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39734 Federal Register / Vol. 72, No.

139 / Friday, July 20, 2007 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION Need for Correction Issued in College Park, Georgia, on April
26, 2007.
Federal Aviation Administration As published, the final rule contains Mark D. Ward,
errors in the summary and legal
Group Manager, System Support Group,
14 CFR Part 71 description of the Class E4 airspace Eastern Service Center.
area. Accordingly, pursuant to the
[FR Doc. 07–3503 Filed 7–19–07; 8:45 am]
authority delegated to me, the summary
[Docket No. FAA–2007–27594; Airspace and legal description for the Class E4 BILLING CODE 4910–13–M
Docket No. 07–ASO–3]
airspace area at Aguadilla, PR,
Establishment of Class D and E incorporated by reference at § 71.1, 14
CFR 71.1, and published in the Federal DEPARTMENT OF THE TREASURY
Airspace; Aguadilla, PR; Correction
Register on May 8, 2007, (72 FR 25962),
AGENCY: Federal Aviation is corrected by making the following Internal Revenue Service
Administration (FAA), DOT. correcting amendment.
26 CFR Part 1
ACTION: Correcting amendment. List of Subjects in 14 CFR Part 71
[TD 9342]
SUMMARY: This document contains a Airspace, Incorporation by reference,
correction to the final rule (FAA–2007– Navigation (air). RIN 1545–BE85
27594; 07–ASO–3), which was ■ In consideration of the foregoing, the Guidance Under Section 1502;
published in the Federal Register of Federal Aviation Administration Amendment of Tacking Rule
May 8, 2007, (72 FR 25962), establishing corrects the adopted amendment, 14 Requirements of Life-Nonlife
Class D and E airspace at Aguadilla, PR. CFR part 71, by making the following Consolidated Regulations
This action corrects errors in the correcting amendment:
summary and legal description for the AGENCY: Internal Revenue Service (IRS),
Class E4 airspace at Aguadilla, PR. PART 71—DESIGNATION OF CLASS A, Treasury.
DATES: Effective Date: Effective 0901 CLASS B, CLASS C, CLASS D, AND ACTION: Final regulations and removal of
UTC, July 5, 2007. The Director of the CLASS E AIRSPACE AREAS; temporary regulations.
Federal Register approves this AIRWAYS; ROUTES; AND REPORTING
incorporation by reference action under POINTS SUMMARY: This document contains final
title 1, Code of Federal Regulations, part regulations under section 1502
■ 1. The authority citation for part 71 concerning the requirements for
51, subject to the annual revision of
continues to read as follows: including insurance companies in a life-
FAA Order 7400.9 and publication of
conforming amendments. Authority: 49 U.S.C. 106(g); 40103, 40113, nonlife consolidated return. These
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959– regulations conform the consolidated
FOR FURTHER INFORMATION CONTACT: 1963 Comp., p. 389. return rules to certain changes in law.
Mark D. Ward, Manager, System
§ 71.1 [Corrected]
These regulations affect corporations
Support Group, Eastern Service Center,
filing life-nonlife consolidated returns.
Federal Aviation Administration, P.O. ■ 2. The incorporation by reference in
