[Federal Register Volume 61, Number 3 (Thursday, January 4, 1996)]
[Rules and Regulations]
[Pages 262-271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-131]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
26 CFR Parts 1 and 602
[TD 8654]
RIN 1545-AS21
Information Reporting for Discharges of Indebtedness
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to the
information reporting requirements of applicable financial entities for
discharges of indebtedness. The final regulations reflect changes to
the Internal Revenue Code of 1986 (Code) made by section 13252 of the
Omnibus Budget Reconciliation Act of 1993 (the Act). The final
regulations affect certain financial institutions and federal executive
agencies.
DATES: These regulations are effective December 22, 1996.
For dates of applicability, see Sec. 1.6050P-1(h).
FOR FURTHER INFORMATION CONTACT: Sharon L. Hall (timing and amount of
discharge) at (202) 622-4930 or Michael F. Schmit (other issues) at
(202) 622-4960, both of the Office of Assistant Chief Counsel (Income
Tax and Accounting). Neither telephone number is toll-free.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in these final regulations
has been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under
control number 1545-1419. Responses to this collection of information
are required for the IRS to monitor whether discharged debtors are
properly complying with tax laws respecting cancellations of
indebtedness.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
The time estimates for the reporting requirements contained in
these final regulations are reflected in the burden estimates for Form
1099-C.
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be sent to the Internal
Revenue Service, Attn: IRS Reports Clearance Officer, T:FP, Washington,
DC 20224, and to the Office of Management and Budget, Attn: Desk
Officer for the Department of Treasury, Office of Information and
Regulatory Affairs, Washington, DC 20503.
Books or records relating to this 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 information are confidential, as required by 26 U.S.C. 6103.
Background
Section 6050P was added to the Code by section 13252 of the Act.
Section 6050P requires certain financial entities to report discharges
of indebtedness of $600 or more during any calendar year, and requires
reporting entities to make a return at such time and in such form as
the Secretary may by regulations prescribe.
On December 27, 1993, temporary regulations (TD 8506) relating to
the reporting of discharge of indebtedness under section 6050P were
published in the Federal Register (58 FR 68301). A notice of proposed
rulemaking (IA-63-93) cross-referencing the temporary regulations was
published in the Federal Register for the same day (58 FR 68337).
Written comments were received in response to the notice of
proposed rulemaking. Fourteen speakers provided testimony at a public
hearing held on March 30, 1994. In response to the comments and
testimony, the IRS and Treasury issued Notice 94-73 (1994-2 C.B. 553),
providing interim relief from penalties for failure to comply with
certain of the reporting requirements of the temporary regulations. The
Notice provided that, with respect to a discharge of indebtedness
occurring before the later of January 1, 1995, or the effective date of
the final regulations under section 6050P, no penalties would be
imposed for the failure to report a discharge of indebtedness:
(a) Under title 11 of the United States Code;
(b) Resulting from the expiration of the statute of limitations for
collection of an indebtedness;
(c) For an amount other than principal in the case of indebtedness
arising in
[[Page 263]]
connection with a lending transaction; or
(d) For a person other than the primary (or first-named) debtor in
the case of indebtedness incurred before January 1, 1995, that involves
multiple debtors.
After consideration of all the comments, the proposed regulations
under section 6050P are adopted, as revised by this Treasury decision,
effective for discharges of indebtedness occurring after December 21,
1996. The temporary regulations and interim relief from penalties
provided in Notice 94-73 remain in effect through December 21, 1996, at
which time the temporary regulations are removed. However, no penalties
will be imposed for the failure to report a discharge of indebtedness
occurring after December 21, 1996, and before January 1, 1997, if the
failure to report would have qualified for penalty relief under Notice
94-73 had the discharge occurred prior to December 22, 1996.
Additionally, the final regulations provide that a financial entity
subject to section 6050P may, at its discretion, apply any of the
provisions of the final regulations to any discharge of indebtedness
occurring on or after January 1, 1996, and before December 22, 1996.
The comments and revisions to the proposed regulations are discussed
below.
At the request of commentators, the IRS and Treasury are
considering the issuance of guidance providing uniform procedures for
requesting extensions of time within which to file information returns
with the IRS and related statements to taxpayers. This guidance, if
issued, would apply to the information reporting requirements set forth
in this Treasury decision.
Explanation of Revisions and Summary of Comments
1. Identifiable Events
Comments were received relating to the issue of when an
indebtedness is discharged for purposes of section 6050P. Under the
temporary and proposed regulations, indebtedness is considered
discharged, and reporting is required, upon the occurrence of an
identifiable event indicating that the indebtedness will never have to
be repaid by the debtor, taking into account all of the facts and
circumstances. The temporary and proposed regulations list three
identifiable events, but make clear that the three items do not
represent an exclusive list of events requiring reporting.
Commentators objected to this facts and circumstances test, and
stated that the final regulations should instead provide an exclusive
list of reporting events. The comments indicated that creditors do not
have the resources to weigh all the facts and circumstances in order to
determine whether a debt will never have to be repaid by the debtor.
In response to these comments, the final regulations provide that,
for purposes of section 6050P, indebtedness is considered discharged,
and reporting is required, only upon the occurrence of certain
identifiable events. The regulations contain an exclusive list of eight
identifiable events, and provide that, in the absence of the occurrence
of one of these events, a Form 1099-C is not required to be filed.
A. Discharges of Indebtedness in Bankruptcy
Commentators objected to the requirement in the temporary and
proposed regulations relating to the reporting of a discharge of
indebtedness in bankruptcy. The commentators stated that the obligation
to report debts discharged in bankruptcy was extremely burdensome due
to the large number of information returns that these bankruptcies
would generate. These commentators also stated that some lenders do not
receive information regarding a debtor's bankruptcy discharge in the
normal course of business.
Commentators also objected to the requirement to report debts
discharged in bankruptcy because income from a discharge in bankruptcy
is excludable under section 108(a)(1)(A). Additionally, while
acknowledging that section 108(b) generally requires the reduction of
tax attributes for amounts of cancellation of indebtedness income
excluded under section 108(a), these commentators indicated that the
majority of bankruptcies involve consumer debt, the discharge of which
is unlikely to give rise to attribute reduction. Thus, they contended
that the reporting of consumer debts discharged in bankruptcy will not
further the purposes of section 6050P.
