Federal Register / Vol. 75, No. 110 / Wednesday, June 9, 2010 / Rules and Regulations 32659 

the appropriate Food and Drug 

Administration district office specified 

in part 5, subpart M of this chapter. 

PART 107—INFANT FORMULA 

■ 3. The authority citation for 21 CFR 

part 107 continues to read as follows: 

Authority: 21 U.S.C. 321, 343, 350a, 371. 

■ 4. Section 107.50 is amended by 

revising paragraph (e)(2) to read as 

follows: 

§ 107.50 Terms and conditions. 

* * * * * 

(e) * * * 

(2) The manufacturer shall promptly 

notify FDA when the manufacturer has 

knowledge (as defined in section 

412(c)(2) of the act) that reasonably 

supports the conclusion that an exempt 

infant formula that has been processed 

by the manufacturer and that has left an 

establishment subject to the control of 

the manufacturer may not provide the 

nutrients required by paragraph (b) or 

(c) of this section, or when there is an 

exempt infant formula that may be 

otherwise adulterated or misbranded 

and if so adulterated or misbranded 

presents a risk of human health. This 

notification shall be made, by 

telephone, to the Director of the 

appropriate FDA district office specified 

in part 5, subpart M of this chapter. 

After normal business hours (8 a.m. to 

4:30 p.m.), contact the FDA Emergency 

Call Center at 866–300–4374. The 

manufacturer shall send a followup 

written confirmation to the Center for 

Food Safety and Applied Nutrition 

(HFS–605), Food and Drug 

Administration, 5100 Paint Branch 

Pkwy., College Park, MD 20740, and to 

the appropriate FDA district office 

specified in part 5, subpart M of this 

chapter. 

■ 5. Section 107.240 is amended by 

revising paragraph (b) to read as follows: 

§ 107.240 Notification requirements. 

* * * * * 

(b) Method of notification. The 

notification made pursuant to 

§ 107.240(a) shall be made, by 

telephone, to the Director of the 

appropriate Food and Drug 

Administration district office listed in 

part 5, subpart M of this chapter. After 

normal business hours (8 a.m. to 4:30 

p.m.), contact the FDA Emergency Call 

Center at 866–300–4374. The 

manufacturer shall send written 

confirmation of the notification to the 

Center for Food Safety and Applied 

Nutrition (HFS–605), Food and Drug 

Administration, 5100 Paint Branch 

Pkwy., College Park, MD 20740, and to 

the appropriate Food and Drug 

Administration district office listed in 

part 5, subpart M of this chapter. 

* * * * * 

PART 312—INVESTIGATIONAL NEW 

DRUG APPLICATION 

■ 6. The authority citation for 21 CFR 

part 312 continues to read as follows: 

Authority: 21 U.S.C. 321, 331, 351, 352, 

353, 355, 360bbb, 371; 42 U.S.C. 262. 

■ 7. Section 312.310 is amended by 

revising paragraph (d)(1) to read as 

follows: 

§ 312.310 Individual patients, including for 

emergency use. 

* * * * * 

(d) * * * 

(1) Emergency expanded access use 

may be requested by telephone, 

facsimile, or other means of electronic 

communications. For investigational 

biological drug products regulated by 

the Center for Biologics Evaluation and 

Research, the request should be directed 

to the Office of Communication, 

Outreach and Development, Center for 

Biologics Evaluation and Research, 301– 

827–1800 or 1–800–835–4709, e-mail: 

ocod@fda.hhs.gov. For all other 

investigational drugs, the request for 

authorization should be directed to the 

Division of Drug Information, Center for 

Drug Evaluation and Research, 301– 

796–3400, e-mail: 

druginfo@fda.hhs.gov. After normal 

working hours (8 a.m. to 4:30 p.m.), the 

request should be directed to the FDA 

Emergency Call Center, 866–300–4374, 

e-mail: 

emergency.operations@fda.hhs.gov. 

* * * * * 

PART 803—MEDICAL DEVICE 

REPORTING 

■ 8. The authority citation for 21 CFR 

part 803 continues to read as follows: 

Authority: 21 U.S.C. 352, 360, 360i, 360j, 

371, 374. 

■ 9. Section 803.12 is amended by 

revising paragraph (c) to read as follows: 

§ 803.12 Where and how do I submit 

reports and additional information? 

* * * * * 

(c) If an entity is confronted with a 

public health emergency, this can be 

brought to FDA’s attention by contacting 

the FDA Office of Emergency 

Operations, Office of Crisis 

Management, Office of the 

Commissioner, at 866–300–4374, 

followed by the submission of an e-mail 

to emergency.operations@fda.hhs.gov or 

a fax report to 301–847–8544. 

