Td 9704

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Rules and Regulations

Federal Register
Vol. 79, No. 223
Wednesday, November 19, 2014

This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.

NUCLEAR REGULATORY
COMMISSION
10 CFR Part 72
RIN 3150–AJ42
[NRC–2014–0120]

List of Approved Spent Fuel Storage
Casks: Holtec International HI–STORM
Underground Maximum Capacity
Canister Storage System, Certificate of
Compliance No. 1040
Nuclear Regulatory
Commission.
ACTION: Direct final rule; withdrawal.
AGENCY:

The U.S. Nuclear Regulatory
Commission (NRC) is withdrawing a
direct final rule that would have added
the Holtec International HI–STORM
Underground Maximum Capacity
(UMAX) Canister Storage System,
Certificate of Compliance (CoC) No.
1040, to the ‘‘List of approved spent fuel
storage casks.’’ The NRC is taking this
action because it has received at least
one significant adverse comment in
response to a companion proposed rule
that was concurrently published with
the direct final rule.
DATES: Effective November 19, 2014, the
NRC withdraws the direct final rule
published at 79 FR 53281 on September
9, 2014.
ADDRESSES: Please refer to Docket ID
NRC–2014–0120 when contacting the
NRC about the availability of
information for this action. You may
access publicly-available information
related to this action by any of the
following methods:
• Federal Rulemaking Web site: Go to
http://www.regulations.gov and search
for Docket ID NRC–2014–0120. Address
questions about NRC dockets to Carol
Gallagher; telephone: 301–287–3422;
email: [email protected]. For
technical questions, contact the
individual listed in the FOR FURTHER

rljohnson on DSK3VPTVN1PROD with RULES

SUMMARY:

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section of this
document.
• NRC’s Agencywide Documents
Access and Management System
(ADAMS): You may obtain publiclyavailable documents online in the
ADAMS Public Documents collection at
http://www.nrc.gov/reading-rm/
adams.html. To begin the search, select
‘‘ADAMS Public Documents’’ and then
select ‘‘Begin Web-based ADAMS
Search.’’ For problems with ADAMS,
please contact the NRC’s Public
Document Room (PDR) reference staff at
1–800–397–4209, 301–415–4737, or by
email to [email protected].
• NRC’s PDR: You may examine and
purchase copies of public documents at
the NRC’s PDR, Room O1–F21, One
White Flint North, 11555 Rockville
Pike, Rockville, Maryland 20852.
FOR FURTHER INFORMATION CONTACT:
Gregory R. Trussell, Office of Nuclear
Material Safety and Safeguards, U.S.
Nuclear Regulatory Commission,
Washington, DC 20555–0001; telephone:
301–415–6445, email: Gregory.Trussell@
nrc.gov.
SUPPLEMENTARY INFORMATION: On
September 9, 2014 (79 FR 53281), the
NRC published in the Federal Register
a direct final rule amending its
regulations in part 72 of Title 10 of the
Code of Federal Regulations to add the
Holtec International HI–STORM UMAX
Canister Storage System, CoC No. 1040,
to the ‘‘List of approved spent fuel
storage casks.’’ The direct final rule was
to become effective on November 24,
2014. The NRC also concurrently
published a companion proposed rule
on September 9, 2014 (79 FR 53352).
In the September 9, 2014, proposed
rule, the NRC stated that if any
significant adverse comments were
received, then the NRC would withdraw
the direct final rule by publishing a
notice in the Federal Register. As a
result, the direct final rule would not
take effect. The NRC received 10
comments from private citizens which
raised issues including inspections;
seismic concerns; stress corrosion
cracking; and aging management, among
others. The comments are available at
www.regulations.gov by searching on
Docket ID NRC–2014–0120. The NRC
determined that at least one of the
comments is significant and adverse as
defined in Section I, ‘‘Procedural
Background,’’ of the direct final rule,
because the comment raises an issue
INFORMATION CONTACT

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serious enough to warrant a substantive
response to clarify or complete the
record. Therefore, the NRC is
withdrawing the direct final rule.
As stated in the September 9, 2014,
proposed rule, the NRC will address the
comments in a subsequent final rule.
The NRC will not initiate a second
comment period on this action.
Dated at Rockville, Maryland, this 13 day
of November, 2014.
For the U.S. Nuclear Regulatory
Commission.
Mark A. Satorius,
Executive Director for Operations.
[FR Doc. 2014–27398 Filed 11–18–14; 8:45 am]
BILLING CODE 7590–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9704]
RIN 1545–BK65

Failure To File Gain Recognition
Agreements or Satisfy Other Reporting
Obligations
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations, temporary
regulations, and removal of temporary
regulations.
AGENCY:

This document contains final
and temporary regulations relating to
the consequences to U.S. and foreign
persons for failing to file gain
recognition agreements (GRAs) or
related documents, or to satisfy other
reporting obligations, associated with
certain transfers of property to foreign
corporations in nonrecognition
exchanges. The regulations are
necessary to update and clarify the rules
that apply when a U.S. or foreign person
fails to file a GRA or related documents
or to satisfy other reporting obligations.
These regulations affect U.S. and foreign
persons that transfer property to foreign
corporations in nonrecognition
exchanges.

SUMMARY:

These regulations are effective
on November 19, 2014.
Applicability Dates: For dates of
applicability, see §§ 1.367(a)–2(f)(4),
1.367(a)–3(g)(1)(x), 1.367(a)–3T(g)(1)(ix),
1.367(a)–7(j), 1.367(a)–8(r)(1)(i) and

DATES:

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Federal Register / Vol. 79, No. 223 / Wednesday, November 19, 2014 / Rules and Regulations

(r)(3), 1.367(e)–2(g), and 1.6038B–
1(g)(6).

comments and revisions are discussed
in this preamble.

FOR FURTHER INFORMATION CONTACT:

Summary of Comments and
Explanation of Revisions

Shane M. McCarrick, (202) 317–6937
(not a toll-free number).
SUPPLEMENTARY INFORMATION:

1. Satisfaction of Section 6038B
Reporting if a GRA Is Filed

Paperwork Reduction Act
The collections of information
contained in the regulations have been
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 1545–1487.
The collections of information are in
§§ 1.367(a)–2(f)(2), 1.367(a)–3(f)(2),
1.367(a)–7(e)(2), 1.367(a)–8(p)(2),
1.367(e)–2(f)(2), 1.6038B–1(c)(4)(ii), and
1.6038B–1(e)(4). The collections of
information are mandatory. The likely
respondents are domestic corporations.
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.
Books and records relating to a
collection of information must be
retained as long as their contents might
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.

rljohnson on DSK3VPTVN1PROD with RULES

Background
This document contains amendments
to 26 CFR part 1. On January 31, 2013,
the IRS and the Department of the
Treasury (Treasury Department)
published a notice of proposed
rulemaking (REG–140649–11) in the
Federal Register (78 FR 6772–01) under
sections 367 and 6038B of the Internal
Revenue Code (Code) (proposed
regulations) relating to the
consequences to U.S. and foreign
persons for failing to file GRAs or
related documents, or to satisfy other
reporting obligations, associated with
certain transfers of property to foreign
corporations in nonrecognition
exchanges. No public hearing was
requested or held. The IRS and the
Treasury Department received written
comments on the proposed regulations,
which are available at
www.regulations.gov. After
consideration of all the comments, the
proposed regulations are adopted as
amended by this Treasury decision. In
addition, this Treasury decision amends
and removes a portion of the temporary
§§ 1.367(a)–3 and 1.367(a)–7 regulations
that were published on March 19, 2013
(T.D. 9615, 2013–1 C.B. 1026). The

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The proposed regulations under
section 6038B require a U.S. person that
transfers property (U.S. transferor) to
file a Form 926, Return by a U.S.
Transferor of Property to a Foreign
Corporation, with respect to a transfer of
stock or securities in all cases in which
a GRA is filed in order to avoid
penalties under section 6038B.
However, the proposed regulations do
not require the U.S. transferor to report
on the Form 926 any specific
information regarding the transferred
stock or securities. The IRS and the
Treasury Department have determined
that, similar to the information that
must be provided for other types of
transferred property, the U.S. transferor
should report on the Form 926 the fair
market value, adjusted tax basis, and
gain recognized with respect to the
transferred stock or securities, as well as
any other information that Form 926, its
accompanying instructions, or other
applicable guidance require to be
submitted with respect to the transfer of
the stock or securities. Section 1.6038B–
1(b)(2)(iv) of these final regulations is
thus modified accordingly.
2. Application to Previously Filed
Requests
The proposed regulations under
§ 1.367(a)–8(p) only apply to requests
for relief submitted on or after the date
the proposed regulations are adopted as
final regulations. One comment
requested that these final regulations
permit U.S. transferors to request relief
under § 1.367(a)–8(p) of the proposed
regulations for certain failures to file a
GRA document or comply with the GRA
provisions that are the subject of
requests for relief submitted before the
date the proposed regulations are
finalized. According to the
commentator, not permitting U.S.
transferors to do so could result in
disparate treatment for similarly
situated U.S. transferors.
The IRS and the Treasury Department
have determined that it is appropriate to
provide relief for certain failures to file
or to comply that were not willful and
that were the subject of requests for
relief submitted under § 1.367(a)–8(p) of
the existing final regulations (or
submitted under § 1.367(a)–8T(e)(10), as
contained in 26 CFR part 1 revised as of
April 1, 2008, or § 1.367(a)–8(c)(2), as
contained in 26 CFR part 1 revised as of