Finally, based on language in section 6050P, commentators contended
that the IRS and Treasury lacked authority to require reporting in
bankruptcy. Under section 6050P(a), ``any applicable financial entity
which discharges . . . the indebtedness of any person'' is subject to
the rules of section 6050P. Commentators argued that creditors should
not be subject to the rules of section 6050P for debts discharged in
bankruptcy because it is the bankruptcy court, not the creditor, that
discharges the debt.
In promulgating the temporary regulations, the IRS and Treasury
fully considered the issue of whether bankruptcy discharges could be
excluded from the reporting requirement. The legislative history to
section 6050P states that ``information returns are required regardless
of whether the debtor is subject to tax on the discharged debt. For
example, Congress does not expect reporting financial institutions and
agencies to determine whether the debtor qualifies for an exclusion
under section 108.'' H.R. Conf. Rep. No. 213, 103d Cong., 1st Sess. 1,
671 (1993). This language indicates that Congress intended that
discharges resulting in excluded income (such as bankruptcy discharges)
be reported.
Accordingly, the IRS and Treasury do not believe that a requirement
to report debts discharged in bankruptcy is outside the scope of
section 6050P. In enacting section 6050P, Congress intended to increase
debtor compliance in reporting discharges of indebtedness. With respect
to the tax consequences to the debtor, it generally makes no difference
whether the debt is voluntarily discharged by the financial entity, or
discharged by a court order. Further, the creditor is receiving an
amount that is less than the amount of the outstanding indebtedness
whether the debt is voluntarily discharged or ordered to be discharged
by a court. Thus, the language ``any applicable financial entity which
discharges . . . indebtedness'' should not be narrowly construed to
exclude instances in which a debt is ordered to be discharged or is
discharged by operation of law.
The IRS and Treasury believe that an objective of the legislative
history quoted above is that information reporting under section 6050P
not impose an undue burden on filers by requiring determinations
regarding whether discharges result in income to debtors. However, the
legislative history does not preclude an exception for certain
discharges in appropriate circumstances. Accordingly, in response to
the above concerns of the commentators, the final regulations provide
an exception from reporting in the case of certain bankruptcy
discharges. Under the final regulations, indebtedness discharged in
bankruptcy is required to be reported only if the creditor knows that
the debtor incurred the indebtedness for business or investment
purposes. Therefore, reporting is not required for consumer debts
discharged in bankruptcy or in cases in which the creditor is not aware
of the purpose for the borrowing or that purpose is not clear.
Information relating to whether a debt was incurred for business or
investment purposes will
[[Page 264]]
be available to a creditor in some cases, such as those in which loan
documents require the borrower to state the purpose of the loan. This
limited reporting of debts discharged in bankruptcy will exclude
information returns relating to consumer debt, while retaining
reporting for those discharges most likely to involve the reduction of
tax attributes under section 108(b). Pursuant to Notice 94-73, no
penalties will be imposed for the failure to report any indebtedness
discharged before December 22, 1996, in bankruptcy. Additionally, no
penalties will be imposed for the failure to report any indebtedness
discharged after December 21, 1996, and before January 1, 1997, in
bankruptcy, since the failure to report would have qualified for
penalty relief under Notice 94-73 had the discharge occurred prior to
December 22, 1996.
B. Expiration of Statute of Limitations for Collection
Under the temporary and proposed regulations, an identifiable event
includes a cancellation or extinguishment by operation of law that
renders a debt unenforceable, such as the expiration of the statute of
limitations for collection of an indebtedness.
Comments were received relating to the requirement to report
indebtedness discharged as a result of the expiration of the statute of
limitations. Commentators argued that expiration of the statute of
limitations should not be an identifiable event because of the
recordkeeping and other administrative burdens that are created by such
a rule. Commentators noted that the statute of limitations for
collection of debt varies from state to state, and that debtors may
relocate and be subject to the rules of multiple jurisdictions.
Further, they contended, an isolated payment by a debtor will
frequently restart the running of the statute of limitations. According
to the commentators, making lenders track the expiration of the statute
of limitations for reporting purposes would require special computer
applications not needed for any other creditor function, require legal
expertise in the collection department, and be very costly.
As a legal matter, commentators argued that the statute of
limitations is an affirmative defense, and affects only judicial
enforceability of the obligation. Most commentators indicated that
collection activity routinely continues after the expiration of the
statute of limitations. The temporary and proposed regulations list
collection activity on the part of the creditor as a factor to be
considered in determining whether debt has been discharged. Thus, even
under the temporary and proposed regulations, expiration of the statute
of limitations would rarely mark the date on which debt is considered
discharged, because collection activity routinely continues after that
date.
In response to these comments, the final regulations provide that
expiration of the statute of limitations for collection of an
indebtedness is an identifiable event for which a Form 1099-C is
required to be filed only if, and at such time as, a debtor's
affirmative defense of the expiration of the statute of limitations is
upheld in a final judgment or decision of a judicial proceeding, and
the period for appealing the judgment or decision has expired.
C. Other Discharges by Operation of Law
As stated above, the temporary and proposed regulations provide
that an identifiable event includes a cancellation or extinguishment by
operation of law that renders a debt unenforceable (such as the
expiration of the statute of limitations for collection of the
indebtedness). The temporary and proposed regulations do not specify
all of the circumstances requiring reporting under this identifiable
event.
In order to further the goal of providing an exclusive list of
reporting events, the final regulations specify those discharges
occurring by operation of law that are required to be reported under
section 6050P. In addition to the statute of limitations identifiable
event previously discussed, the events relating to operation of law
that must be reported are (i) a cancellation or extinguishment of an
indebtedness that renders a debt unenforceable in a receivership,
foreclosure, or similar proceeding in a federal or State court, as
described in section 368(a)(3)(A)(ii); (ii) a cancellation or
extinguishment of an indebtedness upon the expiration of a statutory
period for filing a claim or commencing a deficiency judgment
proceeding; (iii) a cancellation or extinguishment of an indebtedness
that renders a debt unenforceable pursuant to a probate or similar
proceeding; and (iv) a cancellation or extinguishment of an
indebtedness pursuant to an election of foreclosure remedies by a
creditor that statutorily extinguishes or bars the creditor's right to
pursue collection of the indebtedness. This final event relating to an
election of foreclosure remedies will require reporting only where a
mortgage lender or holder is barred by local law from pursuing a
deficiency judgment or note collection proceeding following exercise of
a power of sale contained in a mortgage or deed of trust.
