Guidance under section 355(e); Recognition of
Gain on Certain Distributions of Stock or
Securities in Connection With an Acquisition.

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 1 [REG-116733-98] RIN 1545-AW79

TITLE: Guidance under section 355(e); Recognition of Gain on Certain
Distributions of Stock or Securities in Connection With an
Acquisition.

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking.

SUMMARY: This document withdraws the notice of proposed rulemaking
relating to recognition of gain on certain distributions of stock or
securities of a controlled corporation in connection with an
acquisition that was published in the Federal Register on August 24,
1999. The withdrawal is in response to written comments received and
oral comments presented at a public hearing.

EFFECTIVE DATE: These regulations are effective January 2, 2001.

FOR FURTHER INFORMATION CONTACT: Brendan O'Hara, (202) 622-7530 (not
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On August 24, 1999, the IRS issued proposed regulations
(REG-116733-98) in the Federal Register (64 FR 46155) under section
355(e), relating to the recognition of gain on certain distributions
of stock or securities in connection with an acquisition of stock of
the distributing corporation or of stock of the corporation whose
stock is distributed. In response to written comments received and
comments presented at a public hearing, these proposed regulations
are being withdrawn. New proposed regulations (REG- 107566-00)
covering the same matters as the withdrawn proposed regulations are
being issued elsewhere in this issue of the Federal Register.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Withdrawal of Notice of Proposed Rulemaking

Accordingly, under the authority of 26 U.S.C. 7805 and 26 U.S.C.
355(e)(5), the notice of proposed rulemaking (REG-116733-98) that
was published in the Federal Register on August 24, 1999 (64 FR
46155) is withdrawn.

Robert E. Wenzel
Deputy Commissioner of Internal Revenue

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