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April 1, 2006) before November 19, 2014
(previously filed requests). Accordingly,
§ 1.367(a)–8(r)(3) of these final
regulations provides a procedure under
which U.S. transferors may resubmit
certain previously filed requests
(including requests that were denied).
By submitting a previously filed request
under this procedure, a U.S. transferor
agrees that these final regulations under
§ 1.6038B–1 will apply to any transfer
that is the subject of the request. This is
intended to provide parity between
similarly situated U.S. transferors and
promote the policies underlying the
proposed regulations by ensuring that a
U.S. transferor that establishes its failure
was not willful under § 1.367(a)–8(p) is
still subject to penalties under section
6038B if its failure was not due to
reasonable cause.
3. Promptly Filing an Amended Return
as a Requirement to Seeking Relief
One comment was received regarding
the procedures described in § 1.367(a)–
8(p)(2) of the proposed regulations for
establishing that failures to file GRA
documents, or failures to comply, were
not willful. The comment requested that
these final regulations excuse
Coordinated Industry Case (CIC)
taxpayers from the requirement under
§ 1.367(a)–8(p)(2) of filing an amended
return promptly after discovering a
failure to file or a failure to comply.
Instead, the commentator suggested that
these final regulations allow CIC
taxpayers to submit the materials
required under § 1.367(a)–8(p)(2) when
the taxpayers effect a ‘‘qualified
amended return’’ under Rev. Proc. 94–
69, 1994–2 CB 804 (generally providing
special procedures for certain taxpayers
to show additional tax due or make
adequate disclosure with respect to an
item or position on a tax return prior to
an audit).
According to the commentator, it is
possible that an amended return filed to
correct the failure to file or failure to
comply will differ from the return that
is ultimately audited when the taxpayer
effects a qualified amended return
under Rev. Proc. 94–69. The
commentator stated that this could
result in an inefficient use of resources
in situations in which a CIC taxpayer,
when preparing the amended return,
includes not only adjustments related to
the failure to file or failure to comply,
but also all other adjustments as to
which the taxpayer is aware.
The IRS and the Treasury Department
decline to adopt this comment. The
commentator’s concerns exist in other
international contexts (for example,
§ 1.1503(d)–1(c)(2)), and it would be
inappropriate to create differing

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Federal Register / Vol. 79, No. 223 / Wednesday, November 19, 2014 / Rules and Regulations
procedures for requesting relief under
different provisions. However, the IRS
and the Treasury Department intend to
study the issue.

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4. Modifying the Reported Fair Market
Value of Transferred Stock
One comment requested that these
final regulations provide a mechanism
under which taxpayers may modify the
fair market value of transferred stock or
securities reported on a previously filed
GRA. According to the commentator,
taxpayers often determine the fair
market value of stock or securities
before the date that the stock or
securities are transferred to a foreign
corporation; these determinations are
based on projected financial information
that may, in some cases, deviate from
the actual financial information on the
date of the transfer.
The IRS and the Treasury Department
decline to adopt the comment. The IRS
and the Treasury Department have
determined that the proposed
regulations adequately address the
commentator’s concerns. First, because
a GRA is filed when a taxpayer files its
tax return (rather than at the time of an
outbound transfer of stock or securities),
a taxpayer has, not including
extensions, at least two and a half
months following a transfer to reconcile
projected financial information with
actual financial information.
Furthermore, a taxpayer may file an
extension if it needs additional time to
comply with the requirements of
§ 1.367(a)–8. Finally, a taxpayer that
fails to materially comply with the
requirements of § 1.367(a)–8, including
the requirement to include the fair
market value of the transferred stock or
securities in the GRA pursuant to
§ 1.367(a)–8(c)(3)(i)(B), may be eligible
to correct the GRA by seeking relief
based on a claim that the failure was not
willful.
5. Extension of Relief for Failures That
Are Not Willful to Other Section 367(a)
Reporting Obligations
The IRS and the Treasury Department
have determined that it is appropriate to
extend the relief for failures that are not
willful to certain other reporting
obligations under section 367(a) that
were not covered by the proposed
regulations. This Treasury decision
therefore revises § 1.367(a)–2 (providing
an exception to gain recognition under
section 367(a)(1) for assets transferred
outbound for use in the active conduct
of a trade or business outside of the
United States) and § 1.367(a)–7
(regarding application of section 367(a)
to an outbound transfer of assets by a
domestic target corporation in an

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exchange described in section 361) so
that a taxpayer may, solely for purposes
of section 367(a), be deemed not to have
failed to comply with reporting
obligations under §§ 1.367(a)–2 and
1.367(a)–7 by demonstrating that the
failure was not willful. The temporary
§ 1.367(a)–7 regulations regarding
reasonable cause relief are therefore
removed. Because the cases in which
relief is sought under § 1.367(a)–2 and
many of the cases in which relief is
sought under § 1.367(a)–7 are also
subject to reporting under section 6038B
and the regulations thereunder, the
penalty imposed under section 6038B
for failure to satisfy a reporting
obligation should generally be sufficient
to encourage proper reporting and
compliance.
6. Withdrawal of GRA Directive
On July 26, 2010, the Deputy
Commissioner International (LMSB)
issued directive LMSB–4–0510–017
(Directive). The Directive permits
taxpayers to remedy, without having to
demonstrate reasonable cause, unfiled
or deficient GRA documents associated
with a timely filed initial GRA or a
timely filed document purporting to be
an initial GRA. The Directive explained
that the means to best ensure
compliance with the GRA provisions
was under study and that, pending the
study, the Directive would be effective
‘‘until further notice.’’ Because this
Treasury decision provides
comprehensive guidance that is
designed to ensure compliance with the
GRA provisions, the Deputy
Commissioner (International), Large
Business & International will revoke the
Directive effective on November 19,
2014.
7. Including an Original Form 8838
With a Request for Relief
Under § 1.367(a)–8(p)(2)(i) of the
proposed regulations, a U.S. transferor
who seeks relief for a failure to file or
failure to comply with the GRA rules
must, among other requirements, file an
original Form 8838, Consent to Extend
the Time to Assess Tax Under Section
367—Gain Recognition Agreement, with
an amended return. The Form 8838
must, with respect to the gain realized
but not recognized on the initial
transfer, extend the period of limitations
on the assessment of tax to the period
specified in § 1.367(a)–8(p)(2)(i) of the
proposed regulations. The IRS and the
Treasury Department recognize that in
certain cases (for example, certain cases
in which a U.S. transferor seeks relief
for an unfiled annual certification), the
U.S. transferor will already have filed an
original Form 8838 that extends the

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period of limitations through the
required time period. These final
regulations therefore provide that, in
these cases, a U.S. transferor need not
file another Form 8838 with the
amended return; rather, the U.S.
transferor must attach a copy of the
previously filed Form 8838 to the
amended return. A similar modification
is made to these final regulations under
§ 1.367(e)–2 concerning outbound
liquidations and certain foreign-toforeign liquidations described in section
332.
8. Failure To Comply and Extension of
Period of Limitations
Section 1.367(a)–8(j)(8) of the existing
regulations provides that a failure to
comply with the GRA provisions will
extend the period of limitations on
assessment of tax until the close of the
third full taxable year ending after the
date on which the Director of Field
Operations or Area Director receives
actual notice of the failure to comply
from the U.S. transferor. The same
provision is included in the proposed
regulations. Section 1.367(e)–
2(e)(4)(ii)(B) of the proposed regulations
provides a similar rule with respect to
a liquidation document.
The IRS and the Treasury Department
have determined that the running of the
extended period of limitations arising
under §§ 1.367(a)–8(j)(8) and 1.367(e)–
2(e)(4)(ii)(B) should be based on when
the taxpayer furnishes to the Director of
Field Operations International, Large
Business & International (or any
successor to the roles and
responsibilities of such person) the
information that should have been
provided under the §§ 1.367(a)–8 or
1.367(e)–2 regulations, as applicable.
Thus, in these final regulations,
§§ 1.367(a)–8(j)(8) and 1.367(e)–
2(e)(4)(ii)(B) are modified accordingly.
In addition, §§ 1.367(a)&8(c)(2)(iii),
1.367(e)–2(b)(2)(i)(C)(1), and 1.367(e)–
2(b)(2)(iii)(D) of these final regulations
are revised to clarify that when a
taxpayer files a GRA under § 1.367(a)–
8 or a liquidation document under
§ 1.367(e)–2, the taxpayer agrees to
extend the period of limitations on
assessment of tax, in the circumstances
provided in §§ 1.367(a)–8(j)(8) and
1.367(e)–2(e)(4)(ii)(B), as applicable.
This agreement is deemed consented to
and signed by the Secretary for purposes
of section 6501(c)(4).
9. Reporting Requirement in § 1.367(a)–
3(c)(6)(i)(F)(3)
Section 1.367(a)–3(a) of the existing
final regulations provides the general
rule that a U.S. person must recognize
gain on certain transfers of stock or

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securities to a foreign corporation. In
relevant part, § 1.367(a)–3(c) of the
existing final regulations contains an
exception for certain transfers of stock
or securities of a domestic corporation.
Specifically, § 1.367(a)–3(c)(1) provides
that, except as provided in § 1.367(a)–
3(e) (providing rules for transfers of
stock or securities by a domestic
corporation to a foreign corporation
pursuant to an exchange described in
section 361), a transfer of stock or
securities of a domestic corporation by
a U.S. person to a foreign corporation
that would otherwise be subject to gain
recognition under section 367(a)(1)
pursuant to § 1.367(a)–3(a) will not be
subject to section 367(a)(1) if certain
requirements are satisfied. In particular,
the domestic corporation the stock or
securities of which are transferred
(referred to as the U.S. target company)
must comply with each of the reporting
requirements in § 1.367(a)–3(c)(6) and
each of the four conditions set forth in
§ 1.367(a)–3(c)(1)(i) through (iv) must be
satisfied. The condition set forth in
§ 1.367(a)–3(c)(1)(iv) requires that the
active trade or business test (as defined
in § 1.367(a)–3(c)(3)) be satisfied. To
satisfy the active trade or business test,
the substantiality test (as defined in
§ 1.367(a)–3(c)(3)(iii)) must be satisfied
(among other requirements). The
substantiality test is satisfied if, at the
time of the transfer, the fair market
value of the transferee foreign
corporation is at least equal to the fair
market value of the U.S. target company.
Pursuant to the reporting requirement
contained in § 1.367(a)–3(c)(6)(i)(F)(3),
the U.S. target company must submit a
statement demonstrating that the value
of the transferee foreign corporation
exceeds the value of the U.S. target
company on the acquisition date. The
standard that applies for purposes of the
reporting requirement of § 1.367(a)–
3(c)(6)(i)(F)(3) is intended to be the
same as the standard that applies for
purposes of the substantiality test.
Accordingly, this Treasury decision
revises § 1.367(a)–3(c)(6)(i)(F)(3) so that
the U.S. target company must submit a
statement demonstrating that the value
of the transferee foreign corporation
equals or exceeds the value of the U.S.
target company on the acquisition date.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866, as
supplemented by Executive Order
13563. Therefore, a regulatory
assessment is not required. It also has
been determined that section 553(b) of
the Administrative Procedure Act (5

