REG-127199-15 - Treatment of Certain Domestic Entities Disregarded as Separate From Their Owners as Corporations for Purposes of

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section for
information on electronic access to the
guidance.
FOR FURTHER INFORMATION CONTACT: Paul
Hart, Center for Tobacco Products, Food
and Drug Administration, Bldg. 71, Rm.
G335, 10903 New Hampshire Ave.,
Silver Spring, MD 20993, 1–877–287–
1373, email: [email protected].
SUPPLEMENTARY INFORMATION:

guidance represents the current thinking
of FDA on this topic. It does not
establish any rights for any person and
is not binding on FDA or the public
unless specific regulatory or statutory
requirements are cited. You can use an
alternative approach if it satisfies the
requirements of the applicable statutes
and regulations.

I. Background

Persons with access to the Internet
may obtain an electronic version of the
guidance at either http://
www.regulations.gov or http://www.
fda.gov/TobaccoProducts/Labeling/
RulesRegulationsGuidance/default.htm.

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SUPPLEMENTARY INFORMATION

FDA is announcing the availability of
a revised guidance for industry entitled
‘‘Requirements for the Submission of
Data Needed to Calculate User Fees for
Domestic Manufacturers and Importers
of Tobacco Products; Small Entity
Compliance Guide’’ for the final user fee
rules published July 10, 2014 (79 FR
39302). Also, published elsewhere in
this edition of the Federal Register,
FDA issued a final rule to amend 21
CFR part 1150 (part 1150) to require
domestic manufacturers and importers
of cigars and pipe tobacco to submit to
FDA information needed to calculate
the amount of user fees assessed under
the Federal Food, Drug, and Cosmetic
Act (FD&C Act). FDA issued this user
fee final rule together with the final
rule, ‘‘Deeming Tobacco Products To Be
Subject to the Federal Food, Drug, and
Cosmetic Act, as Amended by the
Family Smoking Prevention and
Tobacco Control Act; Restrictions on the
Sale and Distribution of Tobacco
Products and Required Warning
Statements for Tobacco Products’’
(Deeming rule), which deems all
products that meet the statutory
definition of ‘‘tobacco product,’’ except
accessories of the newly deemed
tobacco products, to be subject to the
FD&C Act. The Deeming rule, among
other things, subjects domestic
manufacturers and importers of cigars
and pipe tobacco to the FD&C Act’s user
fee requirements. Consistent with the
Deeming rule and the requirements of
the FD&C Act, this user fee final rule
requires the submission of the
information needed to calculate user fee
assessments for each manufacturer and
importer of cigars and pipe tobacco to
FDA. In compliance with section 212 of
the Small Business Regulatory
Enforcement Fairness Act (Pub. L. 104–
121), FDA is making available this
revised SECG stating in plain language
the legal requirements of the user fee
final regulations set forth in part 1150.
II. Significance of Guidance
FDA is issuing this revised SECG as
a level 2 guidance, consistent with
FDA’s good guidance practices
regulation (21 CFR 10.115). The

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III. Electronic Access

Dated: May 3, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016–10689 Filed 5–5–16; 8:45 am]
BILLING CODE 4164–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
[REG–127199–15]
RIN 1545–BM94

Treatment of Certain Domestic Entities
Disregarded as Separate From Their
Owners as Corporations for Purposes
of Section 6038A
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking.
AGENCY:

This document contains
proposed regulations that would treat a
domestic disregarded entity wholly
owned by a foreign person as a domestic
corporation separate from its owner for
the limited purposes of the reporting,
record maintenance and associated
compliance requirements that apply to
25 percent foreign-owned domestic
corporations under section 6038A of the
Internal Revenue Code. These changes
are intended to provide the IRS with
improved access to information that it
needs to satisfy its obligations under
U.S. tax treaties, tax information
exchange agreements and similar
international agreements, as well as to
strengthen the enforcement of U.S. tax
laws.
DATES: Written or electronic comments
and requests for a public hearing must
be received by August 8, 2016.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–127199–15), Room
5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station,
SUMMARY:

