[Federal Register: December 21, 2007 (Volume 72, Number 245)]
[Proposed Rules]
[Page 72646-72648]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21de07-21]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-141399-07]
RIN 1545-BH13
Treatment of Overall Foreign and Domestic Losses
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary
regulations and notice of public hearing.
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SUMMARY: In the Rules and Regulations section in this issue of the
Federal Register, the IRS is issuing temporary regulations that provide
guidance relating to the recapture of overall foreign and domestic
losses. Changes to the applicable law were made by the American Jobs
Creation Act of 2004, as corrected by the Gulf Opportunity Zone Act of
2005. The temporary regulations provide guidance needed to comply with
these changes, as well as updated guidance with respect to overall
foreign losses and separate limitation losses, and affect individuals
and corporations claiming foreign tax credits. The text of those
temporary regulations published in this issue of the Federal Register
also serves as the text of these proposed regulations. This document
also provides a notice of public hearing on these proposed regulations.
DATES: Written or electronic comments must be received by March 20,
2008. Outlines of topics to be discussed at the public hearing
scheduled for April 10, 2008, at 10 a.m. must be received by March 20,
2008.
ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-141399-07), room 5203,
Internal Revenue Service, PO Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
141399-07), Courier's desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC 20044, or sent electronically, via the
Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-141399-07).
The public hearing will be held in the IRS Auditorium, Internal Revenue
Building, 1111 Constitution Avenue, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Jeffrey L.
Parry, (202) 622-3850 (not a toll free number); concerning submissions
of comments, the hearing, and/or to be placed on the building access
list to attend the hearing, Richard Hurst,
Richard.A.Hurst@irscounsel.treas.gov.
SUPPLEMENTARY INFORMATION:
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) providing rules relating to the recapture of overall domestic
losses under section
[[Page 72647]]
904(g) as well as the recapture overall foreign losses and separate
limitation losses under section 904(f). The text of those regulations
also serves as the text of these proposed regulations. The preamble to
the temporary regulations explains the temporary regulations and these
proposed regulations. The regulations affect individuals and
corporations claiming foreign tax credits.
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 has also
been determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) does not apply to these regulations, and because
the regulations do not impose a collection of information on small
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f), these regulations have been
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any electronic or written comments (a
signed original and eight (8) copies) that are submitted timely to the
IRS. The Treasury Department and the IRS specifically request comments
on the clarity of the proposed regulations and how they may be made
easier to understand. Moreover, the Treasury Department and the IRS are
considering providing additional guidance on overall domestic losses
and separate limitation losses, as well as further revisions to the
overall foreign loss provisions of the 1987 regulations. Comments are
welcome on this ongoing project, particularly with regard to the need
to provide for guidance on the application of the overall domestic loss
provisions to income earned through foreign or domestic trusts, as well
as guidance regarding the recapture of overall foreign losses and
separate limitation losses on the disposition of property under section
904(f)(3) and (f)(5)(F). In addition, the Treasury Department and the
IRS are continuing to study whether additional rules to better
coordinate the overall foreign loss and overall domestic loss regimes
would be appropriate, including whether a netting rule should apply to
offsetting overall foreign loss accounts and overall domestic loss
accounts. The Treasury Department and the IRS welcome additional
comments in this regard. All comments will be available for public
inspection and copying.
A public hearing has been scheduled for April 10, 2008, in the
Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW.,
Washington, DC. Due to building security procedures, visitors must
enter at the Constitution Avenue entrance. In addition, all visitors
must present photo identification to enter the building. Because of
access restrictions, visitors will not be admitted beyond the immediate
entrance more than 30 minutes before the hearing starts. For
information about having your name placed on the building access list
to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section
of this preamble.
The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who
wish to present oral comments at the hearing must submit electronic or
written comments by March 20, 2008 and an outline of the topics to be
discussed and the time to be devoted to each topic (signed original and
eight (8) copies) by March 20, 2008. A period of 10 minutes will be
allotted to each person for making comments.
An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving outlines has passed. Copies of the
agenda will be available free of charge at the hearing.
Drafting Information
The principal author of these regulations is Jeffrey L. Parry of
the Office of Chief Counsel (International). However, other personnel
from the Treasury Department and the IRS 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 is amended by adding
an entry in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.904(g)-3 also issued under 26 U.S.C. 904(g)(4) * * *
Par. 2. Section 1.904-0 is amended by revising the entries for
Sec. 1.904(f)-1(a), (d)(2), (d)(3), and (d)(4), and for Sec.
1.904(f)-2(c) and (c)(1), and adding entries for Sec. Sec. 1.904(f)-7
and 1.904(f)-8 to read as follows:
Sec. 1.904-0 Outline of regulation provisions for section 904.
* * * * *
Sec. 1.904(f)-1 Overall foreign loss and the overall foreign loss
account.
* * * * *
(a)(1) and (a)(2) [The text of these entries is the same as the
text of the entries for Sec. 1.904(f)-1T(a)(1) and (a)(2) in Sec.
1.904(f)-0T published elsewhere in this issue of the Federal
Register.]
* * * * *
(d)(2), (d)(3), and (d)(4) [The text of these entries is the
same as the text of the entries for Sec. 1.904(f)-1T(d)(2), (d)(3),
and (d)(4) in Sec. 1.904(f)-0T published elsewhere in this issue of
the Federal Register.]
* * * * *
Sec. 1.904(f)-2 Recapture of overall foreign losses.