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U.S.C. chapter 5) does not apply to these
regulations. It is hereby certified that
these regulations will not have a
significant impact on a substantial
number of small entities. This
certification is based on the fact that
these regulations merely provide for a
change in the standard, or clarify or
provide the standard, that will be used
to determine whether a taxpayer that
has failed to file a GRA or satisfy other
reporting obligations under section 367
will be entitled to avoid full gain
recognition under section 367(a)(1) or
367(e)(2), as applicable. Accordingly a
Regulatory Flexibility Analysis under
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Pursuant to
section 7805(f) of the Code, the notice
of proposed rulemaking preceding this
regulation was submitted to the Chief
Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business, and no
comments were received.
Drafting Information
The principal author of these
regulations is Shane M. McCarrick of
the Office of Associate Chief Counsel
(International). However, other
personnel from the IRS and the Treasury
Department participated in their
development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:

■

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

Par. 2. Section 1.367(a)–2 is amended
by adding new paragraph (f) to read as
follows:

■

§ 1.367(a)–2 Exception for transfers of
property for use in the active conduct of a
trade or business.

*

*
*
*
*
(f) Failure to comply with reporting
requirements of section 6038B—(1)
Failure to comply. For purposes of the
exception to the application of section
367(a)(1) provided in paragraph (a) of
§ 1.367(a)–2T, a failure to comply with
the reporting requirements of section
6038B and the regulations thereunder
(failure to comply) has the meaning set
forth in § 1.6038B–1(f)(2).
(2) Relief for certain failures to
comply that are not willful—(i) In

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general. A failure to comply described
in paragraph (f)(1) of this section will be
deemed not to have occurred for
purposes of satisfying the requirements
of this section if the taxpayer
demonstrates that the failure was not
willful using the procedure set forth in
this paragraph (f)(2). For this purpose,
willful is to be interpreted consistent
with the meaning of that term in the
context of other civil penalties, which
would include a failure due to gross
negligence, reckless disregard, or willful
neglect. Whether a failure to comply
was a willful failure will be determined
by the Director of Field Operations
International, Large Business &
International (or any successor to the
roles and responsibilities of such
position, as appropriate) (Director)
based on all the facts and
circumstances. The taxpayer must
submit a request for relief and an
explanation as provided in paragraph
(f)(2)(ii)(A) of this section. Although a
taxpayer whose failure to comply is
determined not to be willful will not be
subject to gain recognition under this
section, the taxpayer will be subject to
a penalty under section 6038B if the
taxpayer fails to demonstrate that the
failure was due to reasonable cause and
not willful neglect. See § 1.6038B–
1(b)(1) and (f). The determination of
whether the failure to comply was
willful under this section has no effect
on any request for relief made under
§ 1.6038B–1(f).
(ii) Procedures for establishing that a
failure to comply was not willful—(A)
Time and manner of submission. A
taxpayer’s statement that the failure to
comply was not willful will be
considered only if, promptly after the
taxpayer becomes aware of the failure,
an amended return is filed for the
taxable year to which the failure relates
that includes the information that
should have been included with the
original return for such taxable year or
that otherwise complies with the rules
of this section, and that includes a
written statement explaining the reasons
for the failure to comply. The amended
return must be filed with the Internal
Revenue Service at the location where
the taxpayer filed its original return.
The taxpayer may submit a request for
relief from the penalty under section
6038B as part of the same submission.
See § 1.6038B–1(f).
(B) Notice requirement. In addition to
the requirements of paragraph
(f)(2)(ii)(A) of this section, the taxpayer
must comply with the notice
requirements of this paragraph
(f)(2)(ii)(B). If any taxable year of the
taxpayer is under examination when the
amended return is filed, a copy of the

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Federal Register / Vol. 79, No. 223 / Wednesday, November 19, 2014 / Rules and Regulations
amended return and any information
required to be included with such
return must be delivered to the Internal
Revenue Service personnel conducting
the examination. If no taxable year of
the taxpayer is under examination when
the amended return is filed, a copy of
the amended return and any
information required to be included
with such return must be delivered to
the Director.
(3) For illustrations of the application
of the willfulness standard of this
paragraph (f), see the examples in
§ 1.367(a)–8(p)(3).
(4) Paragraph (f) applies to requests
for relief submitted on or after
November 19, 2014.
■ Par. 3. Section 1.367(a)–3 is amended:
■ 1. In paragraphs (c)(6)(i)(F)(3)(i) and
(c)(6)(i)(F)(3)(ii), by adding the language
‘‘equals or’’ before the word ‘‘exceeds.’’
■ 2. By revising paragraph (c)(6)(ii).
■ 3. By adding paragraph (f).
■ 4. By adding paragraph (g)(1)(x).
The additions and revisions read as
follows:
§ 1.367(a)–3 Treatment of transfers of
stock or securities to foreign corporations.

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*

*
*
*
*
(c) * * *
(6) * * *
(ii) Except as provided in paragraph
(f) of this section, for purposes of this
paragraph (c)(6), a U.S. income tax
return will be considered timely filed if
it is filed on or before the last date
prescribed for filing (taking into account
any extensions of time therefor) for the
taxable year in which the transfer
occurs.
*
*
*
*
*
(f) Failure to file statements—(1)
Failure to file. For purposes of the
exceptions to the application of section
367(a)(1) provided in paragraphs (c) and
(d)(2)(vi)(B) of this section, there is a
failure to file a statement described in
paragraph (c)(6), (c)(7), or (d)(2)(vi)(C) of
this section (failure to file) if the
statement is not filed with a timely filed
U.S. income tax return or is not
completed in all material respects.
(2) Relief for certain failures to file
that are not willful—(i) In general. A
failure to file described in paragraph
(f)(1) of this section will be deemed not
to have occurred for purposes of
satisfying the requirements of the
applicable regulation if the taxpayer
demonstrates that the failure was not
willful using the procedure set forth in
this paragraph (f)(2). For this purpose,
willful is to be interpreted consistent
with the meaning of that term in the
context of other civil penalties, which
would include a failure due to gross

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negligence, reckless disregard, or willful
neglect. Whether a failure to file was a
willful failure will be determined by the
Director of Field Operations
International, Large Business &
International (or any successor to the
roles and responsibilities of such
position, as appropriate) (Director)
based on all the facts and
circumstances. The taxpayer must
submit a request for relief and an
explanation as provided in paragraph
(f)(2)(ii)(A) of this section. Although a
taxpayer whose failure to file is
determined not to be willful will not be
subject to gain recognition under this
section, the taxpayer will be subject to
a penalty under section 6038B if the
taxpayer fails to satisfy the reporting
requirements, if any, under that section
and does not demonstrate that the
failure was due to reasonable cause and
not willful neglect. See § 1.6038B–1(b)
and (f). The determination of whether
the failure to file was willful under this
section has no effect on any request for
relief made under § 1.6038B–1(f).
(ii) Procedures for establishing that a
failure to file was not willful—(A) Time
and manner of submission. A taxpayer’s
statement that the failure to file was not
willful will be considered only if,
promptly after the taxpayer becomes
aware of the failure, an amended return
is filed for the taxable year to which the
failure relates that includes the
information that should have been
included with the original return for
such taxable year or that otherwise
complies with the rules of this section,
and that includes a written statement
explaining the reasons for the failure to
file. The amended return must be filed
with the Internal Revenue Service at the
location where the taxpayer filed its
original return. The taxpayer may
submit a request for relief from the
penalty under section 6038B as part of
the same submission. See § 1.6038B–
1(f).
(B) Notice requirement. In addition to
the requirements of paragraph
(f)(2)(ii)(A) of this section, the taxpayer
must comply with the notice
requirements of this paragraph
(f)(2)(ii)(B). If any taxable year of the
taxpayer is under examination when the
amended return is filed, a copy of the
amended return and any information
required to be included with such
return must be delivered to the Internal
Revenue Service personnel conducting
the examination. If no taxable year of
the taxpayer is under examination when
the amended return is filed, a copy of
the amended return and any
information required to be included
with such return must be delivered to
the Director.

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(3) For illustrations of the application
of the willfulness standard of this
paragraph (f), see the examples in
§ 1.367(a)–8(p)(3).
(g) * * *
(1) * * *
(x) Paragraphs (c)(6)(ii) and (f) of this
section apply to statements that are
required to be filed on or after
November 19, 2014, as well as to
requests for relief submitted on or after
November 19, 2014.
*
*
*
*
*
■ Par. 4. Section 1.367(a)–3T is
amended:
■ 1. In paragraph (d)(2)(vi)(B)(1)(ii), by
removing the language ‘‘its U.S. income
tax return’’ and adding the language ‘‘its
timely filed U.S. income tax return’’ in
its place.
■ 2. In the first and second sentences of
paragraph (g)(1)(ix), by removing the
language ‘‘(d)(2)(vi)(B)’’ and adding the
language ‘‘(d)(2)(vi)(B)(1)(i),
(d)(2)(vi)(B)(1)(iii), and (d)(2)(vi)(B)(2),’’
in its place.
■ 3. By adding two new sentences at the
end of paragraph (g)(1)(ix).
The additions read as follows:
§ 1.367(a)–3T Treatment of transfers of
stock or securities to foreign corporations
(temporary).