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Washington, DC 20044. Submissions
may be hand delivered between the
hours of 8 a.m. and 4 p.m. to
CC:PA:LPD:PR (REG–127199–15),
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–
127199–15).
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Ronald M. Gootzeit, (202) 317–6937;
concerning submissions of comments
and/or requests for a hearing, Regina
Johnson, (202) 317–6901 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act
The collection of information
contained in this notice of proposed
rulemaking has been previously
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545–1191. The estimated
average annual recordkeeping burden
per recordkeeper is 10 hours. The
estimated reporting burden is being
reported under Form 5472 (OMB #
1545–0123).
The collection of information in this
proposed regulation is in sections
1.6038A–1 through 1.6038A–3 and
1.6038A–5. This information is required
in order to provide the IRS with
improved access to information that it
needs to satisfy its obligations under
U.S. tax treaties, tax information
exchange agreements, and similar
international agreements, as well as to
strengthen the enforcement of U.S. tax
laws. The likely respondents are
foreign-owned domestic entities that are
disregarded as separate from their
owners.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control
number assigned by the Office of
Management and Budget.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
Background
Sections 301.7701–1 through
301.7701–3 (‘‘the entity classification
regulations’’) classify a business entity
with two or more members as either a

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corporation or a partnership, and a
business entity with a single owner as
either a corporation or an entity
disregarded as separate from its owner
(‘‘disregarded entity’’). Certain domestic
business entities, such as limited
liability companies (‘‘LLCs’’), are
classified by default as partnerships (if
they have more than one member) or as
disregarded entities (if they have only
one owner) but are eligible to elect for
federal tax purposes to be classified as
corporations. Under special rules, an
entity that is otherwise disregarded is
not disregarded for certain excise and
employment tax purposes. Section
301.7701–2(c)(2)(iv) and (v).
Some disregarded entities are not
obligated to file a return or obtain an
employer identification number
(‘‘EIN’’). In the absence of a return filing
obligation (and associated record
maintenance requirements) or the
identification of a responsible party as
required in applying for an EIN, it is
difficult for the United States to carry
out the obligations it has undertaken in
its tax treaties, tax information exchange
agreements and similar international
agreements to provide other
jurisdictions with relevant information
on U.S. entities with owners that are tax
resident in the partner jurisdiction or
otherwise have a tax nexus with respect
to the partner jurisdiction.
Section 6001 of the Internal Revenue
Code (‘‘Code’’) provides that every
person liable for any tax imposed by the
Code, or for the collection thereof, shall
keep such records, render such
statements, make such returns and
comply with such rules and regulations
as the Secretary may from time to time
prescribe, and that whenever in the
judgment of the Secretary it is
necessary, he may require any person,
by notice served upon such person or by
regulations, to make such returns,
render such statements, or keep such
records, as the Secretary deems
sufficient to show whether or not such
person is liable for tax. Thus, the
Treasury Department and the IRS have
broad authority under section 6001 of
the Code to promulgate regulations to
require the keeping of records and the
reporting of information by persons who
may be liable for any tax. The Code also
requires many categories of persons to
file returns, even if no tax is owed in a
particular year. For example, all
corporations organized in the United
States must file annual income tax
returns, which may include schedules
requiring the identification of owners
exceeding specified ownership
thresholds. Moreover, foreign
corporations engaged in a trade or
business in the United States (‘‘U.S.

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trade or business’’) must file annual
income tax returns. Section 6012(a)(2);
section 1.6012–2. Domestic partnerships
must file information returns with
schedules identifying each partner.
Section 6031; section 1.6031(a)–1. In
addition, domestic corporations that are
at least 25% foreign-owned are subject
to specific information reporting and
record maintenance requirements.
Section 6038A.
All entities, including disregarded
entities, must have an EIN to file a
required return. Section 6109(a)(1); see
section 301.6109–1(a)(1)(ii)(C) and (b).
An entity must also have an EIN in
order to elect to change its
classification. An entity that accepts its
default classification and is not required
to file a return need not obtain an EIN.
Because a domestic single-member LLC
is classified as a disregarded entity by
default rather than by election and has
no separate federal tax return filing
requirements, there is typically no
federal tax requirement for it to obtain
an EIN. Other applicable federal or state
laws may require an entity to obtain an
EIN. For example, pursuant to federal
law, financial institutions in the United
States generally require an entity to
have an EIN to open an account. See 31
CFR 1020.220(a)(1)(i)(A)(4).
An entity obtains an EIN by filing
Form SS–4, Application for Employer
Identification Number, in which the
entity must identify a responsible party.
The instructions to Form SS–4 define
‘‘responsible party’’ for an entity
(including a disregarded entity) that is
not traded on a public exchange or
registered with the Securities and
Exchange Commission as ‘‘the
individual who has a level of control
over, or entitlement to, the funds or
assets in the entity that, as a practical
matter, enables the individual, directly
or indirectly, to control, manage, or
direct the entity and the disposition of
its funds and assets.’’ The entity must
also report any subsequent change in
the responsible party. See section
301.6109–1(d)(2)(ii).
When an entity, such as an LLC, is
classified as a corporation or a
partnership for tax purposes, general
ownership and accounting information
is available to the IRS through the return
filing and EIN application requirements.
However, a disregarded entity is not
subject to a separate income or
information return filing requirement.
Its owner is treated as owning directly
the entity’s assets and liabilities, and the
information available with respect to the
disregarded entity depends on the
owner’s own return filings, if any are
required. For a disregarded entity that is
formed in the United States and wholly

