46572 Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Proposed Rules 

With Option 033F003 Installed: Modification, 

Replacement, and Installation 

(g) For airplanes with option 033F003 

installed: Within 12 months after September 

6, 2005, do the actions in Table 2 of this AD 

in accordance with the Accomplishment 

Instructions of AvCraft Service Bulletin SB–

328J–00–198, dated August 23, 2004. 

TABLE 2—REQUIREMENTS FOR AIRPLANES WITH OPTION 033F003 INSTALLED

Do the following actions—

By accomplishing all the 

actions specified in—

(1) Modify the electrical wiring of the left-hand and 

right-hand fuel pumps.

Paragraph 

2.B(1) of 

the service 

bulletin. 

(2) Replace the wiring harness of the auxiliary fuel 

system with a new wiring 

harness.

Paragraph 

2.B(2) of 

the service 

bulletin. 

(3) Install markings at fuel 

wiring harnesses.

Paragraph 

2.B(3) of 

the service 

bulletin. 

(4) Install insulated couplings 

in the fuel system.

Paragraph 

2.B(5) of 

the service 

bulletin. 

Revision to Airworthiness Limitations 

(h) Within 12 months after September 6, 

2005, revise the Airworthiness Limitations 

section of the Instructions for Continued 

Airworthiness to incorporate the information 

in AvCraft Temporary Revision (TR) ALD–

028, dated October 15, 2003, into the AvCraft 

328JET Airworthiness Limitations Document. 

Thereafter, except as provided by paragraph 

(k) of this AD, no alternative inspection 

intervals may be approved for this fuel tank 

system. 

Note 2: This may be done by inserting a 

copy of AvCraft TR ALD–028, dated October 

15, 2003, in the AvCraft 328JET 

Airworthiness Limitations Document. When 

this TR has been included in general 

revisions of the AvCraft 328JET 

Airworthiness Limitations Document, the 

temporary revision no longer needs to be 

inserted into the revised Airworthiness 

Limitations document. 

New Requirements of This AD 

Revised Initial Compliance Time 

(i) For Sub-tasks 28–00–00–02 and 28–00–

00–03 (‘‘Detailed Inspection of Outer and 

Inner Fuel Tank Harness Internal’’), as 

identified in AvCraft TR ALD–028, dated 

October 15, 2003; or Section G, ‘‘Fuel Tank 

System Limitations,’’ Revision 2, dated 

January 31, 2005, of the Dornier 328 JET 

Airworthiness Limitations Document (ALD), 

the initial compliance time is within 8 years 

after the effective date of this AD. Thereafter, 

except as provided by paragraph (k) of this 

AD, these tasks must be accomplished at the 

repetitive interval specified in Section G, 

‘‘Fuel Tank System Limitations,’’ Revision 2, 

dated January 31, 2005, of the Dornier 328 

JET Airworthiness Limitations Document. 

No Alternative Inspections, Inspection 

Intervals, or Critical Design Configuration 

Control Limitations (CDCCLs) 

(j) After accomplishing the actions 

specified in paragraphs (f), (g), and (h), and 

the initial inspections in paragraph (i) of this 

AD, no alternative inspections, inspection 

intervals, or critical design configuration 

control limitations (CDCCLs) may be used 

unless the inspections, intervals, or CDCCLs 

are approved as an alternative method of 

compliance (AMOC) in accordance with the 

procedures specified in paragraph (k) of this 

AD. 

Alternative Methods of Compliance (AMOCs) 

(k) The Manager, International Branch, 

ANM–116, Transport Airplane Directorate, 

FAA, has the authority to approve AMOCs 

for this AD, if requested using the procedures 

found in 14 CFR 39.19. Send information to 

ATTN: Tom Groves, Aerospace Engineer, 

International Branch, ANM–116, Transport 

Airplane Directorate, FAA, 1601 Lind 

Avenue, SW., Renton, Washington 98057–

3356; telephone (425) 227–1503; fax (425) 

227–1149. Before using any approved AMOC 

on any airplane to which the AMOC applies, 

notify your appropriate principal inspector 

(PI) in the FAA Flight Standards District 

Office (FSDO), or lacking a PI, your local 

FSDO. 

