[Federal Register Volume 68, Number 131 (Wednesday, July 9, 2003)]
[Proposed Rules]
[Pages 40848-40849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17227]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-143679-02]
RIN 1545-BB68


Effect of Elections in Certain Multi-Step Transactions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

-----------------------------------------------------------------------

SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations that give 
effect to section 338(h)(10) elections made in certain multi-step 
transactions. The text of the temporary regulations published in this 
issue of the Federal Register also serves as the text of these proposed 
regulations.

DATES: Written or electronic comments must be received by October 7, 
2003.

ADDRESSES: Send submissions to: CC:PA:RU (REG-143679-02), 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 4 p.m. to: CC:PA:RU (REG-143679-02), 
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 http://www.irs.gov/regs.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Daniel Heins, Mary Goode or Reginald Mombrun at (202) 622-7930; 
concerning submissions of comments, Guy Traynor at (202) 622-7180 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of

[[Page 40849]]

the Federal Register amend the Income Tax Regulations (26 CFR part 1) 
relating to section 338. 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 
issues of the 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. Pursuant to 
section 7805(f) of the Code, this notice of proposed rulemaking will be 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on their impact. It is hereby certified that 
these regulations do not have a significant economic impact on a 
substantial number of small entities. The number of corporations 
affected is limited because section 338(h)(10) elections are made only 
in extraordinary circumstances, the sale of a business. Furthermore, 
these regulations only affect transactions in which the stock of the 
acquiring corporation is a significant part of the consideration. 
Accordingly, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does 
not apply.

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 copies) that are submitted timely to the IRS. Alternatively, 
taxpayers may submit comments electronically via the Internet directly 
to the IRS Internet site at www.irs.gov/regs. The IRS and Treasury 
Department request comments on the clarity of the proposed rules and 
how they can be made easier to understand. All comments will be 
available for public inspection and copying. A public hearing may be 
scheduled if requested in writing by any person who timely submits 
written comments. If a public hearing is scheduled, notice of the date, 
time, and place of the hearing will be published in the Federal 
Register.

Drafting Information

    The principal authors of these regulations are Daniel Heins and 
Mary Goode, Office of Associate Chief Counsel (Corporate). 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

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

    Authority: 26 U.S.C. 7805 * * *
    Section 1.338(h)(10)-1 is also issued under 26 U.S.C. 337(d), 
338 and 1502.

    2. Sec.  1.338(h)(10)-1 is amended as follows:
    1. Paragraph (c)(2) is revised
    2. Pargraph (e) Examples 11 through 14 are added.
    The revision and additions read as follows:


Sec.  1.338(h)(10)-1  Deemed asset sale and liquidation.

* * * * *
    (c) * * *
    (2) [The text of the proposed amendment to Sec.  1.338(h)(10)-
1(c)(2) is the same as the text of Sec.  1.338(h)(10)-1T(c)(2) 
published elsewhere in this issue of the Federal Register.]
* * * * *
    (e) * * *
    Examples 11 through 14 [The text of the proposed amendments to 
Sec.  1.338(h)(10)-1(e) Examples 11 through 14 is the same as the text 
of Sec.  1.338(h)(10)-1T(e) Examples 11 through 14 published elsewhere 
in the Federal Register.]

Robert E. Wenzel,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 03-17227 Filed 7-8-03; 8:45 am]
BILLING CODE 4830-01-P