27932 Federal Register / Vol. 74, No. 112 / Friday, June 12, 2009 / Rules and Regulations 

paragraph (k)(1) of this section the class B 

stock shall be treated as FA stock for 

purposes of section 7874. 

Example 18. Partnership interest treated as 

stock of foreign acquiring corporation. (i) 

Facts. (A) Individuals A and B equally own 

DC1. FA, a newly-formed corporation, issues 

stock in a public offering for cash. 

Individuals A and B and FA organize FPS. 

FA transfers part of the cash from the public 

offering to FPS in exchange for a class A 

partnership interest. FA holds few assets 

other than the class A partnership interest. 

Individuals A and B transfer their DC1 stock 

to FPS in exchange for class B partnership 

interests. 

(B) The class B partnership interests entitle 

individuals A and B to cash distributions 

from FPS approximately equal to any 

dividend distributions made by FA with 

respect to its publicly traded stock. In certain 

circumstances, the class B partnership 

interests also permit individuals A and B to 

require FPS to redeem the interests in 

exchange for cash equal to the value of an 

amount of FA stock as determined on the 

redemption date. The class B partnership 

interests do not provide individuals A or B 

voting rights with respect to FA. 

(ii) Analysis. The non-liquidating 

distribution rights provided by the class B 

partnership interests are substantially similar 

in all material respects to the dividend rights 

provided by the FA stock. Because FA holds 

few assets other than the class A partnership 

interest, the value of the class B partnership 

interests held by individuals A and B is 

approximately equal to a corresponding 

amount of FA stock. The distribution rights 

on liquidation (or redemption) provided by 

the class B partnership interests, therefore, 

are substantially similar in all material 

respects to distribution rights on liquidation 

(or redemption) provided by the FA stock. 

Thus, the distribution rights provided by the 

class B partnership interests are substantially 

similar in all material respects to the 

distribution rights provided by the publicly 

traded FA stock. As a result, if treating the 

class B partnership interests as FA stock 

would have the effect of treating FA as a 

surrogate foreign corporation, under 

paragraph (k)(1) of this section the class B 

partnership interests shall be treated as FA 

stock for purposes of section 7874. 

Example 19. Creditor treated as a 

shareholder. (i) Facts. Individuals A and B 

equally own DC1. The liabilities of DC1 

exceed the value of its assets. Pursuant to a 

plan, FA, a newly-formed corporation, 

acquires substantially all of the properties 

held by DC1 in exchange solely for FA stock. 

Pursuant to the plan, the DC1 stock held by 

individuals A and B is cancelled, and the 

creditors of DC1 receive all the FA stock in 

exchange for their claims against DC1. 

(ii) Analysis. Because immediately before 

the first date on which properties are 

acquired as part of the acquisition described 

in section 7874(a)(2)(B)(i) the liabilities of 

DC1 exceed the value of its assets, under 

paragraph (k)(2)(i) of this section, for 

purposes of section 7874 the creditors of DC1 

are treated as shareholders of DC1 and the 

creditors’ claims against DC1 are treated as 

DC1 stock. Therefore, for purposes of section 

7874(a)(2)(B)(ii) the FA stock received by the 

creditors of DC1 by reason of their claims 

against DC1 is considered held by former 

shareholders of DC1 by reason of holding 

DC1 stock. 

Example 20. Conversion to a domestic 

corporation and application of section 367. 

(i) Facts. Individuals A and B are United 

States persons and equally own DC1. 

Pursuant to a plan, individuals A and B 

transfer their DC1 stock to FA in exchange 

solely for 80 percent of the outstanding FA 

stock. After the acquisition, the expanded 

affiliated group that includes FA does not 

have substantial business activities in 

Country A when compared to the total 

business activities of the expanded affiliated 

group. 

