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CFR Citation: 26 CFR Part 1

RIN ID: RIN 1545-BH20

REG ID: [REG-137573-07]

NOTICE: PROPOSED RULES

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

SUBJECT CATEGORY: Guidance Under Section 1502; Amendment of Matching Rule for Certain Gains on Member Stock

DATES: Written or electronic comments and requests for a public hearing must be received by June 5, 2008.

DOCUMENT SUMMARY: In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations concerning the treatment of certain intercompany gains with respect to member stock within a consolidated group. The text of those regulations also serves as the text of these proposed regulations. These regulations affect corporations filing consolidated returns.

SUMMARY: Amendment of Matching Rule for Certain Gains on Member Stock; Guidance under Section 1502,

SUPPLEMENTAL INFORMATION

Temporary regulations in the Rules and Regulations section of this issue of the Federal Register amend the Income Tax Regulations (26 CFR part 1) under section 1502 relating to the filing of consolidated returns. The temporary regulations revise Sec. 1.150213(c)(6)(ii)(C) to provide for the redetermination of an intercompany gain as excluded from gross income in certain member stock transactions. The text of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations 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 these regulations. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that these regulations primarily affect affiliated groups of corporations, which tend to be larger businesses. Moreover, the number of taxpayers affected is minimal and the regulations provide relief in certain narrow circumstances. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and 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. In particular, the IRS and Treasury Department do not foresee situations in which it should be necessary to invoke Sec. 1.150213(c)(6)(ii)(C) (the ``Commissioner's Discretionary Rule'') with respect to intercompany gain on property other than stock. Nevertheless, the IRS and Treasury Department request comments on whether any such situations are not appropriately addressed by other provisions of Sec. 1.150213. The Commissioner's Discretionary Rule will be retained while the IRS and Treasury Department consider such comments. However, absent compelling comments, the IRS and Treasury Department anticipate ultimately eliminating the Commissioner's Discretionary Rule. 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 John F. Tarrant, 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 1INCOME 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 1.150213 also issued under 26 U.S.C. 1502. * * *

Par. 2. Section 1.150213 is amended by revising paragraphs (c)(6)(ii)(C),
[[Page 12313]]
(f)(7)(i) and (f)(7)(ii)(A) to read as follows:
Sec. 1.150213 Intercompany transactions.
(c) * * *
(6) * * *
(ii) * * *
(C) [The text of proposed Sec. 1.150213(c)(6)(ii)(C) is the same as the text of Sec. 1.150213T(c)(6)(ii)(C) published elsewhere in this issue of the Federal Register].
(1) [The text of proposed Sec. 1.150213(c)(6)(ii)(C)(1) is the same as the text of Sec. 1.150213T(c)(6)(ii)(C)(1) published elsewhere in this issue of the Federal Register.
(C)(2) [The text of proposed Sec. 1.150213(c)(6)(ii)(C)(2) is the same as the text of Sec. 1.150213T(c)(6)(ii)(C)(2) published elsewhere in this issue of the Federal Register.
(C)(2)(i) [The text of proposed Sec. 1.150213(c)(6)(ii)(C)(2)(i) is the same as the text of Sec. 1.150213T(c)(6)(ii)(C)(2)(i) published elsewhere in this issue of the Federal Register]. * * * * *
(f) * * *
(7) [The text of proposed Sec. 1.150213(f)(7) is the same as the text of Sec. 1.150213T(f)(7) published elsewhere in this issue of the Federal Register].
(i) [The text of proposed Sec. 1.150213(f)(7)(i) is the same as the text of Sec. 1.150213T(f)(7)(i) published elsewhere in this issue of the Federal Register].
(ii) [The text of proposed Sec. 1.150213(f)(7)(ii) is the same as the text of Sec. 1.150213T(f)(7)(ii) published elsewhere in this issue of the Federal Register].
(A) [The text of proposed Sec. 1.150213(f)(7)(ii)(A) is the same as the text of Sec. 1.150213T(f)(7)(ii)(A) published elsewhere in this issue of the Federal Register].
* * * * *
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E84571 Filed 3608; 8:45 am]
BILLING CODE 483001P

FOR FURTHER INFORMATION CONTACT Concerning the proposed regulations, John F. Tarrant or Ross E. Poulsen, (202) 6227790; concerning submission of comments and/or requests for a public hearing, Kelly Banks, (202) 6220932 (not tollfree numbers).