Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Proposed Rules 31473

collections contained in this regulation

is not required.

Dated: May 31, 1996.

Ada E. Deer,

Assistant Secretary—Indian Affairs.

[FR Doc. 96–15510 Filed 6–19–96; 8:45 am]

BILLING CODE 4310–02–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[PS–39–93]

RIN 1545–AR63

Definition of Structure

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUMMARY: This document contains

proposed regulations relating to

deductions available upon demolition of

a building. These proposed regulations

reflect changes to the law made by the

Tax Reform Act of 1984 and affect

owners and lessees of real property who

demolish buildings. This document also

provides notice of a public hearing on

these regulations.

DATES: Written comments, requests to

appear and outlines of topics to be

discussed at the public hearing

scheduled for October 9, 1996, must be

received by September 18, 1996.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (PS–39–93), 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 (PS–39–93),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Bernard P.

Harvey, (202) 622–3110; concerning

submissions and the hearing, Christina

Vasquez, (202) 622–6803 (not toll-free

numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

regulations under section 280B of the

Internal Revenue Code. Section 280B

was added by the Tax Reform Act of

1976, Public Law 94–455, 2124(b), 90

Stat. 1520, 1918 (Oct. 4, 1976), and

significant amendments were made to

the provision by the Economic Recovery

Tax Act of 1981, Public Law 97–34,

212(d)(2)(C) and (e)(2), 95 Stat. 172, 239

(Aug. 13, 1981) (1981 Act) and the Tax

Reform Act of 1984, Public Law 98–369,

1063, 98 Stat. 494, 1047 (July 18, 1984)

(1984 Act). Transition rules were

provided in the Tax Reform Act of 1986,

Public Law 99–514, 1878(h), 100 Stat.

2085, 2904 (Oct. 22, 1986) (1986 Act).

As originally enacted, section 280B

required any costs or losses incurred on

account of the demolition of any

certified historic structure (a building or

structure meeting certain requirements)

to be capitalized into the land upon

which the demolished structure was

located. The 1981 Act modified the

definition of certified historic structure

for purposes of section 280B from a

building or structure meeting certain

requirements to a building (or its

structural components) meeting certain

requirements. The 1984 Act substituted

‘‘any structure’’ for ‘‘certified historic

structure.’’ These proposed regulations

define what ‘‘structure’’ means for

purposes of section 280B.

Explanation of Provisions

These proposed regulations define the

term ‘‘structure’’ for purposes of section

280B as a building and its structural

components as those terms are defined

in § 1.48–1(e) of the Income Tax

Regulations. Thus, under section 280B,

a structure will include only a building

and its structural components and not

other inherently permanent structures

such as oil and gas storage tanks, blast

furnaces, and coke ovens.

The proposed regulations rely on the

legislative history underlying the 1984

and 1986 Acts, which refer repeatedly to

buildings rather than to structures

generally. In addition, the legislative

history of the 1984 Act discusses the

difficulty of applying the intent test of

§ 1.165–3 of the regulations, which

applies to the demolition of buildings,

and indicates that the newly added

language is meant to eliminate this

difficulty.

Proposed Effective Date

The regulations are proposed to be

effective on and after the date that final

regulations are filed with the Federal

Register.

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 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 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) that are submitted

timely to the IRS. All comments will be

available for public inspection and

copying.

A public hearing has been scheduled

for October 9, 1996, in the

Commissioner’s Conference Room.

Because of access restrictions, visitors

will not be admitted beyond the Internal

Revenue 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 the

topics to be discussed and the time to

be devoted to each topic (signed original

and eight (8) copies) by September 18,

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 Bernard P. Harvey, Office

of Assistant Chief Counsel

(Passthroughs and Special Industries).

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 * * *
31474 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Proposed Rules

Par. 2. Section 1.280B–1 is added to

read as follows:

§ 1.280B–1 Demolition of structures.

(a) In general. Section 280B provides

that, in the case of the demolition of any

structure, no deduction otherwise

allowable under chapter 1 of subtitle A

shall be allowed to the owner or lessee

of such structure for any amount

expended for the demolition or any loss

sustained on account of the demolition,

and that the expenditure or loss shall be

treated as properly chargeable to the

capital account with respect to the land

on which the demolished structure was

located.

