Federal Register: PROPOSED RULES [26 CFR Part 1]

DEPARTMENT OF THE TREASURY

CFR Citation: 26 CFR Part 1

REG ID: [REG-153589-06]

RIN ID: RIN 1545-BG34

NOTICE: PROPOSED RULES

DOCUMENT ACTION: Notice of proposed rulemaking by cross-reference to temporary regulation.

SUBJECT CATEGORY: Time and Manner for Electing Capital Asset Treatment for Certain Self-Created Musical Works

DATES: Written or electronic comments and requests for a public hearing must be received by May 8, 2008.

DOCUMENT SUMMARY: In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing a temporary regulation that provides the time and manner for making an election to treat the sale or exchange of musical compositions or copyrights in musical works created by the taxpayer (or received by the taxpayer from the works' creator in a transferred basis transaction) as the sale or exchange of a capital asset. The temporary regulation reflects changes to the law made by the Tax Increase Prevention and Reconciliation Act of 2005 and the Tax Relief and Health Care Act of 2006. The temporary regulation affects taxpayers making the election under section 1221(b)(3) of the Internal Revenue Code (Code) to treat gain or loss from such a sale or exchange as capital gain or loss. The text of the temporary regulation also serves as the text of this proposed regulation.

SUMMARY: Time and Manner for Electing Capital Asset Treatment for Certain Self-Created Musical Works,

SUPPLEMENTAL INFORMATION

Background and Explanation of Provisions

Temporary regulation in the Rules and Regulations section of this issue of the Federal Register amends the Income Tax Regulations (26 CFR part 1) relating to section 1221(b)(3) of the Internal Revenue Code (Code). The temporary regulation provides rules regarding the time and manner for making an election under section 1221(b)(3) to treat the sale or exchange of certain musical compositions or copyrights in musical works as the sale or exchange of a capital asset. The text of the temporary regulation also serves as the text of this proposed regulation. The preamble to the temporary regulation explains the amendments.

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 also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this regulation, and because the regulation does 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) of the Internal Revenue Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before this proposed regulation is adopted as a final regulation, consideration will be given to any
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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 available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. 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 author of these regulations is Jamie Kim of the Office of Associate Chief Counsel (Income Tax & Accounting). 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 1INCOME 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 1.12213 is added to read as follows: Sec. 1.12213 Time and manner for electing capital asset treatment for certain selfcreated musical works.
[The text of proposed Sec. 1.12213 is the same as the text of Sec. 1.12213T(a) through (d)(1) published elsewhere in this issue of the Federal Register.]
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E82307 Filed 2708; 8:45 am]
BILLING CODE 483001P

FOR FURTHER INFORMATION CONTACT Concerning the proposed regulation, Jamie Kim, (202) 6224950; concerning submission of comments or requesting a hearing, Richard.A.Hurst@irscounsel. treas.gov, (202) 622 7180 (not tollfree numbers).