A discharge of indebtedness occurring by operation of law not
enumerated above is not required to be reported under the final
regulations.
D. Collection Activity
Commentators indicated that the temporary and proposed regulations
were unclear regarding the effect of continuing collection activity on
the requirement to report under section 6050P. The temporary and
proposed regulations provide that collection activity is one of the
facts and circumstances to be taken into account in determining whether
a discharge of indebtedness has occurred. The commentators argued that
the final regulations should clarify that reporting is not required
prior to termination of collection efforts on the part of the creditor.
In response to these comments, the final regulations address the
effect of collection efforts on the requirement to report under section
6050P. Under the final regulations, an identifiable event occurs and
reporting is required upon a decision by the creditor, or the
application of a defined policy of the creditor, to discontinue
collection activity and discharge indebtedness. For this purpose, a
defined policy may be either a written policy or a creditor's
established business practice.
Additionally, under the final regulations, there is a rebuttable
presumption that an identifiable event has occurred during a calendar
year if a creditor has not received a payment on an indebtedness at any
time during a 36-month testing period ending at the close of the year.
This presumption is rebutted by the creditor if the creditor (or a
third-party collection agency on behalf of the creditor) has engaged in
significant, bona fide collection activity at any time during the 12-
month period ending at the close of the calendar year, or if facts and
circumstances existing as of January 31 of the calendar year following
expiration of the 36-month testing period indicate that the
indebtedness has not been discharged. Under the final regulations,
significant, bona fide collection activity does not include merely
nominal or ministerial collection action, such as an automated mailing.
Further, facts and circumstances indicating that an indebtedness has
not been discharged include the existence of a lien relating to the
indebtedness against the debtor (to the extent of the value of the
security), or the sale or packaging for sale of the indebtedness by the
creditor.
[[Page 265]]
E. Other Reportable Discharges
Under the temporary and proposed regulations, an identifiable event
includes an agreement between the applicable financial entity and the
debtor to discharge an indebtedness, provided that the last event
necessary to effectuate the discharge has occurred. The final
regulations retain this reporting requirement, restating that an
identifiable event includes a discharge of indebtedness pursuant to an
agreement between an applicable financial entity and a debtor to
discharge indebtedness at less than full consideration. As under the
temporary regulations, this identifiable event will not occur until the
last event necessary to effectuate the discharge has occurred.
The final regulations also provide that a discharge of indebtedness
occurring before the date on which an identifiable event occurs may, at
the creditor's discretion, be reported under section 6050P.
2. Definition of Indebtedness
Commentators objected to the broad definition of indebtedness
provided in the temporary and proposed regulations. The temporary and
proposed regulations provide that, for purposes of reporting the amount
of indebtedness discharged, an indebtedness is any amount owed to the
creditor including principal, interest, penalties, fees, administrative
costs, and fines, to the extent the amount constitutes an indebtedness
under section 61(a)(12). Commentators argued that this definition is
overly broad and should be amended to include principal only (or the
primary indebtedness in the case of a non-lending transaction). In
response to these comments, the final regulations provide certain
exceptions relating to the reporting of amounts other than stated
principal.
A. Reporting of Interest
Commentators offered two main objections to the reporting of
interest. First, commentators stated that reporting interest was
burdensome because interest is not tracked by lenders once indebtedness
is written off or placed on nonaccrual status on the lender's books.
Second, commentators suggested that reporting of interest would be of
marginal benefit to the IRS because in many cases discharged interest
may be excluded from gross income under sections 108(e)(2) and 111.
In response to these comments, and in an effort to reduce the
information reporting burden on affected filers, the final regulations
do not require the reporting of amounts of discharged interest (whether
or not arising in connection with a lending transaction), despite the
fact that some discharged interest will give rise to gross income.
However, at the option of the applicable financial entity, interest may
be included in the amount reported. Additionally, as provided in Notice
94-73, in the case of a discharge of indebtedness before December 22,
1996, no penalties will be imposed for failure to report an amount
other than principal in the case of indebtedness arising in connection
with a lending transaction.
B. Penalties, Fees, Administrative Costs, and Fines
Commentators also argued that, like interest, penalties, fees,
administrative costs, and fines are not tracked by lenders once an
indebtedness is written off on the books of the lender. Thus, they
contended, tracking these amounts would require additional computer
programming and recordkeeping, and would be very costly. With respect
to lending transactions, the IRS and Treasury have concluded that the
benefits that would be derived from requiring the reporting of
penalties, fees, administrative costs, and fines are outweighed by the
burden associated with the requirement. Accordingly, the final
regulations provide that, in the case of a lending transaction, only
discharged amounts of stated principal are required to be reported. In
the case of non-lending transactions, the amount owed, such as a fee,
fine, or penalty, is reportable if discharged.
3. Reporting for Multiple Debtors
Commentators recommended that the multiple debtor rules of the
temporary and proposed regulations be amended so that reporting is
required only with respect to the primary or first-named debtor on the
lender's account. The rationale for this approach is that, in general,
lenders track loans involving multiple debtors only by the name of the
borrower of record, and thus, the information required to be reported
under section 6050P (e.g., the name, address, and taxpayer
identification number (TIN)) for debtors other than the primary debtor
is generally not available to lenders. In addition, the commentators
pointed out that most other information return regulations require
reporting only with respect to a single taxpayer (e.g., Sec. 1.6050H-1
requires reporting only with respect to one designated interest payor
even if multiple debtors are liable on a mortgage). Finally, these
commentators stated that the majority of multiple debtor situations
involve a husband and wife who will likely file a joint return, and
therefore, requiring reporting for each debtor is not necessary.
The IRS and Treasury believe, however, that requiring reporting for
multiple debtors is consistent with section 6050P(a)(1), which provides
that the reporting of a name, address, and TIN is required for each
person whose indebtedness was discharged. Further, while reporting with
respect to only one taxpayer is required under many information
reporting sections of the Code, section 6050J, which is comparable to
section 6050P in that it relates to the reporting of acquisitions and
abandonments of property securing indebtedness, requires reporting for
each person who is a borrower with respect to the secured indebtedness.
