Reg-157714-06

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decision up to whoever is the Chairman
about whether and when to brief other
Commissioners does not solve the
problem. Requiring regular reports to all
Commissioners for investigations lasting
longer than six months will inspire
public confidence and help avoid undue
delays in completing investigations.
[FR Doc. 2012–985 Filed 1–20–12; 8:45 am]
BILLING CODE 6750–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–157714–06]
RIN 1545–BG43

Determination of Governmental Plan
Status
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of public hearing on
proposed rulemaking.
AGENCY:

This document announces a
public hearing on proposed regulations,
(REG–157714–06) relating to the
determination of governmental plans.
DATES: The public hearing is scheduled
for Tuesday, June 5, 2012, at 10 a.m. in
the auditorium of the Internal Revenue
Building. The IRS must receive outlines
of the topics to be discussed at the
public hearing by February 6, 2012.
ADDRESSES: The public hearing is being
held in the Internal Revenue Building,
1111 Constitution Avenue NW.,
Washington, DC. Due to building
security procedures, visitors must enter
at the Constitution Avenue entrance. In
addition, all visitors must present photo
identification to enter the building.
Mail outlines to CC:PA:LPD:PR (REG–
157714–06), Room 5205, Internal
Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC
20044. Submissions may be handdelivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–157714–06),
Couriers Desk, Internal Revenue
Service, 1111 Constitution Avenue NW.,
Washington, DC or sent electronically
via the Federal eRulemaking Portal at
www.regulations.gov (REG–157714–06).
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Pamela Kinard at (202) 622–6060, and
regarding the submission of public
comments and the public hearing, Ms.
Oluwafunmilayo (Funmi) Taylor, at
(202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION: The
subject of the public hearing is the

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SUMMARY:

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advanced notice of proposed
rulemaking (REG–157714–06) that was
published in the Federal Register on
Tuesday, November 8, 2011 (76 FR
69172).
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. A period of 10
minutes is allotted to each person for
presenting oral comments. After the
deadline has passed, persons who have
submitted written comments and wish
to present oral comments at the hearing
must submit an outline of the topics to
be discussed and the amount of time to
be devoted to each topic (a signed
original and four copies) by February 6,
2012.
The IRS will prepare an agenda
containing the schedule of speakers.
Copies of the agenda will be made
available free of charge at the hearing.
Because of access restrictions, the IRS
will not admit visitors beyond the
immediate entrance area more than 30
minutes before the hearing. For
information about having your name
placed on the building access list to
attend the hearing, see the FOR FURTHER
INFORMATION CONTACT section of this
document.
Guy R. Traynor,
Federal Register Liaison, Legal Processing
Division, Publications and Regulations Br.,
Procedure and Administration.
[FR Doc. 2012–1253 Filed 1–20–12; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–120282–10]
RIN 1545–BJ56

Dividend Equivalents From Sources
Within the United States
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary
regulations and notice of public hearing.
AGENCY:

In the Rules and Regulations
section of this issue of the Federal
Register, the IRS is issuing temporary
regulations that provide guidance on the
definition of the term ‘‘specified
notional principal contract’’ for
purposes of section 871(m) of the
Internal Revenue Code (Code) beginning
after March 18, 2012 through December
31, 2012. The text of those regulations
also serves as the text of the proposed
regulations. The preamble to the
temporary regulations explains the

SUMMARY:

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amendments added by the temporary
regulations. The preamble to this notice
of proposed rulemaking explains the
proposed regulations, which provide
guidance to nonresident aliens and
foreign corporations that hold certain
financial products providing for
payments that are contingent upon or
determined by reference to payments of
dividends from sources within the
United States. This document also
provides a notice of a public hearing on
these proposed regulations.
DATES: Written or electronic comments
must be received by April 6, 2012.
Outlines of topics to be discussed at the
public hearing scheduled for April 27,
2012, at 10 a.m., must be received by
April 6, 2012.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–120282–10), room
5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions
may be hand-delivered Monday through
Friday between the hours of 8 a.m. and
4 p.m. to CC:PA:LPD:PR (REG–120282–
10), 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–
120282–10). The public hearing will be
held in the auditorium, Internal
Revenue Service Building, 1111
Constitution Avenue NW., Washington,
DC.
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Mark E. Erwin or D. Peter Merkel at
(202) 622–3870; concerning submission
of comments, the hearing, and/or to be
placed on the building access list to
attend the hearing, Oluwafunmilayo
(Funmi) Taylor, Publications and
Regulations Branch Specialist, at (202)
622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
Temporary regulations in the Rules
and Regulations section of this issue of
the Federal Register amend the Income
Tax Regulations (26 CFR part 1) relating
to section 871. The temporary
regulations extend the section
871(m)(3)(A) statutory definition of the
term specified notional principal
contract (specified NPC) through
December 31, 2012. This document
contains proposed regulations under
section 871(m) of the Code that will be
applicable as of January 1, 2013. The
preamble to the temporary regulations
provides a discussion of the background
of section 871(m) and explains the
provisions contained in the temporary

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Federal Register / Vol. 77, No. 14 / Monday, January 23, 2012 / Proposed Rules

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regulations and § 1.871–16(b) of these
proposed regulations.
1. In General
Section 1.871–15(a) of these proposed
regulations treats a dividend equivalent
as a dividend from sources within the
United States for purposes of sections
871(a), 881, and 4948(a), and chapters 3
and 4 of subtitle A of the Code. As
prescribed by section 871(m)(2),
§ 1.871–15(b)(1) defines a dividend
equivalent as (1) any substitute
dividend made pursuant to a securities
lending or a sale-repurchase transaction
that is contingent upon or determined
by reference to the payment of a
dividend from sources within the
United States, (2) any payment made
pursuant to a specified NPC that is
contingent upon or determined by
reference to the payment of a dividend
from sources within the United States,
or (3) any other payment substantially
similar to such payments. The proposed
regulations specify that a payment is not
a dividend equivalent if it is determined
by reference to an estimate of an
expected (but not yet announced)
dividend without reference to or
adjustment for the amount of any actual
dividend.
For purposes of determining a
dividend equivalent, the term payment
includes any gross amount used in
computing any net amount transferred
to or from the taxpayer. For example,
the terms of a notional principal
contract (NPC) may provide for periodic
payments by each of the counterparties
that occur at quarterly intervals.
Because these payments may offset each
other, in whole or in part, the terms of
such contracts generally provide for
payment of only the net amount owed
between the counterparties (that is, the
difference between the amounts owed
between the counterparties). A dividend
equivalent is equal to the gross amount
that is contingent upon or determined
by reference to a dividend used to
determine a net amount, even if no net
payment is made or the party entitled to
a gross amount determined by reference
to a dividend is required to make a net
payment to the other contracting party.
Section 1.871–15(d) describes
payments that are considered
substantially similar to substitute
dividends made pursuant to securities
lending and sale-repurchase
transactions and to payments made
pursuant to specified NPCs.
Substantially similar payments are (1)
gross-up amounts paid by a short party
in satisfaction of the long party’s tax
liability with respect to a dividend
equivalent, and (2) payments calculated
by reference to a dividend from sources