Related Information 

(l) EASA airworthiness directive 2006–

0197 [Corrected], dated July 11, 2006, also 

addresses the subject of this AD. 

Issued in Renton, Washington, on July 29, 

2008. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E8–18434 Filed 8–8–08; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–149404–07] 

RIN 1545–BH34 

Amendments to New Markets Tax 

Credit Regulations 

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 new 

markets tax credit under section 45D of 

the Internal Revenue Code (Code). The 

proposed regulations revise and clarify 

certain rules relating to recapture of the 

new markets tax credit and will affect 

certain taxpayers claiming the new 

markets tax credit. This document also 

provides a notice of a public hearing on 

these proposed regulations. 

DATES: Written or electronic comments 

must be received by November 10, 2008. 

Outlines of topics to be discussed at the 

public hearing scheduled for December 

12, 2008, at 10 a.m. must be received by 

November 3, 2008. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–149404–07), room 

5203, Internal Revenue Service, PO Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be hand 

delivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to: CC:PA:LPD:PR (REG–149404–07), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the Federal 

eRulemaking Portal at http:// 

www.regulations.gov (IRS REG–149404–

07). 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 proposed regulations, 

Julie Hanlon-Bolton, (202) 622–7028; 

concerning submission of comments, 

the hearing, and/or to be placed on the 

building access list to attend the 

hearing, Regina Johnson, (202) 622–

7180 (not toll-free numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

This document amends 26 CFR part 1 

to provide and clarify rules relating to 

the new markets tax credit under 

section 45D of the Code. Section 45D 

was added to the Code by section 121 

of the Community Renewal Tax Relief 

Act of 2000, Public Law 106–554 (114 

Stat. 2763 (2000)) and amended by 

section 221 of the American Jobs 

Creation Act of 2004, Public Law 108–

357 (118 Stat. 1418 (2004)), section 101 

of the Gulf Opportunity Zone Act of 

2005, Public Law 109–135 (119 Stat. 25 

(2005)), and Division A, section 102 of 

the Tax Relief and Health Care Act of 

2006, Public Law 109–432 (120 Stat. 

2922 (2006)). On December 28, 2004, the 

IRS and the Treasury Department 

published final regulations under 

section 45D (69 FR 77625), with 

corrections on January 28, 2005 (70 FR 

4012). 

Groups and organizations 

representing investors, qualified 

community development entities, 

businesses, and other entities involved 

with the new markets tax credit program 

have since submitted comments 

requesting further guidance on the 


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Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Proposed Rules 46573 

recapture of the credit. The 

commentators suggested that revising 

the final regulations to reduce recapture 

uncertainty would encourage investors 

to bring increased amounts of capital to 

low-income communities. 

General Overview 

Section 45D(a)(1) provides a new 

markets tax credit on a taxpayer’s 

qualified equity investment (QEI) in a 

qualified community development 

entity (CDE). To qualify for the credit, 

among other requirements, substantially 

all of the taxpayer’s cash must be used 

by the CDE to make qualified lowincome community investments 

(QLICIs) pursuant to section 

45D(b)(1)(B). 

A CDE is any domestic corporation or 

partnership if, among other 

requirements, the primary mission of 

the entity is serving, or providing 

investment capital for, low-income 

communities or low-income persons 

pursuant to section 45D(c)(1). Section 

45D(d)(1) provides that a QLICI is: (A) 

Any capital or equity investment in, or 

loan to, any qualified active low-income 

community business (QALICB); (B) the 

purchase from another CDE of any loan 

made by the entity that is a QLICI; (C) 

financial counseling and other services 

to businesses located in, and residents 

of, low-income communities; and (D) 

any equity investment in, or loan to, any 

CDE. A QALICB is any corporation or 

partnership in which at least 50 percent 

of the total gross income of the entity is 

derived from the active conduct of a 

qualified business within any lowincome community, provided certain 

other requirements are met pursuant to 

section 45D(d)(2). 

