[Federal Register: August 26, 2004 (Volume 69, Number 165)]
[Proposed Rules]
[Page 52462-52463]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26au04-13]
[[Page 52462]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-135898-04]
RIN 1545-BD63
Extension of Time To Elect Method for Determining Allowable Loss
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary
regulations.
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SUMMARY: This document contains proposed regulations under section 1502
of the Internal Revenue Code of 1986. The proposed regulations extend
the time for consolidated groups to elect to apply a method for
determining allowable loss on a disposition of subsidiary stock, and
permit consolidated groups to revoke such elections. The proposed
regulations affect corporations filing consolidated returns, both
during and after the period of affiliation, and also affect purchasers
of the stock of members of a consolidated group. The text of the
temporary regulations published in this issue of the Federal Register
serves as the text of these proposed regulations.
DATES: Written or electronic comments must be received by November 24,
2004.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-135898-04), room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered between the
hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-135898-04), Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW.,
Washington, DC, or sent electronically, via the IRS Internet site at
http://www.irs.gov/regs or via the Federal eRulemaking Portal at http://www.regulations.gov
(IRS and REG-135898-04).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Theresa Abell (202) 622-7700 or Martin Huck, (202) 622-7750; concerning
submissions of comments, Robin Jones, (202) 622-7180 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)). Comments on the collection of information should be
sent to the Office of Management and Budget, Attn: Desk Officer for the
Department of Treasury, Office of Information and Regulatory Affairs,
Washington, DC 20503, with copies to the Internal Revenue Service,
Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collection of information should be received by
October 25, 2004. Comments are specifically requested concerning:
Whether the proposed collection of information is necessary for the
proper performance of the functions of the IRS, including whether the
information will have practical utility;
The accuracy of the estimated burden associated with the proposed
collection of information (see below);
How the quality, utility, and clarity of the information to be
collected may be enhanced;
How the burden of complying with the proposed collection of
information may be minimized, including through the application of
automated collection techniques or other forms of information
technology; and
Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
The collection of information in this proposed regulation was
previously approved and reviewed by the Office of Management and Budget
under control number 1545-1774. The collection of information is
required to allow the taxpayer to make certain elections to determine
the amount of allowable loss under Sec. 1.1502-20 in its entirety,
Sec. 1.1502-20 without regard to the duplicated loss factor, or Sec.
1.337(d)-2T; to allow the taxpayer to reapportion a section 382
limitation in certain cases; to allow the taxpayer to waive certain
loss carryovers; and to ensure that loss is not disallowed under Sec.
1.337-2T and basis is not reduced underSec. 1.337(d)-2T to the extent
that the taxpayer establishes that the loss or basis is not
attributable to the recognition of built-in gain on the disposition of
an asset.
This collection of information is modified with respect to
Sec. Sec. 1.1502-20T and 1.1502-32T. Regarding Sec. 1.1502-20T, the
collection of information also is necessary to allow the common parent
of the selling group to reapportion a separate, subgroup or
consolidated section 382 limitation when the acquiring group amends its
Sec. 1.1502-32(b)(4) election. With respect to Sec. 1.1502-32T, the
collection of information also is necessary to allow the acquiring
group to amend its previous Sec. 1.1502-32(b)(4) election, so that it
may use previously waived losses of its subsidiary.
The collection of information is required to obtain a benefit. The
likely respondents are corporations that file consolidated income tax
returns.
Estimated total annual reporting and/or recordkeeping burden:
36,720 hours.
Estimated average annual burden per respondent: 2 hours.
Estimated number of respondents: 18,360.
Estimated annual frequency of responses: Once.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background and Explanation of Provisions
Temporary regulations in the rules and regulations section of this
issue of the Federal Register amend the Income Tax Regulations (26 CFR
Part 1) relating to section 1502. The temporary regulations extend the
time for consolidated groups to elect to apply a method for determining
allowable loss on a disposition of subsidiary stock, and permit
consolidated groups to revoke such elections. The temporary regulations
affect corporations filing consolidated returns, both during and after
the period of affiliation, and also affect purchasers of the stock of
members of a consolidated group. The text of those regulations serves
as the text for these proposed regulations. The preamble to the
temporary regulations explains the amendments and these proposed
regulations.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment is not required. It is hereby
certified that these proposed regulations will not have a significant
economic impact on a substantial number of small entities. This
certification is based on the fact that the regulations provide relief
to consolidated groups by extending the time in which a group may make,
or allowing a group to revoke, certain
[[Page 52463]]
elections of methods for determining allowable loss. In addition,
members of consolidated groups are generally large corporations rather
than small businesses. Therefore, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. Nevertheless, the IRS and Treasury
Department request comments from small entities that believe they might
be adversely affected by these regulations. Pursuant to section 7805(f)
of the Internal Revenue Code, this notice of proposed rulemaking will
be submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on the impact of these regulations.
Comments and Public Hearing
Before the proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) or electronic comments that are submitted timely
to the IRS. The IRS and Treasury Department request comments on the
clarity of the proposed rules and how they can be made easier to
understand. All comments will be made available for public inspection
and copying. A public hearing may be scheduled. If a public hearing is
scheduled, notice of the date, time, and place for the public hearing
will be published in the Federal Register.
Drafting Information
The principal authors of these regulations are Theresa Abell and
Martin Huck of the Office of Associate Chief Counsel (Corporate).
However, other personnel from the IRS and Treasury Department
participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read,
in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.1502-20 is amended by:
1. Revising the first sentence of paragraph (i)(4).
2. Redesignating paragraph (i)(6) as (i)(7).
3. Adding new paragraph (i)(6).
The revisions and addition read as follows:
Sec. 1.1502-20 Disposition or deconsolidation of subsidiary stock.
* * * * *
(i) * * *
(4) [The text of proposed Sec. 1.1502-20(i)(4) is the same as the
text of Sec. 1.1502-20T(i)(4) published elsewhere in this issue of the
Federal Register.]
* * * * *
(6) [The text of proposed Sec. 1.1502-20(i)(6) is the same as the
text of Sec. 1.1502-20T(i)(6) published elsewhere in this issue of the
Federal Register.]
Par. 3. Section 1.1502-32(b)(4)(vii)(C) is amended by removing the
language ``May 7, 2003'' and adding the language ``August 25, 2004''
each time it appears.
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 04-19477 Filed 8-25-04; 8:45 am]
BILLING CODE 4830-01-P