[Federal Register: April 25, 2007 (Volume 72, Number 79)]
[Rules and Regulations]
[Page 20423-20424]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25ap07-2]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9315]
RIN 1545-BD10
Dual Consolidated Loss Regulations; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendments.
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SUMMARY: This document contains corrections to final regulations (TD
9315) that were published in the Federal Register on Monday, March 19,
2007 (72 FR 12902) regarding dual consolidated losses. Section 1503(d)
generally provides that a dual consolidated loss of a dual resident
corporation cannot reduce the taxable income of any other member of the
affiliated group unless, to the extent provided in regulations, the
loss does not offset the income of any foreign corporation.
DATES: These correcting amendments are effective April 25, 2007.
[[Page 20424]]
FOR FURTHER INFORMATION CONTACT: Jeffrey P. Cowan, (202) 622-3860 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the subject of this document are
under section 1503(d) of the Internal Revenue Code.
Need for Correction
As published, final regulations (TD 9315) contain errors that may
prove to be misleading and are in need of clarification.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Correction of Publication
0
Accordingly, 26 CFR part 1 is corrected by making the following
correcting amendments:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.1503(d)-0 is amended by revising the entries (1) and
(2) of Section 1.1503(d)-8(b). The revisions read as follows:
Sec. 1.1503(d)-0 Table of contents.
* * * * *
Sec. 1.1503(d)-8 Effective dates.
* * * * *
(b) * * *
(1) Reduction of term of agreements filed under Sec. Sec. 1.1503-
2A(c)(3), 1.1503-2A(d)(3), 1.1503-2(g)(2)(i), or 1.1503-2T(g)(2)(i).
(2) Reduction of term of agreements filed under Sec. Sec. 1.1503-
2(g)(2)(iv)(B)(2)(i) (1992), 1.1503-2(g)(2)(iv)(B)(3)(i), or Rev. Proc.
2000-42.
* * * * *
0
Par. 3. Section 1.1503(d)-5 is amended by revising the last sentence of
paragraph (a), the second sentence of paragraph (c)(4)(i)(A), and the
only sentence of paragraph (d) to read as follows:
Sec. 1.1503(d)-5 Attribution of items and basis adjustments.
(a) * * * The rules in this section apply for purposes of
Sec. Sec. 1.1503(d)-1 through 1.1503(d)-7.
* * * * *
(c) * * *
(4) * * *
(i) * * *
(A) * * * For purposes of determining items of income, gain,
deduction, and loss of the domestic owner that are attributable to the
domestic owner's foreign branch separate unit described in the
preceding sentence, only items of income, gain, deduction, and loss
that are attributable to the domestic owner's interest in the hybrid
entity, or transparent entity, as provided in paragraph (c)(3) of this
section, shall be taken into account. * * *
* * * * *
(d) * * * The fact that a particular item taken into account in
computing the income or dual consolidated loss of a dual resident
corporation or a separate unit, or the income or loss of an interest in
a transparent entity, is not taken into account in computing income (or
loss) subject to a foreign country's income tax shall not cause such
item to be excluded from being taken into account under paragraph (b),
(c), or (e) of this section.
* * * * *
0
Par. 4. Section 1.1503(d)-7(c) is amended by revising the last sentence
of paragraph (iv) of Example 5 and the last sentence of paragraph (C)
of Example 40(ii).
The revisions read as follows:
Sec. 1.1503(d)-7 Examples.
* * * * *
(c) * * *
Example 5. * * *
(iv) * * * In addition, pursuant to Sec. 1.1503(d)-6(f)(1) and
(3), the deemed transfers pursuant to Rev. Rul. 99-5 as a result of
the sale are not treated as triggering events described in Sec.
1.1503(d)-6(e)(1)(iv) or (v).
* * * * *
Example 40. * * *
(ii) * * *
(C) * * * Pursuant to Sec. 1.1503(d)-6(j)(1)(iii), the domestic
use agreement filed by the P consolidated group with respect to the
year 1 dual consolidated loss of the Country X separate unit is
terminated and has no further effect.
* * * * *
0
Par. 5. Section 1.1503(d)-8 is amended by revising the heading texts of
paragraphs (b)(1) and (2), the only sentence of paragraph (b)(1), the
first sentence of paragraph (b)(2) and the last sentence of paragraph
(b)(4).
The revisions read as follows:
Sec. 1.1503(d)-8 Effective dates.
* * * * *
(b) * * *
(1) Reduction of term of agreements filed under Sec. Sec. 1.1503-
2A(c)(3), 1.1503-2A(d)(3), 1.1503-2(g)(2)(i), or 1.1503-2T(g)(i). If an
agreement is filed in accordance with Sec. Sec. 1.1503-2A(c)(3),
1.1503-2A(d)(3), 1.1503-2(g)(2)(i), or 1.1503-2T(g)(2)(i) with respect
to a dual consolidated loss incurred in a taxable year beginning prior
to the application date and an event requiring recapture with respect
to the dual consolidated loss subject to the agreement has not occurred
as of the application date, then such agreement will be considered by
the Internal Revenue Service to apply only for any taxable year up to
and including the fifth taxable year following the year in which the
dual consolidated loss that is the subject of the agreement was
incurred and thereafter will have no effect.
(2) Reduction of term of agreements filed under Sec. Sec. 1.1503-
2(g)(2)(iv)(B)(2)(i) (1992), 1.1503-2(g)(2)(iv)(B)(3)(i), or Rev. Proc.
2000-42. Taxpayers subject to the terms of a closing agreement entered
into with the Internal Revenue Service pursuant to Sec. Sec. 1.1503-
2(g)(2)(iv)(B)(2)(i) (1992), 1.1503-2(g)(2)(iv)(B)(3)(i), or Rev. Proc.
2000-42 (2000-2 CB 394), see Sec. 601.601(d)(2)(ii)(b) of this
chapter, will be deemed to have satisfied the closing agreement's
fifteen-year certification period requirement if the five-year
certification period specified in Sec. 1.1503(d)-1(b)(20) has elapsed,
provided such closing agreement is still in effect as of the
application date, and provided the dual consolidated losses have not
been recaptured. * * *
* * * * *
(4) * * * Notwithstanding the general application of this paragraph
(b)(4) to events described in Sec. 1.1503-2(g)(2)(iv)(B)(1)(i) through
(iii) that occur after April 18, 2007, a taxpayer may choose to apply
this paragraph (b)(4) to events described in Sec. 1.1503-
2(g)(2)(iv)(B)(1)(i) through (iii) that occur after March 19, 2007 and
on or before April 18, 2007.
* * * * *
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. E7-7782 Filed 4-24-07; 8:45 am]
BILLING CODE 4830-01-P