In Title 26 of the Code of Federal Regulations, part 1 (§§ 1.301 to 1.400), Start Printed Page 38262revised as of April 1, 2006, on page 10, § 1.301-1 is corrected by adding paragraph (g) to read as follows:
(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 § 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 § 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