[Federal Register Volume 67, Number 105 (Friday, May 31, 2002)]
[Proposed Rules]
[Pages 38040-38041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13575]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-102305-02]
RIN 1545-BA52


Loss Limitation Rules

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: This document contains proposed amendments to temporary 
regulations issued under sections 337(d) and 1502. The amendments 
clarify certain aspects of the temporary regulations relating to the 
deductibility of losses recognized on dispositions of subsidiary stock 
by members of a consolidated group. The proposed amendments in these 
proposed regulations apply to corporations filing consolidated returns, 
both during and after the period of affiliation, and also affect 
purchasers of the stock of members of a consolidated group. The text of 
the temporary regulations published in this issue of the Federal 
Register also serves as the text of these proposed regulations. This 
document also provides notice of a public hearing on these regulations.

DATES: Written or electronic comments must be received by July 10, 
2002. Requests to speak (with outlines of oral comments to be 
discussed) at the public hearing scheduled for July 17, 2002, at 10 
a.m., must be received by June 26, 2002.

ADDRESSES: Send submissions to: CC:ITA:RU (REG-102740-02), room 5226, 
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
DC 20044. Submissions may be hand delivered Monday through Friday 
between the hours of 8 a.m. and 6 p.m. to CC:ITA:RU (REG-102740-02), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, 
NW., Washington, DC 20044. Alternatively, taxpayers may submit 
electronic comments directly to the IRS Internet site at www.irs.gov/regs. The public hearing will be held in the Internal Revenue Service 
Auditorium, in the Internal Revenue Service Building, 1111 Constitution 
Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Sean P. Duffley, (202) 622-7530, or Lola L. Johnson, (202) 622-7550; 
concerning submissions of comments, the hearing, and/or to be placed on 
the building access list to attend the hearing, LaNita VanDyke (202) 
622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information contained in this notice of proposed 
rulemaking have been previously reviewed and approved by the Office of 
Management and Budget under control number 1545-1774. No material 
changes to these collections of information are proposed in these 
regulations.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a 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 return information are confidential, as required by 26 U.S.C. 6103.

Background

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend 26 CFR part 1 relating to sections 
337(d) and 1502. The text of those regulations also serves as the text 
of these proposed regulations. The preamble to the temporary 
regulations contains a full explanation of the reasons underlying the 
issuance of these proposed regulations.

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 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 will primarily affect 
affiliated groups of corporations that have elected to file 
consolidated returns, which tend to be larger businesses, and, 
moreover, that any burden on taxpayers is minimal. 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 will be submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on their impact on small business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any electronic and written comments (a 
signed original and eight (8) copies) that are submitted timely to the 
IRS. All comments will be available for public inspection and copying. 
A public hearing has been scheduled for July 17, 2002, at 10 a.m., in 
the IRS Auditorium, IRS Building, 1111 Constitution Avenue, NW., 
Washington, DC. Because of access restrictions, visitors will not be 
admitted beyond the building lobby more than 30 minutes before the 
hearing starts.

Drafting Information

    The principal authors of these regulations are Sean P. Duffley and 
Lola

[[Page 38041]]

L. Johnson, Office of Associate Chief Counsel (Corporate). However, 
other personnel from the IRS and Treasury participated in their 
development.

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 
removing the entry for ``Section 1.1502-20T(i)'' and adding an entry in 
numerical order to read in part as follows:

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

    Section 1.1502-20 also issued under the authority of 26 U.S.C. 
337(d) and 1502. * * *
    Par. 2. In Sec. 1.337(d)-2, paragraphs (a)(4) and (b)(4) are added 
to read as follows:


Sec. 1.337(d)-2  Loss limitation window period.

    [The text of this proposed section is the same as the text of 
Sec. 1.337(d)-2T published elsewhere in this issue of the Federal 
Register].
    Par. 3. Section 1.1502-20 is amended by revising paragraphs 
(i)(3)(v) and (i)(4) to read as follows:


Sec. 1.1502-20  Disposition or deconsolidation of subsidiary stock.

    [The text of this proposed section is the same as the text of 
Sec. 1.1502-20T published elsewhere in this issue of the Federal 
Register].

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 02-13575 Filed 5-30-02; 8:45 am]
BILLING CODE 4830-01-P