Stock Transfer Rules, Transition Rules

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Parts 1 and 7 [TD 8937] RIN 1545-
AY53

TITLE: Stock Transfer Rules: Transition Rules

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

SUMMARY: This document contains final regulations addressing
distributions with respect to, or a disposition of, certain stock
that was subject to prior temporary regulations under section
367(b). Section 367(b) addresses the application of nonrecognition
exchange provisions in Subchapter C of the Internal Revenue Code to
transactions that involve one or more foreign corporations.

DATES: Effective Date. These regulations are effective as of January
11, 2001. Applicability Dates. These regulations apply to
distributions or dispositions that occur on or after January 11,
2001.

FOR FURTHER INFORMATION CONTACT: Mark D. Harris, (202) 622-3860 (not
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On January 24, 2000, the IRS and Treasury issued final regulations
under section 367(b) of the Internal Revenue Code.( Code). At the
same time, the IRS and Treasury also modified temporary regulation
§7.367(b)-12(a). The final regulations and modified temporary
regulation were effective as of February 23, 2000.

As modified, §7.367(b)-12(a) addresses distributions with
respect to, or a disposition of, stock that was subject to certain
provisions of the temporary section 367(b) regulations that were in
effect before February 23, 2000. This document finalizes the rule
stated in §7.367(b)-12(a) in order to insure its continued
application. See section 7805(e)(2) (stating a "sunset rule"
applicable to temporary regulations).

Special Analyses

It has been determined that this Treasury decision 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 notice of proposed rulemaking preceding the regulations
was issued prior to March 29, 1996, the Regulatory Flexibility Act
(5 U.S.C. chapter 6) does not apply.

Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking preceding these regulations was submitted to the Chief
Counsel for Advocacy of the Small Business Administration for
comment on the impact of the proposed regulations on small business.

Drafting Information

The principal author of these regulations is Mark Harris of the
Office of Associate Chief Counsel (International). However, other
personnel from the IRS and Treasury Department participated in their
development.

List of Subjects

26 CFR Parts 1 and 7 Income taxes, Reporting and recordkeeping
requirements. Adoption of Amendments to the Regulations Accordingly,
26 CFR parts 1 and 7 are amended as follows:

PART 1--INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by adding
an entry in numerical order to read in part as follows: Authority:
26 U.S.C. 7805 * * *

Section 1.367(b)-12 also issued under 26 U.S.C. 367(a) and

(b). * * * Par. 2. Section 1.367(b)-0 is amended by revising the
introductory text and adding entries for §1.367(b)-12 to read
as follows: §1.367(b)-0 Table of contents. This section lists
the paragraphs contained in §§1.367(b)-1 through
1.367(b)-6 and 1.367(b)-12.

* * * * *

§1.367(b)-12 Subsequent treatment of amounts attributed or
included in income.

(a) In general.

(b) Applicable rules.

(c) Effective date.

Par. 3. Section 1.367(b)-12 is added to read as follows:
§1.367(b)-12 Subsequent treatment of amounts attributed or
included in income.

(a) In general. This section applies to distributions with respect
to, or a disposition of, stock--

(1) To which, in connection with an exchange occurring before
February 23, 2000, an amount has been attributed pursuant to
§7.367(b)-9 or 7.367(b)-10 of this chapter (as in effect prior
to February 23, 2000, see 26 CFR part 1 revised as of April 1,
1999); or

(2) In respect of which, before February 23, 2000, an amount has
been included in income or added to earnings and profits pursuant to
§7.367(b)-7 or 7.367(b)-10 of this chapter (as in effect prior
to February 23, 2000, see 26 CFR part 1 revised as of April 1,
1999).

(b) Applicable rules. See §7.367(b)-12(b) through (e) of this
chapter (as in effect prior to January 11, 2001, see 26 CFR part 1
revised as of April 1, 2000) for purposes of applying paragraph (a)
of this section.

(c) Effective date. This section applies to distributions or
dispositions that occur on or after January 11, 2001. 

PART 7 - TEMPORARY INCOME TAX REGULATIONS UNDER THE TAX REFORM ACT
OF 1976

Par. 4. The authority citation for part 7 is amended by removing the
entry for §7.367(b)-12 and continues to read in part as
follows:.Authority: 26 U.S.C. 7805 * * * §7.367(b)-12 [Removed]

Par. 5. Section 7.367(b)-12 is removed. 

Commissioner of Internal Revenue

Approved:

Assistant Secretary of the Treasury.

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