[Federal Register Volume 63, Number 7 (Monday, January 12, 1998)]
[Proposed Rules]
[Pages 1803-1804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-44]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-104062-97]
RIN 1545-AV88


Consolidated Returns--Limitations on the Use of Certain Losses 
and Credits

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 of this issue of the 
Federal Register, the IRS is issuing temporary regulations that will 
govern the use of certain tax credits and losses of a consolidated 
group and its members. The text of those temporary regulations also 
serves as the text of these proposed regulations. This document also 
provides notice of a public hearing on these proposed regulations.

DATES: Written comments and outlines of topics to be discussed at the 
public hearing scheduled for May 7, 1998, must be received by April 13, 
1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R [REG-104062-97], room 
5226, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered between the 
hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R [REG-104062-97], Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC. Alternatively, taxpayers may submit comments 
electronically via the Internet by selecting the ``Tax Regs'' option on 
the Home Page or by submitting comments directly to the IRS Internet 
site at: http://www.irs.ustreas.gov/prod/tax__regs/comments.html. The 
public hearing has been scheduled for May 7, 1998, at 10 a.m., in room 
2615, Internal Revenue Building, 1111 Constitution Avenue, NW., 
Washington DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
in general, Roy Hirschhorn (202) 622-7770; concerning amendments 
related to foreign tax credits and foreign losses, Seth Goldstein (202) 
622-3850; concerning submissions and the hearing, Mike Slaughter (202) 
622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to section 1502. The temporary regulations provide 
rules that will govern the use of certain tax credits and losses of a 
consolidated group and its members. The text of those temporary 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the temporary 
regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a regulatory assessment is not required. It is hereby certified that 
these regulations do not have a significant economic impact on a 
substantial number of small entities. This certification is based on 
the fact that these regulations principally affect persons filing 
consolidated federal income tax returns that have carryover or 
carryback of credits from separate return limitation years. Available 
data indicates that many consolidated return filers are large companies 
(not small businesses). In addition, the data indicates that an 
insubstantial number of consolidated return filers that are smaller 
companies have credit carryovers or carrybacks, and thus even fewer of 
these filers have credit carryovers or carrybacks that are subject to 
the separate return limitation year rules. 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, this notice of proposed rulemaking will be 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 written comments (a signed original 
and eight (8) copies) that are submitted timely to the IRS. All 
comments will be made available for public inspection and copying.
    A public hearing has been scheduled for May 7, 1998, at 10 a.m., in 
room 2615. Because of access restrictions, visitors will not be 
admitted beyond the Internal Revenue Building lobby more than 15 
minutes before the hearing starts.
    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 written comments and an outline of the topics (signed original 
and eight (8) copies) to be discussed by April 13, 1998.
    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 Roy A. Hirschhorn of 
the Office of Assistant Chief Counsel (Corporate). Other personnel from 
the IRS and Treasury participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

[[Page 1804]]

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 26 CFR part 1 is amended by 
adding entries in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *

Section 1.1502-3 also issued under 26 U.S.C. 1502.
Section 1.1502-4 also issued under 26 U.S.C. 1502.
Section 1.1502-9 also issued under 26 U.S.C. 1502. * * *
Section 1.1502-23 also issued under 26 U.S.C. 1502. * * *
Section 1.1502-55 also issued under 26 U.S.C. 1502. * * *

    Par. 2. In Sec. 1.1502-3, paragraph (c) is revised to read as 
follows:


Sec. 1.1502-3  Consolidated investment credit.

* * * * *
    (c) [The text of the proposed paragraph (c) of this section is the 
same as the text of Sec. 1.1502-3T(c) published elsewhere in this issue 
of the Federal Register.]
* * * * *
    Par. 3. In Sec. 1.1502-4, paragraphs (f)(3) and (g)(3) are added to 
read as follows:


Sec. 1.1502-4  Consolidated foreign tax credit.

* * * * *
    (f) * * *
    (3) [The text of the proposed paragraph (f)(3) of this section is 
the same as the text of Sec. 1.1502-4T(f)(3) published elsewhere in 
this issue of the Federal Register.]
    (g) * * *
    (3) [The text of the proposed paragraph (g)(3) of this section is 
the same as the text of Sec. 1.1502-4T(g)(3) published elsewhere in 
this issue of the Federal Register.]
* * * * *
    Par. 4. In Sec. 1.1502-9, paragraph (b)(1)(v) is added to read as 
follows:


Sec. 1.1502-9  Application of overall foreign losses recapture rules to 
corporations filing consolidated returns.

* * * * *
    (b) * * *
    (1) * * *
    (v) [The text of the proposed paragraph (b)(1)(v) of this section 
is the same as the text of Sec. 1.1502-9T(b)(1)(v) published elsewhere 
in this issue of the Federal Register.]
* * * * *
    Par. 5. Section 1.1502-21, as proposed to be added at 61 FR 33394, 
June 27, 1996, is amended in paragraph (c)(1)(iii) by adding Example 5. 
to read as follows:


Sec. 1.1502-21  Net operating losses.

* * * * *
    (c) * * *
    (1) * * *
    (iii) [The text of the proposed paragraph (c)(1)(iii) Example 5 of 
this section is the same as the text of Sec. 1.1502-21T(c)(1)(iii) 
Example 5 published elsewhere in this issue of the Federal Register].
* * * * *
    Par. 6. Section 1.1502-23, as proposed to be added at 61 FR 33395, 
June 27, 1996, is amended by redesignating paragraphs (b) and (c) as 
paragraphs (c) and (d) and adding a new paragraph (b) to read as 
follows:


Sec. 1.1502-23  Consolidated net section 1231 gain or loss.

* * * * *
    (b) [The text of the proposed paragraph (b) of this section is the 
same as the text of Sec. 1.1502-23T(b) published elsewhere in this 
issue of the Federal Register.]
* * * * *
    Par. 7. Section 1.1502-55, as proposed to be added at 57 FR 62257, 
December 30, 1992, is amended by adding paragraph (h)(4)(iii) to read 
as follows:


Sec. 1.1502-55  Computation of alternative minimum tax of consolidated 
groups.

* * * * *
    (h) * * *
    (4) * * *
    (iii) [The text of the proposed paragraph (h)(4)(iii) of this 
section is the same as the text of Sec. 1.1502-55T(h)(4)(iii) published 
elsewhere in this issue of the Federal Register.]
* * * * *
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
[FR Doc. 98-44 Filed 1-9-98; 8:45 am]
BILLING CODE 4830-01-P