Moreover, in Notice 94-73, the IRS addressed the concerns of
commentators by providing that no penalties would be imposed for
failure to report a discharge of indebtedness for other than the
primary (or first-named) debtor in the case of indebtedness incurred
before January 1, 1995, thus allowing creditors time to begin
collecting the necessary information for all debtors in the case of
indebtedness incurred after December 31, 1994. The final regulations
incorporate this relief.
In order to reduce the information reporting burden on applicable
financial entities, the final regulations contain two exceptions
relating to multiple debtor reporting. In the case of indebtedness of
less than $10,000 incurred on or after January 1, 1995, that involves
multiple debtors, reporting is required only for the primary (or first-
named) debtor. Additionally, to avoid duplication, the final
regulations provide a husband/wife exception to the requirement for
reporting in the case of multiple debtors. Under this exception, only
one Form 1099-C must be prepared if the creditor knows, or has reason
to know, that the co-obligors were husband and wife living at the same
address when the indebtedness was incurred, and does not know or have
reason to know that such circumstances have changed at the time of the
discharge. These two exceptions apply to discharges of indebtedness
after December 31, 1994.
The final regulations retain the rule of the temporary and proposed
regulations relating to the amount to be reported with respect to each
joint and several debtor.
4. Multiple Creditors/Lending Pools/REMICs
Commentators indicated that further guidance should be provided in
the final regulations regarding section
[[Page 266]]
6050P reporting obligations in the case of participation loans, lending
pools, and other multiple-creditor situations. In response to these
comments, the final regulations provide a general rule that, in the
case of an indebtedness owned (or treated as owned for federal income
tax purposes) by more than one creditor, each creditor that is an
applicable financial entity must comply with the reporting requirements
of this section with respect to any discharge of indebtedness of $600
or more allocable to such creditor. A creditor will be considered to
have complied with the requirements of this section if a lead bank or
other designee of the creditor complies on its behalf.
Comments were received advocating an exception from reporting for
discharges of certain widely-owned securitized indebtedness. The
commentators reasoned that the owners of widely-held securitized
indebtedness will generally have no knowledge regarding when a
discharge occurs, or the amount of discharged debt allocable to each
owner. Further, commentators suggested that it is likely that a
significant portion of such securitized indebtedness may be owned by
persons that are not applicable financial entities and, therefore, are
not subject to section 6050P.
The IRS and Treasury believe, however, that it would be
inconsistent with the purpose of section 6050P to provide a general
exception from reporting for such securitized indebtedness. Section
6050P is intended to increase the likelihood that a debtor will comply
with the tax laws relating to discharge of indebtedness by requiring
the reporting of that event to the IRS. The fact that indebtedness has
been securitized and sold to numerous owners generally does not affect
the tax consequences to the debtor upon a discharge of that
indebtedness. Thus, the IRS and Treasury do not believe that a
discharge of indebtedness should be excepted from section 6050P
reporting simply because that indebtedness was part of a securitization
arrangement.
Commentators also argued that the discharge of an indebtedness held
by a real estate mortgage investment conduit (REMIC) should not be
required to be reported under section 6050P. Because a REMIC is not an
applicable financial entity, commentators contended that section 6050P
should not apply upon a discharge of indebtedness held by a REMIC.
However, section 860F(e) provides that, for purposes of subtitle F
of the Code (Procedure and Administration, including section 6050P), a
REMIC is treated as a partnership and holders of residual interests in
the REMIC are treated as partners. Under the final regulations,
indebtedness owned by a partnership is treated as owned by the
partners. Thus, arguably a discharge of REMIC indebtedness should be
treated similar to partnership indebtedness and thus should be reported
to the extent the residual owners of the REMIC are applicable financial
entities.
Because the IRS and Treasury believe that further study of these
issues is warranted, the final regulations reserve on the application
of section 6050P to discharges of indebtedness held (1) in a pass-
through securitized indebtedness arrangement, or (2) by a REMIC. For
this purpose, a pass-through securitized indebtedness arrangement is
any arrangement whereby one or more debt obligations are pooled and
held for twenty or more persons whose interests in the debt obligations
are undivided co-ownership interests that are freely transferrable. Co-
ownership interests that are actively traded personal property (as
defined in Sec. 1.1092(d)-1) are presumed to be freely transferrable
and held by twenty or more persons. Pending issuance of further
guidance, no penalties will be imposed for failure to report a
discharge of indebtedness held under these circumstances. This relief
from penalties does not extend to arrangements formed for a principal
purpose of avoiding the reporting requirements of this section. The IRS
and Treasury welcome comments regarding compliance with section 6050P
in the case of pass-through securitized indebtedness arrangements and
REMICs.
5. Coordination of Form 1099-A and Form 1099-C
The legislative history to section 6050P indicates that Congress
intended that the IRS and Treasury coordinate reporting under section
6050P with the reporting required under section 6050J. Section 6050J
requires information relating to foreclosures and abandonments of
secured property to be reported on Form 1099-A.
The final regulations provide that if, in the same calendar year, a
discharge of indebtedness reportable under section 6050P occurs in
connection with a foreclosure or abandonment of secured property
reportable under section 6050J, it is not necessary to file both a Form
1099-A and a Form 1099-C for the same debtor. Under the final
regulations, the filing requirements of section 6050J will be satisfied
with respect to a debtor if, in lieu of filing a Form 1099-A, a Form
1099-C is filed in accordance with the instructions for the filing of
that form. This coordinated filing provision applies to discharges of
indebtedness after December 31, 1994.
6. Direct or Indirect Subsidiary
Commentators requested that the final regulations include a
definition of a direct or indirect subsidiary for purposes of section
6050P. Section 6050P(c)(1)(C) provides that the definition of
applicable financial entity includes a direct or indirect subsidiary of
an entity described in section 6050P(c)(1)(A). In response to these
comments, the final regulations provide that, for purposes of section
6050P(c)(1)(C), the term direct or indirect subsidiary means a
corporation in a chain of corporations beginning with the entity
described in section 6050P(c)(1)(A), if at least 50 percent of the
total combined voting power of all classes of stock entitled to vote,
or at least 50 percent of the total value of all classes of stock, of
such corporation is directly owned by the entity described in section
6050P(c)(1)(A), or by one or more other corporations in the chain.