* * * * * 

Dated: June 4, 2010. 

Leslie Kux, 

Acting Assistant Commissioner for Policy. 

[FR Doc. 2010–13820 Filed 6–8–10; 8:45 am] 

BILLING CODE 4160–01–S 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9485] 

RIN 1545–BF28 

Contributed Property 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations under section 704(c) of the 

Internal Revenue Code (Code) providing 

that the section 704(c) anti-abuse rule 

takes into account the tax liabilities of 

both the partners in a partnership and 

certain direct and indirect owners of 

such partners. These final regulations 

further provide that a section 704(c) 

allocation method cannot be used to 

achieve tax results inconsistent with the 

intent of subchapter K of the Code. The 

final regulations affect partnerships and 

their partners. 

DATES: Effective Date: These final 

regulations are effective June 9, 2010. 

Applicability Date: These final 

regulations are applicable for taxable 

years beginning after June 9, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Bryan A. Rimmke at (202) 622–3050 

(not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains amendments 

to 26 CFR part 1 under section 704 of 

the Internal Revenue Code (Code). On 

May 19, 2008, a notice of proposed 

rulemaking (REG–100798–06, 2008–23 

IRB 1135) was published in the Federal 

Register (73 FR 28765) in response to 

the Joint Committee on Taxation’s 

recommendation that the partnership 

rules be strengthened to ensure that the 

allocation rules in the regulations under 

section 704(c) are not used to generate 

unwarranted benefits. See The Report of 

Investigation of Enron Corporation and 

Related Entities Regarding Federal Tax 

and Compensation Issues, and Policy 

Recommendations, (JCS–3–03) February 

2003 at pg. 220. Because no requests to 

speak were submitted by August 18, 

2008, no public hearing was held. 

Written comments, however, were 


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32660 Federal Register / Vol. 75, No. 110 / Wednesday, June 9, 2010 / Rules and Regulations 

received in response to the notice of 

proposed rulemaking. After 

consideration of these comments, the 

proposed regulations are adopted 

without change by this Treasury 

decision. 

Summary of Comments and 

Explanation of Provisions 

The comments on the proposed 

regulations requested that examples be 

given to specifically describe the types 

of transactions to which these 

regulations apply. Additionally, the 

comments requested examples to 

describe the types of transactions which 

would not be abusive under this 

regulation but would be abusive under 

the general subchapter K anti-abuse rule 

found in § 1.701–2. In light of the fact 

that these regulations are anti-abuse 

provisions and the factually intensive 

analysis needed to determine whether 

this regulation is applicable, the 

Treasury Department and the IRS 

decline to adopt these comments. 

Additional comments requested that 

the Treasury Department and the IRS 

consider both a de minimis partner rule 

for direct partners similar to § 1.704– 

1(b)(2)(iii) and a rule for indirect 

partners where the owners would need 

to be related to the look-through entity 

within the meaning of sections 267 or 

707 in order to be considered indirect 

partners for the purposes of the 

regulation. For purposes of § 1.704– 

1(b)(2)(iii), a de minimis partner is any 

partner, including a look-through entity, 

that owns less than 10 percent of the 

capital and profits of a partnership, and 

who is allocated less than 10 percent of 

each partnership item. The Treasury 

Department and the IRS have 

determined that neither a de minimis 

partner provision nor a related partner 

provision for indirect partners would 

conform to the intent of this anti-abuse 

provision and therefore decline to adopt 

such rules. 

This Treasury decision adopts the 

proposed regulations without 

substantive change. Accordingly, the 

regulations amend § 1.704–3(a)(10) to 

provide that, for purposes of applying 

the anti-abuse rule, both direct and 

indirect partners are considered. The 

final regulations provide that an indirect 

partner is any direct or indirect owner 

of a partnership, S corporation, or 

controlled foreign corporation (as 

defined in section 957(a) or 953(c)), or 

direct or indirect beneficiary of a trust 

or estate, that is a partner in the 

partnership, and any consolidated group 

of which the partner in the partnership 

is a member (within the meaning of 

§ 1.1502–1(h)). However, an owner of a 

controlled foreign corporation is treated 

as an indirect partner only with respect 

to the allocation of items that enter into 

the computation of a United States 

shareholder’s inclusion under section 

951(a) with respect to the controlled 

foreign corporation, enter into any 

person’s income attributable to a United 

States shareholder’s inclusion under 

section 951(a) with respect to the 

controlled foreign corporation, or would 

enter into the computations described in 

this paragraph if such items were 

allocated to the controlled foreign 

corporation. 

