Federal Register / Vol. 61, No. 110 / Thursday, June 6, 1996 / Proposed Rules 28821

single warehouse under separate

withdrawals for transportation, via a

single conveyance, may be combined

into one rewarehouse entry if consigned

to the same consignee and deposited

into a single warehouse. This procedure

shall not be allowed for merchandise

which is in any way restricted (for

example, quota/visa). The combined

rewarehouse entry shall have attached

either copies of each warehouse entry

package which is being combined into

the single rewarehouse entry or a

summary with pertinent information,

that is, the date of importation,

commodity description, size, HTSUS

and entry numbers, for all entries

withdrawn for consolidation as one

rewarehouse entry. Any combining of

separate withdrawals into one

rewarehouse entry shall result in the

rewarehouse entry being assigned the

import date of the oldest entry being

combined into the rewarehouse entry.

(3) Combining of separate shipments

shall be prohibited in all other

circumstances.

* * * * *

Michael H. Lane,

Acting Commissioner of Customs.

Approved: April 8, 1996.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 96–14125 Filed 6–5–96; 8:45 am]

BILLING CODE 4820–02–P

DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Parts 351, 353 and 355

Antidumping Duties; Countervailing

Duties

AGENCY: Import Administration,

International Trade Administration,

Commerce.

ACTION: Announcement of opportunity

to file public comments on the public

hearing of proposed antidumping and

countervailing duty regulations.

SUMMARY: The Department of Commerce

(the Department) is announcing the

opportunity to file public comments on

issues raised at the public hearing on

the proposed antidumping and

countervailing duty regulations. The

deadline for filing comments is June 17,

1996. The public hearing will be held

on June 7, 1996.

DATES: A public hearing will be held at

10:00 on June 7, 1996. The deadline for

filing comments is June 17, 1996.

ADDRESSES: The public hearing will be

held in the Auditorium of the Herbert C.

Hoover Building at Pennsylvania

Avenue and 14th Street, N.W.,

Washington, D.C. Address written

comments and requests to participate in

the public hearing to Paul Joffe, Acting

Assistant Secretary for Import

Administration, Central Records Unit,

Room B–099, U.S. Department of

Commerce, Pennsylvania Avenue and

14th Street, N.W., Washington, D.C.

20230. Comments on the proposed

regulations should be addressed:

Attention: Hearing Comments. Each

person submitting a comment should

include his or her name, address, and

give reasons for any recommendation.

FOR FURTHER INFORMATION CONTACT:

Penelope Naas at (202) 482–3534.

SUPPLEMENTARY INFORMATION: On

February 27, 1996, the Department

published proposed antidumping and

countervailing duty regulations (61 FR

7308). We will hold a public hearing on

June 7, 1996. We are allowing

submission of written comments on

issues raised at the hearing. As well, we

are allowing submission of written

comments on any issue raised in written

comments previously submitted.

Proposed Regulations

The proposed regulations are

available on the Internet at the following

address:

HTTP://WWW.ITA.DOC.GOV/IMPORT—

ADMIN/RECORDS/

In addition, the proposed regulations

are available to the public on 3.5′′

diskettes, with specific instructions for

accessing compressed data, at cost, and

paper copies available for reading and

photocopying in Room B–099 of the

Central Records Unit. Any questions

concerning file formatting, document

conversion, access on Internet, or other

file requirements should be addressed to

Andrew Lee Beller, Director of Central

Records, (202) 482–1248.

Format and Number of Copies

To simplify the processing and

distribution of the public comments

pertaining to the Department’s proposed

regulations, parties are encouraged to

submit documents in electronic form

accompanied by an original and three

paper copies. All documents filed in

electronic form must be on DOS

formatted 3.5′′ diskettes, and must be

prepared in either WordPerfect format

or a format that the WordPerfect

program can convert and import into

WordPerfect. Please submit comments

on a separate file on the diskette and

labeled by the section number in the

regulations. If possible, the Department

would appreciate the documents being

filed in either ASCII format or

WordPerfect 5.1, and containing generic

codes. The Department would also

appreciate the use of descriptive file

names.

