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Federal Register / Vol. 86, No. 181 / Wednesday, September 22, 2021 / Rules and Regulations
ii Retroactive application. For distributions made on or before January 4, 2001, see 1.3011g as contained in 26 CFR part 1 revised April 1, 2021.
g Basis. The basis of property received in a distribution to which section 301 applies is the fair market value of such property. See paragraph b of this section.
h Transfers for less than fair market value. If property is transferred by a corporation to a shareholder for an amount less than its fair market value in a sale or exchange, such shareholder is treated as having received a distribution to which section 301 applies. In such case, the amount of the distribution is the excess of the fair market value of the property over the amount paid for such property at the time of the transfer. For example, on January 3, 2021, A, a shareholder of Corporation X, purchased property from X for $20
when the fair market value of such property was $100. The amount of the distribution to A determined under section 301b is $80.
i Reserved j Transactions treated as distributions. A distribution to shareholders with respect to their stock is within the terms of section 301, although it takes place at the same time as another transaction, if the distribution is in substance a separate transaction whether or not connected in a formal sense. This situation is most likely to occur in the case of a recapitalization, a reincorporation, or a merger of a corporation with a newly organized corporation having substantially no property. For example, if a corporation having only common stock outstanding exchanges one share of newly issued common stock and one bond with a principal amount of $10 for each share of outstanding common stock, the distribution of the bond will be a distribution of property to the extent of its fair market value to which section 301 applies, even though the exchange of common stock for common stock may be pursuant to a plan of reorganization under the terms of section 368a1E recapitalization and may result in the shareholder not recognizing any gain or loss on the exchange by reason of section 354.
k Cancellation of indebtedness. The cancellation of indebtedness of a shareholder by a corporation is treated as a distribution of property.
l Cross-references. For certain rules relating to adjustments to earnings and profits and for determining the extent to which a distribution is a dividend, see sections 312 and 316 of the Code and the regulations in this part under sections 312 and 316.

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m Split-dollar and other life insurance arrangements1 Splitdollar life insurance arrangementsi Distribution of economic benefits. The provision by a corporation to its shareholder pursuant to a split-dollar life insurance arrangement, as defined in 1.6122b1 or 2, of economic benefits described in 1.6122d, or of amounts described in 1.6122e, is treated as a distribution of property, the amount of which is determined under 1.6122d and e, respectively.
ii Distribution of entire contract or undivided interest therein. A transfer within the meaning of 1.6122c3
of the ownership of a life insurance contract or an undivided interest therein that is part of a split-dollar life insurance arrangement is a distribution of property, the amount of which is determined pursuant to 1.6122g1
and 2.
2 Other life insurance arrangements.
A payment by a corporation on behalf of a shareholder of premiums on a life insurance contract or an undivided interest therein that is owned by the shareholder constitutes a distribution of property, even if such payment is not part of a split-dollar life insurance arrangement under 1.6122b.
3 When distribution is madei In general. Except as provided in paragraph m3ii of this section, paragraph c of this section applies to determine when a distribution described in paragraph m1 or 2 of this section is taken into account by a shareholder.
ii Exception. Notwithstanding paragraph c of this section, a distribution described in paragraph m1ii of this section is treated as made by a corporation to its shareholder at the time that the life insurance contract, or an undivided interest therein, is transferred within the meaning of 1.6122c3 to the shareholder.
4 Applicability datei General rule. This paragraph m applies to splitdollar and other life insurance arrangements entered into after September 17, 2003. For purposes of this paragraph m4, a split-dollar life insurance arrangement is entered into as determined under 1.6122j1ii.
ii Modified arrangements treated as new arrangements. If a split-dollar life insurance arrangement entered into on or before September 17, 2003, is materially modified within the meaning of 1.6122j2 after September 17, 2003, the arrangement is treated as a new arrangement entered into on the date of the modification.
n Applicability date. Paragraphs a through c, e, g, and h of this
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section apply to distributions under section 301 made after September 22, 2021.
Par. 3. Section 1.3561 is amended by revising paragraph f to read as follows:
1.3561 Receipt of additional consideration in connection with an exchange.

f See 1.3011j for certain transactions that are not within the scope of section 356.

Par. 4. Section 1.3682 is amended by revising the last sentence of paragraph m3iii to read as follows:
1.3682

Definition of terms.

m
3
iii See 1.3011j.

1.9021

Amended
Par. 5. In 1.9021a12, remove the language 1.3011b and add in its place 1.3011c.

1.9023

Amended
Par. 6. In 1.9023a7, remove the language 1.3011b and add in its place 1.3011c.

Douglas W. ODonnell, Deputy Commissioner for Services and Enforcement.
Approved: August 18, 2021.
Mark J. Mazur, Acting Assistant Secretary of the Treasury Tax Policy.
FR Doc. 202119980 Filed 92121; 8:45 am BILLING CODE 483001P

DEPARTMENT OF VETERANS
AFFAIRS
38 CFR Part 71
RIN 2900AR28

Extension of Program of Comprehensive Assistance for Family Caregivers Eligibility for Legacy Participants and Legacy Applicants Department of Veterans Affairs.
Interim final rule.

AGENCY:
ACTION:

The Department of Veterans Affairs VA is revising its regulations that govern VAs Program of Comprehensive Assistance for Family Caregivers PCAFC by extending eligibility for legacy participants, legacy applicants, and their Family Caregivers and the applicable benefits afforded to Family Caregivers, to include the
SUMMARY:

E:FRFM22SER1.SGM

22SER1