These final regulations further 

provide that the principles of section 

704(c), together with the allocation 

methods described in § 1.704–3, 

paragraphs (b), (c) and (d), apply only 

with respect to the contributions of 

property to the partnership. In that 

regard, the anti-abuse rule of § 1.701– 

2(b) provides that, if a partnership is 

formed or availed of in connection with 

a transaction a principal purpose of 

which is to reduce substantially the 

present value of the partners’ Federal 

tax liability in a manner inconsistent 

with the intent of subchapter K, the IRS 

may recast the transaction for Federal 

tax purposes as appropriate to achieve 

tax results that are consistent with the 

intent of subchapter K. Thus, even 

though a transaction may satisfy the 

literal words of the statute or 

regulations, the IRS may recast a 

transaction as appropriate to avoid tax 

results that are inconsistent with the 

intent of subchapter K, including but 

not limited to: (i) Disregarding 

purported partnerships, in whole or 

part, so that partnership assets are 

treated as owned by the partner; (ii) 

disregarding one or more contributions 

or (iii) disregarding one or more 

purported partners. The final 

regulations also provide that, in 

determining if a purported contribution 

of property to a partnership should be 

recast to avoid results that are 

inconsistent with subchapter K, one 

factor that may be relevant is the use of 

the remedial method in which 

allocations of remedial items of income, 

gain, loss or deduction are made to one 

partner and allocations of offsetting 

remedial items are made to a related 

partner. 

Effective/Applicability Date 

These regulations apply to taxable 

years beginning after June 9, 2010. No 

inference should be drawn from this 

effective date with respect to prior law. 

Special Analyses 

It has been determined that this 

Treasury decision is not a significant 

regulatory action as defined in 

Executive Order 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 

regulation does 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 Code, the notice 

of proposed rulemaking was submitted 

to the Chief Counsel for Advocacy of the 

Small Business Administration for 

comment on its impact on small 

business. 

Drafting Information 

The principal author of these final 

regulations is Bryan A. Rimmke, Office 

of the Associate Chief Counsel 

(Passthroughs and Special Industries), 

IRS. 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. 

Adoption of Amendments to the 

Regulations 

■ Accordingly, 26 CFR part 1 is 

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. Section 1.704–3 is amended 

by: 

■ 1. Adding four sentences to paragraph 

(a)(1) at the end of the last sentence and 

revising paragraph (a)(10). 

■ 2. Revising the first sentence of 

paragraph (f) and adding one sentence 

to the end of the paragraph. 

The revisions and additions read as 

follows: 

§ 1.704–3 Contributed property. 

(a) * * * (1) * * * The principles of 

this paragraph (a)(1), together with the 

methods described in paragraphs (b), (c) 

and (d) of this section, apply only to 

contributions of property that are 

otherwise respected. See for example 

§ 1.701–2. Accordingly, even though a 

partnership’s allocation method may be 

described in the literal language of 

paragraphs (b), (c) or (d) of this section, 

based on the particular facts and 

circumstances, the Commissioner can 

recast the contribution as appropriate to 

avoid tax results inconsistent with the 

intent of subchapter K. One factor that 


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Federal Register / Vol. 75, No. 110 / Wednesday, June 9, 2010 / Rules and Regulations 32661 

may be considered by the Commissioner 

is the use of the remedial allocation 

method by related partners in which 

allocations of remedial items of income, 

gain, loss or deduction are made to one 

partner and the allocations of offsetting 

remedial items are made to a related 

partner. 

* * * * * 

(10) Anti-abuse rule—(i) In general. 

An allocation method (or combination 

of methods) is not reasonable if the 

contribution of property (or event that 

results in reverse section 704(c) 

allocations) and the corresponding 

allocation of tax items with respect to 

the property are made with a view to 

shifting the tax consequences of built-in 

gain or loss among the partners in a 

manner that substantially reduces the 

present value of the partners’ aggregate 

tax liability. For purposes of this 

paragraph (a)(10), all references to the 

partners shall include both direct and 

indirect partners. 

(ii) Definition of indirect partner. An 

indirect partner is any direct or indirect 

owner of a partnership, S corporation, 

or controlled foreign corporation (as 

defined in section 957(a) or 953(c)), or 

direct or indirect beneficiary of a trust 

or estate, that is a partner in the 

partnership, and any consolidated group 

of which the partner in the partnership 

is a member (within the meaning of 

§ 1.1502–1(h)). An owner (whether 

directly or through tiers of entities) of a 

controlled foreign corporation is treated 

as an indirect partner only with respect 

to allocations of items of income, gain, 

loss, or deduction that enter into the 

computation of a United States 

shareholder’s inclusion under section 

951(a) with respect to the controlled 

foreign corporation, enter into any 

person’s income attributable to a United 

States shareholder’s inclusion under 

section 951(a) with respect to the 

controlled foreign corporation, or would 

enter into the computations described in 

this sentence if such items were 

allocated to the controlled foreign 

corporation. 