Section 45D(g)(1) provides that, if 

there is a recapture event at any time 

during the 7-year period beginning on 

the date of the original issue of a QEI in 

a CDE, then the tax imposed by this 

chapter for the taxable year in which the 

event occurs must be increased by the 

credit recapture amount. Section 

45D(g)(3) provides that a recapture 

event occurs with respect to an equity 

investment in a CDE if (A) such entity 

ceases to be a CDE, (B) the proceeds of 

the investment cease to be used to make 

QLICIs as required by section 

45D(b)(1)(B), or (C) the QEI is redeemed 

by the CDE. 

Explanation of Provisions 

Redemption Safe Harbor for Partnership 

CDEs 

Section 1.45D–1(e)(3)(iii) provides 

that, in the case of an equity investment 

that is a capital interest in a CDE that 

is a partnership for Federal tax 

purposes, a pro rata cash distribution by 

the CDE to its partners based on each 

partner’s capital interest in the CDE 

during the taxable year will not be 

treated as a redemption for purposes of 

§ 1.45D–1(e)(2)(iii) if the distribution 

does not exceed the CDE’s operating 

income for the taxable year. In addition, 

a non-pro rata de minimis cash 

distribution by a CDE to a partner or 

partners during the taxable year will not 

be treated as a redemption provided the 

distribution does not exceed the lesser 

of 5 percent of the CDE’s operating 

income for that taxable year or 10 

percent of the partner’s capital interest 

in the CDE. 

Commentators expressed the concern 

that a CDE may not be able to calculate 

its operating income in time to make a 

distribution during the taxable year. 

Because most CDEs will make a low 

estimate of operating income in order to 

lessen the risk of not satisfying the 

requirements of the redemption safe 

harbor, many CDEs may not distribute 

the entire amount of operating income 

during the taxable year. In response to 

this concern, the proposed regulations 

provide that, in the case of an equity 

investment that is a capital interest in a 

CDE that is a partnership for Federal tax 

purposes, a pro rata cash distribution by 

the CDE to its partners based on each 

partner’s capital interest in the CDE 

during the taxable year will not be 

treated as a redemption for purposes of 

§ 1.45D–1(e)(2)(iii) if the distribution 

does not exceed the sum of the CDE’s 

operating income for the taxable year 

and the CDE’s undistributed operating 

income (if any) for the prior taxable 

year. 

Additionally, for purposes of the 

redemption safe harbor for partnership 

CDEs, § 1.45D–1(e)(3)(iii) defines 

operating income as the sum of (A) the 

CDE’s taxable income as determined 

under section 703 (except that (1) the 

items described in section 703(a)(1) 

shall be aggregated with the nonseparately stated tax items of the 

partnership; and (2) any gain resulting 

from the sale of a capital asset under 

section 1221(a) or section 1231 property 

shall not be included in taxable 

income); (B) deductions under section 

165 (but only to the extent the losses 

were realized from QLICIs under 

§ 1.45D–1(d)(1)); (C) deductions under 

sections 167 and 168 (including the 

additional first-year depreciation under 

section 168(k)); (D) start-up 

expenditures amortized under section 

195; and (E) organizational expenses 

amortized under section 709. The 

proposed regulations add tax-exempt 

income under section 103 and any other 

depreciation and amortization 

deductions under the Code to the list of 

Code sections that determine the 

amount of operating income. 

Commentators have indicated that 

some CDEs are adding their distributive 

share of the deductions listed in 

§ 1.45D–1(e)(3)(iii) from another 

partnership to the CDE’s calculation of 

operating income. For example, some 

CDEs are adding their distributive share 

of the amortization and depreciation 

deductions under sections 167 and 168 

from another partnership to the CDE’s 

calculation of operating income. The 

proposed regulations clarify that a CDE 

may rely on § 1.704–1(b)(1)(vii) to 

determine its allocable share of the 

deductions listed in § 1.45D–1(e)(3)(iii) 

from another partnership to the CDE’s 

calculation of its operating income. 

Therefore, § 1.704–1(b)(1)(vii) applies to 

treat an allocation to a partner of its 

share of partnership net or ‘‘bottom 

line’’ taxable income or loss as an 

allocation to such partner of the same 

share of each item of income, gain, loss, 

and deduction that is taken into account 

in computing the partner’s net or 

‘‘bottom line’’ taxable income or loss. 

