[Federal Register Volume 63, Number 50 (Monday, March 16, 1998)]
[Proposed Rules]
[Pages 12717-12718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6562]


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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 Credits 
and Related Tax Attributes

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 relate 
to 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, at 10 a.m., 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-104005-98], 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 A. Hirschhorn (202) 622-7770; 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 relate to the use of certain tax credits and related tax 
attributes 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 corporations 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 (preferably 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.

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 1.1502-55 also issued under 26 U.S.C. 1502. * * *
    Par. 2. Section 1.1502-3, as proposed to be amended at 63 FR 1804, 
January 12, 1998, is amended by revising paragraphs (c)(3) and (d)(2) 
and adding paragraph (c)(4) to read as follows:


Sec. 1.1502-3  Consolidated investment credit.

* * * * *
    (c) * * *
    (3) and (4) [The text of proposed paragraphs (c) (3) and (4) of 
this section is the same as the text of Sec. 1.1502-3T(c) (3) and (4) 
published elsewhere in this issue of the Federal Register.]
    (d) * * *
    (2) [The text of proposed paragraph (d)(2) of this section is the 
same as the

[[Page 12718]]

text of Sec. 1.1502-3T(d)(2) published elsewhere in this issue of the 
Federal Register.]
* * * * *
    Par. 3. Section 1.1502-4, as proposed to be amended at 63 FR 1804, 
January 12, 1998, is amended by revising paragraphs (f)(3) and (g)(3) 
to read as follows:


Sec. 1.1502-4  Consolidated foreign tax credit.

* * * * *
    (f) * * *
    (3) [The text of 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 proposed paragraph (g)(3) of this section is the 
same as the text of Sec. 1.1502-4T and (g)(3) published elsewhere in 
this issue of the Federal Register.]
* * * * *
    Par. 4. Section 1.1502-9, as proposed to be amended at 63 FR 1804, 
January 12, 1998, is amended by revising paragraph (b)(1)(v) 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 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 1.1502-55, as proposed to be added at 57 FR 62257, 
December 30, 1992, and amended at 63 FR 1804, January 12, 1998, is 
further amended by revising paragraph (h)(4)(iii)(C) to read as 
follows:


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

* * * * *
    (h) * * *
    (4) * * *
    (iii) * * *
    (C) [The text of proposed paragraph (h)(4)(iii)(C) of this section 
is the same as the text of Sec. 1.1502-55T(h)(4)(iii)(C) published 
elsewhere in this issue of the Federal Register.]
* * * * *
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
[FR Doc. 98-6562 Filed 3-13-98; 8:45 am]
BILLING CODE 4830-01-U