7. Other Exceptions From Reporting
The IRS and Treasury received numerous comments advocating that the
final regulations include exceptions from reporting with respect to
certain discharges of indebtedness.
A. Reporting for Non-U.S. Debtors
Comments were received relating to the inclusion in final
regulations of an exception for reporting discharges of indebtedness of
certain foreign debtors. These comments noted that, in some cases,
discharges of indebtedness that involve such debtors will not result in
income that is taxable in the United States.
On the other hand, there clearly are cases in which a foreign
person may be subject to U.S. tax with respect to a discharge of
indebtedness. Because there is no clear guidance on which financial
institutions may rely for purposes of determining whether a foreign
person would be subject to U.S. tax with respect to cancellation of
indebtedness income, it is not appropriate to provide a general
exception for foreign persons. However, the IRS and Treasury are
continuing to study the issue of whether reporting is necessary in the
case of foreign debtors whose debt is discharged by foreign branches of
U.S. financial institutions. Accordingly, pending the issuance of
further guidance, no penalties will be imposed if an applicable
financial entity fails to report a discharge of indebtedness of a
foreign debtor by a foreign branch of the entity.
[[Page 267]]
B. Reporting Where Debt Is Acquired by Related Persons
Comments were received requesting that the final regulations
clarify whether reporting is required in circumstances in which there
is a deemed discharge of indebtedness pursuant to the regulations under
section 108(e)(4). Section 108(e)(4) and implementing regulations (see
Sec. 1.108-2) provide that the acquisition of outstanding indebtedness
by a person related to the debtor from a person who is not related to
the debtor is treated as if the debtor had acquired the indebtedness
and may result in a realization by the debtor of income from discharge
of indebtedness. Commentators indicated that applicable financial
entities often will be unaware that the conditions of section 108(e)(4)
have been satisfied and that the debtor's indebtedness is considered to
have been discharged. In response to these comments, the final
regulations provide that no reporting is required under section 6050P
in the case of a discharge of indebtedness under section 108(e)(4)
unless the disposition of the indebtedness by the creditor was made
with a view to avoiding the reporting requirements of this section.
C. Reporting for Guarantors of Indebtedness
Commentators also requested guidance on whether, and under what
circumstances, a Form 1099-C must be filed for a guarantor of an
indebtedness when the underlying indebtedness is discharged. The final
regulations provide that, in the case of guaranteed debt, a guarantor
is not treated as a debtor for purposes of reporting under section
6050P. Thus, reporting for guarantors is not required.
D. Reporting for Non-lending Transactions
A number of comments were received advocating an exception in the
final regulations for discharges of indebtedness where the indebtedness
is incurred in a non-lending transaction. Advocates of this exception
argued that the primary reason applicable financial entities, and not
all trade or businesses, were made subject to section 6050P is that
financial entities have extensive involvement in lending transactions
where the majority of discharges of indebtedness will occur.
Commentators argued that when an applicable financial entity is a
creditor as a result of a non-lending transaction, it should be treated
in the same manner as a non-applicable financial entity with respect to
that indebtedness, and not be subject to section 6050P if a discharge
occurs.
Neither the language of section 6050P nor its legislative history
provides any indication that Congress intended for discharges of non-
lending indebtedness to be excluded from reporting. Moreover, it makes
no difference in determining whether a debtor has income under section
61(a)(12) that the indebtedness was incurred in a non-lending
transaction. Accordingly, the final regulations do not adopt this
suggestion.
E. Reporting of Disputed Liabilities
The temporary and proposed regulations do not address the reporting
requirements under section 6050P in the case of the settlement of a
disputed liability. The preamble to the temporary regulations solicited
public comment relating to this issue. Several commentators urged that
the final regulations include an exception from reporting for
settlements of bona fide disputed liabilities.
The determination regarding whether the settlement of a disputed
liability results in discharge of indebtedness income under section
61(a)(12) is inherently factual. Thus, it continues to be the position
of the IRS and Treasury that this issue should be addressed on a case-
by-case basis, rather than by these final regulations. Therefore, the
final regulations do not provide an exception from reporting for
disputed liabilities. Instead, resolution of the question of whether
there may have been a discharge of indebtedness reportable under this
section remains the obligation of the applicable financial entity. The
IRS and Treasury recognize that a creditor and debtor may take
inconsistent positions on this issue. The IRS does not intend to impose
penalties for good faith failures to report settlements that constitute
discharges of indebtedness.
8. Miscellaneous Comments
Comments were also received relating to whether applicable
financial entities have any information reporting obligations in
instances where payments are received on previously discharged debts.
In response to those inquiries, the final regulations clarify that no
additional reporting or Form 1099-C correction is required if a
creditor receives a payment of all or a portion of a discharged debt
that has been reported to the IRS for a prior calendar year.
Comments were received respecting the TIN solicitation requirements
of the temporary and proposed regulations. In response to those
comments, the final regulations provide that a reasonable effort
(rather than all reasonable efforts) must be made to obtain the correct
name/TIN combination of the person whose indebtedness is discharged.
The IRS and Treasury received a number of other comments in
addition to those summarized above. Some of the suggestions contained
in the comments have been adopted in the final regulations. Other
suggested changes were not adopted primarily because those suggestions
were inconsistent with the purpose of the statute and its legislative
history.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 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)
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to
these regulations, and, therefore, a Regulatory Flexibility Analysis is
not required. Pursuant to section 7805(f) of the Internal Revenue Code,
the notice of proposed rulemaking preceding these regulations was
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Drafting Information
The principal authors of these regulations are Sharon L. Hall and
Michael F. Schmit, Office of the Assistant Chief Counsel (Income Tax
and Accounting), IRS. However, other personnel from the IRS and
Treasury Department participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602 are amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by
removing the entry for Sec. 1.6050P-1T and adding an entry in numerical
order to read as follows:
Authority: 26 U.S.C. 7805. * * *
Section 1.6050P-1 also issued under 26 U.S.C. 6050P. * * *
[[Page 268]]
Par. 2. Sections 1.6050P-0 and 1.6050P-1 are added to read as
follows:
Sec. 1.6050P-0 Table of contents.
This section lists the major captions that appear in Sec. 1.6050P-
1.
Sec. 1.6050P-1 Information reporting for discharges of
indebtedness by certain financial entities
(a) Reporting requirement.
(1) In general.