* * * * * 

(f) Effective/Applicability Dates. With 

the exception of paragraphs (a)(1), 

(a)(8)(ii), (a)(8)(iii), (a)(10), and (a)(11) of 

this section, this section applies to 

properties contributed to a partnership 

and to restatements pursuant to § 1.704– 

1(b)(2)(iv)(f) on or after December 21, 

1993. * * * Paragraphs (a)(1) and 

(a)(10) of this section are applicable for 

taxable years beginning after June 9, 

2010. 

Approved: May 28, 2010. 

Linda E. Stiff, 

Deputy Commissioner for Services and 

Enforcement. 

Michael Mundaca, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2010–13790 Filed 6–8–10; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. USCG–2010–0435] 

RIN 1625–AA08 

Special Local Regulation; Hydroplane 

Exhibition, Detroit River, Detroit, MI 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard will enforce 

a temporary special local regulation on 

the Detroit River, Detroit, Michigan from 

June 18, 2010 to June 20, 2010. This 

special local regulation is intended to 

restrict vessels from portions of the 

Detroit River during the Hydroplane 

Exhibition. This special local regulation 

is necessary to protect spectators and 

vessels from the hazards associated with 

powerboat races. 

DATES: This regulation is effective from 

3 p.m. on June 18, 2010, to 5 p.m. on 

June 20, 2010. 

ADDRESSES: Documents indicated in this 

preamble as being available in the 

docket are part of docket USCG–2010– 

0435 and are available online by going 

to http://www.regulations.gov, inserting 

USCG–2010–0435 in the ‘‘Keyword’’ 

box, and then clicking ‘‘Search.’’ They 

are also available for inspection or 

copying at the Docket Management 

Facility (M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590, 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

rule, call or e-mail CDR Joseph 

Snowden, Prevention Department, 

Sector Detroit, Coast Guard; telephone 

(313) 568–9508, e-mail 

Joseph.H.Snowden@uscg.mil. If you 

have questions on viewing the docket, 

call Renee V. Wright, Program Manager, 

Docket Operations, telephone 

(202) 366–9826. 

SUPPLEMENTARY INFORMATION: 

Regulatory Information 

The Coast Guard is issuing this 

temporary final rule without prior 

notice and opportunity to comment 

pursuant to authority under section 4(a) 

of the Administrative Procedure Act 

(APA) (5 U.S.C. 553(b)). This provision 

authorizes an agency to issue a rule 

without prior notice and opportunity to 

comment when the agency for good 

cause finds that those procedures are 

‘‘impracticable, unnecessary, or contrary 

to the public interest.’’ Under 5 U.S.C. 

553(b)(B), the Coast Guard finds that 

good cause exists for not publishing a 

notice of proposed rulemaking (NPRM) 

with respect to this rule because the 

permit application for the Hydroplane 

Exhibition event was not received by 

the Coast Guard in time to publish an 

NPRM followed by a final rule before 

the effective date. Delaying this rule 

would be contrary to the public interest 

of ensuring the safety of vessels during 

the race, and immediate action is 

necessary to prevent possible loss of life 

and property. The Coast Guard has not 

received any complaints or negative 

comments previously with regard to 

events of this type and duration. 

Under 5 U.S.C. 553(d)(3), the Coast 

Guard finds that good cause exists for 

making this rule effective less than 30 

days after publication in the Federal 

Register. Delaying this rule would be 

contrary to the public interest of 

ensuring the safety of vessels during the 

construction, and immediate action is 

necessary to prevent possible loss of life 

and property. The Coast Guard has not 

received any complaints or negative 

comments previously with regard to 

events of this type and duration. 

Background and Purpose 

This temporary special local 

regulation is necessary to ensure the 

safety of vessels and spectators from 

hazards associated with a powerboat 

race. The Captain of the Port Detroit has 

determined that powerboat races in 

close proximity to watercraft and 

waterfront structures pose a significant 

risk to public safety and property. The 

likely combination of large numbers of 

recreational vessels, powerboats 

traveling at high speeds, and large 

numbers of spectators in close 

proximity to powerboats on the water 

pose a significant risk of serious injuries 

or fatalities. Establishing a special local 

regulation around the location of the 

race course will help ensure the safety 

of persons and property at these events 

and help minimize the associated risks. 


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