(ii) Analysis. Under paragraph (c)(1)(i) of 

this section, for purposes of section 

7874(a)(2)(B)(i) FA is treated as acquiring all 

of the properties held by DC1 on the date of 

the stock acquisition. After the acquisition, 

the former shareholders of DC1 own 80 

percent of the stock of FA by reason of 

holding DC1 stock. Therefore, FA is a 

surrogate foreign corporation that is treated 

as a domestic corporation under section 

7874(b). Under paragraph (m)(1) of this 

section, except for purposes of determining 

whether FA is treated as a surrogate foreign 

corporation, the conversion of FA to a 

domestic corporation shall constitute a 

reorganization described in section 

368(a)(1)(F) that occurs immediately before 

the stock acquisition. Section 367 applies to 

the conversion of FA to a domestic 

corporation. See, for example, §§ 1.367(b)–2 

and 1.367(b)–3 for the consequences of the 

conversion. Under paragraph (m)(3) of this 

section, section 367 does not apply to the 

transfers of DC1 stock by individuals A and 

B to FA. 

(o) Effective/applicability date—(1) 

Temporary regulations filed on June 9, 

2009. This section shall apply to 

acquisitions completed on or after June 

9, 2009. However, taxpayers may apply 

this section to acquisitions completed 

before June 9, 2009, if this section is 

applied consistently to all acquisitions 

completed before such date. 

(2) Application of prior temporary 

regulations to certain acquisitions 

completed on or after June 6, 2006. 

Section 1.7874–2T, as contained in 26 

CFR part 1 revised as of April 1, 2009, 

shall not apply to acquisitions 

completed on or after June 6, 2006, 

pursuant to a written agreement that 

was (subject to customary conditions) 

binding on December 28, 2005, and at 

all times thereafter (binding 

commitment). A binding commitment 

shall include options and similar 

interests entered into in connection 

with one or more written agreements 

described in the preceding sentence. 

Accordingly, § 1.7874–2T, as contained 

in 26 CFR part 1 revised as of April 1, 

2009, shall not apply to acquisitions 

that occur, in whole or in part, as a 

result of the exercise of such options or 

similar interests. 

(p) Expiration date. The applicability 

of this section expires on or before June 

8, 2012. 

Linda E. Stiff, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: June 8, 2009. 

Michael Mundaca, 

Acting Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. E9–13770 Filed 6–9–09; 11:15 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket No. USCG–2008–1261] 

RIN 1625–AA00 

Safety Zone; AVI July Fireworks 

Display; Laughlin, NV 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing a safety zone on the 

navigable waters of the lower Colorado 

River, Laughlin, NV, in support of a 

fireworks display near the AVI Resort 

and Casino. This safety zone is 

necessary to provide for the safety of the 

participants, crew, spectators, 

participating vessels, and other vessels 

and users of the waterway. Persons and 

vessels are prohibited from entering 

into, transiting through, or anchoring 

within this safety zone unless 

authorized by the Captain of the Port, or 

his designated representative. 

DATES: This rule is effective from 8:15 

p.m. to 9:15 p.m. on July 4, 2009. 

ADDRESSES: Comments and material 

received from the public, as well as 

documents mentioned in this preamble 

as being available in the docket, are part 

of docket USCG–2008–1261 and are 

available online by going to http:// 

www.regulations.gov, selecting the 

Advanced Docket Search option on the 

right side of the screen, inserting USCG– 

2008–1261 in the Docket ID box, 

pressing Enter, and then clicking on the 

item in the Docket ID column. This 

material is also available for inspection 

or copying at the Docket Management 

Facility (M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590, 

Federal Register / Vol. 74, No. 112 / Friday, June 12, 2009 / Rules and Regulations 27933 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

rule, call or e-mail Petty Officer Shane 

Jackson, Waterways Management, Coast 

Guard; telephone 619–278–7262, e-mail 

Shane.E.Jackson@uscg.mil. If you have 

questions on viewing the docket, call 

Renee V. Wright, Program Manager, 

Docket Operations, telephone 202–366– 

9826. 

