3508 Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Proposed Rules 

assistance. If an applicant does not have 

a DUNS number, it can be obtained free 

of charge through the Dun & Bradstreet 

(D&B) online Web process at http:// 

fedgov.dnb.com/webform. Information 

on CCR’s on-line registration can be 

found at http://www.ccr.gov. Additional 

information on these requirements can 

be found at http://www.grants.gov/ 

applicants/register_your_

organization.jsp. 

CHAPTER II—FEDERAL RAILROAD 

ADMINISTRATION, DEPARTMENT OF 

TRANSPORTATION 

PART 261—CREDIT ASSISTANCE FOR 

SURFACE TRANSPORTATION 

PROJECTS 

3. Revise the authority citation for 

part 261 to read as follows: 

Authority: secs. 1501, et seq., Pub. L. 105– 

178, 112 Stat. 107, 241, as amended; sec. 

1601, 1602, Pub. L. 109–59, 119 Stat.1144; 23 

U.S.C. 601–609 and 315; 49 CFR 1.49. 

CHAPTER VI—FEDERAL TRANSIT 

ADMINISTRATION, DEPARTMENT OF 

TRANSPORTATION 

PART 640—CREDIT ASSISTANCE FOR 

SURFACE TRANSPORTATION 

PROJECTS 

4. Revise the authority for Part 640 to 

read as follows: 

Authority: secs. 1501, et seq., Pub. L. 105– 

178, 112 Stat. 107, 241, as amended; sec. 

1601, 1602, Pub. L. 109–59, 119 Stat.1144; 23 

U.S.C. 601–609 and 315; 49 CFR 1.51. 

5. Add 49 CFR Chapter XIII to read as 

follows: 

CHAPTER XIII—MARITIME 

ADMINISTRATION, DEPARTMENT OF 

TRANSPORTATION 

PART 1700—CREDIT ASSISTANCE 

FOR SURFACE TRANSPORTATION 

PROJECTS 

Sec. 

1700.1 Cross-reference to credit assistance. 

Authority: secs. 1501, et seq., Pub. L. 105– 

178, 112 Stat. 107, 241, as amended; sec. 

1601, 1602, Pub. L. 109–59, 119 Stat. 1144; 

23 U.S.C. 601–609 and 315; 49 CFR 1.66. 

§ 1700.1 Cross-reference to credit 

assistance. 

The regulations in 49 CFR Part 80 

shall be followed in complying with the 

requirements of this part. Title 49, CFR 

Part 80 implements the Transportation 

Infrastructure Finance and Innovation 

Act of 1998, secs. 1501, et seq., (Pub. L. 

105–178, 112 Stat. 107, 241), as 

amended; sec. 1601, 1602, Pub. L. 109– 

59, 119 Stat. 1144; 23 U.S.C. 601–609. 

[FR Doc. E9–1117 Filed 1–16–09; 8:45 am] 

BILLING CODE 4910–62–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–150670–07] 

RIN 1545–BH49 

Guidance Regarding the Treatment of 

Stock of a Controlled Corporation 

Under Section 355(a)(3)(B); Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correction to notice of proposed 

rulemaking by cross-reference to 

temporary regulations. 

SUMMARY: This document contains a 

correction to a notice of proposed 

rulemaking by cross-reference to 

temporary regulations (REG–150670–07) 

that was published in the Federal 

Register on Monday, December 15, 2008 

(73 FR 75979) giving guidance regarding 

the distribution of stock of a controlled 

corporation acquired in a transaction 

described in section 355(a)(3)(B) of the 

Internal Revenue Code. This action is 

necessary in light of amendments to 

section 355(b). The text of those 

regulations also serves as the text of 

these proposed regulations. These 

regulations will affect corporations and 

their shareholders. 

FOR FURTHER INFORMATION CONTACT: 

Russell P. Subin, (202) 622–7790 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The correction notice that is the 

subject of this document is under 

section 355 of the Internal Revenue 

Code. 

Need for Correction 

As published, the notice of proposed 

rulemaking by cross-reference to 

temporary regulations (REG–150670–07) 

contains an error that may prove to be 

misleading and is in need of 

clarification. 

