[Federal Register Volume 77, Number 92 (Friday, May 11, 2012)]
[Proposed Rules]
[Page 27669]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11327]



[[Page 27669]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-107548-11]
RIN 1545-BK10


Modifications to Definition of United States Property

AGENCY: Internal Revenue Service (IRS), Treasury.

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

-----------------------------------------------------------------------

SUMMARY: In the Rules and Regulations section of this Federal Register, 
the IRS and the Treasury Department are issuing temporary regulations 
relating to the treatment of upfront payments made pursuant to certain 
notional principal contracts. The temporary regulations provide that 
certain obligations of United States persons arising from upfront 
payments made by controlled foreign corporations pursuant to contracts 
that are cleared by a derivatives clearing organization or clearing 
agency do not constitute United States property. The text of the 
temporary regulations also serves as the text of these proposed 
regulations.

DATES: Comments and requests for a public hearing must be received by 
August 9, 2012.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-107548-11), room 
5205, 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-
107548-11), 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-107548-11).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Kristine A. Crabtree, (202) 622-3840; concerning submissions of 
comments or a request for a public hearing, Oluwafunmilayo Taylor, 
(202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    The temporary regulations published in the Rules and Regulations 
section of this issue of the Federal Register establish an exception to 
the definition of United States property (within the meaning of section 
956(c)) for obligations of United States persons arising from certain 
upfront payments made with respect to certain contracts that are 
properly classified as notional principal contracts for U.S. Federal 
income tax purposes and that are cleared by a derivatives clearing 
organization or clearing agency. The text of those temporary 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the temporary 
regulations and these proposed regulations.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations, and because 
these regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, this 
notice of proposed rulemaking has been submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on its 
impact on small entities.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under ADDRESSES. In addition 
to the specific requests for comments made elsewhere in this preamble 
or the preamble to the temporary regulations, the IRS and the Treasury 
Department request comments on all aspects of the proposed rules. All 
comments will be available at www.regulations.gov or upon request. A 
public hearing will be scheduled if requested in writing by any person 
who timely submitted written comments. If a public hearing is 
scheduled, notice of the date, time, and place of the hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of these regulations is Kristine A. Crabtree 
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.

Proposed Amendment to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 is amended by adding 
an entry in numerical order to read in part as follows:

    Authority:  26 U.S.C. 7805 * * *
    Section 1.956-2(b)(1)(xi) also issued under 26 U.S.C. 956(e). * 
* *

    Par. 2. Section 1.956-2 is amended by adding new paragraphs 
(b)(1)(xi) and (f) to read as follows:


Sec.  1.956-2  Definition of United States property.

* * * * *
    (b)(1)(xi) [The text of this proposed amendment is the same as the 
text of Sec.  1.956-2T(b)(1)(xi) published elsewhere in this issue of 
the Federal Register].
* * * * *
    (f) [The text of this proposed amendment is the same as the text of 
Sec.  1.956-2T(f) published elsewhere in this issue of the Federal 
Register].

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2012-11327 Filed 5-10-12; 8:45 am]
BILLING CODE 4830-01-P