Box 20636, Atlanta, Georgia 30320; DATES: Effective Date: These regulations
14 CFR 71.1 of Federal Aviation are effective July 20, 2007.
telephone (404) 305–5627. Administration Order 7400.9P, Airspace Applicability Date: For dates of
SUPPLEMENTARY INFORMATION: Designations and Reporting Points, applicability, see §§ 1.1502–47(b) and
Background dated September 1, 2006, and effective 1.1502–76(d).
September 15, 2006, is amended as
Federal Register Document 07–2250, FOR FURTHER INFORMATION CONTACT: Ross
follows:
Docket No. FAA–2007–27594; 07–ASO– Poulsen (202) 622–7790 or Marcie
Paragraph 6004 Class E Airspace Areas Barese (202) 622–7790 (not toll-free
3, published May 8, 2007, (72 FR Designated as an Extension to a Class D
25962), establishes Class D and E4 numbers).
Surface Area.
airspace at Aguadilla, PR. Errors were SUPPLEMENTARY INFORMATION:
* * * * *
discovered in the summary and legal
description describing the Class E4 ASO PR E4 Aguadilla, PR [Corrected] Background
airspace area. In line 13 of the summary, Rafael Hernandez Airport, PR Section 1504(c) of the Internal
Class E should read Class D. In the legal (Lat. 18°29′42″ N., long. 67°07′46″ W.) Revenue Code permits life companies to
description for the Class E4 airspace, the Borinquen VORTAC join in the filing of a consolidated return
navigation aid, Borinquen VORTAC, (Lat. 18°29′53″ N., long. 67°06′30″ W.) with nonlife corporations with certain
and geographical coordinates, Lat. That airspace extending upward from the restrictions, the principal one of which
18°29′53″ N, long. 67°06′30″ W, were surface within 2.4 miles each side of the is that a life company must be a member
omitted. This action corrects those Borinquen VORTAC 257° radial extending of the affiliated group (without regard to
errors. Class E airspace designations for from the 4.5 mile radius to 7 miles west of
section 1504(b)(2)) for five taxable years
the VORTAC. This Class E airspace area is
airspace areas designated as an effective during the specific days and times before it may join in the filing of the
extension to a Class D surface area are established in advance by a Notice to consolidated group’s return. Section
published in Paragraph 6004 of FAA Airmen. The effective days and times will 1.1502–47 contains an exception to this
Order 7400.9P, Airspace Designations thereafter be continuously published in the requirement (the tacking rule) for
and Reporting Points, dated September Airport/Facility Directory. transactions that meet certain
1, 2006, and effective September 15, * * * * * conditions. The original tacking rule
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2006, which is incorporated by On page 25962, column 2, line 13 of the contained five conditions, including
reference in 14 CFR 71.1. The Class E Summary, correct the Class E and Class E4, ‘‘the separation condition.’’
airspace designation listed in this changing ‘‘Class E and Class E4’’ to ‘‘Class D Before 1981, section 843 required all
document will be published and E4’’. insurance companies taxed under
subsequently in the Order. * * * * * Subchapter L to adopt a calendar year