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owned by a foreign corporation, foreign
partnership, or nonresident alien
individual, generally no U.S. income or
information return must be filed if
neither the disregarded entity nor its
owner received any U.S. source income
or was engaged in a U.S. trade or
business during the taxable year.
Moreover, if a disregarded entity only
receives certain types of U.S. source
income, such as portfolio interest or
U.S. source income that is fully
withheld upon at source, its owner may
not have a U.S. return filing
requirement. Even in cases when the
disregarded entity has an EIN, as well as
in cases when income earned through a
disregarded entity must be reported on
its owner’s return (for example, income
from a U.S. trade or business), it may be
difficult to associate the income with
the disregarded entity based solely on
the owner’s return.
Although ownership and accounting
information is generally available under
the reporting requirements established
by the U.S. federal tax system with
respect to many types of domestic
entities, the absence of specific return
filing and associated recordkeeping
requirements for foreign-owned, singlemember domestic entities hinders law
enforcement efforts and compliance
with international standards of
transparency and cooperation in the
area of tax information exchange. These
difficulties have been noted in reviews
of the U.S. legal system by international
organizations, including the Financial
Action Task Force and the Global
Forum on Transparency and Exchange
of Information for Tax Purposes, which
is affiliated with the Organisation for
Economic Co-operation and
Development. The lack of ready access
to information on ownership of, and
transactions involving, these entities
also makes it difficult for the IRS to
ascertain whether the entity or its owner
is liable for any federal tax.
In general, section 6038A imposes
reporting and recordkeeping
requirements (together with certain
procedural compliance requirements)
on domestic corporations that are 25percent foreign-owned. They are
required to file an annual return on
Form 5472, Information Return of a 25%
Foreign-Owned U.S. Corporation or a
Foreign Corporation Engaged in a U.S.
Trade or Business (Under Sections
6038A and 6038C of the Internal
Revenue Code), with respect to each
related party with which the reporting
corporation has had any ‘‘reportable
transactions.’’ See section 1.6038A–2.
These corporations must keep the
permanent books of account or records
as required by section 6001 that are

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sufficient to establish the accuracy of
the federal income tax return of the
corporation, including information,
documents, or records to the extent they
may be relevant to determine the correct
U.S. tax treatment of transactions with
related parties. See section 1.6038A–3.
Explanation of Provisions
These proposed regulations would
amend section 301.7701–2(c) to treat a
domestic disregarded entity that is
wholly owned by one foreign person as
a domestic corporation separate from its
owner for the limited purposes of the
reporting and record maintenance
requirements (including the associated
procedural compliance requirements)
under section 6038A. As with the
existing special rules with respect to
employment and excise taxes, these
proposed regulations would not alter
the framework of the existing entity
classification regulations, including the
treatment of certain entities as
disregarded. These regulations are
intended to provide the IRS with
improved access to information that it
needs to satisfy its obligations under
U.S. tax treaties, tax information
exchange agreements and similar
international agreements, as well as to
strengthen the enforcement of U.S. tax
laws.
Because the proposed regulations
would treat the affected domestic
entities as foreign-owned domestic
corporations for the specific purposes of
section 6038A under the proposed
regulations, and because such entities
are foreign-owned, they would be
reporting corporations within the
meaning of section 6038A.
Consequently, they would be required
to file the Form 5472 information return
with respect to reportable transactions
between the entity and its foreign owner
or other foreign related parties
(transactions that would have been
regarded under general U.S. tax
principles if the entity had been, in fact,
a corporation for U.S. tax purposes) and
would also be required to maintain
records sufficient to establish the
accuracy of the information return and
the correct U.S. tax treatment of such
transactions. In addition, because these
entities would have a filing obligation,
they would be required to obtain an EIN
by filing a Form SS–4 that includes
responsible party information.
To ensure that such entities are
required to report all transactions with
foreign related parties, these regulations
would specify as an additional
reportable category of transaction for
these purposes any transaction within
the meaning of section 1.482–1(i)(7)
(with such entities being treated as