*

*
*
*
*
(g) * * *
(1) * * *
(ix) * * * Paragraph (d)(2)(vi)(B)(1)(ii)
of this section applies to statements that
are required to be filed on or after
November 19, 2014. See paragraph
(d)(2)(vi)(B)(1)(ii) of this section, as
contained in 26 CFR part 1 revised as of
April 1, 2014, for statements required to
be filed on or after March 18, 2013, and
before November 19, 2014.
*
*
*
*
*
■ Par. 5. Section 1.367(a)–7 is amended:
■ 1. In paragraph (a), by removing the
language ‘‘reasonable cause’’ and adding
the language ‘‘not willful’’ in its place.
■ 2. By revising paragraph (e)(2).
■ 3. By revising paragraph (j).
The revisions read as follows:
§ 1.367(a)–7 Outbound transfers of
property described in section 361(a) or (b).

*

*
*
*
*
(e) * * *
(2) Relief for certain failures to
comply that are not willful—(i) In
general. A control group member or U.S.
transferor’s failure to comply with any
requirement of this section will be
deemed not to have occurred for
purposes of satisfying the requirements
of this section if the control group
member or U.S. transferor (or the foreign
acquiring corporation on behalf of the
U.S. transferor), as applicable,

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demonstrates that the failure was not
willful using the procedure set forth in
paragraph (e)(2)(ii) of this section. For
this purpose, willful is to be interpreted
consistent with the meaning of that term
in the context of other civil penalties,
which would include a failure due to
gross negligence, reckless disregard, or
willful neglect. Whether the failure to
comply was a willful failure will be
determined by the Director of Field
Operations International, Large Business
& International (or any successor to the
roles and responsibilities of such
person) (Director) based on all the facts
and circumstances. The control group
member or U.S. transferor (or the foreign
acquiring corporation on behalf of the
U.S. transferor), as applicable, must
submit a request for relief and an
explanation as provided in paragraph
(e)(2)(ii) of this section. Although a U.S
transferor whose failure to comply is
determined not to be willful will not be
subject to gain recognition under this
section, the U.S. transferor will be
subject to a penalty under section 6038B
if the U.S. transferor fails to demonstrate
that the failure was due to reasonable
cause and not willful neglect. See
§ 1.6038B–1(b) and (f). The
determination of whether the failure to
comply was willful under this section
has no effect on any request for relief
made under § 1.6038B–1(f).
(ii) Procedures for establishing that a
failure to comply was not willful—(A)
Time and manner of submission. A
control group member or U.S.
transferor’s statement that the failure to
comply was not willful will be
considered only if, promptly after the
control group member or U.S. transferor,
as applicable, becomes aware of the
failure, an amended return is filed for
the taxable year to which the failure
relates that includes the information
that should have been included with the
original return for such taxable year or
that otherwise complies with the rules
of this section, and that includes a
written statement explaining the reasons
for the failure to comply. The amended
return must be filed with the Internal
Revenue Service at the location where
the taxpayer filed its original return.
The U.S. transferor may submit a
request for relief from the penalty under
section 6038B as part of the same
submission. See § 1.6038B–1(f).
(B) Notice requirement. In addition to
the requirements of paragraph
(e)(2)(ii)(A) of this section, a control
group member or U.S. transferor, as
applicable, must comply with the notice
requirements of this paragraph
(e)(2)(ii)(B). If any taxable year of the
control group member or U.S. transferor,
as applicable, is under examination

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when the amended return is filed, a
copy of the amended return and any
information required to be included
with such return must be delivered to
the Internal Revenue Service personnel
conducting the examination. If no
taxable year of the control group
member or U.S transferor, as applicable,
is under examination when the
amended return is filed, a copy of the
amended return and any information
required to be included with such
return must be delivered to the Director.
(iii) For illustrations of the
application of the willfulness standard
of this paragraph (e)(2), see the
examples in § 1.367(a)–8(p)(3).
*
*
*
*
*
(j) Effective/applicability dates.
Except for paragraph (e)(2) of this
section, this section applies to transfers
occurring on or after April 18, 2013.
Paragraph (e)(2) applies to requests for
relief submitted on or after November
19, 2014. Paragraph (e)(2) of this section
also applies to requests for relief
submitted before November 19, 2014 if
the statute of limitations on the
assessment of tax has not expired for
any year to which the request relates
and the control group member or U.S.
transferor, as applicable, resubmits the
request under paragraph (e)(2) of this
section and notes, on the request, that
the request is being submitted pursuant
to the third sentence of this paragraph
(j). See paragraph (e)(2) of this section,
as contained in 26 CFR part 1 revised as
of April 1, 2014, for requests for relief
submitted after April 17, 2013, and
before November 19, 2014, that are not
resubmitted under paragraph (e)(2) of
this section.
§ 1.367(a)–7T

[Removed]

Par. 6. Section 1.367(a)–7T is
removed.
■ Par. 7. Section 1.367(a)–8 is amended:
■ 1. By revising the eleventh sentence of
paragraph (a).
■ 2. By redesignating paragraphs
(b)(1)(v) through (xv) as (b)(1)(vii)
through (xvii), respectively.
■ 3. By redesignating paragraph
(b)(1)(iv) as paragraph (b)(1)(v).
■ 4. By adding new paragraphs (b)(1)(iv)
and (vi).
■ 5. By revising redesignated paragraphs
(b)(1)(xiii), (xiv), and (xv).
■ 6. By revising paragraph (c)(2)(iii).
■ 7. By revising paragraph (d)(1).
■ 8. By revising paragraph (j)(8).
■ 9. By revising paragraph (p).
■ 10. By adding a sentence at the end of
paragraph (r)(1)(i).
■ 11. By adding paragraph (r)(3).
The revisions and additions read as
follows:
■

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§ 1.367(a)–8 Gain recognition agreement
requirements.

(a) Scope.* * * Paragraph (p) of this
section provides relief for certain
failures to file an initial gain recognition
agreement (as defined in paragraph
(b)(1)(vi) of this section) or to comply
with the requirements of this section
with respect to a gain recognition
agreement (as described in paragraph (c)
of this section).* * *
(b) * * *
(1) * * *
(iv) A gain recognition agreement
document means any agreement,
statement, schedule, or form required to
be filed under this section, including an
initial gain recognition agreement (as
defined in paragraph (b)(1)(vi) of this
section), a new gain recognition
agreement described in paragraph (c)(5)
of this section, a Form 8838 extending
the period of limitations on assessment
of tax described in paragraph (f) of this
section, and an annual certification
described in paragraph (g) of this
section.
*
*
*
*
*
(vi) An initial gain recognition
agreement means the gain recognition
agreement entered into under paragraph
(c) of this section with respect to the
initial transfer.
*
*
*
*
*
(xiii) A timely filed return means a
Federal income tax return filed on or
before the last date prescribed for filing
(taking into account any extensions of
time therefor) such return.
(xiv) Transferee foreign corporation.
Except as provided in this paragraph
(b)(1)(xiv), the transferee foreign
corporation is the foreign corporation to
which the transferred stock or securities
are transferred in an initial transfer. In
the case of an indirect stock transfer, the
transferee foreign corporation has the
meaning set forth in § 1.367(a)–
3(d)(2)(i). The transferee foreign
corporation also includes a corporation
designated as the transferee foreign
corporation in the case of a new gain
recognition agreement entered into
under this section.
(xv) Transferred corporation. Except
as provided in this paragraph (b)(1)(xv),
the transferred corporation is the
corporation the stock or securities of
which are transferred in the initial
transfer. In the case of an indirect stock
transfer, the transferred corporation has
the meaning set forth in § 1.367(a)–
3(d)(2)(ii). The transferred corporation
also includes a corporation designated
as the transferred corporation in the
case of a new gain recognition

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agreement entered into under this
section.
*
*
*
*
*
(c) * * *
(2) * * *
(iii) A statement that the U.S.
transferor agrees to comply with all the
conditions and requirements of this
section, including to recognize gain
under the gain recognition agreement in
accordance with paragraph (c)(1)(i) of
this section, to extend the period of
limitations on assessment of tax as
provided in paragraph (f) of this section,
to file the certification described in
paragraph (g) of this section, and, as
provided in paragraph (j)(8) of this
section, to treat a failure to comply (as
described in paragraph (j)(8) of this
section) as extending the period of
limitations on assessment of tax for the
taxable year in which gain is required to
be reported.
*
*
*
*
*
(d) Filing requirements—(1) General
rule. An initial gain recognition
agreement must be timely filed in order
for the U.S. transferor to avoid
recognizing gain under section 367(a)(1)
with respect to the transferred stock or
securities by reason of the applicable
exceptions provided under § 1.367(a)–3.
Except as provided in paragraph (p) of
this section, an initial gain recognition
agreement is timely filed only if—
(i) The initial gain recognition
agreement and any other gain
recognition agreement document
required to be filed with the initial gain
recognition agreement are included with
a timely filed return of the U.S.
transferor for the taxable year during
which the initial transfer occurs; and
(ii) Each gain recognition agreement
document identified in paragraph
(d)(1)(i) of this section is completed in
all material respects.
*
*
*
*
*
(j) * * *
(8) Failure to comply. A U.S.
transferor fails to comply in any
material respect with any requirement
of this section, or the terms of the gain
recognition agreement as described in
paragraph (c)(1) of this section. A failure
to comply under this paragraph (j)(8)
will extend the period of limitations on
assessment of tax for the taxable year in
which gain is required to be reported
until the close of the third full taxable
year ending after the date on which the
U.S. transferor furnishes to the Director
of Field Operations International, Large
Business & International (or any
successor to the roles and
responsibilities of such person)
(Director) the information that should
have been provided under this section.

