- 48 -
VI. Validity of Section 1.954-2(e)(3), Income Tax Regs.
Because we find that Dover UK’s deemed sale of the H&C
assets constituted a sale of assets used in Dover UK’s business
within the meaning of section 1.954-2(e)(3)(ii) through (iv),
Income Tax Regs., we do not address petitioner’s argument that
section 1.954-2(e)(3), Income Tax Regs., is invalid.
VII. Conclusion
Dover UK’s gain on the deemed sale of the H&C assets does
not constitute FPHCI to petitioner pursuant to section
954(c)(1)(B)(iii).
Decision will be entered
under Rule 155.
21(...continued)
classified as an association taxable as a corporation”. Sec.
301.7701-3(h)(1), Proposed Proced. & Admin. Regs., 64 Fed. Reg.
66594 (Nov. 29, 1999). (We assume that the consequence of that
approach would be that a CFC’s sale of the stock of the
disregarded entity would be treated as a sale of property
described in sec. 954(c)(1)(B)(i), rather than as a sale of
property described in sec. 954(c)(1)(B)(iii), which is
respondent’s approach in this case, under the existing
regulations.) After receiving a number of unfavorable comments,
respondent, on June 26, 2003, issued Notice 2003-46, 2003-28
I.R.B. 53, announcing his intention to withdraw the so-called
extraordinary transaction rule of the proposed regulations.
Formal withdrawal of that portion of the proposed regulations
occurred on Oct. 22, 2003. See REG-1110385-99, 68 Fed. Reg.
60305 (Oct. 22, 2003).
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