(2) No aggregation.
(3) Amounts not includible in income.
(4) Time and place for reporting.
(i) In general.
(ii) Indebtedness discharged in bankruptcy.
(b) Date of discharge.
(1) In general.
(2) Identifiable events.
(i) In general.
(ii) Statute of limitations.
(iii) Decision to discontinue collection activity; creditor's
defined policy.
(iv) Expiration of non-payment testing period.
(3) Permitted reporting.
(c) Indebtedness.
(d) Exceptions from reporting requirement.
(1) Certain bankruptcy discharges.
(i) In general.
(ii) Business or investment debt.
(2) Interest.
(3) Non-principal amounts in lending transactions.
(4) Indebtedness of foreign persons held by foreign branches of U.S.
financial institutions.
(i) Reporting requirements.
(ii) Definition.
(5) Acquisition of indebtedness by related party.
(6) Releases.
(7) Guarantors and sureties.
(e) Additional rules.
(1) Multiple debtors.
(i) In general.
(ii) Amount to be reported.
(2) Multiple creditors.
(i) In general.
(ii) Partnerships.
(iii) Pass-through securitized indebtedness arrangement.
(A) Reporting requirements.
(B) Definition.
(iv) REMICs.
(3) Coordination with reporting under section 6050J.
(4) Direct or indirect subsidiary.
(5) Use of magnetic media.
(6) TIN solicitation requirement.
(i) In general.
(ii) Manner of soliciting TIN.
(7) Recordkeeping requirements.
(8) No multiple reporting.
(f) Requirement to furnish statement.
(1) In general.
(2) Furnishing copy of Form 1099-C.
(3) Time and place for furnishing statement.
(g) Penalties.
(h) Effective dates.
(1) In general.
(2) Earlier application.
Sec. 1.6050P-1 Information reporting for discharges of indebtedness by
certain financial entities.
(a) Reporting requirement--(1) In general. Except as provided in
paragraph (d) of this section, any applicable financial entity (as
defined in section 6050P(c)(1)) that discharges an indebtedness of any
person (within the meaning of section 7701(a)(1)) of at least $600
during a calendar year must file an information return on Form 1099-C
with the Internal Revenue Service. Solely for purposes of the reporting
requirements of section 6050P and this section, a discharge of
indebtedness is deemed to have occurred, except as provided in
paragraph (b)(3) of this section, if and only if there has occurred an
identifiable event described in paragraph (b)(2) of this section,
whether or not an actual discharge of indebtedness has occurred on or
before the date on which the identifiable event has occurred. The
return must include the following information--
(i) The name, address, and taxpayer identification number (TIN), as
defined in section 7701(a)(41), of each person for which there was an
identifiable event during the calendar year;
(ii) The date on which the identifiable event occurred, as
described in paragraph (b) of this section;
(iii) The amount of indebtedness discharged, as described in
paragraph (c) of this section;
(iv) An indication whether the identifiable event was a discharge
of indebtedness in a bankruptcy, if known; and
(v) Any other information required by Form 1099-C or its
instructions, or current revenue procedures.
(2) No aggregation. For purposes of reporting under this section,
multiple discharges of indebtedness of less than $600 are not required
to be aggregated unless such separate discharges are pursuant to a plan
to evade the reporting requirements of this section.
(3) Amounts not includible in income. Except as otherwise provided
in this section, discharged indebtedness must be reported regardless of
whether the debtor is subject to tax on the discharged debt under
sections 61 and 108 or otherwise by applicable law.
(4) Time and place for reporting--(i) In general. Except as
provided in paragraph (a)(4)(ii) of this section, returns required by
this section must be filed with the Internal Revenue Service office
designated in the instructions for Form 1099-C on or before February 28
of the year following the calendar year in which the identifiable event
occurs.
(ii) Indebtedness discharged in bankruptcy. Indebtedness discharged
in bankruptcy that is required to be reported under this section must
be reported for the later of the calendar year in which the amount of
discharged indebtedness first becomes ascertainable, or the calendar
year in which the identifiable event occurs.
(b) Date of discharge--(1) In general. Solely for purposes of this
section, except as provided in paragraph (b)(3) of this section,
indebtedness is discharged on the date of the occurrence of an
identifiable event specified in paragraph (b)(2) of this section.
(2) Identifiable events--(i) In general. An identifiable event is--
(A) A discharge of indebtedness under title 11 of the United States
Code (bankruptcy);
(B) A cancellation or extinguishment of an indebtedness that
renders a debt unenforceable in a receivership, foreclosure, or similar
proceeding in a federal or State court, as described in section
368(a)(3)(A)(ii) (other than a discharge described in paragraph
(b)(2)(i)(A) of this section);
(C) A cancellation or extinguishment of an indebtedness upon the
expiration of the statute of limitations for collection of an
indebtedness, subject to the limitations described in paragraph
(b)(2)(ii) of this section, or upon the expiration of a statutory
period for filing a claim or commencing a deficiency judgment
proceeding;
(D) A cancellation or extinguishment of an indebtedness pursuant to
an election of foreclosure remedies by a creditor that statutorily
extinguishes or bars the creditor's right to pursue collection of the
indebtedness;
(E) A cancellation or extinguishment of an indebtedness that
renders a debt unenforceable pursuant to a probate or similar
proceeding;
(F) A discharge of indebtedness pursuant to an agreement between an
applicable financial entity and a debtor to discharge indebtedness at
less than full consideration;
(G) A discharge of indebtedness pursuant to a decision by the
creditor, or the application of a defined policy of the creditor, to
discontinue collection activity and discharge debt; or
(H) The expiration of the non-payment testing period, as described
in paragraph (b)(2)(iv) of this section.
(ii) Statute of limitations. In the case of an expiration of the
statute of limitations for collection of an indebtedness, an
identifiable event occurs under paragraph (b)(2)(i)(C) of this section
only if, and at such time as, a debtor's affirmative statute of
limitations defense is upheld in a final judgment or decision of a
judicial proceeding, and the period for
[[Page 269]]
appealing the judgment or decision has expired.
(iii) Decision to discontinue collection activity; creditor's
defined policy. For purposes of the identifiable event described in
paragraph (b)(2)(i)(G) of this section, a creditor's defined policy
includes both a written policy of the creditor and the creditor's
established business practice. Thus, for example, a creditor's
established practice to discontinue collection activity and abandon
debts upon expiration of a particular non-payment period is considered
a defined policy for purposes of paragraph (b)(2)(i)(G) of this
section.
