Unknown. Interim final rule with request for comments
19,824 words·~90 min read·
/register/2006/12/22/06-9758A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
--- schema: federal-register doc_type: fedreg source_file: FR-2006-12-22.xml --- 71 246 Friday, December 22, 2006 Contents Agricultural Agricultural Marketing Service RULES Avocados grown in South Florida, 76897-76899 E6-21910 Potato research and promotion plan, 76899-76901 E6-21911 Agriculture Agriculture Department See Agricultural Marketing Service See Animal and Plant Health Inspection Service See Commodity Credit Corporation See Farm Service Agency See Foreign Agricultural Service See Forest Service See Natural Resources Conservation Service NOTICES Agency information collection activities; proposals, submissions, and approvals, E6-21965 76960-76961 E6-21968 Animal Animal and Plant Health Inspection Service NOTICES Meetings:
Control of viral hemorrhagic septicemia, 76961 E6-21966 Antitrust Antitrust Division NOTICES National cooperative research notifications: Institute of Electrical and Electronics Engineers, 77061 06-9832 Power Tool Institute Table Saw Guarding Joint Venture Project; correction, 77098 C6-9644 Tree Care Industry Association, Inc., 77061-77062 06-9833 Army Army Department See Engineers Corps Blind Blind or Severely Disabled, Committee for Purchase From People Who Are See Committee for Purchase From People Who Are Blind or Severely Disabled Centers Centers for Disease Control and Prevention NOTICES Agency information collection activities; proposals, submissions, and approvals, 77023-77026 E6-21931 E6-21935 Centers Centers for Medicare & Medicaid Services PROPOSED RULES Medicaid:
Prescription drugs, 77174-77200 06-9792 NOTICES Agency information collection activities; proposals, submissions, and approvals, 77026-77028 E6-21916 E6-21917 Medicare and Medicaid: Program issuances and coverage decisions; quarterly listing, 77202-77241 E6-21735 Meetings: Medicare— Ambulatory Payment Classification Groups Advisory Panel, 77028-77029 E6-21736 Medicare Education Advisory Panel, 77029-77030 E6-21434 New Medical Services and Technologies Informational Workshop, 77031-77033 06-9838 Children Children and Families Administration NOTICES Native American programs:
Native Americans Administration program policies and procedures; proposed adoption, 77033-77034 06-9834 Commerce Commerce Department See International Trade Administration See Minority Business Development Agency See National Institute of Standards and Technology See National Oceanic and Atmospheric Administration NOTICES Agency information collection activities; proposals, submissions, and approvals, 76975-76976 E6-21919 E6-21922 Committee for Purchase Committee for Purchase From People Who Are Blind or Severely Disabled NOTICES Procurement list; additions and deletions, 76966-76975 E6-21940 E6-21976 Correction, 76975 E6-21977 CITA Committee for the Implementation of Textile Agreements NOTICES Cotton, wool, and man-made textiles:
Vietnam, 76998-76999 06-9839 Commodity Commodity Credit Corporation NOTICES Agency information collection activities; proposals, submissions, and approvals, 76961-76962 06-9830 Customs Customs and Border Protection Bureau NOTICES Commercial laboratory accreditation: SGS North America, Inc.; approval, 77039-77040 E6-21928 Defense Defense Department See Engineers Corps RULES Organization, functions, and authority delegations: Assistant Secretary of Defense for Health Affairs; removed, 76918 06-9823 Personnel, military and civilian:
Armed Forces members serving on State or local juries, 76916-76918 E6-21944 Organizations seeking to represent or organize Armed Forces members in negotiation or collective bargaining; policies, 76914-76916 E6-21943 Drug Drug Enforcement Administration NOTICES *Applications, hearings, determinations, etc.:* Aldrich Chemical Co., Inc., 77062 E6-21880 American Radiolabeled Chemicals, Inc., 77062-77063 E6-21879 Applied Science Labs, 77063 E6-21875 Cambrex North Brunswick, Inc., 77063-77064 E6-21878 E6-21882 Chemic Laboratories, Inc., 77064 E6-21881 Clariant LSM (Missouri) Inc., 77064 E6-21876 Dade Behring Inc., 77064-77065 E6-21870 E6-21871 Johnson Matthey Inc., E6-21884 77065-77066 E6-21896 Meridian Medical Technologies, 77066 E6-21895 Organichem Corp., 77066 E6-21886 Penick Corp., 77066-77067 E6-21873 Research Triangle Institute, 77067 E6-21872 Rhodes Technologies, 77067 E6-21877 Education Education Department NOTICES Grants and cooperative agreements; availability, etc.:
Postsecondary education— North American Mobility in Higher Education Program, 77000-77004 E6-21993 Safe and drug free schools program— Prevention of High-Risk Drinking or Violent Behavior Among College Students, 77004-77007 E6-21987 Meetings: National Mathematics Advisory Panel, 77007-77008 06-9818 Energy Energy Department See Federal Energy Regulatory Commission NOTICES Meetings: Environmental Management Site-Specific Advisory Board— Oak Ridge Reservation, TN, 77008 E6-21953 Engineers Engineers Corps NOTICES Environmental statements; notice of intent:
Los Angeles County, CA; San Pedro Waterfront Project, 76999-77000 E6-21897 EPA Environmental Protection Agency RULES Air pollutants, hazardous; national emission standards: Surface coating of automobiles and light-duty trucks, 76922-76927 E6-21975 Air quality implementation plans; approval and promulgation; various States: designation of areas: Maryland, 76920-76922 E6-21887 Ohio, 76918-76920 E6-21864 Pesticides; tolerances in food, animal feeds, and raw agricultural commodities:
Flucarbazone-sodium, 76927-76932 E6-21843 Superfund program: Toxic chemical release reporting; community-right-to-know— Toxics Release Inventory Program Burden Reduction, 76932-76945 E6-21958 PROPOSED RULES Air pollutants, hazardous; national emission standards: Surface coating of automobiles and light-duty trucks, 76956-76958 E6-21974 Air pollution; standards of performance for new stationary sources: Electric utility steam generating units; Federal requirements and revisions, 77100-77147 E6-21573 NOTICES Environmental statements; availability, etc.:
Agency comment availability, 77012-77013 E6-21971 Agency weekly receipts, 77013-77014 E6-21972 Pesticide programs: Pesticide applicator certifications; State plans— Colorado, 77014-77015 E6-21973 Toxic and hazardous substances control: Integrated Risk Information System— Chemical substance nominations for 2007 program, 77017-77019 E6-21970 Polybrominated diphenyl ethers; toxicological reviews, 77015-77017 E6-21969 Toxics release inventory; reporting frequency, 77019 E6-21957 Executive Executive Office of the President See Science and Technology Policy Office Farm Farm Service Agency NOTICES Agency information collection activities; proposals, submissions, and approvals, 76961-76962 06-9830 FAA Federal Aviation Administration PROPOSED RULES Airworthiness directives:
B-N Group Ltd., 76952-76954 E6-21924 EADS SOCATA, 76950-76952 E6-21929 Empresa Brasileira de Aeronautica S.A. (EMBRAER) Correction, 77098 Z6-20629 Class E airspace, 76954-76955 06-9827 FDIC Federal Deposit Insurance Corporation NOTICES Agency information collection activities; proposals, submissions, and approvals, 77020-77021 06-9829 Federal Energy Federal Energy Regulatory Commission NOTICES Environmental statements; availability, etc.: Broadwater Energy LLC; public meeting, 77009-77010 E6-21961 Meetings;
Sunshine Act, 77010-77012 E6-21962 *Applications, hearings, determinations, etc.:* Portland Natural Gas Transmission System, 77008-77009 E6-21959 Snowflake White Mountain Power, LLC, et al., 77009 E6-21960 Federal Highway Federal Highway Administration NOTICES Environmental statements; notice of intent: Bannock County, ID, 77084 06-9779 Grants and cooperative agreements; availability, etc.: Value Pricing Pilot Program, 77084-77090 E6-21912 FMC Federal Maritime Commission NOTICES Agency information collection activities; proposals, submissions, and approvals, 77021-77022 E6-21985 Federal Motor Federal Motor Carrier Safety Administration NOTICES Motor carrier safety standards:
Commercial driver's license standards; exemption applications— Volvo Trucks North America, Inc., 77090-77091 E6-21913 Federal Railroad Federal Railroad Administration NOTICES Exemption petitions, etc.: Burlington Northern Santa Fe Corp., 77091-77092 E6-21955 Federal Reserve Federal Reserve System NOTICES Agency information collection activities; proposals, submissions, and approvals, 77022-77023 E6-21915 Fish Fish and Wildlife Service NOTICES Endangered and threatened species:
Incidental take permits— Laguna Niguel, CA; California gnatcatcher, 77058-77059 E6-21927 Endangered and threatened species permit applications, E6-21925 77057-77058 E6-21926 Food Food and Drug Administration RULES Animal drugs, feeds, and related products: Gentamicin, 76901-76902 E6-21951 Medical devices: Disqualification of a clinical investigator; technical amendment, 76902 E6-21952 NOTICES Meetings: Reproductive Health Drugs Advisory Committee, 77034 E6-21949 Reports and guidance documents; availability, etc.:
Additional safeguards for children in clinical investigations; process for handling referrals to FDA, 77034-77035 E6-21950 Foreign Foreign Agricultural Service NOTICES Committees; establishment, renewal, termination, etc.: Emerging Markets Advisory Committee, 76962-76963 06-9828 Forest Forest Service NOTICES Environmental statements; notice of intent: Flathead National Forest, MT, 76963-76964 06-9821 Meetings: Lake Tahoe Basin Federal Advisory Committee, 76964-76965 06-9819 Opal Creek Scenic Recreation Area Advisory Council, 76965 06-9820 Resource Advisory Committees— Glenn/Colusa County, 76965 06-9824 Health Health and Human Services Department See Centers for Disease Control and Prevention See Centers for Medicare & Medicaid Services See Children and Families Administration See Food and Drug Administration See National Institutes of Health Homeland Homeland Security Department See Customs and Border Protection Bureau NOTICES Meetings:
Homeland Security Advisory Council, 77039 E6-21914 Housing Housing and Urban Development Department NOTICES Grants and cooperative agreements; availability, etc.: Homeless assistance; excess and surplus Federal properties, 77040 06-9768 Regulatory waiver requests; quarterly listing, 77040-77057 E6-21868 Indian Indian Affairs Bureau NOTICES Reports and guidance documents; availability, etc.: Energy Policy Act of 2005; Section 1813— Energy rights-of-way on tribal lands; draft report to Congress, 77060 06-9835 Interior Interior Department See Fish and Wildlife Service See Indian Affairs Bureau See Land Management Bureau See Reclamation Bureau IRS Internal Revenue Service RULES Income taxes:
Business electronic filing; guidance, 76904-76913 06-9758 Section 482; treatment of controlled services transactions and allocation of income and deductions from intangibles Correction, 76902-76904, 76913-76914 E6-21907 E6-21908 PROPOSED RULES Income taxes: Business electronic filing; guidance, 76955-76956 06-9757 Treatment of controlled services transactions and allocation of income and deductions from intangibles stewardship expense Correction, 76956 E6-21909 International International Trade Administration NOTICES Antidumping:
Large diameter carbon and alloy seamless standard, line, and pressure pipe from— Japan, 76976-76977 E6-21999 Oil country tubular goods, other than drill pipe, from— Korea, 76977 E6-21988 Stainless steel sheet and strip in coils from— Mexico, 76978-76981 E6-21998 Justice Justice Department See Antitrust Division See Drug Enforcement Administration See National Institute of Corrections Labor Labor Department See Mine Safety and Health Administration Land Land Management Bureau NOTICES Realty actions; sales, leases, etc.:
California, 77060-77061 06-9625 Mine Mine Safety and Health Administration NOTICES Meetings: Utilization of Belt Air and the Composition and Fire Retardant Properties of Belt Materials in Underground Coal Mining; Technical Study Panel, 77069-77071 E6-22031 Minority Minority Business Development Agency NOTICES Grants and cooperative agreements; availability, etc.: Queens Minority Business Development Center Program, 76981-76982 E6-21981 National Credit National Credit Union Administration RULES Credit unions:
Insured credit unions; conversion to mutual savings banks; disclosures, voting procedures, etc.; revisions, 77150-77172 E6-21661 National Highway National Highway Traffic Safety Administration NOTICES Motor vehicle safety standards; exemption petitions, etc.: Fulmer Helmets, Inc., 77092 E6-21990 Michelin North America, Inc., 77092-77093 E6-21989 National Institute National Institute of Corrections NOTICES Grants and cooperative agreements; availability, etc.: Transition from Jail to the Community Program, 77067-77069 E6-21978 National Institute National Institute of Standards and Technology NOTICES Agency information collection activities; proposals, submissions, and approvals, 76982 E6-21921 Grants and cooperative agreements; availability, etc.:
Summer Undergraduate Research Fellowships Gaithersburg and Boulder Programs, 76982-76987 E6-21982 NIH National Institutes of Health NOTICES Meetings: National Cancer Institute, 77036 06-9816 National Institute of Allergy and Infectious Diseases, 77036 06-9817 Scientific Review Center, 77036-77038 06-9797 Patent licenses; non-exclusive, exclusive, or partially exclusive: Vion Pharmaceuticals, Inc., 77038-77039 E6-21905 NOAA National Oceanic and Atmospheric Administration RULES Fishery conservation and management:
Northeastern United States fisheries— Atlantic sea scallop, 76945-76949 06-9831 PROPOSED RULES Fishery conservation and management: Pacific Fishery Management Council; meetings and hearings, 76958-76959 E6-21980 NOTICES Agency information collection activities; proposals, submissions, and approvals, 76987-76988 E6-21899 E6-21920 Committees; establishment, renewal, termination, etc.: Hydrographic Services Review Panel, 76988-76989 E6-21945 Marine mammals: Incidental taking; authorization letters, etc.— Eglin Air Force Base, FL; surf zone testing/training and amphibious vehicle training and weapons testing, 76989-76997 E6-21979 Meetings:
North Pacific Fishery Management Council, 76997-76998 E6-21918 National Science National Science Foundation NOTICES Meetings; Sunshine Act, 77071 E6-22015 NRCS Natural Resources Conservation Service NOTICES Federal tax determinations: Florida conservation programs, 76965-76966 06-9813 Nuclear Nuclear Regulatory Commission NOTICES Committees; establishment, renewal, termination, etc.: Atomic Safety and Licensing Board, 77071 E6-21936 Environmental statements; availability, etc.:
Duke Power Co. LLC, 77071-77072 E6-21938 Privacy Act; systems of records, 77072-77073 E6-21937 Overseas Overseas Private Investment Corporation NOTICES Meetings; Sunshine Act, 06-9850 77074 06-9851 Personnel Personnel Management Office NOTICES Excepted service; positions placed or revoked, 77074-77075 E6-21986 Pipeline Pipeline and Hazardous Materials Safety Administration NOTICES Agency information collection activities; proposals, submissions, and approvals, 77093-77094 06-9814 Reclamation Reclamation Bureau NOTICES Water resources planning; discount rate change, 77061 E6-21930 Science Science and Technology Policy Office NOTICES Meetings:
President's Council of Advisors on Science and Technology, 77019-77020 E6-21984 SEC Securities and Exchange Commission NOTICES Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc., 77079-77083 E6-21906 *Applications, hearings, determinations, etc.:* NexBank Securities, Inc., et al., 77075-77078 E6-21941 SBA Small Business Administration NOTICES *Applications, hearings, determinations, etc.:* Alliance Enterprise Corp., 77083 E6-21983 Social Social Security Administration RULES Social Security benefits:
Federal old age, survivors, and disability insurance— Visual disorders; evaluation criteria; revision; correction, 77098 C6-9236 State State Department NOTICES Culturally significant object imported for exhibition: Hans Holbein The Younger's Robert Cheseman, 77083 E6-21963 Culturally significant objects imported for exhibition: Venice and the Islamic World, 828-1797, 77083-77084 E6-21964 Surface Surface Transportation Board NOTICES Rail carriers: Rail cost adjustment factor; quarterly approval, 77094 E6-21947 Railroad operation, acquisition, construction, etc.:
Canadian Pacific Railway, 77094 E6-21898 Iowa Interstate Railroad, Ltd., 77094-77095 E6-21948 Iowa Pacific Holdings, LLC, et al., 77095 E6-21900 Railroad services abandonment: Birmingham Southern Railroad Co., 77095-77096 E6-21763 Textile Textile Agreements Implementation Committee See Committee for the Implementation of Textile Agreements Transportation Transportation Department See Federal Aviation Administration See Federal Highway Administration See Federal Motor Carrier Safety Administration See Federal Railroad Administration See National Highway Traffic Safety Administration See Pipeline and Hazardous Materials Safety Administration See Surface Transportation Board Treasury Treasury Department See Internal Revenue Service Veterans Veterans Affairs Department NOTICES Medical benefits:
Medical care of services; reasonable charges; 2007 calendar year update, 77096-77097 E6-22000 Separate Parts In This Issue Part II Environmental Protection Agency, 77100-77147 E6-21573 Part III National Credit Union Administration, 77150-77172 E6-21661 Part IV Health and Human Services Department, Centers for Medicare & Medicaid Services, 77174-77200 06-9792 Part V Health and Human Services Department, Centers for Medicare & Medicaid Services, 77202-77241 E6-21735 Reader Aids Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions. 71 246 Friday, December 22, 2006 Rules and Regulations DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 915 [Docket No. AMS-FV-06-0170; FV07-915-1 IFR] Avocados Grown in South Florida; Suspension of Weekly Handler Reporting Requirements AGENCY:
Agricultural Marketing Service, USDA. ACTION: Interim final rule with request for comments. SUMMARY: This rule changes the reporting requirements currently prescribed under the marketing order for avocados grown in South Florida (order). The order regulates the handling of avocados grown in South Florida and is administered locally by the Avocado Administrative Committee (Committee). This rule indefinitely suspends the weekly handler reporting requirements specified under the order.
The information from the weekly reports is no longer being used by the industry or the Committee staff and the germane information is available from other sources. This action reduces the reporting burden on handlers, while aligning information collection requirements with the needs of the industry. DATES: Effective December 26, 2006; comments received by February 20, 2007 will be considered prior to issuance of a final rule. ADDRESSES: Interested persons are invited to submit written comments concerning this rule.
Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Fax:
(202)720-8938; E-mail: *moab.docketclerk@usda.gov;* or Internet: *http://www.regulations.gov.* All comments should reference the docket number and the date and page number of this issue of the **Federal Register** and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: *http://www.ams.usda.gov/fv/moab.html.* FOR FURTHER INFORMATION CONTACT: William G. Pimental, Marketing Specialist, or Christian D. Nissen, Regional Manager, Southeast Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA; Telephone:
(863)324-3375, Fax:
(863)325-8793 or E-mail: *William.Pimental@usda.gov* or *Christian.Nissen@usda.gov,* respectively. Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone:
(202)720-2491, Fax:
(202)720-8938, or E-mail: *Jay.Guerber@usda.gov.* SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Agreement No. 121 and Marketing Order No. 915, both as amended (7 CFR part 915), regulating the handling of avocados grown in South Florida, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Department of Agriculture
(USDA)is issuing this rule in conformance with Executive Order 12866. This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling. This rule changes the reporting requirements currently prescribed under the order by indefinitely suspending the weekly handler reporting requirements. The information from the weekly report is no longer being used by the industry or the Committee staff and the germane information is available from other sources. This action reduces the reporting burden on handlers, while aligning information collection requirements with the needs of the industry. The Committee unanimously recommended this change at a meeting on April 19, 2006. Section 915.60 of the avocado marketing order provides authority for the Committee to require handlers to file reports and provide other information as may be necessary for the Committee to perform its duties. Section 915.150 of the order's rules and regulations specifies the requisite reporting requirements, containing, in part, provisions requiring handlers to submit a weekly report. This rule revises § 915.150 by indefinitely suspending paragraphs (a), (b), and
(c)which specify the weekly handler reporting requirements. Prior to this action, handlers were required to submit a weekly report to the Committee listing all avocados handled, the disposition of each lot of noncertified avocados removed from handler's premises, and each lot of noncertified avocados received from another district. The Committee provided a form to assist handlers with supplying the required information. This information was compiled into a report which was made available to the industry. The Committee also used this data for statistical reporting purposes, to assess handlers, and for program compliance. When instituted, the information from the weekly reports was adequate for industry and Committee needs. However, for the past several seasons, the industry has stopped requesting the reports compiled from the weekly data. The Committee believes timely data is necessary for the information to be valuable. The industry is still interested in the volume of avocados handled, but weekly reports are not timely enough to be beneficial when it comes to using such information to help growers and handlers make harvesting and packing decisions. In addition to the weekly reporting information, the Committee staff also receives daily shipment information for all avocado handlers from the Federal-State Inspection Service (FSIS). This information is collected from handlers at the time of inspection and includes information on the volume packed. The Committee staff uses this information to generate daily shipping reports. The reports generated from the FSIS information are more accurate and timely, and the industry finds this information to be more beneficial. As such, the Committee staff has stopped generating reports based on the weekly information. Further, the Committee has found reporting at the time of inspection to be an effective and efficient way of collecting information. Recently, the rules and regulations were amended to require handlers to report added information to the FSIS at the time of inspection (70 FR 59622, October 13, 2005). With that change, handlers are now required to provide information regarding the number of avocados packed per container, in addition to the previous requirement that handlers provide the number and sizes of containers packed. In comparison, handlers find weekly reporting to be time consuming and that it places an additional burden on their staff to ensure weekly reports are submitted. Also, with some of the information contained in the weekly report already being reported at the time of inspection, it represents a duplication of effort. At one time, the Committee staff used the information from the weekly handler reports for statistical reporting purposes, to assess handlers, and for program compliance. However, they too have found the information in the daily shipment reports to be more useful, and of more interest to the industry. Further, the Committee staff has not been using the weekly reports to support program operations or for compliance purposes for some time. The information needed for Committee operations, marketing policies, and compliance is available from the daily inspection information provided by FSIS and from other sources. In addition, damages sustained from hurricanes in 2004 and 2005 resulted in a substantial reduction in assessment income. This rule reduces the amount of time required by the Committee staff to monitor handler reports. Thus, this rule offers the potential for cost savings. This action indefinitely suspends the provisions requiring the submission of the weekly handler report. The information collected under this requirement is no longer being utilized and is not necessary for the operations of the order. This action reduces the reporting burden on handlers and lessens the reporting oversight demands on the Committee staff. Therefore, the Committee voted unanimously to suspend § 915.150 paragraphs (a), (b), and (c). Section 8e of the Act provides that when certain domestically produced commodities, including avocados, are regulated under a Federal marketing order, imports of that commodity must meet the same or comparable grade, size, quality, and maturity requirements. As this rule changes the reporting requirements under the domestic handling regulations, no corresponding changes to the import regulations are required. Initial Regulatory Flexibility Analysis Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service
(AMS)has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis. The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility. There are approximately 300 producers of avocados in the production area and approximately 35 handlers subject to regulation under the order. Small agricultural producers are defined by the Small Business Administration
(SBA)as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $6,500,000 (13 CFR 121.201). According to the National Agricultural Statistics Service and Committee data, the average price for Florida avocados during the 2005-06 season was around $46.75 per 55-pound bushel container, and total shipments were near 470,000 55-pound bushel equivalents. Using the average price and shipment information provided by the Committee, the majority of avocado handlers could be considered small businesses under the SBA definition. In addition, based on avocado production, grower prices, and the total number of Florida avocado growers, the average annual grower revenue is less than $750,000. Thus, the majority of Florida avocado producers may also be classified as small entities. This rule changes the reporting requirements currently prescribed under the order. This rule suspends the weekly handler reporting requirements required under the order. The information from the weekly report is no longer being used by the industry or the Committee staff and the germane information is available from other sources. This action reduces the reporting burden on handlers, while aligning information collection requirements with the needs of the industry. This rule revises § 915.150, which specifies the requisite reporting requirements. Authority for this action is provided for in § 915.60 of the order. The Committee unanimously recommended this change at a meeting held on April 19, 2006. This rule is not expected to result in any additional costs for handlers. This rule reduces the reporting burden on handlers by indefinitely suspending the provisions requiring the submission of a weekly report. It also reduces the amount of time required by the Committee staff to monitor and review handler reports. Thus, this rule offers the potential for cost savings. The potential reduction in costs would benefit all handlers regardless of their size. Consequently, the benefits of this rule are expected to be equally available to all. The Committee discussed keeping the weekly reporting requirements in place as an alternative to this action. However, the Committee believes continuing to collect information that is no longer being utilized by the industry or the Committee staff is unnecessary. Therefore, this alternative was rejected. This rule will not impose any additional reporting or recordkeeping requirements on either small or large avocado handlers. The form, FV-215, “Avocado Handlers Weekly Report Form” is currently approved under OMB No. 0581-0189, Generic OMB Fruit Crops. The suspension of the reporting requirement would reduce the overall burden for that collection by 54 hours. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule. The AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. Further, the Committee's meeting was widely publicized throughout the avocado industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the April 19, 2006, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses. A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: *http://www.ams.usda.gov/fv/moab.html* . Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section. This rule invites comments on changes to the reporting requirements currently prescribed under the Florida avocado marketing order. Any comments received will be considered prior to finalization of this rule. After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that this interim final rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act. Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the **Federal Register** because:
(1)The season has started and handlers are filing reports at this time;
