Internal Revenue Bulletin: 2005-42
October 17, 2005
Final regulations under section 368 of the Code provide guidance regarding the satisfaction of the continuity of interest requirement for corporate reorganizations. Specifically, these regulations identify certain circumstances in which the determination, of whether a proprietary interest in the target corporation is preserved, would be made by reference to the value of the issuing corporation's consideration on the last business day before there is an agreement to effect the potential reorganization.
Proposed regulations under section 863 of the Code govern the source of income from certain space and ocean activities. It also contains proposed regulations governing the source of income from certain communications activities. The regulations affect persons who derive income from activities conducted in space, or on or under water not within the jurisdiction of a foreign country, possession of the United States, or the United States (in international water). It also affects persons who derive income from transmission of communications. A public hearing is scheduled for December 15, 2005.
This notice announces that Treasury and the Internal Revenue Service (IRS) will amend the regulations under section 367(a) of the Code to clarify the application of regulations section 1.367(a)-8, including the provisions addressing the treatment of gain recognition agreements as a result of certain common asset reorganizations involving the U.S. transferor, the transferee foreign corporation, and the transferred corporation.
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