Federal Register / Vol. 61, No. 85 / Wednesday, May 1, 1996 / Rules and Regulations 19187

(C) Notwithstanding the provisions of

paragraphs (h)(2)(vii)(A) and

(h)(2)(vii)(B) of this section, in the case

of an applicant, no prepayment or

special prepayment shall occur without

the prior written approval of the

National Futures Association; in the

case of a registrant, no prepayment or

special prepayment shall occur without

the prior written approval of the

designated self-regulatory organization,

if any, or of the Commission if the

registrant is not a member of a selfregulatory organization. The designated

self-regulatory organization shall

immediately provide the Commission

with a copy of any notice of approval

issued where the requested prepayment

or special prepayment will result in the

reduction of the registrant’s net capital

by 20 percent or more or the registrant’s

excess adjusted net capital by 30

percent or more.

(viii) * * *

(A) * * *

(3) 120 percent of the amount of

adjusted net capital required by a

registered futures association of which it

is a member; or

* * * * *

(3) * * *

(ii) * * *

(C) 120 percent of the amount of

adjusted net capital required by a

registered futures association of which it

is a member; or

* * * * *

(v) * * *

(C) 120 percent of the amount of

adjusted net capital required by a

registered futures association of which it

is a member;

* * * * *

4. Section 1.58 is revised to read as

follows:

§ 1.58 Gross collection of exchange-set

margins.

(a) Each futures commission merchant

which carries a commodity futures or

commodity option position for another

futures commission merchant or for a

foreign broker on an omnibus basis must

collect, and each futures commission

merchant and foreign broker for which

an omnibus account is being carried

must deposit, initial and maintenance

margin on each position reported in

accordance with § 17.04 of this chapter

at a level no less than that established

for customer accounts by the rules of the

applicable contract market.

(b) If the futures commission

merchant which carries a commodity

futures or commodity option position

for another futures commission

merchant or for a foreign broker on an

omnibus basis allows a position to be

margined as a spread position or as a

hedged position in accordance with the

rules of the applicable contract market,

the carrying futures commission

merchant must obtain and retain a

written representation from the futures

commission merchant or from the

foreign broker for which the omnibus

account is being carried that each such

position is entitled to be so margined.

Issued in Washington, D.C. on April 25,

1996, by the Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 96–10714 Filed 4–30–96; 8:45 am]

BILLING CODE 6351–01–P

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 0

[Docket No. FR–3331–C–02]

RIN 2501–AB55

Reinstatement of Two Sections of

HUD’s Standards of Conduct

Regulation at 24 CFR Part 0;

Correction

AGENCY: Office of the Secretary,

Department of Housing and Urban

Development.

ACTION: Correction to final rule.

SUMMARY: This correction to a final rule

issued by the Department of Housing

and Urban Development (Department)

reinstates two sections of HUD’s

Standards of Conduct at 24 CFR part 0,

that pertain to ‘‘Outside employment

and other activities’’ and ‘‘Financial

interests,’’ which were deleted in a final

rule published on April 5, 1996.

DATES: Effective Date: May 6, 1996.

FOR FURTHER INFORMATION CONTACT:

Aaron Santa Anna, Assistant General

Counsel, Ethics Law Division, at (202)

708–3815, or Sam E. Hutchinson,

Associate General Counsel, Office of

Human Resources Law, (202) 708–0888;

451 Seventh Street, SW., Washington,

DC 20410. Hearing or speech-impaired

individuals may call HUD’s TDD

number (202) 708–3259. (Telephone

numbers are not toll-free.)