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within the United States that are made
pursuant to an equity-linked instrument
other than an NPC. The Treasury
Department and the IRS will continue to
monitor equity-linked transactions, and
may identify in separate guidance other
payments that are substantially similar
to a substitute dividend payment or a
payment made pursuant to a specified
NPC.
2. Definition of Specified Notional
Principal Contract
Section 1.871–16 defines the term
specified NPC for payments made after
March 18, 2012. Comments requested
that rules promulgated under section
871(m) rely on objective factors for
determining whether an NPC is a
specified NPC. The Treasury
Department and the IRS believe that the
proposed regulations address these
requests by providing objective rules
that will be administrable and that
identify NPCs entered into with the
potential for tax avoidance.
A. Transition Period
To provide taxpayers with the time
needed to implement withholding on
specified NPCs, temporary regulations
issued together with these proposed
regulations provide that the term
specified NPC will have the same
meaning as provided in section
871(m)(3)(A) for payments made prior to
January 1, 2013. Section 1.871–16(b) is
the same as the temporary regulations
accompanying this notice of proposed
rulemaking. Thus, § 1.871–16T(b)
applies to payments made on or after
March 18, 2012 and before January 1,
2013.
B. Definition Applicable to Payments
Made on or After January 1, 2013
Beginning on January 1, 2013, an NPC
generally will be a specified NPC for
purposes of section 871(m) if: (1) The
long party is ‘‘in the market’’ on the
same day that the parties price the NPC
or when the NPC terminates; (2) the
underlying security is not regularly
traded on a qualified exchange; (3) the
short party posts the underlying security
as collateral and the underlying security
represents more than ten percent of the
collateral posted by the short party; (4)
the term of the NPC has fewer than 90
days; (5) the long party controls the
short party’s hedge; (6) the notional
principal amount is greater than five
percent of the total public float of the
underlying security or greater than 20
percent of the 30-day daily average
trading volume, as determined at the
close of business on the day
immediately preceding the first day of
the term of the NPC; or (7) the NPC is

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3203

entered into on or after the
announcement of a special dividend
and prior to the ex-dividend date.
A long party is considered to be ‘‘in
the market’’ if the long party sells the
underlying security on the same day
that the parties price an NPC or
purchases the underlying security on
the day that the parties terminate an
NPC. An NPC is sometimes entered into
in tranches that spread the execution
over more than one day; in that case, the
proposed regulations consider each day
that a tranche is executed or settled as
a testing date. Similarly, if the long
party to an NPC sells or purchases an
underlying security on a day other than
the pricing date or the settlement date
of an NPC, but sets the price to align
with the price of the NPC (such as with
a forward contract), the long party will
be treated as in the market on that day.
The Code and regulations define
‘‘readily tradable on an established
securities market’’ (and similar phrases)
differently depending on the context.
The Treasury Department and the IRS
believe that ‘‘readily tradable on an
established securities market,’’ as used
in section 871(m), is intended to ensure
that the underlying securities trade in
sufficient volume to provide ample
liquidity in the position. The proposed
regulations provide that if the
underlying security is not regularly
traded on a qualified exchange, an NPC
referencing that security is a specified
NPC. An underlying security is
‘‘regularly traded’’ for this purpose if it
is traded on a qualified exchange and it
was traded on at least 15 out of the 30
trading days prior to the date that the
parties entered into an NPC.
Section 871(m)(3)(A)(iv) provides that
prior to March 18, 2012, an NPC will be
a specified NPC if the short party to the
contract posts the underlying security as
collateral with any long party to the
contract. The Treasury Department and
the IRS believe that when a short party
posts the underlying security as
collateral with the long party the related
NPC should be a specified NPC. In the
event of default by the short party, the
fact that the underlying security is
posted as collateral guarantees that the
value of the collateral moves in tandem
with the contract. This concern is less
applicable when the value of the
underlying securities posted as
collateral is a small portion of the total
amount of cash or other property posted
as collateral for the NPC. The proposed
regulations treat an NPC as a specified
NPC only if the underlying security is
posted as collateral and the underlying
security represents more than ten
percent of the total fair market value

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posted as collateral on any day that the
NPC is in effect.
The proposed regulations treat an
NPC as a specified NPC if the term of
the contract has fewer than 90 days. As
the market for equity-linked NPCs grew
and evolved, taxpayers began to
purchase and sell NPCs in lieu of
trading the underlying equities. Many
transactions entered into to avoid U.S.
withholding tax on dividends involved
short-term equity swaps around an exdividend date. In many cases, the
taxpayer entered into an NPC with a
financial institution that acquired the
underlying security as a hedge of a
contract; the parties then settled or
terminated that contract within days or
weeks of the date it was entered into.
When an NPC has a short duration and
is in effect over an ex-dividend date, the
source rule of section 871(m) should
take precedence over the general source
rule for NPC income in § 1.863–7.
In some situations, the long party
controls the acquisition of stock that the
short party uses to hedge its position
under the contract or has directed the
short party to sell the short party’s
hedge to a particular purchaser at a
specific price and date. The long party
in these situations may exercise such
control over the short party’s hedge
pursuant to terms of a written agreement
or through course of conduct. The
Treasury Department and the IRS
believe that the source rule of section
871(m) should apply to an NPC when a
long party exercises control over the
short party’s hedge. Accordingly, the
proposed regulations treat an NPC as a
specified NPC when a foreign investor
controls the short party’s hedge or
participates in an underlying equity
control program. An underlying equity
control program is any system, whether
carried out electronically or otherwise,
that allows a long party to direct its
counterparty’s hedge of an NPC or that
allows a long party to acquire economic
exposure to an underlying security and
to determine the form of the transaction
later. An underlying equity control
program, however, does not include an
electronic trading platform that allows a
customer to place an order to enter into
an NPC with a dealer, provided that the
dealer independently determines
whether and how to hedge its position
without customer direction.
The proposed regulations treat an
equity swap as a specified NPC when
the notional principal amount of an
NPC is a significant percentage of the
trading volume. Specifically, when the
notional principal amount of the NPC is
greater than five percent of the total
public float or 20 percent of the 30-day
average daily trading volume such