Dated: June 3, 1996.

Paul Joffe,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 96–14308 Filed 6–5–96; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[IA–26–94]

RIN 1545–AU34

Qualified Small Business Stock

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUMMARY: This document contains

proposed regulations relating to the 50-

percent exclusion for gain from certain

small business stock. The proposed

regulations reflect changes to the law

made by the Omnibus Budget

Reconciliation Act of 1993 (OBRA ’93)

and provide guidance to the issuers and

owners of the stock of certain small

businesses. This document also

provides a notice of public hearing on

these proposed regulations.

DATES: Written comments and outlines

of oral comments to be presented at the

public hearing scheduled for October 3,

1996 must be received by September 4,

1996.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (IA–26–94), Room

5226, 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 (IA–26–94),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue,

NW., Washington, DC. The public

hearing will be held in Room 2615,

Internal Revenue Building, 1111

Constitution Avenue, NW., Washington,

DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations,

Catherine A. Prohofsky at (202) 622–

4930; concerning submissions and the

public hearing, Christina Vasquez at

(202) 622–7180; (not toll-free numbers).
28822 Federal Register / Vol. 61, No. 110 / Thursday, June 6, 1996 / Proposed Rules

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Income Tax

Regulations (26 CFR part 1) relating to

section 1202 of the Internal Revenue

Code. Section 1202 was added by

section 13113 of OBRA ’93. Section

1202 allows a taxpayer (other than a

corporation) to exclude 50 percent of

certain gain from the sale of qualified

small business stock held for more than

5 years.

Section 1202(c)(1) provides that only

stock acquired after August 10, 1993, at

its original issuance in exchange for

money, property other than stock, or as

compensation for services to the

corporation (other than as an

underwriter) qualifies for the exclusion

(the original issue requirement). Section

1202(c)(3) provides two rules to prevent

evasion of the original issue

requirement. Under the first rule, the

exclusion does not apply to stock

acquired by the taxpayer if, at any time

during the 4-year period beginning 2

years before the issuance of such stock,

the corporation purchased (directly or

indirectly) any of its stock from the

taxpayer or a related person. Section

1202(c)(3)(A). Under the second rule,

the exclusion does not apply to stock

issued by a corporation if, during the 2-

year period beginning 1 year before the

issuance of such stock, the corporation

made one or more purchases of its stock

with an aggregate value (as of the time

of the respective purchases) exceeding 5

percent of the aggregate value of all of

its stock as of the beginning of the 2-

year period. Section 1202(c)(3)(B).

The IRS and Treasury are concerned

that, in many cases, redemptions that

have neither the purpose nor the effect

of evading the original issue

requirement may result in

disqualification under these rules.

Section 1202(k) authorizes Treasury to

prescribe such regulations as may be

appropriate to carry out the purposes of

section 1202.

Explanation of Provisions

The proposed regulations permit a

corporation to redeem de minimis

amounts of stock without violating the

anti-evasion rules. The proposed

regulations also provide that certain

redemptions that are incident to events

affecting a shareholder and are unlikely

to result in evasion of the original issue

requirement are disregarded in

determining whether redemptions

exceed the de minimis amounts. In

particular, redemptions upon

termination of a shareholder’s

employment or the death, disability, or

mental incompetency of a shareholder

are disregarded. Finally, the regulations

clarify that transfers of stock by a

shareholder to an employee in

connection with the performance of

services are not treated as redemptions

for purposes of the anti-evasion rules.

The regulations will apply to stock

issued after the date they are published

as final regulations. The regulations will

also apply to stock issued on or before

that date, but only with respect to the

effect of redemptions occurring after

that date.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 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) and the Regulatory

Flexibility Act (5 U.S.C. chapter 6) do

not apply to these proposed 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 its impact on small businesses.

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

8 copies) that are submitted timely to

the IRS. All comments will be available

for public inspection and copying.