(b) Definition of structure. For

purposes of section 280B, the term

structure means a building, as defined

in § 1.48–1(e)(1), and the structural

components of that building, as defined

in § 1.48–1(e)(2).

(c) Effective date. This section applies

with respect to demolitions occurring

on or after the date that the final

regulations are filed with the Federal

Register.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 96–15665 Filed 6–19–96; 8:45 am]

BILLING CODE 4830–01–P

26 CFR Part 1

[FI–32–95]

RIN 1545–AT94

Mark to Market for Dealers in

Securities; Equity Interests in Related

Parties and the Dealer-Customer

Relationship

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

and notice of public hearing.

SUMMARY: This document contains

proposed regulations that make mark-tomarket accounting inapplicable to most

equity interests in related entities. The

regulations also relate to the definition

of a dealer in securities for certain

federal income tax purposes. To qualify

as a dealer in securities, a taxpayer must

engage in transactions with customers.

The proposed regulations concern the

existence of dealer-customer

relationships. The Revenue

Reconciliation Act of 1993 amended the

applicable tax law. These regulations

provide guidance for taxpayers that

engage in securities transactions. This

document also provides notice of a

public hearing on these proposed

regulations.

DATES: Written comments and outlines

of oral comments to be presented at a

public hearing scheduled for October

15, 1996, at 10 a.m., must be received

by September 18, 1996.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (FI–32–95), 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 (FI–32–95),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington, DC 20224. The public

hearing will be held in the

Commissioner’s Conference Room, room

3313, Internal Revenue Building, 1111

Constitution Avenue NW., Washington,

DC 20224.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Jo Lynn L.

Ricks, (202) 622–3920, or Robert B.

Williams, (202) 622–3960; concerning

submissions and the hearing, Michael

Slaughter, (202) 622–7190 (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 the

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

August 19, 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

described in the Explanation of

Provisions section of the Preamble

(rather than being included in the text

of the proposed regulations). The

Preamble requests comments on

whether the final regulations should

permit taxpayers to elect to disregard

certain inter-company transactions in

determining status as a dealer in

securities. The preamble also indicates

that, if the election is allowed to be

made, it is expected that taxpayers

would make it by attaching a statement

to a tax return. If the final regulations

allow taxpayers to make this election in

this manner, the information will be

required by the IRS to determine

whether the election has been made,

and will be used for that purpose. The

likely respondents will be businesses

that file consolidated tax returns. If

taxpayers are allowed to make the

election, responses to this collection of

information will be required to obtain

the benefit of having status as a dealer

in securities determined without regard

to certain inter-company transactions.

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: 6,000 hours. The

estimated annual burden per respondent

varies from .25 hour to 1 hour,

depending on individual circumstances,

with an estimated average of .5 hours.

Estimated number of respondents:

12,000. Estimated annual frequency of

responses: once in the existence of each

respondent.

Background

This document contains proposed

regulations under section 475 of the

Internal Revenue Code, which requires

mark-to- market accounting for certain

dealers in securities. Section 475 was

added by section 13223 of the Revenue

Reconciliation Act of 1993, Pubic Law

103–66, 107 Stat. 481, and is effective

for all taxable years ending on or after

December 31, 1993.

Temporary and proposed regulations

published on December 29, 1993, (58 FR

68798) provide that stock in a 50-

percent-controlled subsidiary (and

interests in 50-percent-controlled

partnerships and trusts) are deemed

properly identified as held for

investment and thus are excluded from

mark-to-market accounting. The IRS is

reproposing this rule with two changes.

First, the IRS has concluded that the

rationale for the rule applies equally to

equity interests in most related persons

and not just to persons controlled by the

taxpayer. Second, after considering

various comments received, the IRS

determined that this rule prohibiting

marking a security to market should not

apply if two requirements are met: (1)

The security is actively traded on a

national securities exchange or through

an interdealer quotation system; and (2)

the taxpayer who marks owns less than

5 percent of all shares or interests of the

same class. Comments are requested as