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contract is treated as a specified NPC. If
a long party has multiple NPCs that
reference the same underlying security,
the notional principal amounts of those
contracts must be aggregated when
determining whether the notional
principal amount represents a
significant percentage of the trading
volume.
A special dividend is a nonrecurring
payment to shareholders that is in
addition to any recurring dividend
payment. The proposed regulations
provide that any NPC is a specified NPC
when the parties enter into the NPC
after the announcement of a special
dividend on the underlying stock. The
Treasury Department and the IRS
believe that an NPC entered into after
the announcement of a special dividend
and before the ex-dividend date is more
likely to be entered into for the purpose
of avoiding U.S. tax than an NPC
referencing a stock that pays only a
recurring dividend.
To prevent taxpayers from avoiding
these rules through related parties, the
proposed regulations provide that each
related person (within the meaning of
section 267(b) or 707(b)(1)) is treated as
a party to the contract. The proposed
regulations also provide that an NPC
entered into between two related dealers
is not a specified NPC if the NPC hedges
risk associated with another NPC
entered into with a third party. This rule
is intended to avoid excessive
withholding tax on transactions
commonly employed by dealers to
transfer risk from one entity to another
within their affiliated group.
Notwithstanding these rules defining
the term specified NPC, the
Commissioner may challenge
transactions that are designed to avoid
the application of these rules under
applicable judicial doctrines. Nothing in
these rules precludes the Commissioner
from asserting that a contract labeled as
an NPC or other equity derivative is in
fact an ownership interest in the equity
referenced in the contract.
3. Underlying Security
The term underlying security means
any security that pays a U.S. source
dividend. If an NPC references more
than one security, each reference
security is treated as an underlying
security of a separate NPC. If an NPC
references a customized index, each
component security of that index is
treated as an underlying security in a
separate NPC for purposes of this
section. An index is treated as a
customized index if it is (1) a narrowbased index or (2) any other index
unless futures contracts or options
contracts referencing the index trade on

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a qualified board or exchange. The
definition of the ‘‘narrow-based index’’
is generally based on the definition of
that term in the Securities Exchange Act
of 1934, Section 3(a)(55)(B).
4. Specified NPC Status Arising During
Term of Contract; Liability of
Withholding Agent; and Other
Conforming Amendments
These proposed regulations amend
several regulations under section 1441
to require a withholding agent to
withhold tax owed with respect to a
dividend equivalent. If an NPC that is
not a specified NPC on the date it is
entered into becomes a specified NPC
during the term of the contract, it will
be treated as though it had been a
specified NPC during the entire term of
the contract. Payments made under the
NPC by reference to the payment of a
dividend from sources within the
United States will be re-characterized as
dividend equivalents and all tax owed
with respect to such dividend
equivalents will be due at the time of
the next payment made under the NPC,
including a termination payment. In
cases where the tax owed is greater than
the next payment made under the
specified NPC, the withholding agent is
responsible for reporting and depositing
the total amount due with the IRS. The
mechanism by which a withholding
agent collects the amount due from the
taxpayer is left to the discretion of the
withholding agent and the taxpayer, and
is not specified in these proposed
regulations. The withholding agent must
deposit the total amount due even if it
cannot collect the amount from the
counterparty.
The proposed regulations provide that
dividend equivalents are treated as
income from investments in stock for
purposes of section 892; taxpayers may
rely on § 1.892–3(a)(6) until final
regulations are issued. Finally, the
proposed regulations provide that a
reduced rate of withholding tax
provided by an income tax convention
for dividends paid or derived by a
foreign person applies to a dividend
equivalent.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a
significant regulatory action as defined
in Executive Order 12866. Therefore, a
regulatory assessment is not required. It
also has been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations. Because the
regulation does not impose a collection
of information on small entities, the
Regulatory Flexibility Act (5 U.S.C.

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Federal Register / Vol. 77, No. 14 / Monday, January 23, 2012 / Proposed Rules
chapter 6) does not apply. Pursuant to
section 7805(f) of the Code, these
regulations have been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations,
consideration will be given to any
written comments (a signed original and
eight (8) copies) or electronic comments
that are submitted timely to the IRS. The
IRS and the Treasury Department
request comments on the clarity of the
proposed rules and how they can be
made easier to understand. All
comments will be available for public
inspection and copying.
A public hearing has been scheduled
for April 27, 2012, beginning at 10 a.m.
in the auditorium of the Internal
Revenue Service Building, 1111
Constitution Avenue NW., Washington,
DC. Due to building security
procedures, visitors must enter at the
Constitution Avenue entrance. All
visitors must present photo
identification to enter the building.
Because of access restrictions, visitors
will not be admitted beyond the
immediate entrance area more than 30
minutes before the hearing starts. For
information about having your name
placed on the building access list to
attend the hearing, see the FOR FURTHER
INFORMATION CONTACT section of this
preamble. The rules of 26 CFR
601.601(a)(3) apply to the hearing.
Persons who wish to present oral
comments at the hearing must submit
electronic or written comments and an
outline of the topics to be discussed and
the time to be devoted to each topic by
April 6, 2012. A period of 10 minutes
will be allotted to each person for
making comments. An agenda showing
the scheduling of the speakers will be
prepared after the deadline for receiving
outlines has passed. Copies of the
agenda will be available free of charge
at the hearing.

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Drafting Information
The principal author of these
regulations is D. Peter Merkel, the Office
of Associate Chief Counsel
(International). Other personnel from
the Treasury Department and the IRS
participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.

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Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
proposed to be amended as follows:

3205

similar payment as defined in § 1.871–
15(d), if such payment is contingent
upon or determined by reference to an
estimate of expected dividends and the
estimate of an expected dividend is not
adjusted in any way for the amount of
PART 1— INCOME TAXES
an actual dividend.
Paragraph 1. The authority citation
(ii) Expected dividends. For purposes
for part 1 continues to read in part as
of this section, an expected dividend is
follows:
not considered an estimate of expected
dividends on or after the date that the
Authority: 26 U.S.C. 871(m) and
corporate issuer announces a dividend.
7805 * * *
A dividend announcement occurs on
Par. 2. In § 1.863–7, paragraph (a) is
the earliest date on which the
revised to read as follows:
corporation declares, announces, or
§ 1.863–7 Allocation of income attributable agrees to the amount or payment of such
to certain notional principal contracts under dividend.
section 863(a).
(c) Payments determined on gross
basis. A payment includes any gross
(a) Scope—(1) Introduction. [The text
of the proposed amendments to § 1.863– amount that is used in computing any
net amount that is transferred to or from
7(a)(1) is the same as the text for
§ 1.863–7T(a)(1) published elsewhere in the taxpayer under the terms of the
contract. For example, a dividend
this issue of the Federal Register].
equivalent includes a gross amount
*
*
*
*
*
determined by reference to a dividend
Par. 3. Section 1.871–15 is added to
that is used in computing a net payment
read as follows:
even if the taxpayer makes a net
§ 1.871–15 Treatment of dividend
payment or no payment is made because
equivalents.
the net amount is zero.
(a) In general. A dividend equivalent
(d) Substantially similar payments—
as defined in paragraph (b) of this
(1) In general. For purposes of section
section shall be treated as a dividend
871(m), the following payments are
from sources within the United States
considered payments substantially
for purposes of sections 871(a), 881, and similar to payments described in
4948(a), and chapters 3 and 4 of subtitle paragraph (b)(1)(i) or (b)(1)(ii) of this
A of the Code and the regulations
section and are therefore dividend
thereunder.
equivalents:
(i) Any payment of a beneficial
(b) Dividend equivalent—(1)
owner’s tax liability with respect to a
Definition. The term dividend
dividend equivalent made by a
equivalent means—
(i) Any substitute dividend made
withholding agent is a dividend
pursuant to a securities lending
equivalent received by the beneficial
transaction, a sale-repurchase
owner in an amount determined under
transaction, or a substantially similar
the gross-up formula provided in
transaction that (directly or indirectly)
§ 1.1441–3(f)(1).
(ii) Any payment, including the
is contingent upon or determined by
payment of the purchase price or an
reference to the payment of a dividend
adjustment to the purchase price, is a
(including payments pursuant to a
dividend equivalent if made pursuant to
redemption of stock that gives rise to a
an equity-linked instrument that is
dividend under section 301) from
contingent upon or determined by
sources within the United States;
(ii) Any payment made pursuant to a
reference to a dividend (including
specified notional principal contract
payments pursuant to a redemption of
(specified NPC) described in section
stock that gives rise to a dividend under
871(m) or § 1.871–16 that (directly or
section 301) from sources within the
indirectly) is contingent upon or
United States.
(2) Rules regarding equity-linked
determined by reference to the payment
instruments—(i) In general. An equityof a dividend (including payments
linked instrument is a financial
pursuant to a redemption of stock that
instrument or combination of financial
gives rise to a dividend under section
instruments that references one or more
301) from sources within the United
underlying securities to determine its
States; and
(iii) Any substantially similar
value, including a futures contract,
payment as defined in paragraph (d) of
forward contract, option, or other
this section.
contractual arrangement.
(ii) Equity-linked instruments treated
(2) Exception—(i) In general. The term
as a notional principal contract. An
dividend equivalent does not include
equity-linked instrument that provides
any payment made pursuant to a
for a payment that is a substantially
specified NPC, or any substantially

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(i) Determining when a long party is
in the market. The long party is ‘‘in the
market’’ with respect to the underlying
security if the long party—
(A) Sells or otherwise disposes of the
underlying security on the same day or
days that the parties price the NPC;
(B) Purchases or otherwise acquires
the underlying security on the same day
or days that the NPC terminates; or
(C) Either purchases or disposes of the
underlying security at a price that is set
or calculated in such a way as to be
substantially identical to or determined
by reference to an amount used to price
or terminate the NPC.
(ii) De minimis exception. The long
party will not be deemed to be in the
market with respect to the underlying
security if the amount of the underlying
securities disposed of on a pricing date
or acquired on a termination date is less
than ten percent of the notional
principal amount of the NPC.
§ 1.871–16 Specified notional principal
(2) Underlying security is not
contracts.
regularly
traded. An NPC is described in
(a) Purpose and scope. This section
this paragraph (c)(2) if the underlying
provides guidance with respect to the
security in the NPC is not regularly
definition of a ‘‘specified notional
traded.
principal contract’’ (specified NPC).
(i) Definition of regularly traded—(A)
Paragraph (b) of this section provides
In general. For purposes of this
the definition of a specified NPC for
paragraph (c)(2), an underlying security
payments made after March 18, 2012,
is regularly traded if such security is
through December 31, 2012. Paragraph
listed on one or more qualified
(c) of this section provides the
exchanges at the time the NPC is priced
definition of a specified NPC for
and the underlying security was traded
payments made after December 31,
on at least 15 trading days during the 30
2012. Paragraph (d) of this section
trading days prior to the date the parties
provides rules with respect to a notional
price the NPC.
principal contract that becomes a
(B) Special rule for first 30 days
specified NPC during the term of the
following a public offering. When a
contract. Paragraph (e) of this section
corporation initiates a public offering of
provides rules with respect to the
a security, such security is regularly
treatment of a specified NPC entered
traded if such security is traded during
into by related parties. For purposes of
at least 15 trading days on one or more
section 871(m) and this section, the
qualified exchanges during the 30
term notional principal contract (NPC)
trading days subsequent to the initial
means an NPC as defined in § 1.446–
offering.
3(c)(1) and an equity-linked instrument
(C) Days on which a security is
as provided in § 1.871–15(d).
considered traded. The underlying
(b) [The text of the proposed
securities will be considered traded
amendment to § 1.871–16(b) is the same only on those days in which the
as the text for § 1.871–16T(b) found
underlying securities are traded in
elsewhere in this issue of the Federal
quantities that exceed ten percent of the
Register].
30-day average daily trading volume.
(c) Specified NPCs after December 31,
(ii) Qualified exchange. For purposes
2012. With respect to payments made
of paragraph (c)(2)(i) of this section, the
after December 31, 2012, the term
term qualified exchange means a
specified NPC means any NPC described national securities exchange that is
in any of the paragraphs (c)(1) through
registered with the Securities and
(7) of this section.
Exchange Commission or the national
(1) Contemporaneous transfers of the
market system established pursuant to
underlying securities. An NPC is
section 11A of the Securities Exchange
described in this paragraph (c)(1) if the
Act of 1934 (15 U.S.C. 78f).
(3) Underlying security posted as
long party to the NPC is ‘‘in the market’’
collateral. An NPC is described in this
with respect to the underlying security
on the same day or days that the parties paragraph (c)(3) if the short party to the
NPC posts the underlying security with
price the NPC or on the same day or
the long party as collateral and the
days that the NPC terminates.

srobinson on DSK4SPTVN1PROD with PROPOSALS

similar payment within the meaning of
paragraph (d) of this section is treated
as a notional principal contract for
purposes of section 871(m)(3), this
section, and § 1.871–16.
(e) Anti-abuse rule. If a taxpayer
enters into a transaction or transactions
with a principal purpose of avoiding the
application of this section or § 1.871–16,
payments made with respect to such
transaction or transactions may be
treated as a dividend equivalent to
extent necessary to prevent the
avoidance of these rules.
(f) Effective/applicability date. The
rules of this section apply to payments
made on or after the date of publication
of the Treasury decision adopting these
rules as final regulations in the Federal
Register.
Par. 4. Section 1.871–16 is added to
read as follows:

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underlying security posted as collateral
represents more than ten percent of the
total fair market value of all the
collateral posted by the short party on
any date that the NPC is outstanding.
(4) The NPC has a term of fewer than
90 days—(i) In general. An NPC is
described in this paragraph (c)(4) if the
NPC has a term of fewer than 90 days.
(ii) Term of an NPC. For purposes of
this section, the term of any NPC is the
number of days that the contract is
actually outstanding, including the date
on which the NPC is terminated, but not
the date that the NPC was entered into.
For purposes of determining whether a
contract is a specified NPC, an NPC is
treated as terminated, in whole or in
part, on the date that a long party enters
into any position within the meaning of
§ 1.246–5(b)(3) to the extent that the
position offsets a portion of the long
party’s position with respect to an
underlying security in the NPC.
(5) Long party controls short party’s
hedge. An NPC is described in this
paragraph (c)(5) if—
(i) The long party controls
contractually or by conduct the short
party’s hedge of the short position; or
(ii) The long party enters into an NPC
using an underlying equity control
program (as defined in paragraph (f)(2)
of this section).
(6) Notional principal amount
represents a significant percentage of
trading volume—(i) In general. An NPC
is described in this paragraph (c)(6) if
the notional principal amount of the
underlying security in the NPC is
greater than—
(A) Five percent of the total public
float of that class of security; or
(B) Twenty percent of the 30-day
average daily trading volume
determined as of the close of the
business day immediately preceding the
first day in the term of an NPC.
(ii) Aggregating certain NPCs. When
determining whether the notional
principal amount of an NPC represents
a significant percentage of the trading
volume, a taxpayer must aggregate the
notional principal amounts of all NPCs
for which the taxpayer is the long party
that reference the same underlying
security.
(7) NPC provides for the payment of
a special dividend. An NPC is described
in this paragraph (c)(7) if the NPC is
entered into on or after the
announcement of a special dividend
and prior to the ex-dividend date. An
announcement of a special dividend
occurs on the earliest date on which the
corporation declares, announces, or
agrees to the amount or payment of such
special dividend.

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srobinson on DSK4SPTVN1PROD with PROPOSALS

(d) Specified NPC status arising
during the term of the contract—(1) In
general. This section provides rules for
determining the timing and amount of a
dividend equivalent when an NPC is not
a specified NPC on the date the parties
enter into the NPC and subsequently
becomes a specified NPC during the
term of the transaction. If an NPC that
is not a specified NPC on the date the
parties enter into the contract
subsequently becomes a specified NPC,
any payment made during the term of
the contract (including any payment
during the period between the date the
contract is entered into and the date the
contract becomes a specified NPC) that
is contingent upon or determined by
reference to the payment of a dividend
from sources within the United States is
a dividend equivalent.
(2) Determination of dividend
equivalent—(i) In general. For purposes
of sections 871(a), 881, 4948(a), and
chapters 3 and 4 of subtitle A of the
Code, when an NPC becomes a specified
NPC during the term of the contract, any
tax owed with respect to a dividend
equivalent made prior to the NPC
becoming a specified NPC is payable
when the next payment as described in
§ 1.1871–15(c), including a termination
payment, is made pursuant to the
contract.
(ii) Payment to include amount equal
to dividend equivalent with respect to
current and prior payments. In
computing the amount of tax owed with
respect to the termination of the
specified NPC or the first payment that
occurs after the NPC becomes a
specified NPC, the dividend equivalent
equals the sum of all the dividend
equivalents with respect to the NPC
arising before the date the NPC became
a specified NPC and the amount of any
dividend equivalent arising upon the
termination or payment.
(3) Example. The rules of this
paragraph (d) are illustrated by the
following example:
Example. (i) Facts. Party A is a foreign
corporation organized in a jurisdiction that
does not have an income tax treaty with the
United States. Party B is a domestic
corporation and a dealer in NPCs. Party A
and Party B enter into an NPC on Day 1
whereby Party A will pay Party B an amount
equal to LIBOR multiplied by the notional
value of a specified number of shares of
Corporation X, a domestic corporation, plus
any depreciation on the same number of
shares of Corporation X upon settlement of
the contract. In return, Party B will pay Party
A an amount equal to any dividends paid on
the same specified number of shares of
Corporation X, plus any appreciation on
those shares upon settlement of the contract.
On Day 1, the NPC is not a specified NPC.
On Day 30, Party B determines that it owes

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Party A $25 based on a dividend paid on the
underlying security and that Party A owes
Party B $125 on the LIBOR leg of the
contract. Party A therefore makes a net
payment of $100 to Party B. On Day 120, the
NPC becomes a specified NPC within the
meaning of section 871(m), §§ 1.871–15, and
1.871–16. On Day 120, Party A terminates the
contract and makes a net termination
payment to Party B. In calculating the net
payment, Party B determined that it owes
Party A $25 based on a dividend paid with
respect to the shares of Corporation X and
that Party A owes it $125 attributable to
interest and the decrease in the value of the
shares of Corporation X.
(ii) Analysis. On Day 120, Party A is treated
as having received a dividend equivalent of
$50. This dividend equivalent consists of the
$25 payment made on Day 120 that is based
on a dividend payment made with respect to
the shares of Corporation X and the $25
dividend equivalent made prior to the
contract being considered a specified NPC.

(e) Related persons and parties to an
NPC—(1) In general. For purposes of
this section, a related person is
considered a party to an NPC. A related
person is a person that is related within
the meaning of section 267(b) or
707(b)(1) to one of the parties to the
NPC.
(2) NPC entered into between related
dealers. An NPC entered into between
related persons is not a specified NPC
when the NPC hedges another NPC
(whether or not a specified NPC)
entered into with an unrelated party and
both NPCs were entered into by the
related persons in the ordinary course of
their business as a dealer in securities
or commodities derivatives.
(f) Definitions—(1) Underlying
security. For purposes of this section,
the term underlying security means, for
any NPC, the security with respect to
which the dividend referred to in
§ 1.871–15(b)(1)(ii) is paid. If an NPC
references more than one security or a
customized index, each security or
component of such customized index is
treated as an underlying security in a
separate NPC for purposes of section
871(m), § 1.871–15, and this section.
(2) Underlying equity control
program—(i) In general. The term
underlying equity control program
means any system or procedure that
permits—
(A) A long party to an NPC to direct
how a short party hedges its risk under
such NPC; or
(B) A long party to acquire, or cause
the short party to acquire, an underlying
security in a transaction with a short
party and to instruct the short party to
execute such acquisition in the form of
an NPC after acquiring such underlying
security.
(ii) Electronic trading—(A) In general.
The term underlying equity control

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3207

program does not include an electronic
trading platform that allows customers
electronically to place an order to enter
into an NPC with a dealer and through
which the dealer determines whether
and how to hedge its position.
(B) Example. Customer, a foreign
corporation, and Dealer have entered into a
master agreement that governs NPCs entered
into between Customer and Dealer. Customer
places an order with Dealer via Dealer’s
electronic trading platform to enter into an
NPC with a long position in 100 shares of
Corporation ABC, a domestic corporation.
Dealer’s electronic trading platform allows
Customer to place an order using Dealer’s
computer program. Dealer’s computer system
confirms that Corporation ABC is not on its
restricted list upon receipt of the order.
Dealer’s computer system automatically
determines whether it has an internal hedge
available to offset the risk of a short position
in 100 shares of Corporation ABC. To the
extent that an internal hedge is unavailable,
Dealer’s computer program automatically
seeks to acquire the stock as a hedge in a
market transaction. After obtaining its hedge,
Dealer sends a confirmation that
memorializes the NPC. The notional amount
on the confirmation reflects the price of
Dealer’s hedge plus a market standard
spread. Customer did not enter into the NPC
using an underlying equity control program
solely by placing the order through Dealer’s
electronic trading platform because Customer
did not direct how Dealer hedged its position
under the NPC.