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separate taxpayers for the purpose of
identifying transactions and being
subject to requirements under section
6038A) to the extent not already covered
by another reportable category. The term
‘‘transaction’’ is defined in section
1.482–1(i)(7) to include any sale,
assignment, lease, license, loan,
advance, contribution, or other transfer
of any interest in or a right to use any
property or money, as well as the
performance of any services for the
benefit of, or on behalf of, another
taxpayer. For example, under these
proposed regulations, contributions and
distributions would be considered
reportable transactions with respect to
such entities. Accordingly, a transaction
between such an entity and its foreign
owner (or another disregarded entity of
the same owner) would be considered a
reportable transaction for purposes of
the section 6038A reporting and record
maintenance requirements, even
though, because it involves a
disregarded entity, it generally would
not be considered a transaction for other
purposes, such as making an adjustment
under section 482. The penalty
provisions associated with failure to file
the Form 5472 and failure to maintain
records would apply to these entities as
well.
The proposed regulations would also
provide that the exceptions to the record
maintenance requirements in section
1.6038A–1(h) and (i) for small
corporations and de minimis
transactions will not apply to these
entities.
Consistent with the changes
contemplated by these proposed
regulations, the IRS is also considering
modifications to corporate, partnership,
and other tax or information returns (or
their instructions) to require the filer of
these returns to identify all the foreign
and domestic disregarded entities it
owns.
The proposed regulations would
impose a filing obligation on a foreignowned disregarded entity for reportable
transactions it engages in even if its
foreign owner already has an obligation
to report the income resulting from
those transactions—for example,
transactions resulting in income
effectively connected with the conduct
of a U.S. trade or business. The Treasury
Department and the IRS request
comments on possible alternative
methods for reporting the disregarded
entity’s transactions in such cases.
Proposed Effective/Applicability Date
The regulations are proposed to be
applicable for taxable years ending on or
after the date that is 12 months after the

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date these regulations are published as
final regulations in the Federal Register.
Special Analyses
Certain IRS regulations, including this
one, are exempt from the requirements
of Executive Order 12866, as
supplemented and reaffirmed by
Executive Order 13563. Therefore, a
regulatory assessment is not required. It
has also been determined that section
553(b) and (d) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations. Pursuant
to the Regulatory Flexibility Act (5
U.S.C. chapter 6), it is hereby certified
that this regulation will not have a
significant economic impact on a
substantial number of small entities.
Accordingly, a regulatory flexibility
analysis is not required. This
certification is based on the fact that
these regulations will primarily affect a
small number of foreign-owned
domestic entities that do not themselves
otherwise have a U.S. return filing
requirement, and that the requirement
to file a return for these entities will not
impose a significant burden on them.
Pursuant to section 7805(f), 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 entities.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations,
consideration will be given to any
comments that are submitted timely to
the IRS as prescribed in this preamble
under the ADDRESSES heading. The
Treasury Department and the IRS
request comments on aspects of the
proposed rules for which additional
guidance is desired. All comments will
be available at www.regulations.gov or
upon request. A public hearing will be
scheduled if requested in writing by any
person that timely submits written
comments. If a public hearing is
scheduled, then notice of the date, time,
and place for the public hearing will be
published in the Federal Register.
Drafting Information
The principal author of these
regulations is Ronald M. Gootzeit, Office
of Associate Chief Counsel
(International). However, other
personnel from the Treasury
Department and the IRS participated in
their development.

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List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and part
301 are proposed to be amended as
follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by revising the
entries for §§ 1.6038A–1 and 1.6038A–
2 to read in part as follows:

■

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

*

*

*

*

*

Section 1.6038A–1 also issued under 26
U.S.C. 6001.
Section 1.6038A–2 also issued under 26
U.S.C. 6001.