(2)this rule relaxes the reporting burden on handlers;
(3)the Committee unanimously recommended these changes at a public meeting and interested parties had an opportunity to provide input; and
(4)this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule. List of Subjects in 7 CFR Part 915 Avocados, Marketing agreements, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, 7 CFR part 915 is amended as follows: PART 915—AVOCADOS GROWN IN SOUTH FLORIDA 1. The authority citation for 7 CFR part 915 continues to read as follows: Authority: 7 U.S.C. 601-674. § 915.150 [Suspended in part] 2. In § 915.150, paragraphs (a),
(b)and
(c)are suspended indefinitely. Dated: December 18, 2006. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E6-21910 Filed 12-21-06; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 1207 [Docket No. AMS-FV-06-0177; FV-06-703-IFR] Potato Research and Promotion Plan; Amendment of Administrative Committee Structure AGENCY: Agricultural Marketing Service, USDA. ACTION: Interim final rule with request for comments. SUMMARY: This rule amends the structure of the Administrative Committee (Committee) of the National Potato Promotion Board (Board) as prescribed in the Potato Research and Promotion Plan by increasing the number of Vice-Chairperson positions on the Committee from six to seven. The change is intended to more closely correlate the Committee's representation with potato production in the Northwest district—a five state region which accounts for more than half of all U.S. potato production. DATES: Effective December 26, 2006; comments received by February 20, 2007 will be considered prior to issuance of a final rule. ADDRESSES: Interested persons are invited to submit written comments concerning this rule. Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Fax:
(202)720-8938, or e-mail: *moab.docketclerk@usda.gov.* All comments should reference the docket number and the date and page number of this issue of the **Federal Register** and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: *http://www.ams.usda.gov/fv/rpb.html.* FOR FURTHER INFORMATION CONTACT: Barry Broadbent or Gary Olson, Northwest Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, Suite 385, Portland, OR 97204; Telephone:
(503)326-2724, Fax:
(503)326-7440, or E-mail: *barry.broadbent@usda.gov.* SUPPLEMENTARY INFORMATION: This rule is issued under the Potato Research and Promotion Plan [7 CFR Part 1207], hereinafter referred to as the “Plan.” The Plan is authorized by the Potato Research and Promotion Act, as amended [7 U.S.C. 2611-2627], hereinafter referred to as the “Act.” The Office of Management and Budget
(OMB)has waived the review process required by Executive Order 12866 for this action. This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 311 of the Act, a person subject to a plan may file a petition with the U.S. Department of Agriculture
(USDA)stating that such plan, any provision of such plan, or any obligation imposed in connection with such plan is not in accordance with law and request a modification of such plan or to be exempted therefrom. Such person is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which such person is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided that a complaint is filed not later than 20 days after date of the entry of the ruling. This rule modifies the structure of the Board's Administrative Committee as prescribed in the Plan by increasing the number of Vice-Chairperson positions on the Committee from six to seven. This additional position would be allocated, as provided in the Board's bylaws, to the Northwest district. With this action, Board representation at the executive level for potato producers in Montana, Idaho, Oregon, Washington, and Alaska increases from 25 percent to 33 percent. The change was recommended by a large majority of the Board, with only 3 of 84 members dissenting at the Board's meeting on March 18, 2006. Section 1207.327(b) of the Plan provides the authority to make rules and regulations, with USDA approval, to effectuate the terms and conditions of the Plan. Section 1207.328(a) of the Plan provides the authority to select from its members such officers as may be necessary and to adopt such rules for the conduct of its business as the Board may deem advisable. Section 1207.507(a) of the Plan's administrative rules delineates the structure of Board's Administrative Committee. The Committee is selected from among Board members and must be composed of producer members, one or more importer member(s), and the public member. The Board, through the adoption of their bylaws, may prescribe the manner of selection and the number of members; except that the regulations mandate that the Committee shall include a Chairperson and a fixed number of Vice-Chairpersons. The bylaws also designate the officers and the immediate past Chairperson as the Board's Executive Committee. Prior to this change, the Plan provided for six Vice-Chairperson positions on the Committee. Vice-Chairperson positions are allocated in the Board's bylaws to represent production districts as determined by the Board. This action increases the number of Vice-Chairperson positions to seven. The additional Vice-Chairperson would be allocated to the Northwest district, which historically has been the district with the greatest production. At its meeting on March 18, 2006, the Board discussed the structure of its model of governance as it relates to adequate representation of their constituents. The Board has been studying this issue for a number of years. Representatives from the potato producing districts that have experienced increases over the last 30 years expressed a desire for greater Board representation. The Northwest district, which includes the States of Montana, Idaho, Oregon, Washington, and Alaska, has increased production such that the district now accounts for 49.5 percent of all potatoes produced by or imported into the U.S. Under the current Plan, the Northwest district accounts for 47.4 percent of the votes of the full Board, which the Board has determined to be equitable. In contrast, membership on the Executive Committee, the governing body of the Administrative Committee, is not representative of current production. The Northwest district has held only two of the eight executive positions, which represents only 25 percent of the Executive Committee vote, while production in the district has increased to nearly 50 percent. The members agreed to a compromise solution to increase the number of officer positions on the Administrative Committee by one and, through a change in the Board's bylaws, to allocate the additional Vice-Chairperson position to the Northwest district. Eighty-one Board members voted in favor of the proposal and three members were opposed. Those in opposition represented the Northeast district and were concerned, even after the compromise proposal, that too much influence on the Board would shift to the West. Initial Regulatory Flexibility Analysis and Paperwork Reduction Act In accordance with the Regulatory Flexibility Act
(RFA)[5 U.S.C. 601 *et seq.* ], the Agricultural Marketing Service has examined the impact of this rule on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such action so that small businesses will not be disproportionately burdened. There are approximately 1,353 handlers, 5,223 producers, and 300 importers of potatoes and potato products who are subject to the provisions of the Plan. The Small Business Administration
(SBA)defines small agricultural service firms, which includes handlers and importers, as those having annual receipts of less than $6,500,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. Most of the producers and handlers, and some of the importers would be classified as small businesses under the criteria established by the SBA (13 CFR 121.201). In addition, producers of less than 5 acres of potatoes are exempt from this program. This rule modifies the structure of the Administrative Committee of the Board, as delineated under § 1207.507 of the Plan, by increasing the number of Vice-Chairperson positions from six to seven. The Plan requires that the Committee be comprised of producer Board members, one or more importer Board member(s), and the public Board member. The exact number of members seated on the Committee is determined by the Board through the Board's bylaws. Additionally, the Plan regulations require that the Board elect a Committee Chairperson and a fixed number of Vice-Chairpersons. The Board, through their bylaws, allocates the Committee's officer positions according to production districts, so as to provide equitable representation at the executive level. The Northwest district, which has historically represented a large percentage of total potato production, has in the past been allocated two officer positions, while the other five districts have each been allocated one. Currently, producers within the Northwest district collectively produce over 50 percent of the total U.S. potato production. The additional Vice-Chairperson position created by this would be allocated by the Board's bylaws to the Northwest district, thereby increasing representation for that district at the executive level from 25 percent to 33 percent. The authority for this action is provided in §§ 1207.327 and 1207.328 of the Plan. At their March 18, 2006, meeting, the Board discussed the factors leading up to this action and the potential impact on the industry after the change. However, there is no direct financial impact to producers, handlers, or importers as a result of this action. The Board discussed alternatives to this change, including reducing the number of districts, defining Committee representation as a ratio relative to Board members from each district, and reducing the size of the Board to the size of the existing Administrative Committee. None of the proposals garnered much support and were ultimately dropped from consideration because the changes were deemed to be too divisive to the industry. This rule will not impose any additional reporting or recordkeeping requirements on either small or large potato handlers or importers. As with all Federal research and promotion programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. AMS is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule. Further, the Board's meetings were widely publicized throughout the potato industry and all interested persons were invited to attend the meetings and participate in Board deliberations. Like all Board meetings, the March 18, 2006, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses. This rule invites comments on a change to the Administrative Committee structure as currently prescribed under the Plan. Any comments timely received will be considered prior to finalization of this rule. Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the **Federal Register** because:
(1)Making this change effective prior to that date will facilitate Committee operations;
(2)this issue has been widely discussed at various industry and association meetings, and interested persons have had time to determine and express their positions; and
(3)this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule. List of Subjects in 7 CFR Part 1207 Advertising, Agricultural research, Imports, Potatoes, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, 7 CFR part 1207 is amended as follows: PART 1207—POTATO RESEARCH AND PROMOTION PLAN 1. The authority citation for 7 CFR part 1207 continues to read as follows: Authority: 7 U.S.C. 2611-2627. 2. Section 1207.507(a) is revised to read as follows: § 1207.507 Administrative Committee.
(a)The Board shall annually select from among its members an Administrative Committee composed of producer members as provided for in the Board's bylaws, one or more importer members, and the public member. Selection shall be made in such manner as the Board may prescribe: Except that such committee shall include the Chairperson and seven Vice-Chairpersons, one of whom shall also serve as the Secretary and Treasurer of the Board. Dated: December 18, 2006. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E6-21911 Filed 12-21-06; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 522 Implantation or Injectable Dosage Form New Animal Drugs; Gentamicin AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration
(FDA)is amending the animal drug regulations to reflect approval of an abbreviated new animal drug application (ANADA) filed by Sparhawk Laboratories, Inc. The ANADA provides for use of a gentamicin sulfate injectable solution in piglets for treatment of porcine colibacillosis. DATES: This rule is effective December 22, 2006. FOR FURTHER INFORMATION CONTACT: John K. Harshman, Center for Veterinary Medicine (HFV 104), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-0169, e-mail: *john.harshman@fda.hhs.gov* . SUPPLEMENTARY INFORMATION: Sparhawk Laboratories, Inc., 12340 Santa Fe Trail Dr., Lenexa, KS 66215, filed ANADA 200-394 for the use of Gentamicin Sulfate Injection in piglets up to 3 days old for treatment of porcine colibacillosis caused by strains of *Escherichia coli* sensitive to gentamicin. Sparhawk Laboratories, Inc.'s Gentamicin Sulfate Injection is approved as a generic copy of Schering-Plough Animal Health Corp.'s GARACIN Piglet Injection, approved under NADA 103-037. The ANADA is approved as of November 17, 2006, and the regulations in 21 CFR 522.1044 are amended to reflect the approval and a current format. The basis of approval is discussed in the freedom of information summary. In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday. FDA has determined under 21 CFR 25.33(a)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects in 21 CFR Part 522 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 522 is amended as follows: PART 522—IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS 1. The authority citation for 21 CFR part 522 continues to read as follows: Authority: 21 U.S.C. 360b. 2. In § 522.1044, revise the section heading and paragraphs
(a)and
(b)to read as follows: § 522.1044 Gentamicin.
(a)*Specifications* . Each milliliter of solution contains gentamicin sulfate equivalent to 5, 50, or 100 milligrams
(mg)gentamicin.
(b)*Sponsors* . See sponsors in § 510.600(c) of this chapter for use as in paragraph
(d)of this section.
(1)No. 000061 for use of 5 mg per milliliter (/mL) solution in swine as in paragraph (d)(4), 50 mg/mL solution in dogs and cats as in paragraph (d)(1), 50 mg/mL and 100 mg/mL solution in chickens and turkeys as in paragraphs (d)(2) and (d)(3) of this section.
(2)No. 058005 for use of 5 mg/mL solution in swine as in paragraph (d)(4) of this section.
(3)No. 000010 for use of 50 mg/mL solution in dogs as in paragraph (d)(5) of this section.