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Federal Register / Vol. 72, No. 139 / Friday, July 20, 2007 / Rules and Regulations 39735

tax year. The consolidated return after April 25, 2006, (their date of The IRS and Treasury Department do
regulations required all members of a publication). Several commentators not agree with the commentator’s
consolidated group to adopt the tax year noted that the preamble to the interpretation of the statute or the
of the common parent, but, in order to temporary regulations indicated that the legislative history. The election
accommodate section 843, required a purpose of the separation condition was discussed in the legislative history is the
fiscal-year consolidated group to change largely eliminated in 1984 after election under section 1504(c) allowing
its tax year to a calendar year if, on the Congress repealed the three phase a life company to join in the
last day of its fiscal year, it included an system of life insurance company consolidated return of a nonlife group.
insurance company required by section taxation, and it became even less The legislative history notes that ‘‘[i]f
843 to use a calendar year (Old relevant after Congress suspended this election is not made, existing law
§ 1.1502–76(a)(2)). In 1981, an taxation on distributions from will continue to apply.’’ The legislative
amendment to section 843 became policyholders surplus accounts made history goes on to state:
effective, providing that, under during 2005 and 2006. On that basis, It is understood that although generally
regulations prescribed by the Secretary, these commentators requested that the companies will probably desire to file
an insurance company joining in the effective date of the final regulations be consolidated returns with the life or other
filing of a consolidated return may applicable retroactively for all open tax mutual insurance companies, some may
adopt the fiscal year of the common years. While making this request, choose to continue to file separate returns
parent corporation. however, the commentators recognized under existing law. Where this occurs, it is
On April 25, 2006, temporary that retroactive application of the likely to arise from the fact that the parent
regulations (TD 9258) were published in regulations would present serious corporation (whose year the other members
joining in the filing of the consolidated
the Federal Register (71 FR 23856) administrative concerns. The IRS and return must follow) uses a fiscal year as its
amending the tacking rule of the life- Treasury Department agree with the taxable year. Some life companies may not
nonlife consolidated return regulations commentators that retroactive want to adopt a taxable year other than a
and the regulations relating to taxable application of the final regulations calendar year since filings with State
years of members of a consolidated raises significant questions of insurance commissioners are required by
group. A notice of proposed rulemaking administrability. Therefore, in the these life companies on a calendar year basis.
(REG–133036–05) cross-referencing interest of sound tax administration, the S. Rep. No. 94–938, at 455–56 (1976).
those temporary regulations was IRS and Treasury Department decline to Rather than suggesting that the group
published in the Federal Register (71 adopt this suggestion. has an election to change its taxable
FR 23882) on the same day. The Alternatively, the commentators year when a newly-joining life company
temporary regulations removed the requested that these final regulations be does not desire to adopt the group’s
separation condition of the tacking rule applicable for returns due after the fiscal year, the legislative history