*

*
*
*
*
Par. 2. Section 1.6038A–1 is amended
as follows:
■ 1. Paragraph (c)(1) is amended by
adding a sentence at the end of the
paragraph.
■ 2. The first sentence of paragraph (h)
is revised.
■ 3. The first sentence of paragraph
(i)(1) is revised.
■ 4. Paragraph (n)(1) is amended by
adding a sentence at the end of the
paragraph.
■ 5. Paragraph (n)(2) is amended by
adding a sentence at the end of the
paragraph.
The additions and revisions read as
follows:
■

§ 1.6038A–1
definitions.

General requirements and

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*

*
*
*
*
(c) * * *
(1) * * * A domestic business entity
that is wholly owned by one foreign
person and that is otherwise classified
under § 301.7701–3(b)(1)(ii) of this
chapter as disregarded as an entity
separate from its owner is treated as an
entity separate from its owner and
classified as a domestic corporation for
purposes of section 6038A. See
§ 301.7701–2(c)(2)(vi) of this chapter.
*
*
*
*
*
(h) Small corporation exception. A
reporting corporation (other than an
entity that is treated as a reporting
corporation by reason of § 301.7701–
2(c)(2)(vi) of this chapter) that has less

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than $10,000,000 in U.S. gross receipts
for a taxable year is not subject to
§§ 1.6038A–3 and 1.6038A–5 for that
taxable year.* * *
(i) Safe harbor for reporting
corporations with related party
transactions of de minimis value—(1) In
general. A reporting corporation (other
than an entity that is treated as a
reporting corporation by reason of
§ 301.7701–2(c)(2)(vi) of this chapter) is
not subject to §§ 1.6038A–3 and
1.6038A–5 for any taxable year in which
the aggregate value of all gross payments
it makes to and receives from foreign
related parties with respect to related
party transactions (including monetary,
nonmonetary consideration, and the
value of transactions involving less than
full consideration) is not more than
$5,000,000 and is less than 10 percent
of its U.S. gross income.* * *
*
*
*
*
*
(n) * * *
(1) * * * The last sentence of
paragraph (c)(1) of this section (relating
to certain domestic business entities),
the parenthetical language in paragraph
(h) of this section (relating to entities
that are treated as reporting corporations
by reason of § 301.7701–2(c)(2)(vi) of
this chapter), and the parenthetical
language in paragraph (i)(1) of this
section (relating to entities that are
treated as reporting corporations by
reason § 301.7701–2(c)(2)(vi) of this
chapter) apply to taxable years of such
entities ending on or after the date that
is 12 months after the date of
publication of the Treasury decision
adopting these rules as final regulations
in the Federal Register.
(2) * * * Paragraphs (b)(3)(xi) and
(b)(9) of this section and the last
sentence of paragraph (d) of § 1.6038A–
2 apply to taxable years of the entities
described in § 301.7701–2(c)(2)(vi) of
this chapter ending on or after the date
that is 12 months after the date of
publication of the Treasury decision
adopting these rules as final regulations
in the Federal Register.
*
*
*
*
*
■ Par. 3. Section 1.6038A–2 is amended
as follows:
■ 1. In paragraph (b)(3)(ix), remove the
word ‘‘and’’.
■ 2. In paragraph (b)(3)(x), remove the
period at the end of the paragraph and
add ‘‘; and’’ in its place.
■ 3. Add paragraph (b)(3)(xi).
■ 4. Add paragraph (b)(9).
■ 5. Add a sentence at the end of
paragraph (d).
The additions and revisions read as
follows:
§ 1.6038A–2

*

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*

Requirements of return.