(4)No. 059130 for use of 100 mg/mL solution in turkeys as in paragraph (d)(2) and in chickens as in paragraph (d)(3) of this section. Dated: December 13, 2006. Stephen F. Sundlof, Director, Center for Veterinary Medicine. [FR Doc. E6-21951 Filed 12-21-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 812 [Docket No. 2006N-0494] Medical Device Regulations; Disqualification of a Clinical Investigator; Technical Amendment AGENCY: Food and Drug Administration, HHS. ACTION: Final rule; technical amendment. SUMMARY: The Food and Drug Administration
(FDA)is amending a medical device regulation to include references to the Center for Biologics Evaluation and Research
(CBER)and the Center for Drug Evaluation and Research (CDER). This regulation pertains to the disqualification of a clinical investigator. Currently, only a reference to the Center for Devices and Radiological Health is listed in this regulation. This action is being taken to ensure the accuracy of FDA's regulations. DATES: This rule is effective December 22, 2006. FOR FURTHER INFORMATION CONTACT: Stephen M. Ripley, Center for Biologics Evaluation and Research (HFM-17), Food and Drug Administration, 1401 Rockville Pike, suite 200N, Rockville, MD 20852-1448, 301-827-6210. SUPPLEMENTARY INFORMATION: I. Background FDA is amending 21 CFR 812.119(a) to include references to CBER and CDER. This regulation pertains to the disqualification of a clinical investigator. Currently, only a reference to the Center for Devices and Radiological Health is listed in this regulation. The appropriate Center that has regulatory responsibility for the medical device subject to this regulation is responsible for corresponding with the investigator of the study concerning any possible violations of the applicable requirements. Therefore, FDA is updating this regulation to include the references to CBER and CDER. Publication of this document constitutes final action under the Administrative Procedure Act (5 U.S.C. 553). FDA has determined that notice and public comment are unnecessary because this amendment to the regulations provides only a technical change to update references in the Code of Federal Regulations, and is nonsubstantive. List of Subjects in 21 CFR Part 812 Health records, Medical devices, Medical research, Reporting and recordkeeping requirements. Therefore, under the Federal Food, Drug, and Cosmetic Act, and Public Health Service Act, and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 812 is amended as follows: PART 812—INVESTIGATIONAL DEVICE EXEMPTIONS 1. The authority citation for 21 CFR part 812 continues to read as follows: Authority: 21 U.S.C. 331, 351, 352, 353, 355, 360, 360c-360f, 360h-360j, 371, 372, 374, 379e, 381, 382, 383; 42 U.S.C. 216, 241, 262, 263b-263n. 2. Section 812.119 is amended by revising paragraph
(a)to read as follows: § 812.119 Disqualification of a clinical investigator.
(a)If FDA has information indicating that an investigator has repeatedly or deliberately failed to comply with the requirements of this part, part 50, or part 56 of this chapter, or has repeatedly or deliberately submitted false information either to the sponsor of the investigation or in any required report, the Center for Devices and Radiological Health, the Center for Biologics Evaluation and Research, or the Center for Drug Evaluation and Research will furnish the investigator written notice of the matter under complaint and offer the investigator an opportunity to explain the matter in writing, or, at the option of the investigator, in an informal conference. If an explanation is offered and accepted by the applicable Center, the disqualification process will be terminated. If an explanation is offered but not accepted by the Center, the investigator will be given an opportunity for a regulatory hearing under part 16 of this chapter on the question of whether the investigator is entitled to receive investigational devices. Dated: December 12, 2006. Jeffrey Shuren, Assistant Commissioner for Policy. [FR Doc. E6-21952 Filed 12-21-06; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9278] RIN 1545-BB31, 1545-AY38, 1545-BC52 Treatment of Services Under Section 482; Allocation of Income and Deductions From Intangibles; Stewardship Expense; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correcting amendments. SUMMARY: This document contains corrections to final and temporary regulations (TD 9278) that was published in the **Federal Register** on Friday, August 4, 2006 (71 FR 44466) regarding the treatment of controlled services transactions under section 482 and the allocation of income from intangibles, in particular with respect to contributions by a controlled party to the value of an intangible owned by another controlled party. This document also contains corrections to final and temporary regulations that modify the regulations under section 861 concerning stewardship expenses to be consistent with the changes made to the regulations under section 482. DATES: *Effective Date:* The amendments are effective on January 1, 2007. FOR FURTHER INFORMATION CONTACT: Thomas A. Vidano,
(202)435-5265, or Carol B. Tan
(202)435-5159, for matters relating to section 482, and David F. Bergkuist,
(202)622-3850, for matters relating to stewardship expenses (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background The final and temporary regulations that are the subject of these corrections are under sections 482 and 861 of the Internal Revenue Code. Need for Correction As published, the final and temporary regulations (TD 9278) contains errors that may prove to be misleading and are in need of clarification. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Correction of Publication Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments: 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 1.482-0T is amended by removing the entries for paragraphs (i)(1) through (i)(10), (j)(1), (j)(2) and (j)(3) from § 1.482-1T. **Par. 3.** Section 1.482-1 is amended by revising paragraph
(i)introductory text to read as follows: § 1.482-1 Allocation of income and deductions among taxpayers.
(i)[Reserved]. For further guidance, see § 1.482-1T(i) introductory text. **Par. 4.** Section 1.482-1T is amended as follows: 1. Paragraphs (i)(1) through (i)(10) are added and reserved. 2. Paragraphs (j)(1) through (j)(5) are amended by adding “§ ” before the language “1.482-1(j)(1)”. The addition reads as follows: § 1. 482-1T Allocation of income and deductions among taxpayers (temporary). (i)(1) through (i)(10) [Reserved]. For further guidance, see § 1.482-1(i)(1) through (i)(10). **Par. 5.** Section 1.482-8T is amended by revising paragraph
(b)*Example 12* . (iv), second sentence to read as follows: § 1.482-8T Example of the best method rule (temporary).
(b)* * * Example 12.
(i)* * *
(iv)* * * USP contributed the long-term endorsement contracts with professional athletes. * * * **Par. 6.** Section 1.482-9T is amended as follows: 1. Paragraph (b)(6), *Example 22.* (vi), introductory text is revised. 2. Paragraph (g)(2), *Example 2.* (iv), fifth sentence is revised. 3. Paragraph (i)(2) is revised. 4. Paragraph (i)(5), *Example 1.* (iii), first sentence is revised. 5. Paragraph (i)(5), *Example 3.* (ii), first sentence is revised. 6. Paragraph (l)(5), *Example 20.* (i), second sentence is revised. 7. Paragraph (m)(5), *Example 1.* (ii), fourth sentence is revised. The revisions read as follows: § 1.482-9T Methods to determine taxable income in connection with a controlled services transaction (temporary).
(b)* * *
(6)* * * Example 22.
(i)* * *
(vi)In contrast, if aggregated services AB were allocated by reference to the total U.S. dollar value of sales to uncontrolled parties (trade sales) by each company, the following results would obtain:
(g)* * *
(2)* * * Example 2. * * *
(iv)* * * In the bid on the Country 2 contract for Level 1 waste remediation, Company B proposes to use a multidisciplinary team of specialists from Company A and Company B. * * *
(i)* * *
(2)* * * For purposes of this paragraph (i), an arrangement will be treated as a contingent-payment arrangement if it meets all of the requirements in paragraph (i)(2)(i) of this section and is consistent with the economic substance and conduct requirement in paragraph (i)(2)(ii) of this section.
(5)* * * Example 1.
(i)* * *
(iii)The years under examination are years 6 through 9. * * * Example 3.
(i)* * *
(ii)The years under examination are years 6 through 9. * * *
(l)* * *
(5)* * * Example 20.
(i)* * * Y, a Country B corporation, is a distribution and marketing company that also performs clinical trials for X in Country B. * * *
(m)* * *
(5)* * * Example 1.
(i)* * *
(ii)* * * The comparable profits method may provide the most reliable measure of an arm's length result if uncontrolled parties are identified that perform similar, combined functions of maintaining and providing spare parts for similar equipment. * * * **Par. 7.** Section 1.861-8T is amended as follows: 1. Paragraph (b)(3) is revised. 2. Paragraph (g), paragraph
(i)following *Example 30* . (i)(C) is redesignated as paragraph
(ii)and the paragraph designation for *Example 30* . (i)(C) is removed. 3. Paragraph (h)(1), first three sentences are revised. 4. Paragraph (h)(3) is revised. The revisions read as follows: § 1.861-8T Computation of taxable income from sources within the United States and from other sources and activities (temporary).
(b)* * *
(3)*Supportive functions.* Deductions which are supportive in nature (such as overhead, general and administrative, and supervisory expenses) may relate to other deductions which can more readily be allocated to gross income. In such instance, such supportive deductions may be allocated and apportioned along with the deductions to which they relate. On the other hand, it would be equally acceptable to attribute supportive deductions on some reasonable basis directly to activities or property which generate, have generated or could reasonably be expected to generate gross income. This would ordinarily be accomplished by allocating the supportive expenses to all gross income or to another broad class of gross income and apportioning the expenses in accordance with paragraph (c)(1) of this section. For this purpose, reasonable departmental overhead rates may be utilized. For examples of the application of the principles of this paragraph (b)(3) to expenses other than expenses attributable to stewardship activities, see *Examples 19* through *21* of paragraph
(g)of this section. See paragraph (e)(4)(ii) of this section for the allocation and apportionment of deductions attributable to stewardship expenses. However, supportive deductions that are described in § 1.861-14T(e)(3) shall be allocated and apportioned in accordance with the rules of § 1.861-14T and shall not be allocated and apportioned by reference only to the gross income of a single member of an affiliated group of corporations as defined in § 1.861-14T(d).