and Old § 1.1502–76(a)(2). effective date of the temporary suggests that Congress expected, in such
On May 30, 2006, temporary regulations. We agree with this cases, that no section 1504(c) election
regulations (TD 9264) were published in suggestion. Accordingly, the temporary would be made and the life company
the Federal Register (71 FR 30591), in regulations are applicable to returns due would continue filing separately.
part, amending the regulations relating (without extensions) after April 25, Further, the legislative history is clear
to taxable years of members of a 2006, and on or before the effective date that Congress amended section 843 in
consolidated group. A notice of of these final regulations. These final order to accommodate the consolidated
proposed rulemaking (REG–134317–05) regulations are applicable to returns due return rules relating to taxable years of
cross-referencing those temporary (without extensions) after their effective members of consolidated groups, not to
regulations was published in the date. modify or override them.
Federal Register (71 FR 30640) on the The sole purpose of Old § 1.1502–
same day. The temporary regulations Comments on Prop. Reg. § 1.1502–76
and Temp. Reg. § 1.1502–76T 76(a)(2) was to conform the
eliminated impediments to the consolidated rules to section 843. Once
electronic filing of the statement made One commentator raised several section 843 was amended, not only was
under § 1.1502–76(b)(2)(ii). concerns with the proposal to remove the purpose of Old § 1.1502–76(a)(2)
The IRS and Treasury Department Old § 1.1502–76(a)(2). First, the eliminated, but Old § 1.1502–76(a)(2)
considered several comments commentator reads both the language of was no longer operative because it only
responding to the proposed and section 843 and the legislative history of applies to groups with ‘‘an includible
temporary regulations. After the amendment to section 843 as insurance company required by section
consideration of these comments, the demonstrating congressional intent to 843 to file its return on the basis of a
final regulations adopt the provisions of create a choice, when an insurance calendar year * * *.’’ For these reasons,
the proposed regulations without company joins a fiscal-year consolidated the IRS and Treasury Department
substantive change and the group, of whether the group remains on decline to create a regulatory election
corresponding temporary regulations are the fiscal year (requiring the joining allowing fiscal-year consolidated groups
removed. insurance member to adopt the fiscal to switch to a calendar year upon
Explanation and Summary of year) or adopts a calendar year tax year. including an insurance company in its
Comments Amended section 843 provides that consolidated group.
(under regulations) an insurance Another comment noted that the
Effective Date of § 1.1502–47 company joining in the filing of a legislative history of the amendment to
The IRS received two comments from consolidated return ‘‘may adopt’’ the section 843 contemplates that the
the public relating to the effective date taxable year of the common parent Secretary will write regulations that
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of Prop. Reg. § 1.1502–47 and Temp. corporation. The legislative history of require insurance companies adopting
Reg. § 1.1502–47T. The proposed and amended section 843 acknowledges that the fiscal year of a consolidated group
temporary regulations are effective for ‘‘[s]ome life companies may not want to to maintain adequate records
taxable years for which the due date adopt a [fiscal] year * * *.’’ S. Rep. No. reconciling all of the items on its fiscal
(without extensions) for filing returns is 94–938, at 455–56 (1976). year tax return with the corresponding