(iv) Expiration of non-payment testing period. There is a
rebuttable presumption that an identifiable event under paragraph
(b)(2)(i)(H) of this section has occurred during a calendar year if a
creditor has not received a payment on an indebtedness at any time
during a testing period (as defined in this paragraph (b)(2)(iv))
ending at the close of the year. The testing period is a 36-month
period increased by the number of calendar months during all or part of
which the creditor was precluded from engaging in collection activity
by a stay in bankruptcy or similar bar under state or local law. The
presumption that an identifiable event has occurred may be rebutted by
the creditor if the creditor (or a third-party collection agency on
behalf of the creditor) has engaged in significant, bona fide
collection activity at any time during the 12-month period ending at
the close of the calendar year, or if facts and circumstances existing
as of January 31 of the calendar year following expiration of the 36-
month period indicate that the indebtedness has not been discharged.
For purposes of this paragraph (b)(2)(iv)--
(A) Significant, bona fide collection activity does not include
merely nominal or ministerial collection action, such as an automated
mailing;
(B) Facts and circumstances indicating that an indebtedness has not
been discharged include the existence of a lien relating to the
indebtedness against the debtor (to the extent of the value of the
security), or the sale or packaging for sale of the indebtedness by the
creditor; and
(C) In no event will an identifiable event described in paragraph
(b)(2)(i)(H) of this section occur prior to December 31, 1997.
(3) Permitted reporting. If a discharge of indebtedness occurs
before the date on which an identifiable event occurs, the discharge
may, at the creditor's discretion, be reported under this section.
(c) Indebtedness. For purposes of this section, indebtedness means
any amount owed to an applicable financial entity, including stated
principal, fees, stated interest, penalties, administrative costs and
fines. The amount of indebtedness discharged may represent all, or only
a part, of the total amount owed to the applicable financial entity.
(d) Exceptions from reporting requirement--(1) Certain bankruptcy
discharges--(i) In general. Reporting is required under this section in
the case of a discharge of indebtedness in bankruptcy only if the
creditor knows from information included in the reporting entity's
books and records pertaining to the indebtedness that the debt was
incurred for business or investment purposes as defined in paragraph
(d)(1)(ii) of this section.
(ii) Business or investment debt. Indebtedness is considered
incurred for business purposes if it is incurred in connection with the
conduct of any trade or business other than the trade or business of
performing services as an employee. Indebtedness is considered incurred
for investment purposes if it is incurred to purchase property held for
investment, as defined in section 163(d)(5).
(2) Interest. The discharge of an amount of indebtedness that is
interest is not required to be reported under this section.
(3) Non-principal amounts in lending transactions. In the case of a
lending transaction, the discharge of an amount other than stated
principal is not required to be reported under this section. For this
purpose, a lending transaction is any transaction in which a lender
loans money to, or makes advances on behalf of, a borrower (including
revolving credits and lines of credit).
(4) Indebtedness of foreign debtors held by foreign branches of
U.S. financial institutions--(i) Reporting requirements. [Reserved]
(ii) Definition. An indebtedness held by a foreign branch of a U.S.
financial institution is described in this paragraph (d)(4) only if--
(A) The financial institution is engaged through a branch or office
in the active conduct of a banking or similar business outside the
United States;
(B) The branch or office is a permanent place of business that is
regularly maintained, occupied, and used to carry on a banking or
similar financial business;
(C) The business is conducted by at least one employee of the
branch or office who is regularly in attendance at such place of
business during normal working hours;
(D) The indebtedness is extended outside of the United States by
the branch or office in connection with that trade or business; and
(E) The financial institution does not know or have reason to know
that the debtor is a United States person.
(5) Acquisition of indebtedness by related party. No reporting is
required under this section in the case of a deemed discharge of
indebtedness under section 108(e)(4) (relating to the acquisition of an
indebtedness by a person related to the debtor), unless the disposition
of the indebtedness by the creditor was made with a view to avoiding
the reporting requirements of this section.
(6) Releases. The release of a co-obligor is not required to be
reported under this section if the remaining debtors remain liable for
the full amount of any unpaid indebtedness.
(7) Guarantors and sureties. Solely for purposes of the reporting
requirements of this section, a guarantor is not a debtor. Thus, in the
case of guaranteed indebtedness, reporting under this section is not
required with respect to a guarantor, whether or not there has been a
default and demand for payment made upon the guarantor.
(e) Additional rules--(1) Multiple debtors--(i) In general. In the
case of indebtedness of $10,000 or more incurred on or after January 1,
1995, that involves more than one debtor, a reporting entity is subject
to the requirements of paragraph (a) of this section for each debtor
discharged from such indebtedness. In the case of indebtedness incurred
prior to January 1, 1995, and indebtedness of less than $10,000
incurred on or after January 1, 1995, involving multiple debtors,
reporting under this section is required only with respect to the
primary (or first-named) debtor. Additionally, only one return of
information is required under this section if the reporting entity
knows, or has reason to know, that co-obligors were husband and wife
living at the same address when an indebtedness was incurred, and does
not know or have reason to know that such circumstances have changed at
the date of a discharge of the indebtedness. This paragraph (e)(1)
applies to discharges of indebtedness after December 31, 1994.
(ii) Amount to be reported. In the case of multiple debtors jointly
and severally liable on an indebtedness, the amount of discharged
indebtedness required to be reported under this section with respect to
each debtor is the total amount of indebtedness discharged. For this
[[Page 270]]
purpose, multiple debtors are presumed to be jointly and severally
liable on an indebtedness in the absence of clear and convincing
evidence to the contrary.
(2) Multiple creditors--(i) In general. Except as otherwise
provided in this paragraph (e)(2), if indebtedness is owned (or treated
as owned for federal income tax purposes) by more than one creditor,
each creditor that is an applicable financial entity must comply with
the reporting requirements of this section with respect to any
discharge of indebtedness of $600 or more allocable to such creditor. A
creditor will be considered to have complied with the requirements of
this section if a lead bank, fund administrator, or other designee of
the creditor complies on its behalf in any reasonable manner, such as
by filing a single return reporting the aggregate amount of
indebtedness discharged, or by filing a return with respect to the
portion of the discharged indebtedness allocable to the creditor. For
purposes of this paragraph (e)(2)(i), any reasonable method may be used
to determine the portion of discharged indebtedness allocable to each
creditor.
