|Treasury Decision 9259
||May 8, 2006
Statutory Mergers and Consolidations
Internal Revenue Service (IRS), Treasury.
This document amends final regulations concerning statutory mergers
and consolidations under section 368(a)(1)(A) of the Internal Revenue Code.
These regulations affect corporations engaging in statutory mergers and consolidations,
and their shareholders. This amendment provides transitional relief for certain
transactions initiated before January 23, 2006.
Effective Date: These regulations are effective
January 23, 2006.
Applicability Date: For dates of applicability,
FOR FURTHER INFORMATION CONTACT:
Richard M. Heinecke, (202) 622-7930 (not a toll-free number).
The IRS and Treasury Department published final regulations (T.D. 9242,
2006-7 I.R.B. 422) in the Federal Register on
January 26, 2006 (71 FR 4259) concerning statutory mergers and consolidations
under section 368(a)(1)(A) of the Internal Revenue Code. These regulations,
§1.368-2(b), generally apply to transactions occurring on or after January
23, 2006. Temporary regulations, §1.368-2T(b), generally applied to
transactions occurring in the three years preceding that date (see §1.368-2T
as contained in 26 CFR part 1, revised April 1, 2005).
This amendment provides transitional relief for certain transactions
initiated before January 23, 2006. Parties to transactions within the scope
of the relief may elect to apply the prior temporary regulations (T.D. 9038,
2003-1 C.B. 524) instead of the new final regulations. Certain parties must
adopt consistent treatment to obtain this relief. This election requirement
will be satisfied if none of the specified parties adopts inconsistent treatment.
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. This Treasury decision provides certain taxpayers
with an alternative means of compliance with respect to section 368(a)(1)(A).
Accordingly, it has been determined, pursuant to 5 U.S.C. 553(b)(B), that
prior notice and public procedure is unnecessary and contrary to the public
interest. For this reason, it has also been determined, pursuant to 5 U.S.C.
553(d)(1) and (3), that a delayed effective date is not required. Because
no notice of proposed rulemaking is required, the Regulatory Flexibility Act
(5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal
Revenue Code, these regulations were submitted to the Chief Counsel for Advocacy
of the Small Business Administration for comment on their impact on small
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
Paragraph 1. The authority citation for part 1 continues to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.368-2 is amended by revising paragraph (b)(1)(v)
to read as follows:
§1.368-2 Definition of terms.
* * * * *
(b)(1) * * *
(v) Effective date—(A) In general.
This paragraph (b)(1) applies to transactions occurring on or after January
23, 2006. For rules regarding statutory mergers or consolidation occurring
before January 23, 2006, see §1.368-2T as contained in 26 CFR part 1,
revised April 1, 2005, and §1.368-2(b)(1) as in effect before January
24, 2003 (see 26 CFR part 1, revised April 1, 2002).
(B) Transitional rule. A taxpayer may elect to
apply the provisions of §1.368-2T(b) as contained in 26 CFR part 1, revised
April 1, 2005 (the temporary regulations), instead of the provisions of this
paragraph (b), to a transaction that occurs on or after January 23, 2006,
pursuant to a written agreement which is (subject to customary conditions)
binding on January 22, 2006, and at all times thereafter, or pursuant to a
tender offer announced prior to January 23, 2006. However, the combining
entity of the transferor unit, the combining entity of the transferee unit,
any controlling corporation of the combining entity of the transferee unit
if stock thereof is provided as consideration in the transaction, and any
direct or indirect transferee of transferred basis property from any of the
foregoing, may not elect to apply the provisions of the temporary regulations
unless all such taxpayers elect to apply the provisions of the temporary regulations.
* * * * *
Cono R. Namorato,
Deputy Commissioner for
Services and Enforcement.
Approved April 17, 2006.
Secretary of the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on April 24, 2006, 8:45
a.m., and published in the issue of the Federal Register for April 25, 2006,
71 F.R. 23855)
The principal author of these final regulations is Richard M. Heinecke
of the Office of the Associate Chief Counsel (Corporate). However, other
personnel from the IRS and Treasury Department participated in their development.
* * * * *
Internal Revenue Bulletin 2006-19
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