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39736 Federal Register / Vol. 72, No. 139 / Friday, July 20, 2007 / Rules and Regulations

items on its calendar year statements Drafting Information (A) The first condition is that, at any
filed with State insurance The principal author of these time, 80 percent or more of the new
commissioners. Since the amendment to regulations is Marcie Barese, Office of corporation’s assets it acquired (other
section 843, the input received by the Associate Chief Counsel (Corporate). than in the ordinary course of its trade
IRS and Treasury Department from However, other personnel from the IRS or business) were acquired from the old
taxpayers has not suggested a need for and Treasury Department participated corporation in one or more transactions
guidance in this area. However, the IRS in their development. described in section 351(a) or 381(a).
and Treasury Department welcome This asset test is applied by using the
comments on this topic. List of Subjects in 26 CFR Part 1 fair market values of assets on the date
Income taxes, Reporting and they were acquired and without regard
The final comment suggested that a
recordkeeping requirements. to liabilities. Assets acquired in the
rule be added allowing an insurance ordinary course of business will be
company that joins a fiscal-year Adoption of Amendments to the excluded from total assets only if they
consolidated group and leaves the group Regulations were acquired after the new corporation
before the end of the group’s tax year to became a member of the group
maintain its calendar year. The ■Accordingly, 26 CFR part 1 is
amended as follows: (determined without section 1504(b)(2)).
comment observed that, without such a In addition, assets that the old
rule, § 1.1502–76T(a) and section 843 corporation acquired from outside the
PART 1—INCOME TAXES
create unnecessary work for such an group in transactions not conducted in
insurance company because upon ■ Paragraph 1. The authority citation the ordinary course of its trade or
joining the group, the insurance for part 1 is amended by removing the business are not included in the 80
company would be required to adopt entries for §§ 1.1502–47T and 1.1502– percent (but are included in total assets)
the common parent’s fiscal year under 76T to read, in part, as follows: if the old corporation acquired those
§ 1.1502–76T(a)(1) and upon leaving the Authority: 26 U.S.C. 7805 * * * assets within five calendar years before
group, the insurance company would Section 1.1502–47 also issued under 26 the date of their transfer to the new
have to readopt a calendar year under U.S.C. 1502, 1503(c) and 1504(c). * * * corporation.
section 843. (B) The second condition is that at the
■ Par. 2. Section 1.1502–47 is amended
The IRS and Treasury Department by revising paragraphs (b)(2) and end of the taxable year during which the
decline to adopt this suggestion because (d)(12)(v). first condition is first met, the old
they believe that the number of The revisions read as follows: corporation and the new corporation
taxpayers affected by such a scenario must both have the same tax character.
would be too minimal to justify the § 1.1502–47 Consolidated returns by life- For purposes of this paragraph (d)(12),
creation of a special rule. nonlife groups. a corporation’s tax character is the
* * * * * section under which it would be taxed
Special Analyses (b) * * * (i.e., sections 11, 802, 821, or 831) if it
(2) Tacking rule effective dates—(i) In filed a separate return. If the old
It has been determined that this corporation is not in existence (or
general. Paragraph (d)(12)(v) of this
Treasury decision is not a significant section applies to any original adopts a plan of complete liquidation) at
regulatory action as defined in consolidated Federal income tax return the end of that taxable year, this
Executive Order 12866. Therefore, a due (without extensions) after July 20, paragraph (d)(12)(v)(B) will apply to the
regulatory assessment is not required. 2007. old corporation’s taxable year
Pursuant to 5 U.S.C. 553(d)(3) it has (ii) Prior law. For original immediately preceding the beginning of
been determined that a delayed effective consolidated Federal income tax returns the taxable year during which the first
date is unnecessary because this rule due (without extensions) after April 25, condition is first met.
finalizes currently effective temporary 2006, and on or before July 20, 2007, see (C) The third condition is that, at the
rules regarding including life insurance § 1.1502–47T as contained in 26 CFR end of the taxable year during which the
companies in a life-nonlife consolidated part 1 in effect on April 1, 2007. For first condition is first met, the new
return. It is hereby certified that these original consolidated Federal income corporation does not undergo a
regulations will not have a significant tax returns due (without extensions) on disproportionate asset acquisition under
economic impact on a substantial or before April 25, 2006, see § 1.1502– paragraph (d)(12)(viii) of this section.
number of small entities. This 47 as contained in 26 CFR part 1 in (D) The fourth condition is that, if
certification is based on the fact that effect on April 1, 2006. there is more than one old corporation,
these regulations primarily affect * * * * * the first two conditions apply to all of
affiliated groups of corporations with (d) * * * the corporations. Thus, the second
one or more life insurance company (12) * * * condition (tax character) must be met by
members, which tend to be larger (v) Tacking rule. The period during all of the old corporations transferring
businesses. Moreover, the number of which an old corporation is in existence assets taken into account in meeting the
taxpayers affected is minimal. and a member of the group engaged in test in paragraph (d)(12)(v)(A) of this
Therefore, a Regulatory Flexibility active business is included in (or tacks section.
Analysis under the Regulatory onto) the period for the new corporation * * * * *
Flexibility Act (5 U.S.C. chapter 6) is if the following four conditions listed in
not required. Pursuant to section 7805(f) this paragraph (d)(12)(v) are met. For § 1.1502–47T [Removed]
of the Internal Revenue Code, the notice purposes of this paragraph (d)(12)(v), a ■ Par. 3. Section 1.1502–47T is
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of proposed rulemaking preceding these new corporation is a corporation removed.