(3) Customized index—(i) In general.
For purposes of this section, the term
customized index means any index, as
determined on the date that the long
party and short party enter into an NPC,
that is—
(A) A narrow-based index; or
(B) Any other index unless futures
contracts or option contracts on such
index trade on a qualified board or
exchange, as defined in section
1256(g)(7).
(ii) Narrow-based index. The term
narrow-based index means an index—
(A) That has nine or fewer component
securities;
(B) In which a component security
comprises more than 30 percent of the
index’s weighting;
(C) In which the five highest weighted
component securities in the aggregate
comprise more than 60 percent of the
index’s weighting; or
(D) In which the lowest weighted
component securities comprising, in the
aggregate, 25 percent of the index’s
weighting have an aggregate dollar value
of average daily trading volume of less
than $50,000,000 (or in the case of an
index with 15 or more component
securities, $30,000,000), except that if
there are two or more securities with
equal weighting that could be included
in the calculation of the lowest

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Federal Register / Vol. 77, No. 14 / Monday, January 23, 2012 / Proposed Rules

weighted component securities
comprising, in the aggregate, 25 percent
of the index’s weighting, such securities
shall be ranked from lowest to highest
dollar value of average daily trading
volume and shall be included in the
calculation based on their ranking
starting with the lowest ranked security.
(iii) Aggregate dollar value of average
daily trading volume. For purposes of
determining whether an index is a
narrow-based index, the method for
determining the aggregate dollar value
of average daily trading volume is the
method described in Rule 3a55–1(b)(1),
17 CFR 240.3a55–1(b)(1), under the
Securities Exchange Act of 1934, as in
effect on January 23, 2012.
(4) Long party. The long party is the
party with respect to an NPC entitled to
receive any payment pursuant to such
contract that is contingent upon or
determined by reference to the payment
of a dividend from sources within the
United States on an underlying security.
(5) Short party. The short party is any
party to an NPC who is not a long party.
(6) Special dividend. For purposes of
this section, the term special dividend
means a nonrecurring payment to
shareholders of corporate assets that is
in addition to a recurring dividend
payment, if any (even if paid in
conjunction with a recurring dividend).
(g) Effective/applicability date. The
rules of this section apply to payments
made on or after the date of publication
of the Treasury decision adopting these
rules as final regulations in the Federal
Register.
Par. 5. In § 1.881–2, paragraph (b)(3)
is added and paragraph (e) is revised to
read as follows:
§ 1.881–2 Taxation of foreign corporations
not engaged in U.S. business.

srobinson on DSK4SPTVN1PROD with PROPOSALS

*

*
*
*
*
(b) * * *
(3) [The text of the proposed
amendments to § 1.881–2(b)(3) is the
same as the text for § 1.881–2T(b)(3)
published elsewhere in this issue of the
Federal Register].
*
*
*
*
*
(e) Effective/applicability date. Except
as otherwise provided in this paragraph
(e), this section applies for taxable years
beginning after December 31, 1966.
Paragraph (b)(2) of this section is
applicable to payments made after
November 13, 1997. Paragraph (b)(3) of
this section applies to payments made
on or after the date of publication of the
Treasury decision adopting these rules
as final regulation in the Federal
Register. For corresponding rules
applicable to taxable years beginning
before January 1, 1967, see 26 CFR
1.881–2 (Revised as of January 1, 1971).

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Par. 6. Section 1.892–3 is added to
read as follows:
§ 1.892–3

Income of foreign governments.

(a)(1) through (a)(5) [Reserved]. For
further information, see § 1.892–3T(a)(1)
through (a)(5).
(6) Dividend Equivalents. Income
from investments in stocks includes the
payment of a dividend equivalent
described in section 871(m) and
§ 1.871–15.
(b) [Reserved]. For further
information, see § 1.892–3T(b).
(c) Effective/applicability date.
Paragraph (a)(6) of this section applies
to payments made on or after the date
of publication of the Treasury decision
adopting these rules as final regulation
in the Federal Register. See § 1.892–
3T(a) for the rules that apply before the
date the regulations are published as
final regulations in the Federal Register.
Par. 7. Section 1.894–1 is amended by
redesignating paragraph (c) as (c)(1),
adding paragraph (c)(2), and revising
paragraph (e) to read as follows:
§ 1.894–1

Income affected by treaty.

*

*
*
*
*
(c) * * *
(2) Dividend equivalents. The
provisions of an income tax convention
relating to dividends paid to or derived
by a foreign person apply to a dividend
equivalent under section 871(m) and
§ 1.871–15.
*
*
*
*
*
(e) Effective/applicability date.
Paragraphs (a) and (b) of this section
apply for taxable years beginning after
December 31, 1966. For corresponding
rules applicable to taxable years
beginning before January 1, 1967, (see
26 CFR part 1 revised April 1, 1971).
Except as otherwise provided in this
paragraph, paragraph (c) of this section
is applicable to payments made after
November 1, 1997. Paragraph (c)(2) of
this section applies to payments made
on or after the date of publication of the
Treasury decision adopting these rules
as final regulation in the Federal
Register. See paragraph (d)(6) of this
section for applicability dates for
paragraph (d) of this section.
Par. 8. Section 1.1441–2 is amended
by adding paragraphs (b)(6) and (e)(7),
and revising paragraph (f) to read as
follows:
§ 1.1441–2 Amounts subject to
withholding.

*

*
*
*
*
(b) * * *
(6) [The text of the proposed
amendments to § 1.1441–2(b)(6) is the
same as the text for § 1.1441–2T(b)(6)

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published elsewhere in this issue of the
Federal Register].
*
*
*
*
*
(e) * * *
(7) [The text of the proposed
amendments to § 1.1441–2(e)(7) is the
same as the text for § 1.1441–2T(e)(7)
published elsewhere in this issue of the
Federal Register].
(f) Effective/applicability date. Except
as otherwise provided in this paragraph
(f), this section applies to payments
made after December 31, 2000.
Paragraphs (b)(5) and (d)(4) of this
section apply to payments made after
August 1, 2006. Paragraphs (b)(6) and
(e)(7) of this section apply to payments
made on or after the date of publication
of the Treasury decision adopting these
rules as final regulation in the Federal
Register.
Par. 9. Section 1.1441–3 is amended
by:
1. Redesignating paragraph (h) as
paragraph (j), and revising newly
designated paragraph (j).
2. Adding new paragraphs (h) and (i).
The revision and addition read as
follows:
§ 1.1441–3
withheld.