SUPPLEMENTARY INFORMATION: 

Regulatory Information 

On April 20, 2009 we published a 

notice of proposed rulemaking (NPRM) 

entitled ‘‘Safety zone; AVI July 

Fireworks Display; Laughlin, Nevada,’’ 

in the Federal Register (74 FR 17931). 

We received no comments on the 

proposed rule. No public meeting was 

requested, and none was held. 

Under 5 U.S.C. 553(d)(3), the Coast 

Guard finds that good cause exists for 

making this rule effective less than 30 

days after publication in the Federal 

Register because delaying the effective 

date would be contrary to the public 

interest, since immediate action is 

needed to ensure the public’s safety. 

Background and Purpose 

The AVI Resort and Casino is 

sponsoring the AVI July fireworks 

display, which is to be held at the AVI 

Resort and Casino on the Lower 

Colorado River in Laughlin, Nevada. 

The Coast Guard is establishing a 

temporary safety zone on the navigable 

waters of the Lower Colorado River, 

Laughlin, NV in support of the AVI July 

fireworks display. The safety zone is set 

as a 1000 foot radius around the firing 

site in approximate position: 35°00′45′′ 

N, 114°38′18′′ W. This temporary safety 

zone is necessary to provide for the 

safety of the show’s crew, spectators, 

participants of the event, participating 

vessels, and other vessels and users of 

the waterway. 

Regulatory Analyses 

We developed this rule after 

considering numerous statutes and 

executive orders related to rulemaking. 

Below we summarize our analyses 

based on 13 of these statutes or 

executive orders. 

Regulatory Planning and Review 

This rule is not a significant 

regulatory action under section 3(f) of 

Executive Order 12866, Regulatory 

Planning and Review, and does not 

require an assessment of potential costs 

and benefits under section 6(a)(3) of that 

Order. The Office of Management and 

Budget has not reviewed it under that 

Order. 

This determination is based on the 

size and location of the safety zone. 

Commercial vessels will not be 

hindered by the safety zone. 

Recreational vessels will not be allowed 

to transit through the designated safety 

zone during the specified times. 

Small Entities 

Under the Regulatory Flexibility Act 

(5 U.S.C. 601–612), we have considered 

whether this rule would have a 

significant economic impact on a 

substantial number of small entities. 

The term ‘‘small entities’’ comprises 

small businesses, not-for-profit 

organizations that are independently 

owned and operated and are not 

dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000. 

The Coast Guard certifies under 5 

U.S.C. 605(b) that this rule will not have 

a significant economic impact on a 

substantial number of small entities. 

This rule will affect the following 

entities, some of which may be small 

entities: the owners or operators of 

vessels intending to transit or anchor in 

a portion of the Colorado River from 

8:15 p.m. to 9:15 p.m. on July 4, 2009. 

This safety zone will not have a 

significant economic impact on a 

substantial number of small entities for 

the following reasons. The safety zone 

will only be in effect for one hour late 

in the evening when vessel traffic is 

low. Before the effective period, we will 

publish a Local Notice to Mariners 

(LNM). 

Assistance for Small Entities 

Under section 213(a) of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (Pub. L. 104–121), 

in the NPRM we offered to assist small 

entities in understanding the rule so 

that they could better evaluate its effects 

on them and participate in the 

rulemaking process. 

Small businesses may send comments 

on the actions of Federal employees 

who enforce, or otherwise determine 

compliance with, Federal regulations to 

the Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and the Regional Small Business 

Regulatory Fairness Boards. The 

Ombudsman evaluates these actions 

annually and rates each agency’s 

responsiveness to small business. If you 

wish to comment on actions by 

employees of the Coast Guard, call 1– 

888–REG–FAIR (1–888–734–3247). The 

Coast Guard will not retaliate against 

small entities that question or complain 

about this rule or any policy or action 

of the Coast Guard. 

Collection of Information 

This rule calls for no new collection 

of information under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520). 