*

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(b) * * *
(3) * * *
(xi) With respect to an entity that is
treated as a reporting corporation by
reason of § 301.7701–2(c)(2)(vi) of this
chapter, any other transaction as
defined by § 1.482–1(i)(7), such as
amounts paid or received in connection
with the formation, dissolution,
acquisition and disposition of the entity,
including contributions to and
distributions from the entity.
*
*
*
*
*
(9) Examples. The application of
paragraph (b)(3) of this section may be
illustrated by the following examples:
Example 1. (i) In year 1, W, a foreign
corporation, forms and contributes assets to
X, a domestic limited liability company that
does not elect to be treated as a corporation
under § 301.7701–3(c) of this chapter. In year
2, W contributes funds to X. In year 3, X
makes a payment to W. In year 4, X, in
liquidation, distributes its assets to W.
(ii) In accordance with § 301.7701–
3(b)(1)(ii) of this chapter, X is disregarded as
an entity separate from W. In accordance
with § 301.7701–2(c)(2)(vi) of this chapter, X
is treated as an entity separate from W and
classified as a domestic corporation for
purposes of section 6038A. In accordance
with paragraphs (a)(2) and (b)(3) of this
section, each of the transactions in years 1
through 4 is a reportable transaction with
respect to X. Therefore, X has a section
6038A reporting and record maintenance
requirement for each of those years.
Example 2. (i) The facts are the same as
in Example 1 of this paragraph (b)(9) except
that in year 1 W also forms and contributes
assets to Y, another domestic limited liability
company that does not elect to be treated as
a corporation under § 301.7701–3(c) of this
chapter. In year 1, X and Y form and
contribute assets to Z, another domestic
limited liability company that does not elect
to be treated as a corporation under
§ 301.7701–3(c) of this chapter. In year 2, X
transfers funds to Z. In year 3, Z makes a
payment to Y. In year 4, Z distributes its
assets to X and Y in liquidation.
(ii) In accordance with § 301.7701–
3(b)(1)(ii) of this chapter, Y and Z are
disregarded as entities separate from each
other, W, and X. In accordance with
§ 301.7701–2(c)(2)(vi) of this chapter, Y, Z
and X are treated as entities separate from
each other and W, and are classified as
domestic corporations for purposes of section
6038A. In accordance with paragraph (b)(3)
of this section, each of the transactions in
years 1 through 4 involving Z is a reportable
transaction with respect to Z. Similarly, the
contribution to Y in year 1, the payment to
Y in year 3, and the distribution to Y in year
4 are reportable transactions with respect to
Y. Moreover, X’s funds transfer to Z in year
2 is a reportable transaction. Therefore, Z has
a section 6038A reporting and record
maintenance requirement for years 1 through
4, Y has a section 6038A reporting and record
maintenance requirement for years 1, 3 and
4, and X has a section 6038A reporting and
record maintenance requirement in year 2 in

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Federal Register / Vol. 81, No. 90 / Tuesday, May 10, 2016 / Proposed Rules

addition to its section 6038A reporting and
record maintenance described in Example 1
of this paragraph (b)(9).

(d) * * * In the case of an entity that
is treated as a reporting corporation by
reason of § 301.7701–2(c)(2)(vi) of this
chapter, Form 5472 must be filed at
such time and in such manner as the
Commissioner may prescribe in forms or
instructions.
*
*
*
*
*
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 4. The authority citation for part
301 continues in part to read as follows:

■

under subpart E of subchapter J of
chapter 1 of the Code.
*
*
*
*
*
(e) * * *
(9) Reporting required under section
6038A. Paragraph (c)(2)(vi) of this
section applies to taxable years ending
on or after the date that is 12 months
after the date of publication of the
Treasury decision adopting these rules
as final regulations in the Federal
Register.
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. 2016–10852 Filed 5–6–16; 8:45 am]
BILLING CODE 4830–01–P

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

Par. 5. Section 301.7701–2 is
amended by revising the last sentence of
paragraph (a) and adding paragraphs
(c)(2)(vi) and (e)(9) to read as follows:

■

ehiers on DSK5VPTVN1PROD with PROPOSALS

§ 301.7701–2
definitions.

Coast Guard

Business entities;