The IRS and Treasury invite

comments on matters addressed in the

proposed regulations and suggestions

for any additional exceptions and

clarifications that may be appropriate in

the context of the purpose of section

1202(c)(3) and the regulatory authority

granted in section 1202(k). The IRS and

Treasury specifically invite comments

from the small business community.

The IRS and Treasury are particularly

interested in comments regarding the

scope of the exception for redemptions

incident to termination of employment.

The IRS and Treasury are committed to

extending the exception to independent

contractors, but seek comments

regarding how to determine when a

termination of the independent

contractor’s services has occurred.

A public hearing has been scheduled

for October 3, 1996, at 10 a.m. in Room

2615, Internal Revenue Building, 1111

Constitution Avenue, NW., Washington,

DC. 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 and an outline of

topics to be discussed and the time to

be devoted to each topic (signed original

and 8 copies) by September 4, 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

regulations is Catherine A. Prohofsky,

Office of Assistant Chief Counsel

(Income Tax and Accounting). 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 is amended by adding an entry

in numerical order to read as follows:

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

Section 1.1202–2 is also issued under 26

U.S.C. 1202(k).

* * *

Par. 2. Sections 1.1202–0 and 1.1202–

2 are added to read as follows:

§ 1.1202–0 Table of contents.

This section lists the major captions

that appear in the regulations under

§ 1.1202–2.

§ 1.1202–2 Qualified Small Business Stock;

Effect of Redemptions.

(a) Redemptions from taxpayer or related

person.

(1) In general.

(2) De minimis amount.

(b) Significant redemptions.

(1) De minimis amount.

(2) Special rule.

(c) Transfers by shareholders in connection

with the performance of services not treated

as purchases.

(d) Exceptions for termination of services,

death, or disability or mental incompetency.

(1) Termination of services.

(2) Death.

(3) Disability or mental incompetency.

(e) Effective date.
Federal Register / Vol. 61, No. 110 / Thursday, June 6, 1996 / Proposed Rules 28823

§ 1.1202–2 Qualified small business stock;

effect of redemptions.

(a) Redemptions from taxpayer or

related person—(1) In general. Stock

acquired by a taxpayer is not qualified

small business stock if, in one or more

purchases during the 4-year period

beginning on the date 2 years before the

issuance of the stock, the issuing

corporation purchases (directly or

indirectly) more than a de minimis

amount of its stock from the taxpayer or

from a person related (within the

meaning of section 267(b) or 707(b)) to

the taxpayer.

(2) De minimis amount. For purposes

of this paragraph (a), stock exceeds a de

minimis amount only if the aggregate

amount paid for the stock exceeds

$10,000 and more than 2 percent of the

stock held by the taxpayer and related

persons is acquired. The following rules

apply for purposes of determining

whether the 2-percent limit is exceeded.

The percentage of stock acquired in any

single purchase is determined by

dividing the stock’s value (as of the time

of purchase) by the value (as of the time

of purchase) of all stock held (directly

or indirectly) by the taxpayer and

related persons immediately before the

purchase. The percentage of stock

acquired in multiple purchases is the

sum of the percentages determined for

each separate purchase.

(b) Significant redemptions—(1) In

general. Stock is not qualified small

business stock if, in one or more

purchases during the 2-year period

beginning on the date 1 year before the

issuance of the stock, the issuing

corporation purchases more than a de

minimis amount of its stock and the

purchased stock has an aggregate value

(as of the time of the respective

purchases) exceeding 5 percent of the

aggregate value of all of the issuing

corporation’s stock as of the beginning

of such 2-year period.

(2) De minimis amount. For purposes

of this paragraph (b), stock exceeds a de

minimis amount only if the aggregate

amount paid for the stock exceeds

$10,000 and more than 2 percent of all

outstanding stock is purchased. The

following rules apply for purposes of

determining whether the 2-percent limit

is exceeded. The percentage of the stock

acquired in any single purchase is

determined by dividing the stock’s

value (as of the time of purchase) by the

value (as of the time of purchase) of all

stock outstanding immediately before

the purchase. The percentage of stock

acquired in multiple purchases is the

sum of the percentages determined for

each separate purchase.

