Internal Revenue Bulletin:  2008-23 

June 9, 2008 

Announcement 2008-53

Partner’s Distributive Share; Correction


AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Correction to notice of proposed regulations.

SUMMARY:

This document contains corrections to the notice of proposed regulations (REG-143397-05, 2007-41 I.R.B. 790) that was published in the Federal Register on Wednesday, August 22, 2007 (72 FR 46932) concerning the application of sections 704(c)(1)(B) and 737 to distributions of property after two partnerships engage in an assets-over merger. The proposed regulations affect partnerships and their partners.

FOR FURTHER INFORMATION CONTACT:

Jason Smyczek or Laura Fields at (202) 622-3050 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The notice of proposed rulemaking (REG-143397-05) that is the subject of these corrections is under sections 704(c) and 737 of the Internal Revenue Code.

Need for Correction

As published, this notice of proposed rulemaking (REG-143397-05) contains errors that may prove to be misleading and are in need of clarification.

Correction for Publication

Accordingly, the notice of proposed rulemaking (REG-143397-05) that was the subject of FR Doc. E7-16189 is corrected as follows:

1. On page 46932, column 1, the heading, the subject “Partner’s Distributive Share’’ is corrected to read “Rules for Contribution and Subsequent Distribution of Section 704(c) Property in Connection with Partnership Mergers’’.

2. On page 46932, column 3, in the preamble under the paragraph heading Background, first full paragraph in the column, line 6, the language “described in § 1.708-1(c)(3). Rev. Rul.’’ is corrected to read “described in § 1.708-1(c)(3)(i). Rev. Rul.’’.

3. On page 46933, column 3, in the preamble under the paragraph heading “A. Assets-Over Partnership Mergers’’, first full paragraph in the column, line 2, the language “3(c)(4)(iii) provide that taxpayers may’’ is corrected to read “3(a)(9) provide that taxpayers may’’.

§ 1.704-3 [Corrected]

4. On page 46934, column 2, § 1.704-3(a)(9), line 6, the language “§ 1.708-1(c)(3) (the transferor’’ is corrected to read “§ 1.708-1(c)(3)(i) (the transferor’’.

§ 1.704-4 [Corrected]

5. On page 46935, column 1, § 1.704-4(c)(4), line 3 from the top of the column, the language “§ 1.708-1(c)(3) by a partnership (the’’ is corrected to read “§ 1.708-1(c)(3)(i) by a partnership (the’’.

6. On page 46935, column 2, § 1.704-4(c)(4)(ii)(B), second line from the bottom of the paragraph is corrected to read “See § 1.737-2(b)(1)(ii)(B) for a similar rule in’’.

7. On page 46935, column 3, § 1.704-4(c)(4)(ii)(E) is corrected by adding a sentence at the end of the paragraph to read as follows:

§ 1.704-4 Distribution of contributed property.

* * * * *

(c) * * *

(4) * * *

(ii) * * *

(E) * * * See § 1.737-2(b)(1)(ii)(E) for a similar rule in the context of section 737.

* * * * *

8. On page 46936, column 1, § 1.704-4(c)(4)(ii)(F), Example (2)(i), line 7 from the bottom of the paragraph, the language “fair market value of $400x, and $450x in’’ is corrected to read “fair market value of $400x, and $400x in’’.

9. On page 46936, column 1, § 1.704-4(c)(4)(ii)(F), Example (2)(i), lines 3 and 4 from the bottom of the paragraph, the language “PRS1 as follows: A, 25%; B, 25%; C, 16.67%; D, 16.67% and E, 16.67%. On January 1,’’ is corrected to read “PRS1 as follows: A, 25.76 percent; B, 25.76 percent; C, 16.16 percent; D, 16.16 percent; and E, 16.16 percent. On January 1,’’.

10. On page 46936, column 2, § 1.704-4(c)(4)(ii)(F), Example (2)(ii), first line of the column, the language “as a result of the merger. C also has $100 of’’ is corrected to read “as a result of the merger. C also has $100x of’’.

11. On page 46936, column 2, § 1.704-4(c)(4)(ii)(F), Example (3)(i), lines 3 and 4 from the bottom of the paragraph, the language “loss interests in PRS1 as follows: A, 27.5%; B, 27.5%; C, 15%; D, 15% and E, 15%. On’’ is corrected to read “loss interests in PRS1 as follows: A, 27.5 percent; B, 27.5 percent; C, 15 percent; D, 15 percent; and E, 15 percent. On’’.

12. On page 46936, column 2, § 1.704-4(c)(4)(ii)(F), Example (3)(i), last line of the paragraph, the language “when its value is still $600.’’ is corrected to read “when its value is still $600x.’’

13. On page 46936, column 2, § 1.704-4(c)(4)(ii)(F), Example (3)(ii), line 8, the language “($600x (fair market value)—100x (adjusted’’ is corrected to read “($600x (fair market value)—$100x (adjusted’’.

14. On page 46936, column 2, § 1.704-4(c)(4)(ii)(F), Example (3)(ii), line 5 from the bottom of the paragraph, the language “E each succeed to $150 of new section 704(c)’’ is corrected to read “E each succeed to $150x of new section 704(c)’’.

15. On page 46936, column 2, § 1.704-4 paragraph (c)(4)(ii)(F), Example (3)(ii), last line of the paragraph, the language “recognize $150 of gain.’’ is corrected to read “recognize $150x of gain.’’.

16. On page 46936, column 3, § 1.704-4(c)(4)(ii)(F), Example (5)(i), line 5 from the bottom of the paragraph, the language “of the partnerships, A contributed the Asset’’ is corrected to read “of the partnerships, A contributed Asset’’.

17. On page 46936, column 3, § 1.704-4(c)(4)(ii)(F), Example (5)(ii), last line of the paragraph, the language “distributes all of Asset X to A.’’ is corrected to read “distributes Asset X to A.’’.

§ 1.737-2 [Corrected]

18. On page 46937, column 1, item 2 in instructional Par. 5. is corrected, and item 3 is added to read as follows:

Par. 5. Section 1.737-2 is amended as follows:

1. * * *

2. Paragraph (e) is redesignated as paragraph (f).

3. New paragraph (e) is added.

The addition and revision read as follows:

§ 1.737-2 Exceptions and special rules.

* * * * *

(e) Reverse section 704(c) gain. * * *

19. On page 46938, column 3, § 1.737-2(b)(1)(ii)(F), Example (5)(ii), line 2 from the bottom of the paragraph, the language “liabilities. In 2006, PRS2 distributes all of’’ is corrected to read “liabilities. In 2006, PRS2 distributes’’.

Cynthia Grigsby,
Senior Federal Register Liaison Officer,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).

Note

(Filed by the Office of the Federal Register on November 5, 2007, 8:45 a.m., and published in the issue of the Federal Register for November 6, 2007, 72 F.R. 62608)


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