one or more 

members of the transferee unit. The 

transaction also does not satisfy the 

requirements of paragraph (b)(12)(ii)(B) of 

this section because X does not qualify as a 

combining entity. Accordingly, the 

transaction cannot qualify as a statutory 

merger or consolidation for purposes of 

section 368(a)(1)(A).

Example 7. Merger of a corporation into a 

disregarded entity in exchange for interests 

in the disregarded entity. (i) Under State W 

law, Z merges into X. Pursuant to such law, 

the following events occur simultaneously at 

the effective time of the transaction: All of 

the assets and liabilities of Z become the 

assets and liabilities of X and Z’s separate 

legal existence ceases for all purposes. In the 

merger of Z into X, the Z shareholders 

exchange their stock of Z for interests in X 

so that, immediately after the merger, X is 

not disregarded as an entity separate from Y 

for Federal tax purposes. Following the 

merger, pursuant to § 301.7701–3(b)(1)(i) of 

this chapter, X is classified as a partnership 

for Federal tax purposes. (ii) The transaction 

does not satisfy the requirements of 

paragraph (b)(1)(ii)(A) of this section because 

immediately after the merger X is not 

disregarded as an entity separate from Y and, 

consequently, all of the assets and liabilities 

of Z, the combining entity of the transferor 

unit, do not become the assets and liabilities 

of one or more members of a transferee unit. 

Accordingly, the transaction cannot qualify 

as a statutory merger or consolidation for 

purposes of section 368(a)(1)(A).

Example 8. Merger transaction preceded by 

distribution. (i) Z operates two unrelated 

businesses, Business P and Business Q, each 

of which represents 50 percent of the value 

of the assets of Z. Y desires to acquire and 

continue operating Business P, but does not 

want to acquire Business Q. Pursuant to a 

single plan, Z sells Business Q for cash to 

parties unrelated to Z and Y in a taxable 

transaction, and then distributes the proceeds 

of the sale pro rata to its shareholders. Then, 

pursuant to State W law, Z merges into Y. 

Pursuant to such law, the following events 

occur simultaneously at the effective time of 

the transaction: All of the assets and 

liabilities of Z related to Business P become 

the assets and liabilities of Y and Z’s separate 

legal existence ceases for all purposes. In the 

merger, the Z shareholders exchange their Z 

stock for Y stock. 

(ii) The transaction satisfies the 

requirements of paragraph (b)(1)(ii) of this 

section because the transaction is effected 

pursuant to State W law and the

Federal Register / Vol. 70, No. 3 / Wednesday, January 5, 2005 / Proposed Rules 749

following events occur simultaneously at the 

effective time of the transaction: All of the 

assets and liabilities of Z, the combining 

entity and sole member of the transferor unit, 

become the assets and liabilities of Y, the 

combining entity and sole member of the 

transferee unit, and Z ceases its separate legal 

existence for all purposes. Accordingly, the 

transaction qualifies as a statutory merger or 

consolidation for purposes of section 

368(a)(1)(A).

Example 9. Transaction effected pursuant 

to foreign statutes. (i) Z and Y are entities 

organized under the laws of Country Q and 

classified as corporations for Federal tax 

purposes. Z and Y combine. Pursuant to 

statutes of Country Q the following events 

occur simultaneously: All of the assets and 

liabilities of Z become the assets and 

liabilities of Y and Z’s separate legal 

existence ceases for all purposes. 

(ii) The transaction satisfies the 

requirements of paragraphs (b)(1)(ii) of this 

section because the transaction is effected 

pursuant to statutes of Country Q and the 

following events occur simultaneously at the 

effective time of the transaction: All of the 

assets and liabilities of Z, the combining 

entity of the transferor unit, become the 

assets and liabilities of Y, the combining 

entity and sole member of the transferee unit, 

and Z ceases its separate legal existence for 

all purposes. Accordingly, the transaction 

qualifies as a statutory merger or 

consolidation for purposes of section 

368(a)(1)(A).

