[Federal Register Volume 68, Number 171 (Thursday, September 4, 2003)]
[Proposed Rules]
[Pages 52542-52543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22454]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-132760-03]
RIN 1545-BC38


Guidance Under Section 1502; Application of Section 108 to 
Members of a Consolidated Group

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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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 govern 
the application of section 108 when a member of a consolidated group 
realizes discharge of indebtedness income. The text of those 
regulations also serves as the text of these proposed regulations.

DATES: Written or electronic comments must be received by December 3, 
2003.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-132760-03), room 
5203, 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:LPD:PR (REG-
132760-03), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC. Alternatively, taxpayers may submit 
comments electronically directly to the IRS Internet site at http://www.irs.gov/regs.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Amber Renee Cook or Marie C. Milnes-Vasquez at (202) 622-7530; 
concerning submission of comments, Treena Garrett at (202) 622-3401 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    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 govern the 
application of section 108 when a member of a consolidated group 
realizes discharge of indebtedness income. The text of those 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the amendments.

Special Analysis

    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. Further, it 
is hereby certified that these regulations will 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. 
Moreover, the number of taxpayers affected and the average burden are 
minimal. Accordingly, 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 (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and Treasury Department specifically request 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 will be scheduled if requested in writing by 
any person that timely submits written comments. If a public hearing is 
scheduled, notice of the date, time, and place for the hearing will be 
published in the Federal Register.

Drafting Information

    Various personnel from the IRS and Treasury Department participated 
in the development of these regulations.

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 continues to read in part as 
follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.1502-28 also issued under 26 U.S.C. 1502. * * *

    Par. 2. Section 1.1502-19 is amended as follows:
    1. Paragraph (b)(1) is revised.
    2. The headings for paragraphs (h)(2) and (h)(2)(i) are revised.
    3. Paragraph (h)(2)(ii) is redesignated as paragraph (h)(2)(iii).
    4. New paragraph (h)(2)(ii) is added.
    The revisions and addition read as follows:


Sec.  1.1502-19  Excess loss accounts.

[The text of this proposed section is the same as the text of Sec.  
1.1502-19T

[[Page 52543]]

published elsewhere in this issue of the Federal Register].
    Par. 3. Section 1.1502-21 is amended as follows:
    1. Paragraphs (b)(2)(iv) and (c)(2)(vii) are revised.
    2. Paragraph (h)(6) is redesignated as paragraph (h)(7).
    3. New paragraph (h)(6) is added.
    4. New paragraph (h)(8) is added.
    The revision and additions read as follows:


Sec.  1.1502-21  Net operating losses.

[The text of this proposed section is the same as the text of Sec.  
1.1502-21T published elsewhere in this issue of the Federal Register].
    Par. 4. Section 1.1502-28 is added to read as follows:


Sec.  1.1502-28  Consolidated section 108.

[The text of this proposed section is the same as the text of Sec.  
1.1502-28T published elsewhere in this issue of the Federal Register].
    Par. 5. Section 1.1502-32 is amended as follows:
    1. Paragraphs (b)(3)(ii)(C)(1) and (b)(3)(iii)(A) are revised.
    2. Paragraph (b)(4)(vii) is added.
    3. Paragraph (b)(5)(ii), Example 4, paragraphs (a), (b), and (c) 
are revised.
    4. Paragraph (h)(7) is added.
    The revisions and additions read as follows:


Sec.  1.1502-32  Investment adjustments.

[The text of this proposed section is the same as the text of Sec.  
1.1502-32T published elsewhere in this issue of the Federal Register].

Robert E. Wenzel,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 03-22454 Filed 8-29-03; 3:14 pm]
BILLING CODE 4830-01-P