Termination of a Partnership CDE 

Under Section 708(b)(1)(B) 

Under section 708(b)(1)(B), a 

partnership is considered as terminated 

if within a twelve-month period there is 

a sale or exchange of 50 percent or more 

of the total interest in partnership 

capital and profits. Section 1.708–

1(b)(4) provides, in part, that if a 

partnership is terminated by a sale or 

exchange of an interest, the following is 

deemed to occur: The partnership 

contributes all of its assets and 

liabilities to a new partnership in 

exchange for an interest in the new 

partnership; and, immediately 

thereafter, the terminated partnership 

distributes interests in the new 

partnership to the purchasing partner 

and the other remaining partners in 

proportion to their respective interests 

in the terminated partnership in 

liquidation of the terminated 

partnership, either for the continuation 

of the business by the new partnership 

or for its dissolution and winding up. 

If the terminating partnership is a 

CDE, because of the deemed distribution 

of interests in that new partnership to 

the purchasing partner and the other 

remaining partners, a recapture event 

may be triggered under section 

45D(g)(3)(C) and § 1.45D–1(e)(2)(iii). 

However, because the sale of a QEI is 

not a recapture event under section 

45D(g)(3) and because the remaining 

partner or partners are not being cashed 

out, the IRS and the Treasury 

Department do not believe that the sale 


rwilkins on PROD1PC63 with PROPOSALS
46574 Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Proposed Rules 

of a QEI that causes the termination of 

a CDE partnership under section 

708(b)(1)(B) should trigger recapture. 

Accordingly, the proposed regulations 

provide that a termination under section 

708(b)(1)(B) of a CDE partnership is not 

a recapture event. 

Reasonable Expectations 

Section 1.45D–1(d)(6)(i) provides that 

an entity is generally treated as a 

QALICB for the duration of the CDE’s 

investment in the entity if the CDE 

reasonably expects, at the time the CDE 

makes the capital or equity investment 

in, or loan to, the entity, that the entity 

will satisfy the requirements to be a 

QALICB under § 1.45D–1(d)(4)(i) 

throughout the entire period of the 

investment or loan. 

The proposed regulations clarify how 

the reasonable expectations rule of 

§ 1.45D–1(d)(6)(i) applies when a CDE 

makes an investment in or loan to 

another CDE. The proposed regulations 

provide that a CDE may rely on § 1.45D–

1(d)(6)(i) to treat an entity as a QALICB 

even if the CDE’s investment in or loan 

to the entity is made through other CDEs 

under § 1.45D–1(d)(1)(iv)(A). 

Commentators indicated that some 

CDEs are unsure whether they may rely 

on § 1.45D–1(d)(6)(i) if their investments 

involve the portions of business rule 

under section 45D(d)(2)(C), the rental to 

others of real property under sections 

45D(d)(3)(A), and the exclusions from 

the definition of a qualified business 

under § 1.45D–1(d)(5)(iii). Section 

1.45D–1(d)(6)(i) already applies to all of 

these rules in determining whether an 

entity meets the requirements to be a 

QALICB under § 1.45D–1(d)(4)(i). 

Nevertheless, the proposed regulations 

clarify that CDEs may rely on these rules 

when applying § 1.45D–1(d)(6)(i). 

Proposed Effective Date 

The rules contained in these 

regulations are proposed to apply to 

taxable years ending on or after the date 

of publication of the Treasury decision 

adopting these rules as final regulations 

in the Federal Register. 

Request for Comments 

The IRS and the Treasury Department 

invite taxpayers to submit comments on 

issues relating to this notice of proposed 

rulemaking. In particular, the IRS and 

the Treasury Department encourage 

taxpayers to submit comments on how 

to define, under § 1.45D–1(d)(2)(i), the 

dollar amounts received by a CDE ‘‘in 

payment of, or for, capital, equity, or 

principal’’ that are set aside either for 

financial counseling and other services, 

for an equity investment, or as principal 

received on a loan. Section 1.45D–

1(d)(2)(i) provides that such amounts 

must be reinvested by the CDE in a 

QLICI no later than twelve months from 

the date of receipt to be treated as 

continuously invested in a QLICI. 

