Inbound Grantor Trusts With Foreign Grantors

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 1 [REG-252487-96] RIN 1545-AX25

TITLE: Inbound Grantor Trusts With Foreign Grantors

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross reference to
temporary regulations.

SUMMARY: The IRS is proposing regulations relating to the definition
of the term grantor for purposes of part I of subchapter J, chapter
1 of the Internal Revenue Code. The text of temporary regulations
published elsewhere in this issue of the Federal Register, also
serves as the text of these proposed regulations. This document also
provides notice of a public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by October
12, 1999. Requests to speak (with outlines of oral comments to be
discussed) at the public hearing scheduled for November 2, 1999, at
10 a.m. must be submitted by October 12, 1999.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-252487-96), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered between the
hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-252487- 96),
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue,
NW., Washington, DC. Alternatively, taxpayers may submit comments
electronically via the Internet by selecting the "Tax Regs" option
on the IRS Home Page, or by submitting comments directly to the IRS
Internet site at http://www.irs.ustreas.gov/tax_regs/regslist.html.
The public hearing will be held in room 2615, Internal Revenue
Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, James
A. Quinn, (202) 622-3060; concerning submissions and the hearing,
Guy R. Traynor, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Temporary regulations in the Rules and Regulations section of this
issue of the Federal Register amend the Income Tax Regulations (26
CFR part 1) relating to section 671. The temporary regulations
contain rules relating to the definition of grantor for purposes of
part I of subchapter J, chapter 1 of the Internal Revenue Code.

The text of those temporary regulations also serves as the text of
these proposed regulations. The preamble to the temporary
regulations explains the temporary regulations.

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 regulation does 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
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 (preferably a
signed original and eight (8) copies) that are submitted timely to
the IRS. The IRS and Treasury Department specifically request
comments on the clarity of the proposed regulations and how they can
be made easier to understand. All comments will be available for
public inspection and copying.

A public hearing has been scheduled for November 2, 1999, 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 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 by October 12, 1999, and submit an outline
of the topics to be discussed and the time to be devoted to each
topic (preferably a signed original and eight (8) copies) by October
12, 1999.

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 James A. Quinn of the
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 as
follows:

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

Par. 2. In §1.671-2, paragraph (e) is revised to read as follows:

§1.671-2 Applicable principles.

* * * * *.(e) [The text of this proposed paragraph (e) is the same
as the text of §1.671-2T(e) published elsewhere in this issue of the
Federal Register].

John M. Dalrymple
Acting Deputy Commissioner of Internal Revenue

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