[Federal Register Volume 64, Number 6 (Monday, January 11, 1999)]
[Proposed Rules]
[Pages 1571-1573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-151]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-106905-98]
RIN 1545-AW09


Allocation of Loss With Respect to Stock and Other Personal 
Property

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Partial withdrawal of notice of proposed rulemaking; notice of 
proposed rulemaking by cross-reference to temporary regulations; and 
notice of public hearing.

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SUMMARY: This document contains proposed Income Tax Regulations 
relating to the allocation of loss recognized on the disposition of 
stock and other personal property. The loss allocation regulations 
primarily will affect taxpayers that claim the foreign tax credit and 
that incur losses with respect to personal property and are necessary 
to modify existing guidance. Prior proposed regulations are withdrawn. 
This document also provides notice of a public hearing on these 
proposed regulations.

DATES: Written comments must be received by May 5, 1999. Outlines of 
oral comments to be discussed at the public hearing scheduled for May 
26, 1999, must be received by May 5, 1999.

ADDRESSES: Send submissions to CC:DOM:CORP:R (REG-106905-98), room 
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,

[[Page 1572]]

Washington, DC 20044. Submissions may be hand delivered Monday through 
Friday between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-
106905-98), 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 IRS 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 will be held in room 2615, Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations in general, 
Seth B. Goldstein of the Office of Associate Chief Counsel 
(International), (202) 622-3810; concerning submissions of comments, 
the hearing, and/or to be placed on the building access list to attend 
the hearing, Michael Slaughter, (202) 622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Temporary regulations published elsewhere in this issue of the 
Federal Register provide guidance concerning the allocation of loss 
with respect to personal property. The text of those temporary 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the proposed 
regulations. Proposed Sec. 1.865-1, published on July 8, 1996 (REG-
209750-95, formerly INTL-4-95 (1996-2 C.B. 484), 61 FR 35696), is 
withdrawn.

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 impact analysis is not required.
    An initial regulatory flexibility analysis has been prepared for 
this notice of proposed rulemaking under 5 U.S.C. 603. A summary of the 
analysis is set forth below under the heading ``Summary of Initial 
Regulatory Flexibility Analysis.'' 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 businesses.

Summary of Initial Regulatory Flexibility Analysis

    These proposed regulations under sections 861 and 865 of the 
Internal Revenue Code address the allocation of loss with respect to 
personal property and are necessary for the proper computation of the 
foreign tax credit limitation under section 904 of the Internal Revenue 
Code. These regulations are promulgated under sections 861, 865(j)(1) 
and 7805 of the Internal Revenue Code. If adopted, these proposed 
regulations will affect small entities such as small businesses but not 
other small entities such as government or tax exempt organizations, 
which do not pay taxes. The IRS and Treasury Department are not aware 
of any federal rules that duplicate, overlap or conflict with these 
regulations. None of the significant alternatives considered in 
drafting these regulations would have significantly altered the 
economic impact of these regulations on small entities. There are no 
alternative rules that are less burdensome to small entities but that 
accomplish the purpose of the statute. The IRS and Treasury Department 
request comments from small entities concerning this analysis.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments that are submitted 
timely to the IRS (a signed original and eight (8) copies). In 
particular, the IRS requests comments on the clarity of the proposed 
regulations and how they may be made easier to understand. All comments 
will be available for public inspection and copying.
    A public hearing has been scheduled for May 26, 1999, beginning at 
10 a.m. in room 2615 of the Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC. Due to building security 
procedures, visitors must enter at the 10th Street entrance, located 
between Constitution and Pennsylvania Avenues, NW. In addition, all 
visitors must present photo identification to enter the building. 
Because of access restrictions, visitors will not be admitted beyond 
the immediate entrance area more than 15 minutes before the hearing 
starts. For information about having your name placed on the building 
access list to attend the hearing, see the FOR FURTHER INFORMATION 
CONTACT section of this preamble.
    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 to be discussed and the time to 
be devoted to each topic (signed original and eight (8) copies) by May 
5, 1999. 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 Seth B. Goldstein, of 
the Office of the Associate Chief Counsel (International), IRS. 
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 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 is amended by adding 
an entry in numerical order to read as follows:

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

    Section 1.865-1 also issued under 26 U.S.C. 865. * * *

    Par. 2. Section 1.861-8 is amended by revising paragraph (e)(8) to 
read as follows:


Sec. 1.861-8  Computation of taxable income from sources within the 
United States and from other sources and activities.

* * * * *
    (e) * * *
    (8) [The text of this proposed paragraph (e)(8) is the same as the 
text of Sec. 1.861-8T(e)(8) published elsewhere in this issue of the 
Federal Register.]
* * * * *
    Par. 3. Section 1.865-1 is added immediately following Sec. 1.864-
8T, to read as follows:


Sec. 1.865-1 Loss with respect to personal property other than stock.

    [The text of this proposed Sec. 1.865-1 is the same as the text of 
Sec. 1.865-1T published elsewhere in this issue of the Federal 
Register.]
    Par. 4. Section 1.865-2 is amended by adding paragraphs (b)(4)(iii) 
and (b)(4)(iv) Example 3 through Example 6 to read as follows:


Sec. 1.865-2  Loss with respect to stock.

* * * * *
    (b) * * *

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    (4) * * *
    (iii) [The text of this proposed paragraph (b)(4)(iii) is the same 
as the text of Sec. 1.865-2T(b)(4)(iii) published elsewhere in this 
issue of the Federal Register.]
    (iv) * * *
    Example 3 through Example 6 [The text of this proposed paragraph 
(b)(4)(iv) Example 3 through Example 6 is the same as the text of 
Sec. 1.865-2T(b)(4)(iv) Example 3 through Example 6 published elsewhere 
in this issue of the Federal Register.]
* * * * *
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 99-151 Filed 1-8-99; 8:45 am]
BILLING CODE 4830-01-U