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Except as provided in paragraph (p) of
this section, for purposes of this
paragraph (j)(8), a failure to comply
includes—
(i) If there is a gain recognition event
in a taxable year, a failure to report gain
or pay any additional tax or interest due
under the terms of the gain recognition
agreement; and
(ii) A failure to file a gain recognition
agreement document, other than an
initial gain recognition agreement or a
document required to be filed with the
initial gain recognition agreement. For
this purpose, there is a failure to file a
gain recognition agreement document
if—
(A) The gain recognition agreement
document is not timely filed as required
under this section, or
(B) The gain recognition agreement
document is not completed in all
material respects.
*
*
*
*
*
(p) Relief for certain failures to file or
failures to comply that are not willful—
(1) In general. This paragraph (p)
provides relief if there is a failure to file
an initial gain recognition agreement as
required under paragraph (d)(1) of this
section (failure to file), or a failure to
comply that is a triggering event under
paragraph (j)(8) of this section (failure to
comply). A failure to file or failure to
comply will be deemed not to have
occurred for purposes of paragraph
(d)(1) of this section or paragraph (j)(8)
of this section if the U.S. transferor
demonstrates that the failure was not
willful using the procedure set forth in
this paragraph (p). For this purpose,
willful is to be interpreted consistent
with the meaning of that term in the
context of other civil penalties, which
would include a failure due to gross
negligence, reckless disregard, or willful
neglect. Whether a failure to file or
failure to comply was willful will be
determined by the Director (as described
in paragraph (j)(8) of this section) based
on all the facts and circumstances. The
U.S. transferor must submit a request for
relief and an explanation as provided in
paragraph (p)(2)(i) of this section.
Although a U.S. transferor whose failure
to file or failure to comply is determined
not to be willful will not be subject to
gain recognition under paragraph (b),
(c), or (e) of § 1.367(a)–3 or paragraph
(c)(1) of this section, as applicable, the
U.S. transferor will be subject to a
penalty under section 6038B if the U.S.
transferor fails to satisfy the reporting
requirements under that section and
does not demonstrate that the failure
was due to reasonable cause and not
willful neglect. See § 1.6038B–1(b)(2)
and (f). The determination of whether

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the failure to file or failure to comply
was willful under this section has no
effect on any request for relief made
under § 1.6038B–1(f).
(2) Procedures for establishing that a
failure to file or failure to comply was
not willful—(i) Time and manner of
submission. A U.S. transferor’s
statement that a failure to file or failure
to comply was not willful will be
considered only if, promptly after the
U.S. transferor becomes aware of the
failure, an amended return is filed for
the taxable year to which the failure
relates that includes the information
that should have been included with the
original return for such taxable year or
that otherwise complies with the rules
of this section, and that includes a
written statement explaining the reasons
for the failure to file or failure to
comply. The U.S. transferor must file,
with the amended return, a Form 8838
extending the period of limitations on
assessment of tax with respect to the
gain realized but not recognized on the
initial transfer to the later of: The close
of the eighth full taxable year following
the taxable year during which the initial
transfer occurred (date one); or the close
of the third full taxable year ending after
the date on which the required
information is provided to the Director
(date two). However, the U.S. transferor
is not required to file a Form 8838 with
the amended return if both date one is
later than date two and a Form 8838 was
previously filed extending the period of
limitations on assessment of tax with
respect to the gain realized but not
recognized on the initial transfer to date
one. If a Form 8838 is not required to
be filed with the amended return
pursuant to the previous sentence, a
copy of the previously filed Form 8838
must be filed with the amended return.
The amended return and either a Form
8838 or a copy of the previously filed
Form 8838, as the case may be, must be
filed with the Internal Revenue Service
at the location where the U.S. transferor
filed its original return. The U.S.
transferor may submit a request for
relief from the penalty under section
6038B as part of the same submission.
See § 1.6038B–1(f).
(ii) Notice requirement. In addition to
the requirements of paragraph (p)(2)(i)
of this section, the U.S. transferor must
comply with the notice requirements of
this paragraph (p)(2)(ii). If any taxable
year of the U.S. transferor is under
examination when the amended return
is filed, a copy of the amended return
and any information required to be
included with such return must be
delivered to the Internal Revenue
Service personnel conducting the
examination. If no taxable year of the

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U.S. transferor is under examination
when the amended return is filed, a
copy of the amended return and any
information required to be included
with such return must be delivered to
the Director.
(3) Examples. The following examples
illustrate the application of this
paragraph (p). All of the examples are
based solely on the following facts and
any additional facts stated in the
particular example. DC, a domestic
corporation, wholly owns FS and FA,
each a foreign corporation. In Year 1,
pursuant to a transaction qualifying
both as an exchange under section 351
and a reorganization under section
368(a)(1)(B), DC transferred all the FS
stock to FA solely in exchange for
voting stock of FA (FS Transfer). The
fair market value of the FS stock
exceeded DC’s tax basis in the stock at
the time of the FS transfer. Absent the
application of section 367 to the
transaction, DC’s exchange of the FS
stock for the stock of FA qualified as a
tax-free exchange under sections 351(a)
and section 354. Immediately after the
transaction, both FA and FS were
controlled foreign corporations (as
defined in section 957). Furthermore,
DC was a section 1248 shareholder (as
defined in § 1.367(b)–2(b)) with respect
to FA and FS, and a 5-percent
shareholder with respect to FA for
purposes of § 1.367(a)–3(b)(ii). Thus, DC
was required to recognize gain under
section 367(a)(1) by reason of the FS
Transfer unless DC timely filed an
initial gain recognition agreement (GRA)
as required by paragraph (d)(1) of this
section and complies in all material
respects with the requirements of this
section throughout the term of the GRA.
The application of section 6038B is not
addressed in these examples. DC may be
subject to a penalty under section 6038B
even if DC demonstrates under this
section that a failure to file or failure to
comply was not willful. See § 1.6038B–
1(b) and (f) for the application of section
6038B.
Example 1. Taxpayer failed to file a GRA
due to accidental oversight. (i) Facts. DC filed
its tax return for the year of the FS Transfer,
reporting no gain with respect to the
exchange of the FS stock. DC, through its tax
department, was aware of the requirement to
file a GRA in order for DC to avoid
recognizing gain with respect to the FS
Transfer under section 367(a)(1), and had the
experience and competency to properly
prepare the GRA. DC had filed many GRAs
over the years and had never failed to timely
file a GRA. However, although DC prepared
the GRA with respect to the FS Transfer, it
was not filed with DC’s tax return for the year
of the FS Transfer due to an accidental
oversight. During the preparation of the
following year’s tax return, DC discovered

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that the GRA was not filed. DC filed an
amended return to file the GRA and
complied with the procedures set forth under
paragraph (p)(2) of this section promptly after
it became aware of the failure.
(ii) Result. Because DC failed to file a GRA
with its timely filed tax return for the year
of the FS Transfer, there is a failure to timely
file the GRA as required by paragraph (d)(1)
of this section. However, based on the facts
of this Example 1, including that the failure
to timely file the GRA was an isolated and
accidental oversight, the failure to timely file
is not a willful failure to file. Accordingly,
the timely filed requirement of paragraph
(d)(1) of this section is considered to be
satisfied, and DC is not required to recognize
the gain realized on the FS Transfer under
section 367(a)(1).
Example 2. Taxpayer’s course of conduct
is taken into account in determination. (i)
Facts. DC filed its tax return for the year of
the FS Transfer, reporting no gain with
respect to the exchange of the FS stock, but
failed to file a GRA. DC, through its tax
department, was aware of the requirement to
file a GRA in order for DC to avoid
recognizing gain with respect to the FS
Transfer under section 367(a)(1). DC had not
consistently and in a timely manner filed
GRAs in the past, and also had an established
history of failing to timely file other tax and
information returns for which it was subject
to penalties. In a year subsequent to Year 1,
DC transferred stock of another foreign
subsidiary with respect to which DC had a
built-in gain (FS2) to FA in a transaction that
qualified as both a reorganization under
section 368(a)(1)(B) and an exchange
described under section 351 (FS2 Transfer).
DC was required to recognize gain on the FS2
Transfer under section 367(a)(1) unless DC
timely filed a GRA as required by paragraph
(d)(1) of this section and complied with the
requirements of this section during the term
of the GRA. DC reported no gain on the FS2
Transfer on its tax return, but failed to file
a GRA. At the time of the FS2 Transfer, DC
was already aware of its failure to file the
GRA required for the prior FS Transfer, but
had not implemented any safeguards to
ensure that it would timely file GRAs for
future transactions. DC filed an amended
return to file the GRA for the FS2 Transfer
and complied with the procedures set forth
under paragraph (p)(2) of this section
promptly after it became aware of the failure.
DC asserts that its failure to timely file a GRA
with respect to the FS2 Transfer was due to
an isolated oversight similar to the one that
occurred with respect to the FS Transfer. At
issue is DC’s failure to timely file a GRA for
the FS2 Transfer.
(ii) Result. Because DC failed to file a GRA
with its timely filed tax return for the year
of the FS2 Transfer, there is a failure to
timely file the GRA as required by paragraph
(d)(1) of this section. DC’s course of conduct
is taken into account in determining whether
its failure to timely file a GRA for the FS2
Transfer was willful. Based on the facts of
this Example 2, including DC’s history of
failing to file required tax and information
returns in general and GRAs in particular,
and its failure to implement safeguards to
ensure that it would timely file GRAs, the

