Notice 2006-46 announced rules that

would further revise the exception to gain recognition under §1.897-5T(c)(4) (i) described in Notice 89-85. Under the notice, the period that a foreign corporation must consider with respect to prior stock dispositions would be revised to the earliest of either (i) the period beginning on the date that is 10 years prior to the date on which the acquiring domestic corporation or a related person (within the meaning of section 267(b)) is in control (as determined under section 304(c)) of the foreign corporation and ending on the date of the reorganization; or (ii) the period beginning on the date that is 10 years prior to the date of the reorganization and ending on the date of the reorganization.

.03 Coordination with Nonrecognition Provisions under Section 897(e)

Subject to the rules of section 897(d) and any regulations issued under section 897(e)(2), section 897(e)(1) provides that any nonrecognition provision will apply for purposes of section 897 only in the case of an exchange of a USRPI for an interest the sale of which would be taxable under Chapter 1 of the Code. Section 897(e)(2)(A) directs the Secretary to prescribe regulations (which are necessary or appropriate to prevent the avoidance of Federal income taxes) providing the extent to which nonrecognition provisions apply for purposes of section 897(e).

Section 1.897-6T(a)(1) provides that, except as otherwise provided in §§1.8975T and -6T, for purposes of section 897(e), any nonrecognition provision applies to a transfer by a foreign person of a USRPI on which gain is realized only to the extent that the transferred USRPI is exchanged for a USRPI which, immediately following the exchange, would be subject to U.S. taxation on its disposition, and the transferor complies with the filing requirements of §1.897-5T(d)(1)(iii) (as modified by Notice 89-57).

.04 Overview of Section 368(a)(1)(F)

Section 368(a)(1)(F) defines an F reorganization as a mere change in identity, form, or place of organization of one

corporation, however effected. A mere change can consist of a transaction that involves an actual or deemed transfer of property by a transferor corporation to a resulting corporation (each term as defined in §1.368-2(m)(1)). A transaction in which a foreign corporation redomiciles into the United States, for example, may qualify as an F reorganization.

Section 1.368-2(m) sets forth the scope and requirements for an F reorganization. Among the requirements imposed by that paragraph for a qualifying F reorganization, §1.368-2(m)(1)(ii) provides that a potential F reorganization (as defined in §1.368-2(m)(1)) must meet an “identity of stock ownership” requirement. Specifically, that provision requires that “[t] he same person or persons must own all of the stock of the transferor corporation, determined immediately before the potential F reorganization, and of the resulting corporation, determined immediately after the potential F reorganization, in identical proportions.”