Correction of Publication 

Accordingly, the publication of the 

notice of proposed rulemaking by crossreference to temporary regulations 

(REG–150670–07), which was the 

subject of FR Doc. E8–29545, is 

corrected as follows: 

On page 75980, column 2, under the 

CFR part heading ‘‘PART 1—INCOME 

TAXES’’, line 2 of the authority citation, 

the language ‘‘Section 1.355–2(g) also 

issued under 26’’ is corrected to read 

‘‘Section 1.355–2(g) and (i) also issued 

under 26’’. 

LaNita Van Dyke, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel (Procedure and Administration). 

[FR Doc. E9–1104 Filed 1–16–09; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–149519–03] 

RIN 1545–BC63 

Section 707 Regarding Disguised 

Sales, Generally 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Withdrawal of notice of 

proposed rulemaking. 

SUMMARY: This document withdraws 

proposed regulations relating to the 

treatment of transactions between a 

partnership and its partners as disguised 

sales of partnership interests between 

the partners under section 707(a)(2)(B) 

of the Internal Revenue Code. The 

withdrawal affects partnerships and 

their partners. 

FOR FURTHER INFORMATION CONTACT: 

Deane M. Burke or Allison R. Carmody, 

(202) 622–3070 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

Section 707(a)(2)(B) provides that, 

under regulations prescribed by the 

Secretary, if transfers of property 

between a partner or partners and a 

partnership, when viewed together, are 

properly characterized as a sale or 

exchange of property, such transfers 

shall be treated as either transactions 

between the partnership and one who is 

not a partner or between two or more 

partners acting other than in their 

capacity as partners. The legislative 

history of section 707(a)(2)(B) indicates 

the provision was adopted as a result of 

Congressional concern that taxpayers 

were deferring or avoiding tax on sales 

of partnership property, including sales 

of partnership interests, by 

characterizing sales as contributions of 

property, including money, followed or 

preceded by related partnership 

distributions. See H.R. Rep. No. 861, 

98th Cong. 2nd Sess. 861 (1984), 1984– 

3 (Vol. 2) CB 115. Specifically, Congress 

was concerned about court decisions 

that allowed tax-free treatment in cases 

that were economically 

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Federal Register / Vol. 74, No. 12 / Wednesday, January 21, 2009 / Proposed Rules 3509 

indistinguishable from sales of property 

to a partnership or another partner, and 

believed that these transactions should 

be treated for tax purposes in a manner 

consistent with their underlying 

economic substance. See H.R. Rep. No. 

432, 98th Cong. 2nd Sess. 1218 (1984) 

(H.R. Rep.), and S. Prt. No. 169 (Vol. I), 

98th Cong. 2nd Sess. 225 (1984) (S. Prt.) 

(discussing Communications Satellite 

Corp. v. United States, 625 F.2d 997 (Ct. 

Cl. 1980), and Jupiter Corp. v. United 

States, 2 Cl. Ct. 58 (1983), both of which 

involved disguised sales of a 

partnership interest). 

On October 9, 2001, the IRS and the 

Treasury Department issued Notice 

2001–64 (2001–2 CB 316), (see 

§ 601.601(d)(2)(ii)(b)), announcing that 

the IRS and the Treasury Department 

were considering issuing proposed 

regulations under section 707(a)(2)(B), 

relating to disguised sales of partnership 

interests. The IRS and the Treasury 

Department requested comments on the 

scope and substance of guidance 

concerning disguised sales of 

partnership interests, including any 

applicable safe harbors or exceptions. 

Written comments in response to Notice 

2001–64 were received and considered 

in drafting proposed regulations. 

In response to requests, on November 

26, 2004, the Treasury Department and 

the IRS published in the Federal 

Register (69 FR 68838) a notice of 

proposed rulemaking under section 

707(a)(2)(B), (REG–149519–03) relating 

to disguised sales of partnership 

interests. The proposed regulations 

sought to amend the existing regulations 

for disguised sales of property (existing 

property regulations) by adding rules for 

disguised sales of partnership interests 

and by revising the rules relating to 

disguised sales of property. The 

proposed regulations for disguised sales 

of partnership interests include a 

framework similar to that in the existing 

property regulations, with a general rule 

that would apply based on all of the 

facts and circumstances. 