(h)* * *
(1)* * * In general, the rules of this section, as well as the rules of §§ 1.861-9T, 1.861-10T, 1.861-11T, 1.861-12T, and 1.861-14T apply for taxable years beginning after December 31, 1986, except for paragraphs (a)(5)(ii), (b)(3), (e)(4), (f)(4)(i), and paragraph
(g)*Example 17* , *Example 18* , and *Example 30* of this section, which are generally applicable for taxable years beginning after December 31, 2006. Also, see §§ 1.861-8(e)(12)(iv) and 1.861-14(e)(6) for rules concerning the allocation and apportionment of deductions for charitable contributions. In the case of corporate taxpayers, transition rules set forth in § 1.861-13T provide for the gradual phase-in of certain provisions of this and the foregoing sections. * * *
(3)*Expiration date.* The applicability of the paragraphs (a)(5)(ii), (b)(3), (e)(4), (f)(4)(i), and paragraph
(g)*Example 17* , *Example 18* , and *Example 30* of this section, expires on or before July 31, 2009. **Par. 8.** Section 1.6662-6T is amended by revising paragraph (d)(2)(ii)(B), first sentence to read as follows: § 1.6662-6T Transactions between parties described in section 482 and net section 482 transfer price adjustments (temporary). (d)(2)(ii)(B) A taxpayer's selection of the services cost method for certain services, described in § 1.482-9T(b), and its application of that method to a controlled services transaction will be considered reasonable for purposes of the specified method requirement only if the taxpayer reasonably allocated and apportioned costs in accordance with § 1.482-9T(k), reasonably concluded that the controlled services transaction meets the conditions of § 1.482-9T(b)(3), and reasonably concluded that the controlled services transaction is not described in § 1.482-9T(b)(2). * * * Cynthia Grigsby, Senior Federal Register Liaison Officer, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. E6-21908 Filed 12-21-06; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 5 [TD 9304] RIN 1545-BF26 Guidance Necessary To Facilitate Business Electronic Filing Under Section 1561 AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final and temporary regulations. SUMMARY: This document contains temporary regulations that affect component members of controlled groups of corporations and consolidated groups filing life-nonlife Federal income tax returns. They provide guidance regarding the apportionment of tax benefit items and the amount and type of information these members are required to submit with their returns. The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the **Federal Register** . DATES: *Effective Date:* These regulations are effective on December 22, 2006. *Applicability Date:* For dates of applicability, see §§ 1.1502-43T(e)(1), 1.1502-47T(t)(1), 1.1561-1T(d)(1), 1.1561-2T(f)(1), 1.1561-3T(d)(1) and 1.1563-1T(e)(1). The applicability of these regulations will expire on December 21, 2009. FOR FURTHER INFORMATION CONTACT: Grid Glyer,
(202)622-7930 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Section 1561(a) provides that the *component members* of a *controlled group of corporations* (as those terms are defined in section 1563) are limited to using the amounts of certain tax benefit items described therein in the same manner as if they were one corporation. Although section 1561(a) provides that these amounts shall generally be divided equally among those members, it also provides that if those members consent to adopt an apportionment plan, then, except as provided below, they will be permitted to allocate these amounts among themselves unequally. Section 1.1561-3(b) provides the procedural format by which those members may adopt an apportionment plan. On May 26, 2006, the IRS and Treasury Department released temporary regulations (TD 9264), which, among other things, eliminated regulatory impediments to the electronic filing (e-filing) of many statements that corporate taxpayers were previously required to include on or with their Federal income tax returns. As noted in section 2.C. of the preamble to those regulations, § 1.1561-3(b) presents an impediment to the e-filing of that information which each member of a controlled group is required to provide with its Federal income tax return when it makes the consent provided therein. These temporary regulations remove that impediment and also clarify the amount and type of information that each member of such group is required to submit with its return, whether or not the group chooses to apportion unequally the specified tax benefit items among its members. Thus, these regulations require each member of such group to provide the requisite information, whether or not it consents to adopt an apportionment plan, on a form ( *i.e.* , Schedule O or any successor to that form) to be filed with each member's Federal income tax return for each taxable year for which it is a component member of a controlled group. Explanation of Provisions 1. Revision of the Regulations Under Section 1561 The IRS and Treasury Department are publishing temporary regulations under section 1561 for several reasons. First, the current regulations are outdated in that they refer to tax benefit items that are no longer listed in section 1561(a). Except as provided below, to minimize this issue in the future, the temporary regulations refer generically to the tax benefit items listed in section 1561(a) rather than refer specifically to those items by listing and describing each one. Second, the current regulations do not provide guidance to taxpayers regarding how to allocate the amounts of the section 1561(a) tax benefit items among the component members of a controlled group of corporations which have an apportionment plan in effect. As a result, the IRS often can not determine whether taxpayers have correctly allocated these items. Thus, the temporary regulations refer to a new form ( *i.e.* , Schedule O or any successor to that form) on which such members will provide information about these items. Except as provided below, each component member of a controlled group must file this form every year with its Federal income tax return whether or not:
(1)An apportionment plan is in effect, or
(2)any change is made to the group's apportionment of its section 1561(a) tax benefit items from the previous year. However, whenever one or more of the component members of a controlled group of corporations are also members of a consolidated group, the parent of such consolidated group shall file one form on behalf of all of its members. That form shall contain all the information required for each such member. Finally, § 1.1561-3(b) presents an impediment to e-filing where such members have consented to the adoption of an apportionment plan. That section requires each member of a controlled group to attach to its return, for each year following the adoption of the plan, a copy of its signed consent to such plan. As explained in TD 9264, that signature requirement presents an impediment to e-filing. These temporary regulations eliminate this impediment and provide that the form will be the mechanism by which such member adopts (and also amend or terminate) such plan. Thus, each member of the group (that is not a member of a consolidated group) will file this form to consent to adopt a plan, even if it is a wholly-owned subsidiary of the group. *Compare* § 1.1561-3(b)(2)(i) (a wholly-owned subsidiary of a controlled group was not required to consent to adopt a plan because it was deemed to consent if all the component members of that group that are not wholly owned subsidiaries consent). Thus, these temporary regulations eliminate the deemed consent provision of § 1.1561-3(b)(2)(i). 2. Regulation Authorizing the Component Members of a Controlled Group To Apportion the Accumulated Earnings Credit Unequally if They Have an Apportionment Plan in Effect Section 1561(a) provides that the component members of a controlled group of corporations must divide the amount of the accumulated earnings credit (the credit) equally unless the Secretary prescribes regulations permitting an unequal allocation of that amount. However, § 1.1561-2(c) requires that they divide that amount equally. The IRS and Treasury Department have concluded that they no longer will require such members to divide that amount equally. Therefore, these temporary regulations now provide that the component members of a controlled group may choose to allocate the amount of that credit unequally among themselves if they have an apportionment plan in effect. 3. Revisions to § 1.1563-1 A. Reformatting the Regulation For the sake of consistency, the IRS and Treasury Department are reformatting § 1.1563-1 to conform it to current formatting conventions. It is not intended that any such reformatting constitute a substantive change. Moreover, the changes described in this paragraph of the preamble are only limited to formatting. Thus, for example, except for the changes described below, no examples in § 1.1563-1 have been updated to reflect current law. Such changes are beyond the scope of this project and will be addressed in a separate regulation project. B. Updating the Definition of a Brother-Sister Controlled Group Section 900 of the American Jobs Creation Act of 2004, Pub. L. 108-357, 118 Stat. 1418 (the 2004 amendment), revised the definition of a brother-sister controlled group in section 1563(a)(2). Prior to this 2004 amendment, commonly owned corporations qualified as a brother-sister controlled group if five or fewer persons who are individuals, estates, or trusts own (within the meaning of section 1563(d)(2)) stock possessing:
(A)At least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of each corporation (the 80 percent requirement) and
(B)more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such person only to the extent such stock ownership is identical with respect to each such corporation (the more-than-50 percent requirement). The 2004 amendment eliminated the 80 percent requirement from the section 1563(a)(2) definition of a brother-sister controlled group. As a result, for purposes of section 1561, corporations are component members of a brother-sister controlled group if just the more-than-50 percent requirement is satisfied. However, for all other provisions of law that incorporate the section 1563(a) definition of a brother-sister controlled group, both the more-than-50 percent requirement and the 80 percent requirement must be satisfied in order to qualify as a brother-sister controlled group. See section 1563(f)(5). Therefore, these temporary regulations reflect this change. These temporary regulations apply to tax years beginning on or after the date they are published in the **Federal Register** . However, the above described 2004 amendment to section 1563(a)(2) is effective for tax years beginning after October 22, 2004. C. Clarifying That an S Corporation Is Treated as an Excluded Member of a Controlled Group Under Current Law Section 1.1561-1(c)(1) provides that, for purposes of sections 1561 and 1563, the term *corporation* includes an electing small business corporation and refers to § 1.1563-1(b)(2)(ii)( *c* ) for the treatment of such a corporation as an excluded member of a controlled group of corporations. Specifically, § 1.1563-1(b)(2)(ii)(c) provides that only an electing small business corporation which is not subject to the tax imposed by section 1378 will be treated as an excluded member. Section 1378, as in effect when § 1.1563-1(b)(2)(ii)( *c* ) was published (old section 1378), taxed the income of an electing small business corporation if its income exceeded a certain threshold. That income was taxed at the lower of the rate determined under section 1201(a) or section 11. Thus, when such corporation was subject to tax under section 11, it was appropriate to treat such corporation as a component member of a controlled group for purposes of allocating its section 11 tax benefit amount. Old section 1378 was ultimately repealed as part of the Tax Reform Act of 1986 (Pub. L. 99-514, 100 Stat. 2085). Thus, § 1.1563-1(b)(2)(ii)( *c* ) became obsolete. Under current law, an S corporation (the successor to an electing small business corporation) is generally subject to tax at the entity level under only two provisions:
(1)Section 1374, which imposes tax on certain recognized built-in gain, and
(2)section 1375, which imposes tax on passive investment income under certain circumstances. However, in both cases, the amount of tax imposed on an S corporation is computed by applying the highest rate of tax specified in section 11(b). *See* sections 1374(b)(1) and 1375(a). Thus, under either of these provisions, no portion of any of the lower tax bracket amounts of section 11(b) could be allocated to such a corporation. In other instances, an S corporation is partially liable for taxes that were imposed on the income of its predecessor C corporation that it must now recapture. *See, e.g.* , sections 167(g), 460(b), 1363(d) and 1371(d)(2). However, these recapture taxes are not being imposed on an S corporation's own income. Since an S corporation is not *currently* subject to any tax to which either the tax bracket amounts of section 11(b) apply, or any other tax benefit item to which section 1561(a) applies, it is appropriate to treat that corporation as an excluded member of a controlled group. These temporary regulations clarify that only to the extent that a particular tax (and thus a particular tax benefit item to which section 1561(a)) applies to an S corporation is that type of corporation treated as a component member of the group. This general reference to a tax that applies to an S corporation is intended to avoid the issue in § 1.1563-1(b)(2)(ii)(c) of referring to a particular Code section that later became obsolete ( *i.e.* , old section 1378). D. Clarifying That the Life Insurance Company Provisions Do Not Apply to the Controlled Group Rules Where That Type of Company Is a Member (Whether Eligible or Ineligible) of a Life-Nonlife Affiliated Group for the Consolidated Return Year for Which a Section 1504(c)(2) Election Is Effective The current regulations under section 1563 describe the treatment of life insurance companies under the controlled group rules. Section 1.1563-1(a)(5) provides that two or more life insurance companies that are members of a controlled group are treated as a distinct controlled group of corporations composed only of life insurance companies. Section 1.1563-1(b)(2)(ii)( *e* ) defines a life insurance company as an excluded member unless that type of company is a member of a separate life insurance company controlled group described in § 1.1563-1(a)(5). Section 1504(c)(2) provides that if an affiliated group includes any domestic life insurance companies that would otherwise not be treated as includible members of the group, then, except as provided therein, the common parent of such group may elect (pursuant to regulations prescribed by the Secretary) to treat all such companies as includible corporations. Paragraph (f)(6) of § 1.1502-47 implements section 1504(c)(2) as it relates to section 1563. These temporary regulations provide that if one or more life insurance companies are members (whether eligible or ineligible) of an affiliated group for the consolidated return year for which a section 1504(c)(2) election is effective, then those members are not treated as either excluded members of the controlled group or as members of a separate life insurance controlled group. *See* § 1.1502-47(f)(6). Rather, any eligible members are treated as members of the consolidated group, and any ineligible members are treated, along with the eligible and includible members of the consolidated group, as members of a life-nonlife controlled group. These temporary regulations apply to tax years beginning on or after the date they are published in the **Federal Register** . However, paragraph (f)(6) of § 1.1502-47 applies to tax years of consolidated groups beginning on or after January 1, 1982. *See* TD 7877. 4. Revisions to Two Consolidated Return Regulations A. § 1.1502-43 Section 1.1502-43 provides rules for calculating the consolidated accumulated earnings tax. Section 1.1502-43(d) is currently reserved. These temporary regulations clarify that if the consolidated group is part of a controlled group then section 1561 applies in determining the amount of that credit. These temporary regulations apply to consolidated return years for which a return is due (without extensions) after the date it is published in the **Federal Register** . However, pursuant to the Tax Reform Act of 1969, Pub. L. 91-172, 78 Stat. 116, the accumulated earnings credit became a full tax benefit item under section 1561(a) for tax years beginning after December 31, 1974. B. § 1.1502-47 Section 1.1502-47 provides rules for a life-nonlife consolidated group to calculate its consolidated taxable income. Paragraph
(s)of § 1.1502-47 requires a consolidated group to provide a notation on the face of its return identifying it as a life-nonlife return. This requirement presents an impediment to e-filing. These temporary regulations remove the impediment by deleting the requirement to provide that notation. 5. Deleting Obsolete Regulations As part of this Treasury decision, the IRS and Treasury Department are deleting numerous obsolete regulations. This effort is part of an ongoing process to remove those types of regulations from the Code of Federal Regulations (the CFR). Therefore, the following regulations are deleted from the CFR: § 1.342-1, 1.371-1 through 1.371-2, 1.372-1, 1.374-1 through 1.374-4, 1.1018-1, 1.1562-0 through 1.1562-7, 1.1564-1 and 5.1561-1. 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 has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6) refer to the Special Analyses section of the preamble to the cross-reference notice of proposed rulemaking published in the Proposed Rules section in this issue of the **Federal Register** . Pursuant to section 7805(f) of the Code, these temporary regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. Drafting Information The principal author of these regulations is Grid Glyer, Office of Associate Chief Counsel (Corporate). However, other personnel from the IRS and Treasury Department participated in their development. List of Subjects 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. 26 CFR Part 5 Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR parts 1 and 5 are amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 is amended by adding entries in numerical order to read, in part, as follows: Authority: 26 U.S.C. 7805 * * * Section 1.1502-43T also issued under 26 U.S.C. 1502. * * * Section 1.1561-2T also issued under 26 U.S.C. 1561. * * * § 1.108-1 [Removed] **Par. 2.** Section 1.108-1 is removed and reserved. § 4.342-1 [Removed] **Par. 3.** Section 1.342-1 is removed. § 1.371-1 [Removed] **Par. 4.** Section 1.371-1 is removed. § 1.371-2 [Removed] **Par. 5.** Section 1.371-2 is removed. § 1.372-1 [Removed] **Par. 6.** Section 1.372-1 is removed. § 1.374-1 [Removed] **Par. 7.** Section 1.374-1 is removed. § 1.374-2 [Removed] **Par. 8.** Section 1.374-2 is removed. § 1.374-3 [Removed] **Par. 9.** Section 1.374-3 is removed. § 1.374-4 [Removed] **Par. 10.** Section 1.374-4 is removed. § 1.924(a)-1T [Amended] **Par. 10A.** For each entry in the “Location” column of the following table, remove the language in the “Remove” column and add the language in the “Add” column in its place: Location Remove Add The fifth sentence of § 1.924(a)-1T(j)(2)(i) a statement completing the form ( *i.e.* , Schedule O or any successor to that form). The fifth sentence of § 1.924(a)-1T(j)(2)(i) § 1.1561-3(b) § 1.1561-3T. The sixth sentence of § 1.924(a)-1T(j)(2)(i) § 1.1561-3(c) § 1.1561-3T(a). § 1.1018-1 [Removed] **Par. 11.** Section 1.1018-1 is removed. **Par. 12.** Section 1.1502-43 is amended by revising paragraph
(d)and adding paragraph
(e)to read as follows: § 1.1502-43 Consolidated accumulated earnings tax.