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failure to timely file a GRA with respect to
the FS2 Transfer rises to the level of a willful
failure to timely file. Accordingly, DC is
ineligible for relief under paragraph (p) of
this section, the GRA is not considered
timely filed for purposes of paragraph (d)(1)
of this section, and DC must recognize the
full amount of the gain realized on the FS2
Transfer.
Example 3. GRA not completed in all
material respects. (i) Facts. DC timely filed
its tax return for the year of the FS Transfer,
reporting no gain with respect to the
exchange of the FS stock. DC was aware of
the requirement to file a GRA to avoid
recognizing gain under section 367(a)(1),
including the requirement to provide the
basis and fair market value of the transferred
stock. However, DC filed a purported GRA
that did not contain the fair market value of
the FS stock. Instead, the GRA was filed with
the statement that the fair market value
information was ‘‘available upon request.’’
Other than the omission of the fair market
value of the FS stock, the GRA contained all
other information required by this section.
(ii) Result. Because DC omitted the fair
market value of the FS stock from the GRA,
the GRA was not completed in all material
respects. Accordingly, there is a failure to
timely file the GRA. Furthermore, because
DC knowingly omitted such information,
DC’s omission is a willful failure to timely
file a GRA. Accordingly, DC is ineligible for
relief under paragraph (p) of this section, the
GRA is not considered timely filed for
purposes of paragraph (d)(1) of this section,
and DC must recognize the full amount of the
gain realized on the FS Transfer. The same
result would arise if DC had included the fair
market value of the FS stock, but knowingly
omitted its tax basis from the GRA.
Example 4. Taxpayer knew of GRA filing
requirement, but intentionally chose not to
file. (i) Facts. When DC filed its tax return for
the tax year of the FS Transfer, it was aware
of the requirement to file a GRA to avoid
recognizing gain under section 367(a)(1).
However, because DC anticipated selling
Business A in the following tax year, which
was expected to produce a capital loss that
could be carried back to fully offset the gain
recognized on the FS Transfer, DC
intentionally chose not to file a GRA. DC
recognized the gain from the FS Transfer
under section 367(a)(1) and reported the gain
on its timely filed tax return. At the end of
the following year, a large class action
lawsuit was filed against Business A and,
consequently, DC was unable to sell the
business. As a result, DC did not realize the
expected capital loss, and it was not able to
offset the gain from the FS Transfer. DC now
seeks to file a GRA for the FS Transfer.
(ii) Result. Because DC failed to file a GRA
with its timely filed tax return for the year
of the FS Transfer, there is a failure to timely
file the GRA as required by paragraph (d)(1)
of this section. Furthermore, because DC
intentionally chose not to file a GRA for the
FS Transfer, its actions constitute a willful
failure to timely file a GRA. Accordingly, DC
is ineligible for relief under paragraph (p) of
this section, the GRA is not considered
timely filed for purposes of paragraph (d)(1)
of this section, and DC must recognize the

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full amount of the gain realized on the FS
Transfer in Year 1.

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*

*
*
*
*
(r) Effective/applicability dates—(1)
* * * (i) * * * The eleventh sentence
of paragraph (a) and paragraphs
(b)(1)(iv), (b)(1)(vi), (b)(1)(xiii), (d)(1),
(j)(8), and (p) of this section will apply
to gain recognition agreement
documents that are required to be filed
on or after November 19, 2014, as well
as to requests for relief submitted on or
after November 19, 2014.
*
*
*
*
*
(3) Applicability to requests for relief
submitted before November 19, 2014.
The eleventh sentence of paragraph (a)
and paragraphs (b)(1)(iv), (b)(1)(vi),
(b)(1)(xiii), (d)(1), (j)(8), and (p) of this
section will apply to requests for relief
submitted before November 19, 2014
if—
(i) The statute of limitations on the
assessment of tax has not expired for
any year to which the request relates;
and
(ii) The U.S. transferor resubmits the
request under paragraph (p) of this
section, notes on the request that the
request is being submitted pursuant to
this paragraph (r)(3), and acknowledges
on the request that the last sentence of
§ 1.6038B–1(g)(6) provides a special rule
regarding the application of § 1.6038B–
1 to any transfer that is the subject of the
request.
■ Par. 8. Section 1.367(e)–2 is amended:
■ 1. By revising the ninth sentence and
adding two new sentences before the
last sentence of paragraph (a).
■ 2. By revising paragraph (b)(1)(i).
■ 3. In paragraph (b)(2)(i)(A)(2), by
removing the language ‘‘its U.S. income
tax returns’’ and adding the language
‘‘its timely filed U.S. income tax
returns’’ in its place.
■ 4. In paragraph (b)(2)(i)(A)(3), by
removing the language ‘‘its U.S. income
tax return’’ and adding the language ‘‘its
timely filed U.S. income tax return’’ in
its place.
■ 5. By revising paragraph (b)(2)(i)(C)(1).
■ 6. In the first sentence of paragraph
(b)(2)(i)(E)(3), by removing the language
‘‘its U.S. income tax return’’ and adding
the language ‘‘its timely filed U.S.
income tax return’’ in its place.
■ 7. In paragraph (b)(2)(i)(E)(4)(ii), by
removing the language ‘‘its U.S. income
tax return’’ and adding the language ‘‘its
timely filed U.S. income tax return’’ in
its place.
■ 8. In paragraph (b)(2)(i)(E)(5)(ii), by
removing the language ‘‘its U.S. income
tax return’’ and adding the language ‘‘its
timely filed U.S. income tax return’’ in
its place.
■ 9. In the first sentence of paragraph
(b)(2)(iii)(A), by removing the language

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‘‘its U.S. income tax return’’ and adding
the language ‘‘its timely filed U.S.
income tax return’’ in its place.
■ 10. By adding a sentence at the end of
paragraph (b)(2)(iii)(D).
■ 11. In paragraph (c)(2)(i)(B)(3), by
removing the language ‘‘their U.S.
income tax returns’’ and adding the
language ‘‘their timely filed U.S. income
tax returns’’ in its place.
■ 12. By revising paragraph (e).
■ 13. By adding paragraphs (f) and (g).
The revisions and additions read as
follows:
§ 1.367(e)–2 Distributions described in
section 367(e)(2).

(a) Purpose and scope—(1) In general.
* * * Paragraph (e) of this section
provides rules regarding failures to file
statements or other documents required
under this section or failures to comply
with the requirements of this section.
Paragraph (f) of this section provides
relief for certain failures to file or
comply. Finally, paragraph (g) of this
section specifies the effective/
applicability dates for the rules of this
section. * * *
*
*
*
*
*
(b) Distribution by a domestic
corporation—(1) General rule—(i)
Recognition of gain and loss. If a
domestic corporation (domestic
liquidating corporation) makes a
distribution of property in complete
liquidation under section 332 to a
foreign corporation (foreign distributee
corporation) that meets the stock
ownership requirements of section
332(b) with respect to stock in the
domestic liquidating corporation,
then—
(A) Section 337(a) and (b)(1) will not
apply; and
(B) The domestic liquidating
corporation will recognize gain or loss
on the distribution of property to the
foreign distributee corporation, except
as provided in paragraph (b)(2) of this
section.
*
*
*
*
*
(2) * * *
(i) * * *
(C) * * *
(1) A declaration that the distribution
to the foreign distributee corporation is
one to which the rules of this paragraph
(b)(2)(i) apply and a certification that
the domestic liquidating corporation
and the foreign distributee corporation
agree to comply with all the conditions
and requirements of this section,
including, as provided in paragraph
(e)(4)(ii)(B) of this section, to treat a
failure to comply (as described in
paragraph (e)(4)(i) of this section) as
extending the period of limitations on

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68771

assessment of tax for the taxable year in
which gain is required to be reported.
*
*
*
*
*
(iii) * * *
(D) * * * The required statement
shall also state that the domestic
liquidating corporation agrees, as
provided in paragraph (e)(4)(ii)(B) of
this section, to treat a failure to comply
(as described in paragraph (e)(4)(i) of
this section) as extending the period of
limitations on assessment of tax for the
taxable year in which gain is required to
be reported.
*
*
*
*
*
(e) Failures to file or failures to
comply—(1) Scope. This paragraph (e)
provides rules regarding a failure to file
an initial liquidation document with
respect to one or more liquidating
distributions by a domestic liquidating
corporation that, absent such failure,
would qualify for nonrecognition
treatment under paragraph (b)(2)(i) or
(iii) of this section, or with respect to
one or more liquidating distributions by
a foreign liquidating corporation that,
absent such failure, would qualify for
nonrecognition treatment under
paragraph (c)(2)(i)(B) of this section
(failure to file). This paragraph (e) also
provides rules regarding failures to
comply in all material respects with the
terms of this section with respect to one
or more liquidating distributions for
which nonrecognition treatment was
initially claimed under paragraph
(b)(2)(i), (b)(2)(iii), or (c)(2)(i)(B) of this
section, as applicable (failure to
comply).
(2) Definitions. The following
definitions apply for purposes of this
section.
(i) An initial liquidation document
means any statement, schedule, or form
required to be filed under this section in
order for the domestic liquidating
corporation or foreign liquidating
corporation, as applicable, to initially
qualify to claim nonrecognition
treatment with respect to one or more
liquidating distributions described in
this section, including—
(A) The statement and attachments
described in paragraph (b)(2)(i)(C) of
this section;
(B) The statement described in
paragraph (b)(2)(iii)(D) of this section;
and
(C) The statement and attachments
described in paragraph (c)(2)(i)(C) of
this section.
(ii) A subsequent liquidation
document means any statement,
schedule, or form (other than an initial
liquidation document) required to be
filed under this section in order for the
domestic liquidating corporation or