(iv) Effective dates. This paragraph 

(b)(1) applies to transactions occurring 

after the date these regulations are 

published as final regulations in the 

Federal Register. For rules regarding 

statutory mergers or consolidations on 

or after January 24, 2003, and before 

these regulations are published as final 

regulations in the Federal Register, see 

§ 1.368–2T(b)(1). For rules regarding 

statutory mergers or consolidations 

before January 24, 2003, see § 1.368–

2(b)(1) as it applies before January 24, 

2003 (see 26 CFR part 1, revised April 

1, 2002).

* * * * *

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement.

[FR Doc. 05–202 Filed 1–4–05; 8:45 am] 

BILLING CODE 4830–01–M

DEPARTMENT OF THE TREASURY

Internal Revenue Service 

26 CFR Part 1 

[REG–125628–01] 

RIN 1545–BA65 

Revision of Income Tax Regulations 

Under Sections 358, 367, 884, and 

6038B Dealing With Statutory Mergers 

or Consolidations Under Section 

368(a)(1)(A) Involving One or More 

Foreign Corporations

AGENCY: Internal Revenue Service (IRS), 

Treasury.

ACTION: Notice of proposed rulemaking 

and notice of public hearing. 

SUMMARY: This document contains 

proposed regulations amending the 

income tax regulations under various 

provisions of the Internal Revenue Code 

(Code) to account for statutory mergers 

and consolidations under section 

368(a)(1)(A) (including reorganizations 

described in section 368(a)(2)(D) and 

(E)) involving one or more foreign 

corporations. These proposed 

regulations are issued concurrently with 

proposed regulations (REG–117969–00) 

that would amend the definition of a 

reorganization under section 

368(a)(1)(A) to include certain statutory 

mergers or consolidations effected 

pursuant to foreign law.

DATES: Written and electronic comments 

and requests to speak and outlines of 

topics to be discussed at the public 

hearing scheduled for May 19, 2005, at 

10 a.m. must be received by April 28, 

2005.

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–125628–01), room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to: CC:PA:LPD:PR (REG–125628–

01), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the IRS Internet site 

at: http://www.irs.gov/regs or via the 

Federal eRulemaking Portal at http://

www.regulations.gov (IRS and REG–

125628–01). The public hearing will be 

held in the Auditorium, Internal 

Revenue Building, 1111 Constitution 

Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations, 

Robert W. Lorence, Jr., (202) 622–3860; 

concerning submissions, the hearing, or 

placement on the building access list to 

attend the hearing, Guy Traynor, (202) 

622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in this notice of proposed 

rulemaking has been submitted to the 

Office of Management and Budget for 

review in accordance with the 

Paperwork Reduction Act (44 U.S.C. 

3507(d)). Comments on the collection of 

information should be sent to the Office 

of Management and Budget, Attn: Desk 

Officer for the Department of the 

Treasury, Office of Information and 

Regulatory Affairs, Washington, DC 

20503, with copies to the Internal 

Revenue Service, Attn: IRS Reports 

Clearance Officer, SE:W:CAR:MP:T:T:SP 

Washington, DC 20224. Comments on 

the collection of information should be 

received no later than March 7, 2005. 

Comments are specifically requested 

concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the IRS, 

including whether the information will 

have practical utility; 

The accuracy of the estimated burden 

associated with the proposed collection 

of information (see below); 

How the quality, utility, and clarity of 

the information to be collected may be 

enhanced; 

How the burden of complying with 

the proposed collection of information 

can be minimized, including through 

the application of automated collection 

techniques or other forms of information 

technology; and 

Estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

The collection of information in this 

proposed regulation is in § 1.367(a)–

3(d)(2)(vi)(B)(1)(ii). This information is 

required to inform the IRS of a domestic 

corporation that is claiming an 

exception from the application of 

section 367(a) and (d) to certain 

transfers of property to a foreign 

corporation that is re-transferred by the 

foreign corporation to a domestic 

corporation controlled by the foreign 

corporation. The information is in the 

form of a statement attached to the 

domestic corporation’s U.S. income tax 

return for the year of the transfer 

certifying that if the foreign corporation 

disposes of the stock of the domestic 

controlled corporation with a tax 

avoidance purpose, the domestic 

corporation will file an income tax 

return (or amended return, as the case 

may be) reporting gain. The collection of