(d)[Reserved]. For further guidance, see § 1.1502-43T(d).
(e)[Reserved]. For further guidance, see § 1.1502-43T(e)(1). **Par. 13.** Section 1.1502-43T is added to read as follows: § 1.1502-43T Consolidated accumulated earnings tax (temporary).
(a)through
(c)[Reserved]. For further guidance, see § 1.1502-43(a) through (c).
(d)*Consolidated accumulated earnings credit—*
(1)*In general.* [Reserved]
(2)*Special rule if consolidated group part of controlled group.* If a consolidated group is treated as a component member of a controlled group, or if each member of a consolidated group is treated as a component member of a controlled group, see section 1561 for determining the portion of the accumulated earnings credit to be allocated to such group or to such members.
(e)*Effective date—*
(1)*Applicability date.* This section applies to any consolidated Federal income tax return due (without extensions) after December 22, 2006. However, a consolidated group may apply this section to any consolidated Federal income tax return filed on or after December 22, 2006.
(2)*Expiration date.* The applicability of this section will expire on December 21, 2009. **Par. 14.** Section 1.1502-47 is amended by revising paragraph
(s)and adding paragraph
(t)to read as follows: § 1.1502-47 Consolidated returns by life-nonlife groups.
(s)[Reserved]. For further guidance, see § 1.1502-47T(s).
(t)[Reserved]. For further guidance, see § 1.1502-47T(t)(1). **Par. 15.** Section 1.1502-47T is amended by revising paragraph
(s)and adding paragraph
(t)to read as follows: § 1.1502-47T Consolidated returns by life-nonlife groups (temporary).
(s)*Filing requirements.* Nonlife consolidated taxable income or loss under paragraph
(h)of § 1.1502-47 shall be determined on a separate Form 1120 or 1120-PC, and consolidated partial LICTI under paragraph
(j)of § 1.1502-47 shall be determined on a separate Form 1120-L. The consolidated return shall be made on a separate Form 1120, 1120-PC, or 1120-L filed by the common parent (if the group includes a life company), which shows the set-offs under paragraphs (g), (m), and
(n)of § 1.1502-47 and clearly indicates on the face of the return that it is a life-nonlife consolidated return (if the group includes a life company). See also § 1.1502-75(j), relating to statements and schedules for subsidiaries.
(t)*Effective date—*
(1)*Applicability date.* Paragraph
(s)of this section applies to any consolidated Federal income tax return due (without extensions) after December 22, 2006. However, a consolidated group may apply paragraph
(s)of this section to any consolidated Federal income tax return filed on or after December 22, 2006.
(2)*Expiration date.* The applicability of paragraph
(s)of this section will expire on December 21, 2009. **Par. 16.** Section 1.1502-90 is amended by: 1. Removing and reserving the entry for § 1.1502-95(e)(8). 2. Removing and reserving the entry for § 1.1502-95(f). 3. Reserving an entry for § 1.1502-95(g). 4. Adding entries for § 1.1502-95T. The additions read as follows: § 1.1502-90 Table of contents. § 1.1502-95 Rules on ceasing to be a member of a consolidated group (or loss subgroup).
(g)[Reserved]. § 1.1502-95T Rules on ceasing to be a member of a consolidated group (or loss subgroup) (temporary).
(a)through (e)(7) [Reserved]. (e)(8) Reporting requirements.
(i)Common Parent.
(ii)Former Member.
(iii)Exception.
(f)Filing the election to apportion the section 382 limitation and net unrealized built-in gain.
(1)Form of the election to apportion.
(i)Statement.
(ii)Agreement.
(2)Signing the agreement.
(3)Filing of the election.
(i)Filing by the common parent.
(ii)Filing by the former member.
(4)Revocation of election.
(g)Effective date.
(1)Applicability date.
(2)Expiration date. § 1.1561-0 [Removed] **Par. 17.** Section 1.1561-0 is removed. § 1.1561-1 [Removed] **Par. 18.** Section 1.1561-1 is removed. **Par. 19.** Section 1.1561-1T is added to read as follows: § 1.1561-1T General rules regarding certain tax benefits available to the component members of a controlled group of corporations (temporary).
(a)*In general.*
(1)Part II (section 1561 and following) of subchapter B of chapter 6 of the Internal Revenue Code (part II) provides rules to limit the amounts of certain specified tax benefit items of component members of a controlled group of corporations on a December 31, for their taxable years which include such December 31. The component members of such a group shall be limited for purposes of subtitle A of the Code to the amounts of certain items, set forth in section 1561(a), as if they were one corporation. Certain other tax items also set forth in section 1561(a) ( *e.g.* , the additional tax imposed by section 11(b)(1) and the section 55(d)(3) phase out of the alternative minimum tax exemption amount) will be determined by combining the taxable income of all such members and then allocating the amount of such items among such members.
(2)For certain definitions (including the definition of a *controlled group of corporations* and a *component member* ) and special rules for purposes of this part II see section 1563.
(b)*Special rules.*
(1)For purposes of this part II, the term *corporation* includes a small business corporation (as defined in section 1361). However, for the treatment of such a corporation as an *excluded member* of a controlled group of corporations see § 1.1563-1(b)(2)(ii)(C).
(2)In the case of corporations electing a 52-53-week taxable year under section 441(f)(1), the provisions of this part II shall be applied in accordance with the special rule of section 441(f)(2)(A). See § 1.441-2.
(c)*Tax avoidance.* The provisions of this part II do not delimit or abrogate any principle of law established by judicial decision, or any existing provisions of the Code, such as sections 269, 482, and 1551, which have the effect of preventing the avoidance or evasion of income taxes.
(d)*Effective date* —(1) *Applicability date.* This section applies to any taxable year beginning on or after December 22, 2006. However, taxpayers may apply this section to any Federal income tax return filed on or after December 22, 2006.
(2)*Expiration date.* The applicability of this section will expire on December 21, 2009. **Par. 20.** Section 1.1561-2 is amended by removing and reserving paragraphs
(a)and (b), revising paragraph (c), removing and reserving paragraph(d), and adding paragraph
(f)to read as follows: § 1.1561-2 Determination of amount of tax benefits.
(c)[Reserved]. For further guidance, see § 1.1561-2T(c).
(f)[Reserved]. For further guidance, see § 1.1561-2T(f)(1). **Par. 21.** Section 1.1561-2T is added to read as follows: § 1.1561-2T Determination of amount of tax benefits (temporary).
(a)through
(b)[Reserved].
(c)*Accumulated earnings credit.* The component members of a controlled group of corporations may allocate the amount of the accumulated earnings credit unequally if they have an apportionment plan in effect.
(d)[Reserved].
(e)[Reserved]. For further guidance, see § 1.1561-2(e).
(f)*Effective date* —(1) *Applicability date.* This section applies to any taxable year beginning on or after December 22, 2006. However, taxpayers may apply this section to any Federal income tax return filed on or after December 22, 2006.
(2)*Expiration date.* The applicability of this section will expire on December 21, 2009. § 1.1561-3 [Removed] **Par. 22.** Section 1.1561-3 is removed. **Par. 23.** Section 1.1561-3T is added to read as follows: § 1.1561-3T Allocation of the section 1561(a) tax items (temporary).
(a)*Filing of form* —(1) *In general.* For each taxable year that a corporation is a component member of the same controlled group of corporations on a December 31, for its taxable year that includes such December 31, such corporation and all other component members of such group must each file the required form ( *i.e.* , Schedule O or any successor to that form) with each Federal income tax return. Each such corporation must file that form with its return whether or not—
(i)An apportionment plan is in effect; or
(ii)Any change is made in the group's apportionment of its section 1561(a) tax benefit items from the previous year.
(2)*Exception for component members that are members of a consolidated group.* If one or more of the component members of a controlled group of corporations are also members of a consolidated group, the parent of such consolidated group shall file only one form on behalf of all of such members. Such form shall contain the information required for each such member.
(b)*No apportionment plan in effect.* If the component members of a controlled group of corporations do not have an apportionment plan in effect, the amounts of the section 1561(a) items must be divided equally among all such members. For purposes of the preceding sentence, if any component members of a controlled group of corporations are also members of a consolidated group, such members will each be treated as a separate component member of the controlled group.
(c)*Apportionment plan in effect* —(1) *Adoption of plan.* The component members of a controlled group of corporations consent to the adoption (or amendment) of an apportionment plan by checking the box to that effect on such form. For purposes of this paragraph (c)—
(i)An apportionment plan that is adopted (including a plan that has been amended) continues in effect until it is terminated;
(ii)A consolidated group is treated as one component member of such group; and
(iii)The members must allocate the amounts of the section 1561(a) items between or among themselves as described in the plan.
(2)*Limitation on adopting a plan* —(i) *Sufficient statute of limitations period.* The members may only adopt or amend such a plan if there is at least one year remaining in the statutory period (including any extensions thereof) for the assessment of a deficiency against every member the tax liability of which would be increased by the adoption of such a plan.
(ii)*Insufficient statute of limitations period.* If any member cannot satisfy the requirement of paragraph (c)(2)(i) of this section, the members may not adopt or amend such a plan unless the member not satisfying such requirement has entered into an agreement with the Internal Revenue Service to extend the statute of limitations for the limited purpose of assessing any deficiency against such member attributable to the adoption of such a plan.
(3)*Termination of plan.* An apportionment plan that is in effect for the component members of a controlled group with respect to a particular December 31 is terminated with respect to a succeeding December 31 if—
(i)Each member of such group consents to the termination of such a plan for such succeeding December 31 by checking the box to that effect on its form;
(ii)The controlled group ceases to remain in existence (within the meaning of section 1563(a)) during the calendar year ending on such succeeding December 31;
(iii)Any corporation which was a component member of such group on the particular December 31 is not a component member of such group on such succeeding December 31; or
(iv)Any corporation which was not a component member of such group on the particular December 31 is a component member of such group on such succeeding December 31.
(d)*Effective date* —(1) *Applicability date.* This section applies to any taxable year beginning on or after December 22, 2006. However, taxpayers may apply this section to any Federal income tax return filed on or after December 22, 2006.
(2)*Expiration date.* The applicability of this section will expire on December 21, 2009. § 1.1562-0 [Removed] **Par. 24.** Section 1.1562-0 is removed. § 1.1562-1 [Removed] **Par. 25.** Section 1.1562-1 is removed. § 1.1562-2 [Removed] **Par. 26.** Section 1.1562-2 is removed. § 1.1562-3 [Removed] **Par. 27.** Section 1.1562-3 is removed. § 1.1562-4 [Removed] **Par. 28.** Section 1.1562-4 is removed. § 1.1562-5 [Removed] **Par. 29.** Section 1.1562-5 is removed. § 1.1562-6 [Removed] **Par. 30.** Section 1.1562-6 is removed. § 1.1562-7 [Removed] **Par. 31.** Section 1.1562-7 is removed. § 1.1563-1 [Removed] **Par. 32.** Section 1.1563-1 is removed. **Par. 33.** Section 1.1563-1T is amended by revising paragraphs (a), (b), (c)(1), (c)(2)(iv),
(d)and
(e)to read as follows: § 1.1563-1T Definition of controlled group of corporations and component members (temporary).
(a)*Controlled group of corporations* —(1) *In general* . For purposes of sections 1561 through 1563, the term *controlled group of corporations* means any group of corporations which is either a *parent-subsidiary controlled group* (as defined in paragraph (a)(2) of this section), a *brother-sister controlled group* (as defined in paragraph (a)(3)(i) of this section), a *combined group* (as defined in paragraph (a)(4) of this section), or a *life insurance controlled group* (as defined in paragraph (a)(5) of this section). For the exclusion of certain stock for purposes of applying the definitions contained in this paragraph, see section 1563(c) and § 1.1563-2.
(2)*Parent-subsidiary controlled group.*
(i)The term *parent-subsidiary controlled group* means one or more chains of corporations connected through stock ownership with a common parent corporation if—
(A)Stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned (directly and with the application of § 1.1563-3(b)(1), relating to options) by one or more of the other corporations; and
(B)The common parent corporation owns (directly and with the application of § 1.1563-3(b)(1), relating to options) stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of at least one of the other corporations, excluding, in computing such voting power or value, stock owned directly by such other corporations.