Federalism 

A rule has implications for federalism 

under Executive Order 13132, 

Federalism, if it has a substantial direct 

effect on State or local governments and 

would either preempt State law or 

impose a substantial direct cost of 

compliance on them. We have analyzed 

this rule under that Order and have 

determined that it does not have 

implications for federalism. 

Unfunded Mandates Reform Act 

The Unfunded Mandates Reform Act 

of 1995 (2 U.S.C. 1531–1538) requires 

Federal agencies to assess the effects of 

their discretionary regulatory actions. In 

particular, the Act addresses actions 

that may result in the expenditure by a 

State, local, or tribal government, in the 

aggregate, or by the private sector of 

$100,000,000 or more in any one year. 

Though this rule will not result in such 

an expenditure, we do discuss the 

effects of this rule elsewhere in this 

preamble. 

Taking of Private Property 

This rule will not effect a taking of 

private property or otherwise have 

taking implications under Executive 

Order 12630, Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights. 

Civil Justice Reform 

This rule meets applicable standards 

in sections 3(a) and 3(b)(2) of Executive 

Order 12988, Civil Justice Reform, to 

minimize litigation, eliminate 

ambiguity, and reduce burden. 

Protection of Children 

We have analyzed this rule under 

Executive Order 13045, Protection of 

Children from Environmental Health 

Risks and Safety Risks. This rule is not 

an economically significant rule and 

does not create an environmental risk to 

health or risk to safety that may 

disproportionately affect children. 

Indian Tribal Governments 

This rule does not have tribal 

implications under Executive Order 

13175, Consultation and Coordination 

with Indian Tribal Governments, 

because it does not have a substantial 

direct effect on one or more Indian 

tribes, on the relationship between the 

27934 Federal Register / Vol. 74, No. 112 / Friday, June 12, 2009 / Rules and Regulations 

Federal Government and Indian tribes, 

or on the distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. 

Energy Effects 

We have analyzed this rule under 

Executive Order 13211, Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use. We have 

determined that it is not a ‘‘significant 

energy action’’ under that order because 

it is not a ‘‘significant regulatory action’’ 

under Executive Order 12866 and is not 

likely to have a significant adverse effect 

on the supply, distribution, or use of 

energy. The Administrator of the Office 

of Information and Regulatory Affairs 

has not designated it as a significant 

energy action. Therefore, it does not 

require a Statement of Energy Effects 

under Executive Order 13211. 

Technical Standards 

The National Technology Transfer 

and Advancement Act (NTTAA) (15 

U.S.C. 272 note) directs agencies to use 

voluntary consensus standards in their 

regulatory activities unless the agency 

provides Congress, through the Office of 

Management and Budget, with an 

explanation of why using these 

standards would be inconsistent with 

applicable law or otherwise impractical. 

Voluntary consensus standards are 

technical standards (e.g., specifications 

of materials, performance, design, or 

operation; test methods; sampling 

procedures; and related management 

systems practices) that are developed or 

adopted by voluntary consensus 

standards bodies. 

This rule does not use technical 

standards. Therefore, we did not 

consider the use of voluntary consensus 

standards. 

Environment 

We have analyzed this rule under 

Department of Homeland Security 

Management Directive 023–01 and 

Commandant Instruction M16475.lD, 

which guide the Coast Guard in 

complying with the National 

Environmental Policy Act of 1969 

(NEPA) (42 U.S.C. 4321–4370f), and 

have concluded this action is one of a 

category of actions which do not 

individually or cumulatively have a 

significant effect on the human 

environment. This rule is categorically 

excluded, under figure 2–1, paragraph 

(34)(g), of the Instruction. This rule 

involves establishment of a safety zone. 

An environmental analysis checklist 

and a categorical exclusion 

determination are available in the 

docket where indicated under 

ADDRESSES. 

List of Subjects in 33 CFR Part 165 

Harbors, Marine safety, Navigation 

(water), Reporting and recordkeeping 

requirements, Security measures, 

Waterways. 