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Federal Register / Vol. 79, No. 223 / Wednesday, November 19, 2014 / Rules and Regulations

foreign liquidating corporation, as
applicable, to continue to qualify for
nonrecognition treatment with respect
to one or more liquidating distributions
described in this section, including—
(A) The schedule described in
paragraph (b)(2)(i)(E)(3) of this section;
(B) The schedule described in
paragraph (b)(2)(i)(E)(4)(ii) of this
section; and
(C) The statement and attachments
described in paragraph (b)(2)(i)(E)(5) of
this section.
(iii) A timely filed U.S. income tax
return means a Federal income tax
return filed on or before the last date
prescribed for filing (taking into account
any extensions of time therefor) such
return.
(3) Failure to file—(i) General rule.
For purposes of this section and except
as provided in paragraph (b)(2)(i)(D) or
(f) of this section, there is a failure to file
an initial liquidation document if—
(A) An initial liquidation document is
not filed with the timely filed U.S.
income tax return specified under this
section, or
(B) An initial liquidation document is
not completed in all material respects.
(ii) Consequences of a failure to file.
If there is a failure to file an initial
liquidation document, then
nonrecognition treatment under
paragraph (b)(2)(i), (b)(2)(iii), or
(c)(2)(i)(B) of this section (as
appropriate) will not apply.
(4) Failure to comply—(i) General
rule. For purpose of this section and
except as provided in paragraph
(b)(2)(i)(D) or (f) of this section, a failure
to comply includes—
(A) A failure to report gain, or pay any
additional tax or interest due, in
accordance with the requirements under
this section; and
(B) A failure to file a subsequent
liquidation document, as determined by
applying paragraph (e)(3)(i) of this
section, but replacing the term ‘‘initial
liquidation document’’ with the term
‘‘subsequent liquidation document.’’
(ii) Consequences of a failure to
comply. If there is a failure to comply
in any material respect with the terms
of paragraph (b)(2)(i), (b)(2)(iii), or
(c)(2)(i) of this section, as applicable,
then—
(A) Any gain (but not loss) that was
not previously recognized by the
domestic liquidating corporation or
foreign liquidating corporation, as
applicable, under paragraph (b)(2)(i),
(b)(2)(iii), or (c)(2)(i)(B) of this section
must be recognized; and
(B) The period of limitations on
assessment of tax for the taxable year in
which gain is required to be reported
will be extended until the close of the

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third full taxable year ending after the
date on which the domestic liquidating
corporation, foreign distributee
corporation, or foreign liquidating
corporation, as applicable, furnishes to
the Director of Field Operations
International, Large Business &
International (or any successor to the
roles and responsibilities of such
position, as appropriate) (Director) the
information that should have been
provided under this section.
(f) Relief for certain failures to file or
failures to comply that are not willful—
(1) In general. This paragraph (f)
provides relief if there is a failure to file
an initial liquidation document as
described in paragraph (e)(3)(i) of this
section (failure to file), or a failure to
comply in any material respect with the
terms of this section as described in
paragraph (e)(4)(i) of this section (failure
to comply). A failure to file or a failure
to comply will be deemed not to have
occurred for purposes of paragraph
(e)(3)(ii) or (e)(4)(ii) of this section if the
taxpayer demonstrates that the failure
was not willful using the procedure set
forth in this paragraph (f). For this
purpose, willful is to be interpreted
consistent with the meaning of that term
in the context of other civil penalties,
which would include a failure due to
gross negligence, reckless disregard, or
willful neglect. Whether a failure to file
or failure to comply was willful will be
determined by the Director (as described
in paragraph (e)(4)(ii)(B) of this section)
based on all the facts and
circumstances. The taxpayer must
submit a request for relief and an
explanation as provided in paragraph
(f)(2)(i) of this section. Although a
taxpayer whose failure to file or failure
to comply is determined not to be
willful will not be subject to gain or loss
recognition under this section, the
taxpayer will be subject to a penalty
under section 6038B if the taxpayer fails
to satisfy the reporting requirements, if
any, under that section and does not
demonstrate that the failure was due to
reasonable cause and not willful
neglect. See § 1.6038B–1(e)(4) and (f).
The determination of whether the
failure to file or failure to comply was
willful under this section has no effect
on any request for relief made under
§ 1.6038B–1(f).
(2) Procedures for establishing that a
failure to file or failure to comply was
not willful—(i) Time and manner of
submission. A taxpayer’s statement that
a failure to file or failure to comply was
not willful will be considered only if,
promptly after the taxpayer becomes
aware of the failure, an amended return
is filed for the taxable year to which the
failure relates that includes the

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information that should have been
included with the original return for
such taxable year or that otherwise
complies with the rules of this section,
and that includes a written statement
explaining the reasons for the failure. In
the case of a liquidating distribution
described in paragraph (b)(2)(iii) of this
section, the taxpayer must file, with the
amended return, a Form 8838 extending
the period of limitations on assessment
of tax with respect to the gain realized
but not recognized with respect to the
liquidating distribution to the close of
the third full taxable year ending after
the date on which the required
information is provided to the Director.
In the case of a liquidating distribution
described in paragraph (b)(2)(i) or
(c)(2)(i)(B) of this section, the taxpayer
must file, with the amended return, a
Form 8838 extending the period of
limitations on the assessment of tax
with respect to the gain realized but not
recognized with respect to the
liquidating distribution to the later of:
the date provided in paragraph
(b)(2)(i)(C)(5), taking into account
paragraph (c)(2)(i)(C) and (D), as
applicable (date one); or, the close of the
third full taxable year ending after the
date on which the required information
is provided to the Director (date two).
However, the taxpayer is not required to
file a Form 8838 with the amended
return if both date one is later than date
two and a Form 8838 was previously
filed extending the period of limitations
on assessment of tax with respect to the
gain realized but not recognized with
respect to the liquidating distribution to
date one. If a Form 8838 is not required
to be filed pursuant to the previous
sentence, a copy of the previously filed
Form 8838 must be filed with the
amended return. The amended return
and either a Form 8838 or a copy of the
previously filed Form 8838, as the case
may be, must be filed with the Internal
Revenue Service at the location where
the taxpayer filed its original return.
The taxpayer may submit a request for
relief from the penalty under section
6038B as part of the same submission.
See § 1.6038B–1(f).
(ii) Notice requirement. In addition to
the requirements of paragraph (f)(2)(i) of
this section, the taxpayer must comply
with the notice requirements of this
paragraph (f)(2)(ii). If any taxable year of
the taxpayer is under examination when
the amended return is filed, a copy of
the amended return and any
information required to be included
with such return must be delivered to
the Internal Revenue Service personnel
conducting the examination. If no
taxable year of the taxpayer is under

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examination when the amended return
is filed, a copy of the amended return
and any information required to be
included with such return must be
delivered to the Director.
(3) For illustrations of the application
of the willfulness standard of this
paragraph (f), see the examples in
§ 1.367(a)–8(p)(3).
(g) Effective/applicability dates.
Except as otherwise provided, this
section applies to distributions
occurring on or after September 7, 1999
or, if the taxpayer so elects, to
distributions in taxable years ending
after August 8, 1999. The ninth, tenth,
and eleventh sentences of paragraph (a)
of this section, and paragraphs (b)(1)(i),
(b)(2)(i)(A)(2), (b)(2)(i)(A)(3),
(b)(2)(i)(E)(3), (b)(2)(i)(E)(4)(ii),
(b)(2)(i)(E)(5)(ii), (b)(2)(iii)(A),
(c)(2)(i)(B)(3), (e), and (f) of this section
will apply to liquidation documents that
are required to be filed on or after
November 19, 2014, as well as to
requests for relief submitted on or after
November 19, 2014.
■ Par. 9. Section 1.6038B–1 is amended:
■ 1. By adding a sentence after the first
sentence in paragraph (b)(1)(i).
■ 2. By revising paragraph (b)(2)(i)(B)(1).
■ 3. By adding paragraph (b)(2)(iii).
■ 4. By adding paragraph (b)(2)(iv).
■ 5. By revising paragraphs (c)(1)
through (c)(5).
■ 6. By revising paragraph (e)(4).
■ 7. By removing paragraph (f)(1)(i).
■ 8. By redesignating paragraphs
(f)(1)(ii) and (f)(1)(iii) as paragraphs
(f)(1)(i) and (f)(1)(ii), respectively.
■ 9. By adding paragraph (f)(2)(iii).
■ 10. By adding paragraph (f)(2)(iv).
■ 11. In paragraph (g)(1), by removing
the language ‘‘(g)(5)’’ and adding the
language ‘‘(g)(6)’’ in its place.
■ 12. By adding paragraph (g)(6).
The revisions and additions read as
follows:
§ 1.6038B–1 Reporting of certain transfers
to foreign corporations.

rljohnson on DSK3VPTVN1PROD with RULES

*

*
*
*
*
(b) * * * (1) * * * -(i) * * * In
addition, if the U.S. person files a
statement under § 1.367(a)–
3(d)(2)(vi)(C), a gain recognition
agreement under § 1.367(a)–8, or a
liquidation document under § 1.367(e)–
2(b), such person must comply in all
material respects with the requirements
of such section pursuant to the terms of
the statement, gain recognition
agreement, or liquidation document, as
applicable, in order to satisfy a reporting
obligation under section 6038B. * * *
*
*
*
*
*
(2) * * *
(i) * * *