(ii)The definition of a parent-subsidiary controlled group of corporations may be illustrated by the following examples: Example 1. P Corporation owns stock possessing 80 percent of the total combined voting power of all classes of stock entitled to vote of S Corporation. P is the common parent of a parent-subsidiary controlled group consisting of member corporations P and S. Example 2. Assume the same facts as in *Example 1* . Assume further that S owns stock possessing 80 percent of the total value of shares of all classes of stock of T Corporation. P is the common parent of a parent-subsidiary controlled group consisting of member corporations P, S, and T. The result would be the same if P, rather than S, owned the T stock. Example 3. L Corporation owns 80 percent of the only class of stock of M Corporation and M, in turn, owns 40 percent of the only class of stock of O Corporation. L also owns 80 percent of the only class of stock of N Corporation and N, in turn, owns 40 percent of the only class of stock of O. L is the common parent of a parent-subsidiary controlled group consisting of member corporations L, M, N, and O. Example 4. X Corporation owns 75 percent of the only class of stock of Y and Z Corporations; Y owns all the remaining stock of Z; and Z owns all the remaining stock of Y. Since intercompany stockholdings are excluded (that is, are not treated as outstanding) for purposes of determining whether X owns stock possessing at least 80 percent of the voting power or value of at least one of the other corporations, X is treated as the owner of stock possessing 100 percent of the voting power and value of Y and of Z for purposes of paragraph (a)(2)(i)(B) of this section. Also, stock possessing 100 percent of the voting power and value of Y and Z is owned by the other corporations in the group within the meaning of paragraph (a)(2)(i)(A) of this section. (X and Y together own stock possessing 100 percent of the voting power and value of Z, and X and Z together own stock possessing 100 percent of the voting power and value of Y.) Therefore, X is the common parent of a parent-subsidiary controlled group of corporations consisting of member corporations X, Y, and Z.
(3)*Brother-sister controlled group* —(i) *In general* . The term *brother-sister controlled group* means two or more corporations if the same five or fewer persons who are individuals, estates, or trusts own (directly and with the application of the rules contained in § 1.1563-3(b)) stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such person only to the extent such stock ownership is identical with respect to each such corporation.
(ii)*Additional stock ownership requirement for purposes of certain other provisions of law.* For purposes of any provision of law (other than sections 1561 through 1563) that incorporates the section 1563(a) definition of a controlled group, the term *brother-sister controlled group* means two or more corporations if the same five or fewer persons who are individuals, estates, or trusts own (directly and with the application of the rules contained in § 1.1563-3(b)) stock possessing—
(A)At least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of each corporation (the 80 percent requirement);
(B)More than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such person only to the extent such stock ownership is identical with respect to each such corporation (the more-than-50 percent identical ownership requirement); and
(C)The five or fewer persons whose stock ownership is considered for purposes of the 80 percent requirement must be the same persons whose stock ownership is considered for purposes of the more-than-50 percent identical ownership requirement.
(iii)*Examples.* The principles of paragraph (a)(3)(ii) of this section may be illustrated by the following examples: Example 1.
(i)The outstanding stock of corporations P, Q, R, S, and T, which have only one class of stock outstanding is owned by the following unrelated individuals: Corporations Individuals P (percent) Q (percent) R (percent) S (percent) T (percent) Identical ownership A 55 51 55 55 55 51. B 45 49 (45% in P & Q). C 45 D 45 E 45 Total 100 100 100 100 100
(ii)Corporations P and Q are members of a brother-sister controlled group of corporations. Although the more-than-50 percent identical ownership requirement is met for all 5 corporations, corporations R, S, and T are not members because at least 80 percent of the stock of each of those corporations is not owned by the same 5 or fewer persons whose stock ownership is considered for purposes of the more-than-50 percent identical ownership requirement. Example 2.
(i)The outstanding stock of corporations U and V, which have only one class of stock outstanding, is owned by the following unrelated individuals: Individuals Corporations U (percent) V (percent) A 12 12 B 12 12 C 12 12 D 12 12 E 13 13 F 13 13 G 13 13 H 13 13 Total 100 100
(ii)Any group of five of the shareholders will own more than 50 percent of the stock in each corporation, in identical holdings. However, U and V are not members of a brother-sister controlled group because at least 80 percent of the stock of each corporation is not owned by the same five or fewer persons. Example 3.
(i)Corporations X and Y each have two classes of stock outstanding, voting common and non-voting common. (None of this stock is excluded from the definition of stock under section 1563(c).) Unrelated individuals A and B own the following percentages of the class of stock entitled to vote (voting) and of the total value of shares of all classes of stock (value) in each of corporations X and Y: Individuals Corporations X Y A 100% voting, 60% value 75% voting, 60% value. B 0% voting, 10% value 25% voting, 10% value.
(ii)No other shareholder of X owns (or is considered to own) any stock in Y. X and Y are a brother-sister controlled group of corporations. The group meets the more-than-50 percent identical ownership requirement because A and B own more than 50 percent of the total value of shares of all classes of stock of X and Y in identical holdings. (The group also meets the more-than-50 percent identical ownership requirement because of A's voting stock ownership.) The group meets the 80 percent requirement because A and B own at least 80 percent of the total combined voting power of all classes of stock entitled to vote. Example 4. Assume the same facts as in *Example 3* except that the value of the stock owned by A and B is not more than 50 percent of the total value of shares of all classes of stock of each corporation in identical holdings. X and Y are not a brother-sister controlled group of corporations. The group meets the more-than-50 percent identical ownership requirement because A owns more than 50 percent of the total combined voting power of the voting stock of each corporation. For purposes of the 80 percent requirement, B's voting stock in Y cannot be combined with A's voting stock in Y since B, who does not own any voting stock in X, is not a person whose ownership is considered for purposes of the more-than-50 percent identical ownership requirement. Because no other shareholder owns stock in both X and Y, these other shareholders' stock ownership is not counted towards meeting either the more-than-50 percent identical ownership requirement or the 80 percent ownership requirement.
(iv)*Special rule if prior law applies.* Paragraph (a)(3)(ii) of this section, as amended by TD 8179, applies to taxable years ending on or after December 31, 1970. See, however, the transitional rule in paragraph
(d)of this section.
(4)*Combined group.*
(i)The term *combined group* means any group of three or more corporations if—
(A)Each such corporation is a member of either a parent-subsidiary controlled group of corporations or a brother-sister controlled group of corporations; and
(B)At least one of such corporations is the common parent of a parent-subsidiary controlled group and also is a member of a brother-sister controlled group.
(ii)The definition of a combined group of corporations may be illustrated by the following examples: Example 1. Smith, an individual, owns stock possessing 80 percent of the total combined voting power of all classes of the stock of corporations X and Y. Y, in turn, owns stock possessing 80 percent of the total combined voting power of all classes of the stock of corporation Z. X, Y, and Z are members of the same combined group since—
(i)X, Y, and Z are each members of either a parent-subsidiary or brother-sister controlled group of corporations; and
(ii)Y is the common parent of a parent-subsidiary controlled group of corporations consisting of Y and Z, and also is a member of a brother-sister controlled group of corporations consisting of X and Y. Example 2. Assume the same facts as in *Example 1* , and further assume that corporation X owns 80 percent of the total value of shares of all classes of stock of corporation T. X, Y, Z, and T are members of the same combined group.
(5)*Life insurance controlled group.*
(i)The term *life insurance controlled group* means two or more life insurance companies each of which is a member of a controlled group of corporations described in paragraph (a)(2), (a)(3)(i), or (a)(4) of this section and to which § 1.1502-47(f)(6) does not apply. Such insurance companies shall be treated as a controlled group of corporations separate from any other corporations which are members of a controlled group described in such paragraph (a)(2), (a)(3)(i), or (a)(4). For purposes of this section, the common parent of the controlled group described in paragraph (a)(2) of this section shall be referred to as the common parent of the life insurance controlled group.
(ii)The following examples illustrate the definition of a life insurance controlled group. In these examples, L indicates a life company, another letter indicates a nonlife company and each corporation uses the calendar year as its taxable year. Example 1. Since January 1, 1999, corporation P has owned all the stock of corporations and Y, and L <sup>1</sup> has owned all the stock of corporation X. On January 1, 2005, Y acquired all of the stock of corporation L <sup>2</sup> . Since L <sup>1</sup> and L <sup>2</sup> are members of a parent-subsidiary controlled group of corporations, such companies are treated as members of a life insurance controlled group separate from the parent-subsidiary controlled group consisting of P, X and Y. For purposes of this section, P is referred to as the common parent of the life insurance controlled group even though P is not a member of such group. Example 2. The facts are the same as in *Example 1* , except that, beginning with the 2005 tax year, the P affiliated group elected to file a consolidated return and P made a section 1504(c)(2) election. Pursuant to paragraph (a)(5)(i) of this section, L <sup>1</sup> and L <sup>2</sup> are not members of a separate life insurance controlled group. Instead, P, X, Y, L <sup>1</sup> and L <sup>2</sup> constitute one controlled group. *See* § 1.1502-47(f)(6).
(6)*Voting power of stock.* For purposes of this section, and §§ 1.1563-2 and 1.1563-3, in determining whether the stock owned by a person (or persons) possesses a certain percentage of the total combined voting power of all classes of stock entitled to vote of a corporation, consideration will be given to all the facts and circumstances of each case. A share of stock will generally be considered as possessing the voting power accorded to such share by the corporate charter, by-laws, or share certificate. On the other hand, if there is any agreement, whether express or implied, that a shareholder will not vote his stock in a corporation, the formal voting rights possessed by his stock may be disregarded in determining the percentage of the total combined voting power possessed by the stock owned by other shareholders in the corporation, if the result is that the corporation becomes a component member of a controlled group of corporations. Moreover, if a shareholder agrees to vote his stock in a corporation in the manner specified by another shareholder in the corporation, the voting rights possessed by the stock owned by the first shareholder may be considered to be possessed by the stock owned by such other shareholder if the result is that the corporation becomes a component member of a controlled group of corporations.
(b)*Component members* —(1) *In general.* For purposes of sections 1561 through 1563, a corporation is a component member of a controlled group of corporations on a December 31 (and with respect to the taxable year which includes such December 31) if such corporation—
(i)Is a member of such controlled group on such December 31 and is not treated as an excluded member under paragraph (b)(2) of this section; or
(ii)Is not a member of such controlled group on such December 31 but is treated as an additional member under paragraph (b)(3) of this section.
(2)*Excluded members.*
(i)A corporation, which is a member of a controlled group of corporations on the December 31 included within its taxable year, but was a member of such group for less than one-half of the number of days in such taxable year which precede such December 31, shall be treated as an excluded member of such group on such December 31.
(ii)A corporation which is a member of a controlled group of corporations on any December 31 shall be treated as an excluded member of such group on such date if, for its taxable year including such date, such corporation is—
(A)Exempt from taxation under section 501(a) (except a corporation which is subject to tax on its unrelated business taxable income under section 511) or 521 for such taxable year;
(B)A foreign corporation not subject to taxation under section 882(a) for the taxable year;
(C)An S corporation (as defined in section 1361) for purposes of any tax benefit item described in section 1561(a) to which it is not subject;
(D)A franchised corporation (as defined in section 1563(f)(4) and § 1.1563-4); or
(E)An insurance company subject to taxation under section 801, unless such insurance company (without regard to this paragraph (b)(2)(ii)(E)) is a component member of a life insurance controlled group described in paragraph (a)(5)(i) of this section or unless § 1.1502-47(f)(6) applies (which treats a life insurance company, for which a section 1504(c)(2) election is effective, as a member (whether eligible or ineligible) of a life-nonlife affiliated group).
(3)*Additional members.* A corporation shall be treated as an additional member of a controlled group of corporations on the December 31 included within its taxable year if it—
(i)Is not a member of such group on such December 31;
(ii)Is not described, with respect to such taxable year, in paragraph (b)(2)(ii)(A), (B), (C), (D), or
(E)of this section; and
(iii)Was a member of such group for one-half (or more) of the number of days in such taxable year which precede such December 31.