The Treasury Department and the IRS 

received written comments on the 

proposed regulations from interested 

parties. The Treasury Department and 

the IRS, having now thoroughly 

considered those comments, have 

decided to withdraw the proposed 

regulations. The Treasury Department 

and the IRS will continue to study this 

area and may issue guidance in the 

future. Until new guidance is issued, 

any determination of whether transfers 

between a partner or partners and a 

partnership is a transfer of a partnership 

interest will be based on the statutory 

language, guidance provided in 

legislative history, and case law. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Withdrawal of Notice of Proposed 

Rulemaking 

Accordingly, under the authority of 

26 U.S.C. 7805, the notice of proposed 

rulemaking (REG–149519–03) that was 

published in the Federal Register on 

November 26, 2004 (69 FR 68838) is 

withdrawn. 

L.E. Stiff, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. E9–1101 Filed 1–16–09; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–143686–07] 

RIN 1545–BH35 

The Allocation of Consideration and 

Allocation and Recovery of Basis in 

Transactions Involving Corporate 

Stock or Securities 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations under sections 

301, 302, 304, 351, 354, 356, 358, 368, 

861, 1001, and 1016 of the Internal 

Revenue Code (Code). The proposed 

regulations provide guidance regarding 

the recovery of stock basis in 

distributions under section 301 and 

transactions that are treated as 

dividends to which section 301 applies, 

as well as guidance regarding the 

determination of gain and the basis of 

stock or securities received in exchange 

for, or with respect to, stock or 

securities in certain transactions. The 

proposed regulations affect shareholders 

and security holders of corporations. 

These proposed regulations are 

necessary to provide such shareholders 

and security holders with guidance 

regarding the allocation and recovery of 

basis on distributions of property. 

DATES: Written or electronic comments, 

and a request for a public hearing, must 

be received by April 21, 2009. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–143686–07), room 

5203, Internal Revenue Service, P.O. 

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–143686– 

07), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS#REG– 

143686–07). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations 

under sections 301, 302, and 304, 

Theresa M. Kolish, (202) 622–7530; 

concerning the proposed regulations 

under sections 351, 354, 356, 358, 368, 

1001, and 1016, Rebecca O. Burch, (202) 

622–7550; concerning the proposed 

regulations under section 861, Jeffrey L. 

Parry, (202) 622–4476; concerning 

submission of comments or to request a 

hearing, Richard Hurst (202) 622–7180 

(not toll free numbers). 

Background 

The primary objective of these 

proposed regulations is to provide a 

single model for stock basis recovery by 

a shareholder that receives a 

constructive or actual distribution to 

which section 301 applies and a single 

model for sale and exchange 

transactions to which section 302(a) 

applies, including certain elements of a 

reorganization exchange. Further to this 

objective, these proposed regulations 

define the scope of the exchange that 

must be analyzed under particular Code 

provisions, and provide a methodology 

for determining gain realized under 

section 356 and stock basis under 

section 358. 

In addition, these proposed 

regulations respond to comments 

received by the IRS and Treasury 

Department regarding the current 

section 358 regulations, such as 

suggestions to expand the tracing rules 

to stock transfers that are subject to 

section 351 but do not qualify as 

reorganizations, questions regarding 

whether (and, if so, to what extent) 

shareholder elections constitute terms of 

an exchange, and whether the terms of 

an exchange control for purposes of 

qualifying a transaction as a 

reorganization under section 368. 

Finally, these proposed regulations 

include amendments to the section 304 

regulations that import the statutory 

amendments to that section. See section 

226 of the Tax Equity and Fiscal 

Responsibility Act of 1982, Public Law 

97–248 (96 Stat. 325, 490) (September 3, 

1982), section 712(l) of the Deficit 

Reduction Act of 1984, Public Law 98– 

369 (98 Stat. 494, 953–55) (July 18, 

1984), section 1875(b) of the Tax Reform 

Act of 1986, Public Law 99–514 (100 

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