[Federal Register Volume 60, Number 247 (Tuesday, December 26, 1995)]
[Proposed Rules]
[Pages 66771-66772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30828]



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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[INTL-0009-95]
RIN 1545-AT42


Certain Transfers of Domestic Stock or Securities by U.S. Persons 
to Foreign Corporations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations and notice of public hearing.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations revising the 
rules under section 367(a) with respect to certain transfers of stock 
or securities of domestic corporations by United States persons 
pursuant to the corporate organization, reorganization or liquidation 
provisions of the Internal Revenue Code. The text of those temporary 
regulations also serves as the text of these proposed regulations. This 
document also provides notice of a public hearing on these proposed 
regulations.

DATES: Written comments must be received by March 25, 1996. Outlines of 
topics to be discussed at the public hearing scheduled for April 11, 
1996, at 10 a.m. must be received by March 21, 1996.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (INTL 0009-95), Room 
5228, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. In the alternative, submissions may be hand 
delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R 
(INTL-0009-95), Courier's Desk, Internal Revenue Service, 1111 
Constitution Ave. NW., Washington, DC. 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, Philip L. 
Tretiak at (202) 622-3860; concerning submissions and the hearing, 
Christina Vasquez at (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 of 1995 (44 
U.S.C. 3507).
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attn: Desk Officer for the Department 
of Treasury, Office of Information and Regulatory Affairs, Washington, 
DC 20503, with copies to the Internal Revenue Service, Attn: IRS 
Reports Clearance Officer, T:FP, Washington, DC 20224. Comments on the 
collection of information should be received by February 26, 1996.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    The collection of information is in Sec. 1.367(a)-3T(c)(4). This 
information is required by the IRS as a condition for a taxpayer to 
qualify for an exception to the general rule of taxation under section 
367(a)(1). This information will be used to determine whether a 
taxpayer properly qualifies for a claimed exception. The respondents 
generally will be U.S. corporations, probably U.S. multinationals, that 
are acquired by foreign companies pursuant to nonrecognition exchanges 
or that engage in joint ventures with foreign companies. Responses to 
this collection of information by the relevant U.S. corporations are 
required in order for the shareholders of such corporations to 

[[Page 66772]]
qualify for an exception to the general rule under section 367(a)(1).
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.
    Estimated total annual reporting burden: 1,000 hours. The estimated 
annual burden per respondent varies from 1 hour to 20 hours, depending 
on individual circumstances, with an estimated average of 10 hours.
    Estimated number of respondents: 100.
    Estimated annual frequency of responses: Once.

Background

    The temporary regulations published in the Rules and Regulations 
section of this issue of the Federal Register amend the Income Tax 
Regulations (26 CFR part 1) relating to section 367(a). The temporary 
regulations contain rules relating to the transfer of stock or 
securities by a United States person to a foreign corporation in an 
exchange described in section 367(a).
    The text of those temporary regulations also serves as the text of 
these proposed regulations. The preamble to the temporary regulations 
explains the temporary regulations. Final regulations under section 
367(a) regarding transfers of stock or securities will integrate the 
proposed regulations herein with the notice of proposed rulemaking 
published on August 26, 1991, in the Federal Register (56 FR 41993). 
Thus, the proposed regulations herein supplement and, where 
inconsistent with, supersede, the 1991 proposed regulations.

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 has also 
been determined that this regulation does not have a significant impact 
on a substantial number of small entities. Thus, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) does not apply to these 
regulations, and therefore, a Regulatory Flexibility Analysis is not 
required. 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 their impact on small business.

Comments and Notice of 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 Internal Revenue 
Service. All comments will be available for public inspection and 
copying.
    A public hearing has been scheduled for April 11, 1996, at 10 a.m. 
in the IRS Auditorium. Because of access restrictions, visitors will 
not be admitted beyond the building lobby more than 15 minutes before 
the hearing starts.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing.
    Persons that wish to present oral comments at the hearing must 
submit written comments by March 25, 1996 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 March 21, 1996.
    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 proposed regulations is Philip L. 
Tretiak of the Office of Associate Chief Counsel (International), 
Internal Revenue Service. However, other personnel from the IRS and 
Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income tax, 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. New Sec. 1.367-9 is added to read as follows:


Sec. 1.367(a)-9  Transfers by U.S. persons of stock or securities of 
domestic corporations to foreign corporations.

    [The text of this proposed section is the same as the text of 
paragraphs (a), (c), (d), (e), (f), (g)(1), and (h)(1) of Sec. 1.367-3T 
published elsewhere in this issue of the Federal Register].
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 95-30828 Filed 12-22-95; 8:45 am]
BILLING CODE 4830-01-U