SUPPLEMENTARY INFORMATION: On April

5, 1996, the Department published a

final rule that revised the Department’s

Standards of Conduct regulation at 24

CFR Part 0. This final rule takes effect

on May 6, 1996. See 61 FR 15350. The

final rule removed 24 CFR part 0 in its

entirety and replaced it with a single

section that provides a cross reference to

the executive branch financial

disclosure regulations at 5 CFR part

2634 and the Standards of Ethical

Conduct for Employees of the Executive

Branch regulation at 5 CFR part 2635

(the Standards). Most of the provisions

in 24 CFR part 0 were superseded when

5 CFR parts 2634 and 2635 took effect.

Among the provisions removed from

24 CFR part 0 were two—§ 0.735–203

regarding ‘‘Outside employment and

other activities’’ and § 0.735–204

regarding ‘‘Financial interests’’—that

were not superseded by 5 CFR parts

2634 and 2635. Those two provisions

remained in effect temporarily under

the Notes following 5 CFR 2635.804 and

5 CFR 2635.403(a), as extended at 59 FR

4779–4780, 60 FR 6390–6391, and 60

FR 66857–66858 (see also appendixes

A–C to 5 CFR part 2635). The notes are

‘‘grandfather’’ provisions that currently

preserve until August 7, 1996 (or until

issuance of the agency’s supplemental

standards of ethical conduct regulation,

whichever occurs first) such

requirements for prior approval of

employment or activities, and

prohibitions on acquiring or holding a

specific financial interest, contained in

agency regulations, instructions or other

issuances in effect prior to the effective

date of the Standards. In accordance

with these grandfather provisions, the

Department is reinstating removed

sections 0.735–203 and 0.735–204 of 24

CFR, renumbered respectively as

sections 0.2 and 0.3, to avoid an

untimely lapse in enforcement authority

pending issuance of the Department’s

supplemental standards of ethical

conduct as a final rule.

On June 30, 1995, the Department

published proposed supplemental

standards of ethical conduct for its

employees. See 60 FR 34420–34426.

The proposed rule would establish

restrictions on outside employment and

activities and prohibitions on the

ownership of certain financial interests,

similar to those in 24 CFR 0.735–203

and 0.735–204. In that rulemaking

document, the Department also

proposed to revise 24 CFR part 0 by

removing all of the provisions therein

and replacing them with a residual

provision that would cross reference 5

CFR parts 2634 and 2635, as well as the

Department’s supplemental standards of

ethical conduct to be codified at 5 CFR

part 7501. Upon publication of the

Department’s supplemental standards of

ethical conduct as a final rule, the

Department will, as proposed at 60 FR

34420–34426, amend the residual cross

reference section in 24 CFR part 0 by

adding a cross reference to the

Department’s supplemental standards of

ethical conduct at 5 CFR part 7501. In
19188 Federal Register / Vol. 61, No. 85 / Wednesday, May 1, 1996 / Rules and Regulations

addition, if the Department’s

supplemental standards of ethical

conduct regulation takes effect before

the expiration of the grandfather period

on August 7, 1996, the Department will,

upon the effective date of those

regulations, amend 24 CFR part 0 by

removing the grandfathered sections

regarding ‘‘Outside employment and

other activities’’ and ‘‘Financial

interests.’’

Accordingly, FR Doc. 96–8380, a final

rule published in the Federal Register

on April 5, 1996 (61 FR 15350), is

amended by adding the following

provisions in title 24 of the Code of

Federal Regulations:

PART 0—STANDARDS OF CONDUCT

1. The authority citation for part 0

continues to read as follows:

Authority: 5 U.S.C. 7301; 42 U.S.C.

3535(d).

§ 0.735–203 [Redesignated as § 0.2]

2. Section 0.735–203 is redesignated

as § 0.2.

§ 0.735–204 [Redesignated as § 0.3]

3. Section 0.735–204 is redesignated

as § 0.3.

Dated: April 25, 1996.

Camille E. Acevedo,

Assistant General Counsel for Regulations.

[FR Doc. 96–10690 Filed 4–30–96; 8:45 am]

BILLING CODE 4210–32–P

24 CFR Part 290

[Docket No. FR–3715–C–03]

RIN 2502–AG30

Office of the Assistant Secretary for

Housing-Federal Housing

Commissioner; Disposition of

Multifamily Projects and Sale of HUDHeld Multifamily Mortgages; Final

Rule; Correction

AGENCY: Office of the Assistant

Secretary for Housing-Federal Housing

Commissioner, HUD.

ACTION: Final rule; Correction.