■ For the reasons discussed in the 

preamble, the Coast Guard amends 33 

CFR part 165 as follows: 

PART 165—REGULATED NAVIGATION 

AREAS AND LIMITED ACCESS AREAS 

■ 1. The authority citation for part 165 

continues to read as follows: 

Authority: 33 U.S.C. 1226, 1231; 46 U.S.C. 

Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 

33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; 

Pub. L. 107–295, 116 Stat. 2064; Department 

of Homeland Security Delegation No. 0170.1. 

■ 2. Add new temporary zone 

§ 165.T11–167 to read as follows: 

§ 165.T11–167 Safety zone; AVI July 

Fireworks Display; Laughlin, Nevada. 

(a) Location. The following area is a 

safety zone: the navigable waters 

extending out 1000 feet from the firing 

site located at approximately 35°00′45′′ 

N, 114°38′18′′ W. 

(b) Enforcement Period. This rule will 

be enforced from 8:15 p.m. to 9:15 p.m. 

on July 4, 2009. If the need for the safety 

zone ends before the scheduled 

termination time, the Captain of the Port 

will cease enforcement of this safety 

zone. 

(c) Definitions. The following 

definition applies to this section: 

designated representative means any 

commissioned, warrant, and petty 

officers of the Coast Guard on board 

Coast Guard, Coast Guard Auxiliary, 

and local, state, and federal law 

enforcement vessels who have been 

authorized to act on the behalf of the 

Captain of the Port. 

(d) Regulations. (1) Entry into, transit 

through or anchoring within this safety 

zone is prohibited unless authorized by 

the Captain of the Port of San Diego or 

his designated on-scene representative. 

(2) Mariners requesting permission to 

transit through the safety zone may 

request authorization to do so from the 

Patrol Commander (PATCOM). The 

PATCOM may be contacted on VHF–FM 

Channel 16. 

(3) All persons and vessels shall 

comply with the instructions of the 

Coast Guard Captain of the Port or the 

designated representative. 

(4) Upon being hailed by U.S. Coast 

Guard patrol personnel by siren, radio, 

flashing light, or other means, the 

operator of a vessel shall proceed as 

directed. 

(5) The Coast Guard may be assisted 

by other federal, state, or local agencies. 

Dated: May 27, 2009. 

T.H. Farris, 

Captain, U.S. Coast Guard, Captain of the 

Port San Diego. 

[FR Doc. E9–13776 Filed 6–11–09; 8:45 am] 

BILLING CODE 4910–15–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[USCG–2009–0191] 

RIN 1625–AA00 

Safety Zone: Ohio River Mile 265.2 to 

266.2 and From Kanawha River Mile 0.0 

to 0.5, Point Pleasant, WV 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing a temporary safety zone for 

the waters of the Ohio River beginning 

at mile 265.2 and ending at mile 266.2, 

and the waters of the Kanawha River 

beginning at mile 0.0 and ending at mile 

0.5, extending the entire width of both 

rivers. This safety zone is needed to 

protect persons and vessels from the 

potential safety hazards associated with 

the City of Point Pleasant 2009 

Fireworks Display. Entry into this zone 

is prohibited unless specifically 

authorized by the Captain of the Port 

Ohio Valley or a designated 

representative. 

DATES: This rule is effective from 9:30 

p.m. on July 4, 2009 until 10:30 p.m. on 

July 4, 2009. 

ADDRESSES: Documents indicated in this 

preamble as being available in the 

docket are part of docket USCG–2009– 

0191 and are available online by going 

to http://www.regulations.gov, selecting 

the Advanced Docket Search option on 

the right side of the screen, inserting 

USCG–2009–0191 in the Docket ID box, 

pressing Enter, and then clicking on the 

item in the Docket ID column. They are 

also available for inspection or copying 

two locations: the Docket Management 

Facility (M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590, 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

rule, call or e-mail Petty Officer Sean T. 

Lewis, Marine Safety Unit Huntington at