Income taxes: Corporate distributions and adjustments; CFR correction,

[Federal Register: July 6, 2006 (Volume 71, Number 129)]

[Rules and Regulations]

[Page 38261-38262]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr06jy06-3]

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

Corporate Distributions and Adjustments

CFR Correction

In Title 26 of the Code of Federal Regulations, part 1 (Sec. Sec. 1.301 to 1.400),

[[Page 38262]]

revised as of April 1, 2006, on page 10, Sec. 1.301-1 is corrected by adding paragraph (g) to read as follows:

Sec. 1.301-1 Rules applicable with respect to distributions of money and other property.

* * * * *

(g) Reduction for liabilities--(1) General rule. For the purpose of section 301, no reduction shall be made for the amount of any liability, unless the liability is assumed by the shareholder within the meaning of section 357(d).

(2) No reduction below zero. Any reduction pursuant to paragraph (g)(1) of this section shall not cause the amount of the distribution to be reduced below zero.

(3) Effective dates--(i) In general. This paragraph (g) applies to distributions occurring after January 4, 2001.

(ii) Retroactive application. This paragraph (g) also applies to distributions made on or before January 4, 2001, if the distribution is made as part of a transaction described in, or substantially similar to, the transaction in Notice 99-59 (1999-2 C.B. 761), including transactions designed to reduce gain (see Sec. 601.601(d)(2) of this chapter). For rules for distributions on or before January 4, 2001 (other than distributions on or before that date to which this paragraph (g) applies), see rules in effect on January 4, 2001 (see Sec. 1.301-1(g) as contained in 26 CFR part 1 revised April 1, 2001).

[FR Doc. 06-55522 Filed 7-5-06; 8:45 am]

BILLING CODE 1505-01-D