SUMMARY: On March 21, 1996 (61 FR

11684), the Department published a

final rule that implemented the

regulatory requirements under the

Multifamily Housing Property

Disposition Reform Act of 1994 that

affected the management and

disposition of HUD-owned properties

and properties with HUD-held

mortgages, and the sale of HUD-held

multifamily mortgages. The purpose of

this correction is to remove duplicate

information contained in § 290.39(c).

EFFECTIVE DATE: April 22, 1996.

FOR FURTHER INFORMATION CONTACT:

Barbara D. Hunter, Director, Program

Management Division, Office of

Multifamily Asset Management and

Disposition, Department of Housing and

Urban Development, Room 6182, 451

7th Street, SW., Washington, DC 20410.

Telephone (202) 708–3944; TTY (202)

708–4594. (These are not toll-free

numbers.)

SUPPLEMENTARY INFORMATION:

Accordingly, FR Doc. 96–6791, a final

rule on Part 290, Multifamily Projects

and Sale of HUD-Held Multifamily

Mortgages, published in the Federal

Register on March 21, 1996 at 61 FR

11684, is corrected as follows:

On page 11690, in the third column,

in § 290.39, paragraph (c) is corrected by

removing the second paragraph (c)(2)

that begins with ‘‘(2) A subsidized

project * * *’’, and by also removing

the undesignated paragraph in the

second paragraph (c)(2) that begins with

‘‘This requirement shall continue

* * *’’.

Dated: April 25, 1996.

Camille E. Acevedo,

Assistant General Counsel for Regulations.

[FR Doc. 96–10794 Filed 4–30–96; 8:45 am]

BILLING CODE 4210–27–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8665]

RIN 1545–AT55

Treatment of Underwriters in Section

351 and Section 721 Transactions

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations concerning transfers of cash

to a corporation or a partnership. The

final regulations will affect taxpayers in

transactions under section 351 or

section 721 when there is an offering of

stock or partnership interests through an

underwriter.

EFFECTIVE DATE: May 1, 1996.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulation under section

351(a), Susan T. Edlavitch, (202) 622–

7750; concerning the regulation under

section 721(a), James A. Quinn, (202)

622–3060 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains final

regulations under section 351 and

section 721. The final regulations

provide for the treatment of transfers of

cash to a corporation or a partnership

pursuant to an offering of stock or

partnership interests through an

underwriter.

Section 351(a) provides that no gain

or loss is recognized if property is

transferred to a corporation by one or

more persons solely in exchange for

stock in the corporation and

immediately after the exchange the

person or persons are in control (as

defined in section 368(c)) of the

corporation.

Section 721(a) provides that no gain

or loss is recognized to a partnership or

to any of its partners in the case of a

contribution of property to the

partnership in exchange for an interest

in the partnership.

On August 10, 1995, the IRS

published in the Federal Register a

notice of proposed rulemaking (CO–26–

95), adding regulations under section

351 and section 721 of the Internal

Revenue Code relating to transfers of

cash to a corporation or a partnership

(60 FR 40792). The proposed rules were

based on the conclusion that Situation

2 of Rev. Rul. 78–294 (1978–2 C.B. 141)

does not reflect current underwriting

practices. The proposed rules were also

based on the conclusion that

underwritings of partnership interests

should be treated similarly to

underwritings of stock. The rules, under

certain circumstances, disregard

underwriters of stock and partnership

interests for purposes of section 351 and

section 721.

Public Comments and the Final

Regulations

The IRS received few comments from

the public on the proposed regulations.

The comments received were generally

supportive of the proposed regulations

but sought guidance beyond the

intended scope of the rules. No public

hearing was requested and none was

held. After consideration of all the

comments, the regulations proposed by

CO–26–95 are adopted by this Treasury

decision.

In the notice of proposed rulemaking,

the IRS and Treasury invited public

comment with respect to three issues:

(a) Whether the proposed rules should

apply for all tax purposes; (b) whether

the proposed rules should be limited to

underwriters; and (c) whether the

proposed rules should be limited to

cash transactions. After consideration of