(4)Examples. The provisions of this paragraph may be illustrated by the following examples: Example 1. Brown, an individual, owns all of the stock of corporations W and X on each day of 1964. W and X each uses the calendar year as its taxable year. On January 1, 1964, Brown also owns all the stock of corporation Y (a fiscal year corporation with a taxable year beginning on July 1, 1964, and ending on June 30, 1965), which stock he sells on October 15, 1964. On December 1, 1964, Brown purchases all the stock of corporation Z (a fiscal year corporation with a taxable year beginning on September 1, 1964, and ending on August 31, 1965). On December 31, 1964, W, X, and Z are members of the same controlled group. However, the component members of the group on such December 31 are W, X, and Y. Under paragraph (b)(2)(i) of this section, Z is treated as an excluded member of the group on December 31, 1964, since Z was a member of the group for less than one-half of the number of days (29 out of 121 days) during the period beginning on September 1, 1964 (the first day of its taxable year) and ending on December 30, 1964. Under paragraph (b)(3) of this section, Y is treated as an additional member of the group on December 31, 1964, since Y was a member of the group for at least one-half of the number of days (107 out of 183 days) during the period beginning on July 1, 1964 (the first day of its taxable year) and ending on December 30, 1964. Example 2. On January 1, 1964, corporation P owns all the stock of corporation S, which in turn owns all the stock of corporation S-1. On November 1, 1964, P purchases all of the stock of corporation X from the public and sells all of the stock of S to the public. Corporation X owns all the stock of corporation Y during 1964. P, S, S-1, X, and Y file their returns on the basis of the calendar year. On December 31, 1964, P, X, and Y are members of a parent-subsidiary controlled group of corporations; also, corporations S and S-1 are members of a different parent-subsidiary controlled group on such date. However, since X and Y have been members of the parent-subsidiary controlled group of which P is the common parent for less than one-half the number of days during the period January 1 through December 30, 1964, they are not component members of such group on such date. On the other hand, X and Y have been members of a parent-subsidiary controlled group of which X is the common parent for at least one-half the number of days during the period January 1 through December 30, 1964, and therefore they are component members of such group on December 31, 1964. Also since S and S-1 were members of the parent-subsidiary controlled group of which P is the common parent for at least one-half the number of days in the taxable years of each such corporation during the period January 1 through December 30, 1964, P, S, and S-1 are component members of such group on December 31, 1964. Example 3. Throughout 1964, corporation M owns all the stock of corporation F which, in turn, owns all the stock of corporations L-1, L-2, X, and Y. M is a domestic mutual insurance company subject to taxation under section 821, F is a foreign corporation not engaged in a trade or business within the United States, L-1 and L-2 are domestic life insurance companies subject to taxation under section 802, and X and Y are domestic corporations subject to tax under section 11 of the Code. Each corporation uses the calendar year as its taxable year. On December 31, 1964, M, F, L-1, L-2, X, and Y are members of a parent-subsidiary controlled group of corporations. However, under paragraph (b)(2)(ii) of this section, M, F, L-1, and L-2 are treated as excluded members of the group on December 31, 1964. Thus, on December 31, 1964, the component members of the parent-subsidiary controlled group of which M is the common parent include only X and Y. Furthermore, since paragraph (b)(2)(ii)(E) of this section does not result in L-1 and L-2 being treated as excluded members of a life insurance controlled group, L-1 and L-2 are component members of a life insurance controlled group on December 31, 1964.
(5)*Application of constructive ownership rules.* For purposes of paragraphs (b)(2)(i) and
(3)of this section, it is necessary to determine whether a corporation was a member of a controlled group of corporations for one-half (or more) of the number of days in its taxable year which precede the December 31 falling within such taxable year. Therefore, the constructive ownership rules contained in § 1.1563-3(b) (to the extent applicable in making such determination) must be applied on a day-by-day basis. For example, if P Corporation owns all the stock of X Corporation on each day of 1964, and on December 30, 1964, acquires an option to purchase all the stock of Y Corporation (a calendar-year taxpayer which has been in existence on each day of 1964), the application of § 1.1563-3(b)(1) on a day-by-day basis results in Y being a member of the brother-sister controlled group on only one day of Y's 1964 year which precedes December 31, 1964. Accordingly, since Y is not a member of such group for one-half or more of the number of days in its 1964 year preceding December 31, 1964, Y is treated as an excluded member of such group on December 31, 1964.
(c)*Overlapping groups* —(1) *In general.* If on a December 31 a corporation is a component member of a controlled group of corporations by reason of ownership of stock possessing at least 80 percent of the total value of shares of all classes of stock of the corporation, and if on such December 31 such corporation is also a component member of another controlled group of corporations by reason of ownership of other stock (that is, stock not used to satisfy the at-least-80 percent total value test) possessing at least 80 percent of the total combined voting power of all classes of stock of the corporation entitled to vote, then such corporation shall be treated as a component member only of the controlled group of which it is a component member by reason of the ownership of at least 80 percent of the total value of its shares.
(2)*Brother-sister controlled groups.*
(iv)The provisions of this paragraph (c)(2) may be illustrated by the following examples (in which it is assumed that all the individuals are unrelated): *Example 1.*
(i)On each day of 1970 all the outstanding stock of corporations M, N, and P is held in the following manner: Individuals Corporations M (percent) N (percent) P (percent) A 55 40 5 B 40 20 40 C 5 40 55
(ii)Since the more-than-50 percent identical ownership requirement of section 1563(a)(2) is met with respect to corporations M and N and with respect to corporations N and P, but not with respect to corporations M, N, and P, corporation N would, without the application of this paragraph (c)(2), be a component member on December 31, 1970, of overlapping groups consisting of M and N and of N and P. If N does not file an election in accordance with paragraph (c)(2)(i) of this section, the Internal Revenue Service will determine the group in which N is to be included. *Example 2.*
(i)On each day of 1970, all the outstanding stock of corporations S, T, W, X, and Z is held in the following manner: Individuals Corporations S T W X Z D 52 52 52 52 52 E 40 2 2 2 2 F 2 40 2 2 2 G 2 2 40 2 2 H 2 2 2 40 2 I 2 2 2 2 40
(ii)On December 31, 1970, the more-than-50 percent identical ownership requirement of section 1563(a)(2) may be met with regard to any combination of the corporations but all five corporations cannot be included as component members of a single controlled group because the inclusion of all the corporations in a single group would be dependent upon taking into account the stock ownership of more than five persons. Therefore, if the corporations do not file a statement in accordance with paragraph (c)(2)(ii) of this section, the Internal Revenue Service will determine the group in which each corporation is to be included. The corporations or the Internal Revenue Service, as the case may be, may designate that three corporations be included in one group and two corporations in another, or that any four corporations be included in one group and that the remaining corporation not be included in any group.
(d)*Transitional rules* —(1) *In general.* Treasury decision 8179 amended paragraph (a)(3)(ii) of this section to revise the definition of a brother-sister controlled group of corporations. In general, those amendments are effective for taxable years ending on or after December 31, 1970.
(2)*Limited nonretroactivity.*
(i)Under the authority of section 7805(b), the Internal Revenue Service will treat an old group as a brother-sister controlled group corporations for purposes of applying sections 401, 404(a), 408(k), 409A, 410, 411, 412, 414, 415, and 4971 of the Code and sections 202, 203, 204, and 302 of the Employment Retirement Income Security Act of 1974 (ERISA) in a plan year or taxable year beginning before March 2, 1988, to the extent necessary to prevent an adverse effect on any old member (or any other corporation), or on any plan or other entity described in such sections (including plans, etc., of corporations not part of such old group), that would result solely from the retroactive effect of the amendment to this section by TD 8179. An adverse effect includes the disqualification of a plan or the disallowance of a deduction or credit for a contribution to a plan. The Internal Revenue Service, however, will not treat an old member as a member of an old group to the extent that such treatment will have an adverse effect on that old member.
(ii)Section 7805(b) will not be applied pursuant to paragraph (d)(2)(i) of this section to treat an old member of an old group as a member of a brother-sister controlled group to prevent an adverse effect for a taxable year if, for that taxable year, that old member treats or has treated itself as not being a member of that old group for purposes of sections 401, 404(a), 408(k), 409A, 410, 411, 412, 414, 415, and 4971 of the Code and sections 202, 203, 204, and 302 and Title IV of ERISA for such taxable year (such as by filing, with respect to such taxable year, a return, amended return, or claim for credit or refund in which the amount of any deduction, credit, limitation, or tax due is determined by treating itself as not being a member of the old group for purposes of those sections). However, the fact that one or more (but not all) of the old members do not qualify for section 7805(b) treatment because of the preceding sentence will not preclude that old member (or members) from being treated as a member of the old group under paragraph (d)(2)(i) of this section in order to prevent the disallowance of a deduction or credit of another old member (or other corporation) or to prevent the disqualification of, or other adverse effect on, another old member's plan (or other entity) described in the sections of the Code and ERISA enumerated in such paragraph.
(3)*Election of general nonretroactivity.* In the case of a taxable year ending on or after December 31, 1970, and before March 2, 1988, an old group will be treated as a brother-sister controlled group of corporations for all purposes of the Code for such taxable year if—
(i)Each old member files a statement consenting to such treatment for such taxable year with the District Director having audit jurisdiction over its return within six months after March 2, 1988; and
(ii)No old member—
(A)Files or has filed, with respect to such taxable year, a return, amended return, or claim for credit or refund in which the amount of any deduction, credit, limitation, or tax due is determined by treating any old member as not a member of the old group; or
(B)Treats the employees of all members of the old group as not being employed by a single employer for purposes of sections 401, 404(a), 408(k), 409A, 410, 411, 412, 414, 415, and 4971 of the Code and sections 202, 203, 204, and 302 of ERISA for such taxable year.
(4)*Definitions.* For purposes of this paragraph (d)—
(i)An *old group* is a brother-sister controlled group of corporations, determined by applying paragraph (a)(3)(ii) of this section as in effect before the amendments made by Treasury decision 8179, that is not a brother-sister controlled group of corporations, determined by applying paragraph (a)(3)(ii) of this section as amended by such Treasury decision; and
(ii)An *old member* is any corporation that is a member of an old group.
(5)*Election to choose between membership in more than one controlled group.* If—
(i)An old member has filed an election under paragraph (c)(2) of this section to be treated as a component member of an old group for a December 31 before March 2, 1988; and
(ii)That corporation would (without regard to such paragraph) be a component member of more than one brother-sister controlled group (not including an old group) on the December 31, that corporation may make an election under that paragraph by filing an amended return on or before September 2, 1988. This paragraph (d)(5) does not apply to a corporation that is treated as a member of an old group under paragraph (d)(3) of this section.
(6)*Refunds.* See section 6511(a) for period of limitation on filing claims for credit or refund.
(e)*Effective date* —(1) *Applicability date.* Paragraphs (a), (b), (c)(1), (c)(2)(iv) and
(d)of this section apply to taxable years beginning on or after December 22, 2006. However, taxpayers may apply these paragraphs to any Federal income tax return filed on or after December 22, 2006. Paragraphs (c)(2)(i) through
(iii)of this section apply to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006.
(2)*Expiration date.* The applicability of paragraphs (a), (b), (c)(1), (c)(2)(iv) and
(d)of this section will expire on December 21 2009. The applicability of paragraphs (c)(2)(i) through
(iii)of this section will expire on May 26, 2009. § 1.1563-3 [Amended] **Par. 34.** In § 1.1563-3, at the end of paragraph (d)(3) *Example 3,* add the phrase “for purposes of paragraph (a)(3)(ii) of § 1.1563-1T”. § 1.1564-1 [Removed] **Par. 35.** Section 1.1564-1 is removed. PART 5—TEMPORARY INCOME TAX REGULATIONS UNDER THE REVENUE ACT OF 1978 **Par. 36.** The authority citation for part 5 continues to read as follows: Authority: 26 U.S.C. 7805. § 5.1561-1 [Removed] **Par. 37.** Section 5.1561-1 is removed. Mark E. Matthews, Deputy Commissioner for Services and Enforcement. Approved: December 12, 2006. Eric Solomon, Acting Deputy Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 06-9758 Filed 12-21-06; 8:45 am]
Connectionstraces to 16
Traces to 16 documents
CFR
U.S. Code
- Rule making§ 553
- Definitions§ 601
- EXPEDITED PROCESSING OF REQUESTS FOR JAPANESE IMPERIAL GOVERNMENT RECORDS.§ 804
- New animal drugs§ 360b
- Prohibited acts§ 331
- Regulations§ 216
- Rules and regulations§ 7805
- Regulations§ 1502
- Limitation on accumulated earnings credit in the case of certain controlled corporations§ 1561
21 references not yet in our index
- 7 CFR 915
- 7 USC 601-674
- 7 CFR 1207
- 7 USC 2611-2627
- 21 CFR 522
- 21 CFR 20
- 5 USC 801-808
- 21 CFR 812
- 26 CFR 1
- T.D. 9278
- T.D. 9304
- T.D. 9264
- Pub. L. 108-357
- 118 Stat. 1418
- Pub. L. 99-514
- 100 Stat. 2085
- T.D. 7877
- Pub. L. 91-172
- 78 Stat. 116
- 26 CFR 5
- T.D. 8179
Citation graph
cites case law
Unknown
Interim final rule with request for comments
Cite7 CFR 915
Cite7 USC 601-674
Cite7 CFR 1207
Cites 37 · showing 12Cited by 0 across 0 sources