(c) Transfers by shareholders in

connection with the performance of

services not treated as purchases. A

transfer of stock by a shareholder to an

employee or independent contractor (or

to a beneficiary of an employee or

independent contractor) is not treated as

a purchase of the stock by the issuing

corporation for purposes of this section

even if the stock is treated as having

first been transferred to the corporation

under § 1.83–6(d)(1) (relating to

transfers by shareholders to employees

or independent contractors).

(d) Exceptions for termination of

services, death, or disability or mental

incompetency. A stock purchase is

disregarded for purposes of this section

if—

(1) Termination of services—(i)

Employees and directors. The stock was

acquired by the seller in connection

with the performance of services as an

employee or director and the stock is

purchased from the seller incident to

the seller’s retirement or other bona fide

termination of such services;

(ii) Independent contractors.

[Reserved];

(2) Death. The stock is purchased

from the deceased shareholder’s estate,

beneficiary, heir, surviving joint tenant,

or from a surviving spouse or a trust

established by a decedent, the stock is

purchased within 3 years and 9 months

from the date of death, and the stock (or

an option to acquire the stock) was

acquired by the seller before or on

account of the death of the decedent; or

(3) Disability or mental incompetency.

The stock is purchased incident to the

disability or mental incompetency of the

selling shareholder.

(e) Effective date. This section applies

to stock issued after the date these

regulations are published as final

regulations in the Federal Register. This

section also applies to stock issued on

or before the date these regulations are

published as final regulations in the

Federal Register, but only with respect

to the effect of purchases by the issuing

corporation that occur after that date.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 96–14231 Filed 6–3–96; 11:29 am]

BILLING CODE 4830–01–U

26 CFR Parts 1, 31, 35a, 301, 502, 503,

509, 513, 514, 516, 517, 520, and 521

[IL–62–90; IL–32–93; IL–52–86; IL–52–94]

RIN 1545–AO27; 1545–AR90; 1545–AL99;

1545–AT00

General Revision of Regulations

Relating to Withholding of Tax on

Certain U.S. Source Income Paid to

Foreign Persons and Related

Collection, Refunds, and Credits;

Revision of Information Reporting and

Backup Withholding Regulations; and

Removal of Regulations Under Part

35a and of Certain Regulations Under

Income Tax Treaties; Correction

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Correction to notice of public

hearing on proposed rulemaking.

SUMMARY: This document contains

corrections to the notice of a public

hearing (IL–52–86) which was

published in the Federal Register on

Wednesday, May 8, 1996 (61 FR 20767),

regarding proposed regulations relating,

in part, to information reporting and

backup withholding.

FOR FURTHER INFORMATION CONTACT:

Philip Garlett, (202) 622–3880 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The notice of public hearing that is

subject to these corrections will be held

on Wednesday, July 24, 1996, beginning

at 10 a.m. Requests to speak and

outlines of oral comments must be

received by Wednesday, July 3, 1996.

Need for Correction

As published, the notice of public

hearing (IL–52–86) contains errors

which may prove to be misleading and

are in need of clarification.

Correction of Publication

Accordingly, the publication of the

notice of hearing (IL–52–86), which was

the subject of FR Doc. 96–11409, is

corrected as follows:

1. On page 20767, column 1, in the

heading, the language ‘‘26 CFR Parts 1,

32 and 35a’’ is corrected to read ‘‘26

CFR Parts 1, 31, 35a, 301, 502, 503, 509,

513, 514, 516, 517, 520, and 521’’.

2. On page 20767, column 1, in the

heading, the language ‘‘[IL–52–86]’’ is

corrected to read ‘‘[IL–62–90; IL–32–93;

IL–52–86; IL–52–94]’’.

3. On page 20767, column 1, in the

heading, the language ‘‘RIN 1545–

AL99’’ is corrected to read ‘‘RIN 1545–

AO27; 1545–AR90; 1545–AL99; 1545–

AT00’’.