(ii) Partnerships. For purposes of paragraph (e)(2)(i) of this
section, indebtedness owned by a partnership is treated as owned by the
partners.
(iii) Pass-through securitized indebtedness arrangement--(A)
Reporting requirements. [Reserved]
(B) Definition. For purposes of this paragraph (e)(2)(iii), a pass-
through securitized indebtedness arrangement is any arrangement whereby
one or more debt obligations are pooled and held for twenty or more
persons whose interests in the debt obligations are undivided co-
ownership interests that are freely transferrable. Co-ownership
interests that are actively traded personal property (as defined in
Sec. 1.1092(d)-1) are presumed to be freely transferrable and held by
twenty or more persons.
(iv) REMICs. [Reserved]
(3) Coordination with reporting under section 6050J. If, in the
same calendar year, a discharge of indebtedness reportable under
section 6050P occurs in connection with a transaction also reportable
under section 6050J (relating to foreclosures and abandonments of
secured property), an applicable financial entity need not file both a
Form 1099-A and a Form 1099-C with respect to the same debtor. The
filing requirements of section 6050J will be satisfied with respect to
a borrower if, in lieu of filing Form 1099-A, a Form 1099-C is filed in
accordance with the instructions for the filing of that form. This
paragraph (e)(3) applies to discharges of indebtedness after December
31, 1994.
(4) Direct or indirect subsidiary. For purposes of section
6050P(c)(1)(C), the term direct or indirect subsidiary means a
corporation in a chain of corporations beginning with an entity
described in section 6050P(c)(1)(A), if at least 50 percent of the
total combined voting power of all classes of stock entitled to vote,
or at least 50 percent of the total value of all classes of stock, of
such corporation is directly owned by the entity described in section
6050P(c)(1)(A), or by one or more other corporations in the chain.
(5) Use of magnetic media. Any return required under this section
must be filed on magnetic media to the extent required by section
6011(e) and the regulations thereunder. A failure to file on magnetic
media when required constitutes a failure to file an information return
under section 6721. Any person not required by section 6011(e) to file
returns on magnetic media may request permission to do so under
applicable regulations and revenue procedures.
(6) TIN solicitation requirement--(i) In general. For purposes of
reporting under this section, a reasonable effort must be made to
obtain the correct name/taxpayer identification number (TIN)
combination of a person whose indebtedness is discharged. A TIN
obtained at the time an indebtedness is incurred satisfies the
requirement of this section, unless the entity required to file knows
that such TIN is incorrect. If the TIN is not obtained prior to the
occurrence of an identifiable event, it must be requested of the debtor
for purposes of satisfying the requirement of this paragraph (e)(6).
(ii) Manner of soliciting TIN. Solicitations made in the manner
described in Sec. 301.6724-1(e)(1)(i) and (2) of this chapter will be
deemed to have satisfied the reasonable effort requirement set forth in
paragraph (e)(6)(i) of this section. A TIN solicitation made after the
occurrence of an identifiable event must clearly notify the debtor that
the Internal Revenue Service requires the debtor to furnish its TIN,
and that failure to furnish such TIN may subject the debtor to a $50
penalty imposed by the Internal Revenue Service. A TIN provided under
this section is not required to be certified under penalties of
perjury.
(7) Recordkeeping requirements. Any applicable financial entity
required to file a return with the Internal Revenue Service under this
section must also retain a copy of the return, or have the ability to
reconstruct the data required to be included on the return under
paragraph (a)(1) of this section, for at least four years from the date
such return is required to be filed under paragraph (a)(4) of this
section.
(8) No multiple reporting. If discharged indebtedness is reported
under this section, no further reporting under this section is required
for the amount so reported, notwithstanding that a subsequent
identifiable event occurs with respect to the same amount. Further, no
additional reporting or Form 1099-C correction is required if a
creditor receives a payment of all or a portion of a discharged
indebtedness reported under this section for a prior calendar year.
(f) Requirement to furnish statement--(1) In general. Any
applicable financial entity required to file a return under this
section must furnish to each person whose name is shown on such return
a written statement that includes the following information--
(i) The information required by paragraph (a)(1) of this section;
(ii) The name, address, and TIN of the applicable financial entity
required to file a return under paragraph (a) of this section;
(iii) A legend identifying the statement as important tax
information that is being furnished to the Internal Revenue Service;
and
(iv) Any other information required by Form 1099-C or its
instructions, or current revenue procedures.
(2) Furnishing copy of Form 1099-C. The requirement to provide a
statement to the debtor will be satisfied if the applicable financial
entity furnishes copy B of the Form 1099-C or a substitute statement
that complies with the requirements of the current revenue procedure
for substitute Forms 1099.
(3) Time and place for furnishing statement. The statement required
by this paragraph (f) must be furnished to the debtor on or before
January 31 of the year following the calendar year in which the
identifiable event occurs. The statement will be considered furnished
to the debtor if it is mailed to the debtor's last known address.
(g) Penalties. For penalties for failure to comply with the
requirements of this section, see sections 6721 through 6724.
(h) Effective dates--(1) In general. The rules in this section
apply to discharges of indebtedness after December 21, 1996, except
paragraphs (e)(1) and (e)(3) of this section, which apply to discharges
of indebtedness after December 31, 1994.
(2) Earlier application. Notwithstanding the provisions of
paragraph (h)(1) of this section, an applicable financial entity may,
at its discretion, apply any of the provisions of this section to any
discharge of indebtedness occurring on or after
[[Page 271]]
January 1, 1996, and before December 22, 1996.
Secs. 1.6050P-0T and 1.6050P-1T [Removed]
Par. 3. Sections 1.6050P-0T and 1.6050P-1T are removed.
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Par. 4. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
Sec. 602.101 [Amended]
Par. 5. In Sec. 602.101, paragraph (c) is amended by removing the
entry for 1.6050P-1T and adding an entry in numerical order in the
table to read ``1.6050P-1..........1545-1419''.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved: December 12, 1995.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 96-131 Filed 1-3-96; 8:45 am]
BILLING CODE 4830-01-U