(a) * * * But see paragraphs (c)(2)(iii)
through (vi) of this section for special
rules that apply to an eligible entity that
is otherwise disregarded as an entity
separate from its owner.
*
*
*
*
*
(c) * * *
(2) * * *
(vi) Special rule for reporting under
section 6038A—(A) In general. An
entity that is disregarded as separate
from its owner for any purpose under
this section is treated as an entity
separate from its owner and classified as
a corporation for purposes of section
6038A if—
(1) The entity is a domestic entity;
and
(2) One foreign person has direct or
indirect sole ownership of the entity.
(B) Definitions—(1) Indirect sole
ownership. For purposes of paragraph
(c)(2)(vi)(A)(2) of this section, indirect
sole ownership means ownership by
one person entirely through one or more
entities disregarded as separate from
their owners or through grantor trusts,
regardless of whether any such
disregarded entity or grantor trust is
domestic or foreign.
(2) Entity disregarded as separate
from its owner. For purposes of this
paragraph (c)(2)(vi)(B), an entity
disregarded as separate from its owner
is an entity described in paragraph
(c)(2)(i) of this section, without regard to
the exceptions provided in paragraphs
(c)(2)(ii) though (vi) of this section.
(3) Grantor trust. For purposes of this
paragraph (c)(2)(vi)(B), a grantor trust is
any portion of a trust that is treated as
owned by the grantor or another person

VerDate Sep<11>2014

15:20 May 09, 2016

Jkt 238001

DEPARTMENT OF HOMELAND
SECURITY

33 CFR Part 110
[Docket Number USCG–2015–0729]
RIN 1625–AA01

Port of Miami Anchorage Area; Atlantic
Ocean, Miami Beach, FL
Coast Guard, DHS.
Notice of proposed rulemaking.

AGENCY:
ACTION:

The Coast Guard proposes to
revise the Miami Anchorage. Under the
proposal, the Miami Anchorage would
be divided into two separate anchorage
areas. This action is necessary to reduce
potential damage to threatened coral
posed by anchoring vessels. This
proposed revision would update the
regulation to clarify the regulatory text
and to reflect the establishment of two
anchorage areas instead of one area
currently in place. We invite your
comments on this proposed rulemaking.
DATES: Comments and related material
must be received by the Coast Guard on
or before July 11, 2016.
ADDRESSES: You may submit comments
identified by docket number USCG–
2015–0729 using the Federal
eRulemaking Portal at http://
www.regulations.gov. See the ‘‘Public
Participation and Request for
Comments’’ portion of the
SUPPLEMENTARY INFORMATION section for
further instructions on submitting
comments.
FOR FURTHER INFORMATION CONTACT: If
you have questions about this proposed
rulemaking, call or email LT Ruth
Sadowitz, Sector Miami Waterways
Management Division, U.S. Coast
Guard; telephone 305–535–4307, email
[email protected].
SUMMARY:

PO 00000

Frm 00053

Fmt 4702

Sfmt 4702

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations
CFR Code of Federal Regulations
DHS Department of Homeland Security
FDEP Florida Department of Environmental
Protection
FR Federal Register
NMFS National Marine Fisheries Service
NPRM Notice of proposed rulemaking
§ Section
SEFCRI South East Florida Coral Reef
Initiative
U.S.C. United States Code

II. Background, Purpose, and Legal
Basis
On December 1, 2015, the Coast
Guard published a Notice of Study and
request for comments (80 FR 75020)
advising that we were evaluating an
amendment to the Miami Anchorage (33
CFR 110.188) that would divide the
anchorage into two separate anchorage
areas. The possible modification of the
anchorage area was designed in
coordination with local stakeholders in
an effort to mitigate damage to coral that
may be caused by vessels anchoring.
Comments provided by these
stakeholders, academic research, and
environmental reports addressed a
number of options to potentially reduce
the likelihood of damage to the Florida
Reef in the Miami Anchorage. Those
documents, which may be found in the
docket, influenced this Coast Guard’s
selection of the anchorage modification
proposed in this notice.
In response to the Notice of Study, the
Coast Guard received four comments.
The first comment was from the nonprofit organization, Miami Waterkeeper.
Miami Waterkeeper supports the
modifications to the anchorage area as
those modifications would both better
protect threatened species and critical
coral habitat and still allow for safe
navigation.
The second comment came from the
National Marine Fisheries Service—
Habitat Conservation Division (NFMS).
NMFS stated that they support
relocating the anchorage area in order to
reduce continued degradation of the
coral reef and, ultimately, allow for
restoration of the reef.
The third comment was from NOAA.
On December 1, 2015, NOAA submitted
a comment to verify the coordinates of
the possible amended anchorage area
listed in the notice. The coordinates for
the location of the amended anchorage
areas were published incorrectly. The
latitudinal coordinates were
inadvertently published in the longitude
column and vice versa. However, the
numerical coordinates published in the
chart was correct. The error has been

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