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(B) * * *
(1) Except as provided in paragraph
(b)(2)(iii) of this section, the U.S.
transferor (or one or more successors)
filed an initial gain recognition
agreement under § 1.367(a)–8, and filed
Form 926 in accordance with paragraph
(b)(2)(iv) of this section; or
*
*
*
*
*
(ii) * * *
(iii) Timely filed initial gain
recognition agreement. Paragraph
(b)(2)(i)(B)(1) of this section will not
apply unless the initial gain recognition
agreement is timely filed as determined
under § 1.367(a)–8(d)(1), but for
purposes of this section, determined
without regard to § 1.367(a)–8(p).
However, see paragraph (f)(3) of this
section for certain relief that may be
available.
(iv) Satisfaction of section 6038B
reporting if a gain recognition
agreement is timely filed. If the U.S.
transferor is described in paragraph
(b)(2)(i)(B)(1) of this section and is not
otherwise required to file a Form 926
with respect to a transfer of assets other
than the stock or securities to the
transferee foreign corporation, the
requirements of this section are satisfied
with respect to the transfer of the stock
or securities by completing Part I and
Part II of Form 926, noting on the Form
926 that a gain recognition agreement is
being filed pursuant to § 1.367(a)–8;
reporting on the Form 926 the fair
market value, adjusted tax basis, and
gain recognized with respect to the
transferred stock or securities;
submitting on the Form 926 any other
information that Form 926, its
accompanying instructions, or other
applicable guidance require to be
submitted with respect to the transfer of
the stock or securities; and attaching a
signed copy of the Form 926 to its
timely filed U.S. income tax return
(including extensions) for the year of the
transfer. If the U.S. transferor is required
to file Form 926 with respect to a
transfer of assets in addition to the stock
or securities, the requirements of this
section are satisfied with respect to the
transfer of the stock or securities by
noting on the Form 926 that a gain
recognition agreement is being filed
pursuant to § 1.367(a)–8; reporting on
the Form 926 the fair market value,
adjusted tax basis, and gain recognized
with respect to the transferred stock or
securities; and submitting on the Form
926 any other information that Form
926, its accompanying instructions, or
other applicable guidance require to be
submitted with respect to the transfer of
the stock or securities.
*
*
*
*
*

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(c) * * *
(1) through (4)(i) [Reserved]. For
further guidance, see § 1.6038B–1T(c)(1)
through (4)(i).
(ii) Stock or securities. Describe any
stock or securities that are transferred,
including the adjusted tax basis and fair
market value of the stock or securities,
the class or type, amount, and
characteristics of the stock or securities,
and the name, address, place of
incorporation, and general description
of the corporation issuing the stock or
securities. In addition, if any provision
of § 1.367(a)–3 or § 1.367(a)–3T applies
to except the transfer of the stock or
securities from section 367(a)(1),
provide information supporting the
claimed application of such provision.
However, see paragraph (b)(2) of this
section for certain exceptions and
special rules for reporting transfers of
stock or securities under section 367(a).
(iii) through (5) [Reserved]. For
further guidance, see § 1.6038B–
1T(c)(4)(iii) through (5).
*
*
*
*
*
(e) * * *
(4) Reporting rules for section
367(e)(2) distributions by domestic
liquidating corporations—(i) General
rule. Except as provided in paragraph
(e)(4)(ii) of this section, if the
distributing corporation makes a
distribution of property in complete
liquidation under section 332 to a
foreign distributee corporation that
meets the stock ownership requirements
of section 332(b) with respect to the
stock of the distributing corporation,
then the distributing corporation must
complete a Form 926 and attach a
signed copy of such form to its timely
filed U.S. income tax return (including
extensions) for the taxable years that
include one or more liquidating
distributions. The property description
contained in Part III of the Form 926
must contain a description, including
the adjusted tax basis and fair market
value, of all property distributed by the
distributing corporation (regardless of
whether the distribution of the property
qualifies for nonrecognition treatment).
The description must also identify the
items of property for which
nonrecognition treatment is claimed
under § 1.367(e)–2(b)(2)(ii) or (iii), as
applicable.
(ii) Special rule. Except as provided in
paragraph (e)(4)(iii) of this section, if the
distributing corporation distributes
items of property that will be used by
the foreign distributee corporation in
the conduct of a trade or business in the
United States and the distributing
corporation does not recognize gain or
loss on such distribution under

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Federal Register / Vol. 79, No. 223 / Wednesday, November 19, 2014 / Rules and Regulations

§ 1.367(e)–2(b)(2)(i) with respect to such
property, then the distributing
corporation may satisfy the
requirements of this section by
completing Part I and Part II of Form
926, noting in Part III that the
information required by Form 926 is
contained in a statement required by
§ 1.367(e)–2(b)(2)(i)(C)(2), and attaching
a signed copy of Form 926 to its timely
filed U.S. income tax return (including
extensions) for each taxable year that
includes one or more distributions in
liquidation. In addition, if the
distributing corporation distributes
stock of a domestic subsidiary
corporation and does not recognize gain
or loss on such distribution under
§ 1.367(e)–2(b)(2)(iii) with respect to
such stock, then the distributing
corporation may satisfy the
requirements of this section by
completing Part I and Part II of Form
926, noting in Part III that the
information required by Form 926 is
contained in a statement required by
§ 1.367(e)–2(b)(2)(iii)(D), and attaching a
signed copy of Form 926 to its timely
filed U.S. income tax return (including
extensions) for the taxable years that
include one or more distributions of
domestic subsidiary stock.
(iii) Properly filed statement.
Paragraph (e)(4)(ii) will not apply if
there is a failure to file an initial
liquidation document as determined
under § 1.367(e)–2(e)(3)(i), but for
purposes of this section, determined
without regard to § 1.367(e)–2(f).
However, see paragraph (f)(3) of this
section for certain relief that may be
available.
(f) * * *
(2) * * *
(iii) With respect to an initial gain
recognition agreement filed under
§ 1.367(a)–8, a failure to comply as
determined under § 1.367(a)–8(j)(8), but
for purposes of this section, determined
without regard to the application of
§ 1.367(a)–8(p).
(iv) With respect to an initial
liquidation document filed under
§ 1.367(e)–2(b)(2), a failure to comply as
determined under § 1.367(e)–2(e)(4)(i),
but for purposes of this section,
determined without regard to the
application of § 1.367(e)–2(f).
*
*
*
*
*
(g) * * *
(6) The second sentence of paragraph
(b)(1)(i) and paragraphs (b)(2)(i)(B)(1),
(b)(2)(iii), (b)(2)(iv), (c), (e)(4), (f)(2)(iii),
and (f)(2)(iv) of this section will apply
to documents required to be filed on or
after November 19, 2014, as well as to
requests for relief submitted on or after
November 19, 2014. The second

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sentence of paragraph (b)(1)(i) and
paragraphs (b)(2)(i)(B)(1), (b)(2)(iii),
(b)(2)(iv), (c), and (f)(2)(iii) of this
section will also apply to any transfer
that is the subject of a request for relief
submitted pursuant to § 1.367(a)–8(r)(3).
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
Approved: October 31, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2014–27365 Filed 11–18–14; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[Docket No. USCG–2014–0367]
RIN 1625–AA09

Drawbridge Operation Regulation;
Darby Creek, Essington, PA
Coast Guard, DHS.
Final rule.

AGENCY:
ACTION:

The Coast Guard is changing
the operating regulation that governs the
Conrail railroad bridge over Darby Creek
at mile marker 0.25 in Essington, PA.
The bridge owner, Conrail, is modifying
the existing remote operating system
which controls the bridge operations.
Cameras will be installed and the
remote operating site will move from its
current location in Delair, NJ to Mt.
Laurel, NJ. The train crew is no longer
required to stop and check the waterway
for approaching vessel traffic prior to
initiating a bridge closure and mariners
requesting an opening for the bridge
will have to contact the new remote
location.

SUMMARY:

This rule is effective December
19, 2014.
ADDRESSES: Documents mentioned in
this preamble are part of docket USCG–
2014–0367. To view documents
mentioned in this preamble as being
available in the docket, go to http://
www.regulations.gov, type the docket
number in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on Open Docket
Folder on the line associated with this
rulemaking. You may also visit the
Docket Management Facility in Room
W12–140 on the ground floor of the
Department of Transportation West
Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m.
DATES:

PO 00000

Frm 00012

Fmt 4700

Sfmt 4700

and 5 p.m., Monday through Friday,
except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
email Mrs. Jessica Shea, Fifth Coast
Guard District Bridge Administration
Division, Coast Guard; telephone 757–
398–6422, email
[email protected]. If you have
questions on viewing the docket, call
Cheryl Collins, Program Manager,
Docket Operations, telephone 202–366–
9826.
SUPPLEMENTARY INFORMATION:
Table of Acronyms
CFR Code of Federal Regulations
Conrail Consolidated Rail Corporation
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of Proposed Rulemaking
§ Section Symbol
U.S.C. United States Code

A. Regulatory History and Information
On August 1, 2014, we published a
notice of proposed rulemaking (NPRM)
entitled Drawbridge Operation
Regulation; Darby Creek, Essington, PA
in the Federal Register (79 FR 44724).
We received no comments on the
proposed rule. No public meeting was
requested, and none was held.
B. Basis and Purpose
The bridge owner, Conrail, requested
a change to 33 CFR 117.903 because
they modified the sensor and visual
equipment on site at their bridge across
Darby Creek. They also relocated the
remote operation station to a new
location. The regulation is changing two
aspects of the bridge operation.
Specifically, the location of the remote
operator and the installation of cameras
to verify whether any vessels are
transiting the waterway before a bridge
closure is initiated. This rule does not
change the operating schedule of the
bridge.
The scope of the waterway inspection
is different between the current on-site
train crewmember inspection process
and the range of the proposed camera
installation. There is also a difference in
the time it takes between the inspection
and the initiation of the bridge closure
operations. Currently, the regulation
requires an on-site train crewmember to
conduct an inspection of the waterway
for vessels by stopping the train
approximately 200 feet north of the
bridge site when approached from the
north and 300 feet south of the bridge
site when approached from the south.
Once the train is stopped, the train
crewmember walks to the bridge site
and physically looks up and down the
channel. The time it takes to stop the

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