Commentators suggested defining 

amounts received ‘‘in payment of, or for, 

capital, equity, or principal’’ by using 

the same rules and redemption safe 

harbor in § 1.45D–1(e)(3), which defines 

when an investment is redeemed or 

otherwise cashed out by a CDE. The 

proposed regulations do not adopt this 

suggestion. The IRS and the Treasury 

Department believe this approach may 

be inappropriate because redeeming one 

dollar of an equity investment is a 

recapture event under section 

45D(g)(3)(C), while failing to reinvest 

one dollar in a QLICI under § 1.45D–

1(d)(2)(i) lowers the dollar amount 

treated as meeting the substantially-all 

requirement by one dollar. 

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 

also has 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 

regulations do 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, this notice 

of proposed rulemaking has been 

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) or electronic comments 

that are submitted timely to the IRS. 

Comments are requested on all aspects 

of the proposed regulations. All 

comments will be available for public 

inspection and copying. 

A public hearing has been scheduled 

for December 12, 2008, beginning at 10 

a.m. in the IRS Auditorium, Internal 

Revenue Building, 1111 Constitution 

Avenue, NW., Washington, DC. Due to 

building security procedures, visitors 

must enter at the Constitution Avenue 

entrance. In addition, all visitors must 

present photo identification to enter the 

building. Because of access restrictions, 

visitors will not be admitted beyond the 

immediate entrance area more than 30 

minutes before the hearing starts. For 

information about having your name 

placed on the building access list to 

attend the hearing, see the FOR FURTHER

INFORMATION CONTACT section of this 

preamble. 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

must submit electronic or written 

comments by November 10, 2008. 

Outline of the topics to be discussed 

and the time to be devoted to each topic 

(a signed original and eight (8) copies) 

by November 3, 2008. 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 Julie Hanlon-Bolton with 

the Office of the Associate Chief 

Counsel (Passthroughs and Special 

Industries). However, other personnel 

from the IRS and the 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 * * * 

Par. 2. Section 1.45D–1 is amended 

by: 

1. Redesignating the paragraph (a) 

entries for paragraphs (e)(4), (e)(5), 

(e)(6), and (e)(7) as paragraphs (e)(5), 

(e)(6), (e)(7), and (e)(8), respectively, 

adding a new entry for paragraph (e)(4), 

and revising the entry for paragraph 

(h)(2). 

3. Revising paragraph (d)(6)(i). 

4. Revising paragraph (e)(3)(iii) 

introductory text. 

5. Redesignating paragraphs 

(e)(3)(iii)(B), (e)(3)(iii)(C), (e)(3)(iii)(D), 

and (e)(3)(iii)(E) as paragraphs 

(e)(3)(iii)(C), (e)(3)(iii)(D), (e)(3)(iii)(E), 

and (e)(3)(iii)(F), respectively, and 

adding new paragraph (e)(3)(iii)(B). 

6. Revising newly-designated 

paragraph (e)(3)(iii)(D). 

7. Redesignating paragraphs (e)(4), 

(e)(5), (e)(6), and (e)(7) as paragraphs 


rwilkins on PROD1PC63 with PROPOSALS
Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Proposed Rules 46575 

(e)(5), (e)(6), (e)(7), and (e)(8), 

respectively, and adding new paragraph 

(e)(4). 

8. Revising the heading for paragraph 

(h)(2) and adding a sentence at the end 

of the paragraph. 

The additions and revisions read as 

follows: 

§ 1.45D–1 New markets tax credit. 

(a) * * * 

(e) * * * 

(4) Section 708(b)(1)(B) termination. 

* * * * * 

(h) * * * 

(2) Exception for certain provisions. 