*

Determination of amounts to be

*
*
*
*
(h) Dividend equivalents—(1) In
general. [The text of the proposed
amendments to § 1.1441–3(h)(1) is the
same as the text for § 1.1441–3T(h)(1)
published elsewhere in this issue of the
Federal Register].
(2) Procedures for withholding with
respect to a dividend equivalent paid
prior to a notional principal contract
(NPC) becoming a specified NPC. In the
event that an NPC becomes a specified
NPC (as defined in § 1.871–16) after the
date that the parties enter into the NPC,
the term dividend equivalent includes
any payment that is made prior to the
date the NPC becomes a specified NPC
and that was (directly or indirectly)
contingent upon or determined by
reference to the payment of a dividend
(including payments pursuant to a
redemption of stock that gives rise to a
dividend under section 301) from
sources within the United States. The
withholding agent is required to
withhold with respect to a dividend
equivalent made prior to the NPC
becoming a specified NPC when the
next payment as described in § 1.871–
15(c), including a termination payment,
is made pursuant to the contract. For
purposes of section 6601 and the
regulations thereunder, the last date
prescribed for payment of tax imposed
with respect to a dividend equivalent
made prior to an NPC becoming a
specified NPC is determined based on

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Federal Register / Vol. 77, No. 14 / Monday, January 23, 2012 / Proposed Rules
the date of the next payment as
described in § 1.871–15(c), including a
termination payment, made pursuant to
the contract. For further guidance
regarding liability for penalties and
interest, see §§ 1.1441–1(b)(7)(iii) and
1.1461–1(a)(2).
(3) Effective/applicability date. The
rules of this paragraph (h)(2) apply to
payments made on or after the date of
publication of the Treasury decision
adopting these rules as final regulation
in the Federal Register.
(i) [The text of the proposed
amendments to § 1.1441–3(i)(1) is the
same as the text for § 1.1441–3T(i)(1)
published elsewhere in this issue of the
Federal Register].
(j) Effective/applicability date. Except
as otherwise provided in paragraphs (g),
(h), and (i) of this section, this section
applies to payments made after
December 31, 2000.
Par. 10. Section 1.1441–4 is amended
by:
1. Revising paragraph (a)(3)(i).
2. Adding paragraph (a)(3)(iii).
3. Revising paragraph (g)(1).
The revisions and addition read as
follows:

srobinson on DSK4SPTVN1PROD with PROPOSALS

§ 1.1441–4 Exemptions from withholding
for certain effectively connected income
and other amounts.

(a) * * *
(3)(i) [The text of the proposed
amendments to § 1.1441–4(a)(3)(i) is the
same as the text for § 1.1441–4T(a)(3)(i)
published elsewhere in this issue of the
Federal Register].
(ii) * * *
(iii) [The text of the proposed
amendments to § 1.1441–4(a)(3)(iii) is
the same as the text for § 1.1441–
4T(a)(3)(iii) published elsewhere in this
issue of the Federal Register].
*
*
*
*
*
(g) Effective/applicability date—(1)
General rule. Except as otherwise
provided in this paragraph (g)(1), this
section applies to payments made after
December 31, 2000. The rules of
paragraph (a)(3)(iii) of this section apply
to payments made on or after the date
of publication of the Treasury decision
adopting these rules as final regulation
in the Federal Register.
*
*
*
*
*
Par. 11. Section 1.1441–6 is amended
by:
1. Revising paragraph (c)(2).
2. Redesignating paragraph (h) as
paragraph (i) and revising newly
designated paragraph (i).
3. Adding a new paragraph (h).
The revision and addition read as
follows:

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§ 1.1441–6 Claim of reduced withholding
under an income tax treaty.

*

*
*
*
*
(c) * * *
(2) Income to which special rules
apply. The income to which paragraph
(c)(1) of this section applies is dividends
and interest from stocks and debt
obligations that are actively traded,
dividends from any redeemable security
issued by an investment company
registered under the Investment
Company Act of 1940 (15 U.S.C. 80a–1),
dividends, interest, or royalties from
units of beneficial interest in a unit
investment trust that are (or were upon
issuance) publicly offered and are
registered with the Securities and
Exchange Commission under the
Securities Act of 1933 (15 U.S.C. 77a),
and amounts paid with respect to loans
of securities described in this paragraph
(c)(2). With respect to a dividend
equivalent as defined in section 871(m)
and § 1.871–15, this paragraph (c)(2)
applies to the extent that the underlying
security as defined in § 1.871–16(f)(1)
satisfies the requirements of this
paragraph (c)(2). For purposes of this
paragraph (c)(2), a stock or debt
obligation is actively traded if it is
actively traded within the meaning of
section 1092(d) and § 1.1092(d)–1 when
documentation is provided.
*
*
*
*
*
(h) Dividend equivalents. The rate of
withholding on a dividend equivalent
may be reduced to the extent provided
under an income tax treaty in effect
between the United States and a foreign
country. For this purpose, a dividend
equivalent is treated as a dividend from
sources within the United States. To
receive a reduced rate of withholding
with respect to a dividend equivalent, a
foreign person must satisfy the other
requirements described in this section.
(i) Effective/applicability dates—(1)
General rule. This section applies to
payments made after December 31,
2000, except for paragraph (g) of this
section which applies to payments
made after December 31, 2001, and
paragraph (h) of this section which
applies to payments made on or after
the date of publication of the Treasury
decision adopting these rules as final
regulation in the Federal Register.
(2) [Reserved]
Par. 12. Section 1.1441–7 is amended
by:
1. Redesignating paragraph (a)(2) as
paragraph (a)(3) and revising newly
designated paragraph (a)(3).
2. Adding a new paragraph (a)(2).
3. Adding an entry for Example 6 in
paragraph (a)(3).
4. Revising paragraph (g).

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The revision and addition read as
follows:
§ 1.1441–7 General provisions relating to
withholding agents.

(a) * * *
(2) [The text of the proposed
amendments to § 1.1441–7(a)(2) is the
same as the text for § 1.1441–7T(a)(2)
published elsewhere in this issue of the
Federal Register].
(3) [The text of the proposed
amendments to § 1.1441–7(a)(3) is the
same as the text for § 1.1441–7T(a)(3)
published elsewhere in this issue of the
Federal Register].
*
*
*
*
*
Example 6. [The text of the proposed
amendments to § 1.1441–7(a)(3), Example 6
is the same as the text for § 1.1441–7T(a)(3),
Example 6 published elsewhere in this issue
of the Federal Register].