regulations was submitted to the Chief (whether or not newly organized) during ■ Par. 4. Section 1.1502–76 is amended
Counsel for Advocacy of the Small the period its eligibility depends upon by revising paragraphs (a), (b)(2)(ii)(D),
Business Administration for comment the tacking rule. The four conditions are and (d).
on its impact on small business. as follows— The revisions read as follows:

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Federal Register / Vol. 72, No. 139 / Friday, July 20, 2007 / Rules and Regulations 39737

§ 1.1502–76 Taxable year of members of same consolidated group, as a (ii) Prior law. For original
group. consequence of the same plan or consolidated Federal income tax returns
(a) Taxable year of members of group. arrangement, cease to be members of due (without extensions) after April 25,
The consolidated return of a group must that group and remain affiliated as 2006, and on or before July 20, 2007, see
be filed on the basis of the common members of another consolidated group, § 1.1502–76T as contained in 26 CFR
parent’s taxable year, and each an election under this paragraph part 1 in effect on April 1, 2007. For
subsidiary must adopt the common (b)(2)(ii)(D)(1) may be made only if it is original consolidated Federal income
parent’s annual accounting period for made by each such member. Each tax returns due (without extensions) on
the first consolidated return year for statement must also indicate that an or before April 25, 2006, see § 1.1502–
which the subsidiary’s income is agreement, as described in paragraph 76 as contained in 26 CFR part 1 in
includible in the consolidated return. If (b)(2)(ii)(D)(2) of this section, has been effect on April 1, 2006.
any member is on a 52–53-week taxable entered into. Each party signing the (2) Election to ratably allocate items
year, the rule of the preceding sentence agreement must retain either the effective date—(i) In general. Paragraph
shall, with the advance consent of the original or a copy of the agreement as (b)(2)(ii)(D) of this section applies to any
Commissioner, be deemed satisfied if part of its records. See § 1.6001–1(e). original consolidated Federal income
the taxable years of all members of the (2) Agreement. For each election tax return due (without extensions) after
group end within the same 7-day under this paragraph (b)(2)(ii), the July 20, 2007.
period. Any request for such consent member and the common parent of each (ii) Prior law. For original
shall be filed with the Commissioner of affected group must sign and date an consolidated Federal income tax returns
Internal Revenue, Washington, DC agreement. The agreement must— due (without extensions) after May 30,
20224, not later than the 30th day before (i) Identify the extraordinary items, 2006, and on or before July 20, 2007, see
the due date (not including extensions their amounts, and the separate or § 1.1502–76T as contained in 26 CFR
of time) for the filing of the consolidated consolidated returns in which they are part 1 in effect on April 1, 2007. For
return. included; original consolidated Federal income
(b) * * * (ii) Identify the aggregate amount to be tax returns due (without extensions) on
(2) * * * or before May 30, 2006, see § 1.1502–76
(ii) * * * ratably allocated, and the portion of the
amount included in the separate and as contained in 26 CFR part 1 in effect
(D) Election—(1) Statement. The on April 1, 2006.
election to ratably allocate items under consolidated returns; and
this paragraph (b)(2)(ii) must be made in (iii) Include the name and employer § 1.1502–76T [Removed]
a separate statement entitled, ‘‘THIS IS identification number of the common
parent (if any) of each group that must ■ Par. 5. Section 1.1502–76T is
AN ELECTION UNDER § 1.1502– removed.
76(b)(2)(ii) TO RATABLY ALLOCATE take the items into account.
THE YEAR’S ITEMS OF [INSERT * * * * * § 1.502–35 [Amended]
NAME AND EMPLOYER (d) Effective/applicability date—(1)
IDENTIFICATION NUMBER OF THE Taxable years of members of group § 1.502–76 [Amended]
MEMBER].’’ The election must be filed effective date. (i) In general. Paragraph ■ Par. 6. For each entry in the
by including a statement on or with the (a) of this section applies to any original ‘‘Location’’ column of the following
returns including the items for the years consolidated Federal income tax return table, remove the language in the
ending and beginning with S’s change due (without extensions) after July 20, ‘‘Remove’’ column and add the language
in status. If two or more members of the 2007. in the ‘‘Add’’ column in its place:

Location Remove Add

§ 1.1502–35(c)(4)(ii)(B) ....................................... § 1.1502–76T(b)(2)(ii)(D) .................................. § 1.1502–76(b)(2)(ii)(D).


§ 1.1502–76(b)(2)(ii)(A)(2) .................................. paragraph (b)(2)(ii)(D) of § 1.1502–76T ........... paragraph (b)(2)(ii)(D) of this section.

Kevin M. Brown, DEPARTMENT OF THE TREASURY 7425 and return of wrongfully levied
Deputy Commissioner for Services and upon property under section 6343 of the
Enforcement. Internal Revenue Service Internal Revenue Code (Code) of 1986.
Approved: July 16, 2007. These temporary regulations clarify that
26 CFR Part 301 such notices and claims should be sent
Eric Solomon,
Assistant Secretary of the Treasury (Tax [TD 9344] to the IRS official and office specified in
Policy). the relevant IRS publications. The
RIN 1545–BG24
[FR Doc. E7–14084 Filed 7–19–07; 8:45 am] temporary regulations will affect parties
Change to Office to Which Notices of seeking to provide the IRS with notice
BILLING CODE 4830–01–P
Nonjudicial Sale and Requests for of a nonjudicial foreclosure sale and
Return of Wrongfully Levied Property parties making administrative requests
Must Be Sent for return of wrongfully levied property.
The text of the temporary regulations
AGENCY: Internal Revenue Service (IRS),
also serves as the text of the proposed
Treasury.
regulations set forth in the notice of
ACTION: Final and temporary
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proposed rulemaking on this subject in


regulations.
the Proposed Rules section in this issue
SUMMARY: This document contains final of the Federal Register.
and temporary regulations relating to
the discharge of liens under section

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