* * * * * 

(d) * * * 

(6) * * * 

(i) * * * Except as provided in 

paragraph (d)(6)(ii) of this section, an 

entity is treated as a qualified active 

low-income community business for the 

duration of the qualified community 

development entity’s (CDE’s) 

investment in the entity if the CDE 

reasonably expects, at the time the CDE 

makes the capital or equity investment 

in, or loan to, the entity, that the entity 

will satisfy the requirements to be a 

qualified active low-income community 

business under paragraphs (d)(4)(i) and 

(d)(5) of this section (including, if 

applicable, portions of business under 

paragraph (d)(4)(iii) of this section) 

throughout the entire period of the 

investment or loan. A CDE may rely on 

this paragraph (d)(6)(i) to treat an entity 

as a qualified active low-income 

community business even if the CDE’s 

investment in or loan to the entity is 

made through other CDEs under 

paragraph (d)(1)(iv)(A) of this section. 

(e) * * * 

(3) * * * 

(iii) Capital interest in a partnership. 

In the case of an equity investment that 

is a capital interest in a CDE that is a 

partnership for Federal tax purposes, a 

pro rata cash distribution by the CDE to 

its partners based on each partner’s 

capital interest in the CDE during the 

taxable year will not be treated as a 

redemption for purposes of paragraph 

(e)(2)(iii) of this section if the 

distribution does not exceed the sum of 

the CDE’s ‘‘operating income’’ for the 

taxable year and the CDE’s 

undistributed ‘‘operating income’’ (if 

any) for the prior taxable year. For 

purposes of this paragraph (e)(3)(iii), 

§ 1.704–1(b)(1)(vii) applies to treat an 

allocation to a partner of its share of 

partnership net or ‘‘bottom line’’ taxable 

income or loss as an allocation to such 

partner of the same share of each item 

of income, gain, loss, and deduction that 

is taken into account in computing the 

partner’s net or ‘‘bottom line’’ taxable 

income or loss. In addition, a non-pro 

rata ‘‘de minimis’’ cash distribution by 

a CDE to a partner or partners during the 

taxable year will not be treated as a 

redemption. A non-pro rata ‘‘de 

minimis’’ cash distribution may not 

exceed the lesser of 5 percent of the 

CDE’s ‘‘operating income’’ for that 

taxable year or 10 percent of the 

partner’s capital interest in the CDE. For 

purposes of this paragraph (e)(3)(iii), 

with respect to any taxable year, 

‘‘operating income’’ is the sum of: 

* * * * * 

(B) Tax-exempt income under section 

103; 

* * * * * 

(D) Deductions under sections 167 

and 168, including the additional firstyear depreciation under section 168(k), 

and any other depreciation and 

amortization deductions under the 

Code; 

* * * * * 

(e) * * * 

(4) Section 708(b)(1)(B) termination. A 

termination under section 708(b)(1)(B) 

of a CDE that is a partnership is not a 

recapture event. 

* * * * * 

(h) * * * 

(2) Exception for certain provisions. 

* * * Paragraph (d)(6)(i) of this section 

as it relates to a CDE’s investment under 

paragraph (d)(1)(iv)(A), paragraph 

(e)(3)(iii) of this section as it relates to 

the distribution of undistributed 

‘‘operating income’’ for the prior taxable 

year and to the application of § 1.704–

1(b)(1)(vii), paragraph (e)(3)(iii)(B) of 

this section, paragraph (e)(3)(iii)(D) of 

this section as it relates to any other 

depreciation and amortization 

deductions under the Code, and 

paragraph (e)(4) of this section apply to 

taxable years ending on or after the date 

of publication of the Treasury decision 

adopting these rules as final regulation 

in the Federal Register. 

Linda E. Stiff, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. E8–18442 Filed 8–8–08; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 410 and 419 

[CMS–1404–P] 

RIN 0938–AP17 

Medicare Program: Proposed Changes 

to the Hospital Outpatient Perspective 

Payment System and CY 2009 Payment 

Rates; Proposed Changes to the 

Ambulatory Surgical Center Payment 

System and CY 2009 Payment Rates 

Correction 

In proposed rule document E8–15539 

beginning on page 41416 in the issue of 

Friday, July 18, 2008, make the 

following correction: 

On pages 41504 through 41505, Table 

30 should be replaced to appear as 

follows: 

BILLING CODE 4120–01–D 


rwilkins on PROD1PC63 with PROPOSALS