*

*
*
*
*
(g) Effective/applicability date. Except
as otherwise provided in paragraph
(f)(3) of this section and as otherwise
provided in this paragraph (g), this
section applies to payments made after
December 31, 2000. Paragraph (a)(2)
applies to payments made on or after
the date of publication of the Treasury
decision adopting these rules as final
regulation in the Federal Register.
Par. 13. Section 1.1461–1 is amended
by:
1. Redesignating paragraph (c)(2)(i)(L)
and (M) as paragraphs (c)(2)(i)(M) and
(N) respectively.
2. Adding a new paragraph (c)(2)(i)(L).
3. Revising paragraph (i).
The addition reads as follows:
§ 1.1461–1
withheld.

*

Payment and returns of tax

*
*
*
*
(c) * * *
(2) * * *
(i) * * *
(L) [The text of the proposed
amendments to § 1.1461–1(c)(2)(i)(L) is
the same as the text for § 1.1461–
1T(c)(2)(i)(L) published elsewhere in
this issue of the Federal Register].
*
*
*
*
*
(i) Effective/applicability date. Unless
otherwise provided in this section and
as otherwise provided in this paragraph
(i), this section shall apply to returns
required for payments made after
December 31, 2000. The rules of
paragraph (c)(2)(i)(L) of this section
apply to returns for payments made on
or after the date of publication of the
Treasury decision adopting these rules

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3210

Federal Register / Vol. 77, No. 14 / Monday, January 23, 2012 / Proposed Rules

as final regulation in the Federal
Register.
Steven T. Miller,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. 2012–1231 Filed 1–19–12; 11:15 am]
BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–168745–03]
RIN 1545–BE18

Guidance Regarding Deduction and
Capitalization of Expenditures Related
to Tangible Property; Hearing
Internal Revenue Service (IRS),
Treasury.
ACTION: Change of date of public hearing
on proposed rulemaking.
AGENCY:

This document changes the
date of a public hearing on proposed
regulations relating to the deduction
and capitalization of expenditures
related to tangible property.
DATES: The public hearing originally
scheduled for Thursday, April 4, 2012,
at 10 a.m. is rescheduled for
Wednesday, April 25, 2012, at 10 a.m.
Written or electronically submitted
public comments are due by March 26,
2012. Requests to speak and outlines of
topics to be discussed at the public
hearing must be received by March 21,
2012.
ADDRESSES: The public hearing is being
held in the auditorium of the Internal
Revenue Service building, 1111
Constitution Avenue NW., Washington,
DC.
Due to building security procedures,
visitors must enter at the Constitution
Avenue entrance. Send submissions to:
CC:PA:LPD:PR (REG–168745–03); Room
5203, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington,
DC 20044. Submissions my be hand
delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–168745–03)
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue NW.,
Washington, DC. Alternatively,
comments may be transmitted
electronically via the Federal
eRulemaking Portal at
www.regulations.gov. (IRS–REG–
168745–03)
FOR FURTHER INFORMATION CONTACT:
Regarding the regulations, Merrill D.
Feldstein or Alan Williams at (202) 622–

srobinson on DSK4SPTVN1PROD with PROPOSALS

SUMMARY:

VerDate Mar<15>2010

16:33 Jan 20, 2012

Jkt 226001

4950; regarding the public comments
and/or public hearing Oluwafunmilayo
(Funmi) Taylor at (202) 622–7180 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION: A notice
of proposed rulemaking and notice of
public hearing appearing in the Federal
Register on Tuesday, December 27, 2011
(76 FR 81128), announced that a public
hearing on proposed regulations relating
to the deduction and capitalization of
expenditures related to tangible
property, would be held on Wednesday,
April 4, 2012, beginning at 10 a.m. in
the auditorium of the Internal Revenue
Service Building at 1111 Constitution
Avenue NW., Washington, DC.
The date of the public hearing has
been changed. The hearing is now
scheduled for Wednesday, April 25,
2012, beginning at 10 a.m. in the
auditorium of the Internal Revenue
Service building at 1111 Constitution
Avenue NW., Washington, DC. Requests
to speak and outlines of topics to be
discussed at the public hearing must be
received by March 21, 2012.
Guy R. Traynor,
Federal Register Liaison, Publications and
Regulations Br., Legal Processing Division,
Associate Chief Counsel, Procedure and
Administration.
[FR Doc. 2012–1256 Filed 1–20–12; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–133223–08]
RIN 1545–BI19

Indian Tribal Government Plans
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of public hearing on
proposed rulemaking.
AGENCY:

This document announces a
public hearing on proposed regulations,
(REG–133223–08) relating to Indian
tribal government plans.
DATES: The public hearing is scheduled
for Tuesday, June 5, 2012, at 10 a.m. in
the auditorium of the Internal Revenue
Building. The IRS must receive outlines
of the topics to be discussed at the
public hearing by February 6, 2012.
ADDRESSES: The public hearing is being
held in the Internal Revenue Building,
1111 Constitution Avenue NW.,
Washington, DC. Due to building
security procedures, visitors must enter
at the Constitution Avenue entrance. In
SUMMARY:

PO 00000

Frm 00052

Fmt 4702

Sfmt 9990

addition, all visitors must present photo
identification to enter the building.
Mail outlines to CC:PA:LPD:PR (REG–
133223–08), Room 5205, Internal
Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC
20044. Submissions may be handdelivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–133223–08),
Couriers Desk, Internal Revenue
Service, 1111 Constitution Avenue NW.,
Washington, DC or sent electronically
via the Federal eRulemaking Portal at
www.regulations.gov (REG–133223–08).
FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations,
Pamela Kinard at (202) 622–6060, and
regarding the submission of public
comments and the public hearing, Ms.
Oluwafunmilayo (Funmi) Taylor, at
(202) 622–7180 (not toll-free numbers).
The
subject of the public hearing is the
advanced notice of proposed
rulemaking (REG–133223–08) that was
published in the Federal Register on
Tuesday, November 8, 2011 (76 FR
69188).
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. A period of 10
minutes is allotted to each person for
presenting oral comments. After the
deadline has passed, persons who have
submitted written comments and wish
to present oral comments at the hearing
must submit an outline of the topics to
be discussed and the amount of time to
be devoted to each topic (a signed
original and four copies) by February 6,
2012.
The IRS will prepare an agenda
containing the schedule of speakers.
Copies of the agenda will be made
available free of charge at the hearing.
Because of access restrictions, the IRS
will not admit visitors beyond the
immediate entrance area more than 30
minutes before the hearing. For
information about having your name
placed on the building access list to
attend the hearing, see the FOR FURTHER
INFORMATION CONTACT section of this
document.
SUPPLEMENTARY INFORMATION:

Guy R. Traynor,
Federal Register Liaison, Legal Processing
Division, Publications and Regulations Br.,
Procedure and Administration.
[FR Doc. 2012–1252 Filed 1–20–12; 8:45 am]
BILLING CODE 4830–01–P

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