* * * * *
(c) and (c)(1) [The text of these entries is the same as the
text of the entries for Sec. 1.904(f)-2T(c) and (c)(1) in Sec.
1.904(f)-0T published elsewhere in this issue of the Federal
Register.]
* * * * *
Sec. 1.904(f)-7 Separate limitation loss and the separate
limitation loss account.
[The text of the entries for this section is the same as the
text of the entries for Sec. 1.904(f)-7T(a) through (f) in Sec.
1.904(f)-0T published elsewhere in this issue of the Federal
Register.]
Sec. 1.904(f)-8 Recapture of separate limitation loss accounts.
[The text of the entries for this section is the same as the
text of the entries for Sec. 1.904(f)-8T(a) through (c) in Sec.
1.904(f)-0T published elsewhere in this issue of the Federal
Register.]
Par. 3. In Sec. 1.904(f)-1, paragraph (a)(2) is added, and
paragraph (d)(4) is revised, to read as follows:
Sec. 1.904(f)-1 Overall foreign loss and the overall foreign loss
account.
(a)(1) * * *
(2) [The text of the proposed amendments to Sec. 1.904(f)-1(a)(2)
is the same as the text of Sec. 1.904(f)-1T(a)(2) published elsewhere
in this issue of the Federal Register.]
* * * * *
(d) * * *
(4) [The text of the proposed amendments to Sec. 1.904(f)-1(d)(4)
is the same as the text of Sec. 1.904(f)-1T(d)(4) published elsewhere
in this issue of the Federal Register.]
* * * * *
Par. 4. Section 1.904(f)-2(c)(1) and (c)(5) Example 4. are revised
to read as follows:
[[Page 72648]]
Sec. 1.904(f)-2 Recapture of overall foreign losses.
* * * * *
(c) * * * (1) [The text of the proposed amendments to Sec.
1.904(f)-2(c)(1) is the same as the text of Sec. 1.904(f)-2T(c)(1)
published elsewhere in this issue of the Federal Register.]
* * * * *
(5) * * *
Example 4. [The text of the proposed amendments to Sec.
1.904(f)-2(c)(5) Example 4. is the same as the text of Sec.
1.904(f)-2T(c)(5) Example 4. published elsewhere in this issue of
the Federal Register.]
* * * * *
Par. 5. Sections 1.904(f)-7 and 1.904(f)-8 are added to read as
follows:
Sec. 1.904(f)-7 Separate limitation loss and the separate limitation
loss account.
[The text of proposed Sec. 1.904(f)-7 is the same as the text of
Sec. 1.904(f)-7T(a) through (f) published elsewhere in this issue of
the Federal Register.]
Sec. 1.904(f)-8 Recapture of separate limitation loss accounts.
[The text of proposed Sec. 1.904(f)-8 is the same as the text of
Sec. 1.904(f)-8T(a) through (c) published elsewhere in this issue of
the Federal Register.]
Par. 6. Section 1.904(g)-0 is added to read as follows:
Sec. 1.904(g)-0 Outline of regulation provisions.
* * * * *
Sec. 1.904(g)-1 Overall domestic loss and the overall domestic loss
account.
[The text of the entries for this section is the same as the
text for Sec. 1.904(g)-1T(a) through (f) in Sec. 1.904(g)-0T
published elsewhere in this issue of the Federal Register.]
Sec. 1.904(g)-2 Recapture of overall domestic losses.
[The text of the entries for this section is the same as the
text for Sec. 1.904(g)-2T(a) through (d) in Sec. 1.904(g)-0T
published elsewhere in this issue of the Federal Register.]
Sec. 1.904(g)-3 Ordering rules for the allocation of net operating
losses, net capital losses, U.S. source losses, and separate
limitation losses, and for recapture of separate limitation losses,
overall foreign losses, and overall domestic losses.
[The text of the entries for this section is the same as the
text for Sec. 1.904(g)-3T(a) through (i) in Sec. 1.904(g)-0T
published elsewhere in this issue of the Federal Register.]
Par. 7. Sections 1.904(g)-1, 1.904(g)-2, and 1.904(g)-3 are added
to read as follows:
Sec. 1.904(g)-1 Overall domestic loss and the overall domestic loss
account.
[The text of proposed Sec. 1.904(g)-1 is the same text of Sec.
1.904(g)-1T(a) through (f) published elsewhere in this issue of the
Federal Register.]
Sec. 1.904(g)-2 Recapture of overall domestic losses.
[The text of proposed Sec. 1.904(g)-2 is the same text of Sec.
1.904(g)-2T(a) through (d) published elsewhere in this issue of the
Federal Register.]
Sec. 1.904(g)-3 Ordering rules for the allocation of net operating
losses, net capital losses, U.S. source losses, and separate limitation
losses, and for recapture of separate limitation losses, overall
foreign losses, and overall domestic losses.
[The text of proposed Sec. 1.904(g)-3 is the same text of Sec.
1.904(g)-3T(a) through (i) published elsewhere in this issue of the
Federal Register.]
Par. 8. Section 1.1502-9 is revised to read as follows:
Sec. 1.1502-9 Consolidated overall foreign losses and separate
limitation losses.
[The text of proposed Sec. 1.1502-9 is the same as the text of
Sec. 1.1502-9T(a) through (e) published elsewhere in this issue of the
Federal Register.]
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E7-24896 Filed 12-20-07; 8:45 am]
BILLING CODE 4830-01-P