[Federal Register Volume 69, Number 53 (Thursday, March 18, 2004)]
[Proposed Rules]
[Pages 12811-12812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6141]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG 153172-03]
RIN 1545-BB25


Loss Limitation Rules

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 under 
sections 337(d) and 1502 of the Internal Revenue Code relating to the 
deductibility of losses recognized on dispositions of subsidiary stock 
by members of a consolidated group, the consequences of treating 
subsidiary stock as worthless, and when stock of a member of a 
consolidated group may be treated as worthless. The temporary 
regulations apply to corporations filing consolidated returns. 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 June 16, 
2004.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-153172-03), 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-
153172-03), 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: Regarding the regulations under 
section 337(d), Mark Weiss (202-622-7790) of the Office of Associate 
Chief Counsel (Corporate), and regarding the regulations under section 
1502, Lola L. Johnson (202-622-7550) of the Office of Associate Chief 
Counsel (Corporate); regarding submission of comments and/or requests 
for a hearing, Sonya M.

[[Page 12812]]

Cruse (202-622-4693) of the Office of Procedure and Administration (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 337(d) and section 1502. The text of those 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the amendments.

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 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, which tend to be larger businesses. 
Therefore a Regulatory Flexibility Analysis 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 Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) or electronic comments that are submitted timely 
to the IRS. The IRS and the Treasury Department 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 may be scheduled if requested by any person 
who timely submits 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

    The principal author of the regulations under section 337(d) is 
Mark Weiss, Office of Associate Chief Counsel (Corporate). The 
principal author of the regulations under section 1502 is Lola 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 amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 continues to read as 
follows:

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

    Par. 2. Section 1.337(d)-2(c)(2) is 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 1.1502-35(f)(1) is added to read as follows:


Sec.  1.1502-35  Transfers of subsidiary member stock and 
deconsolidations of subsidiary members.

    [The text of this proposed section is the same as the text of Sec.  
1.1502-35T published elsewhere in this issue of the Federal Register].
    Par. 4. In Sec.  1.1502-80, paragraph (c) is revised to read as 
follows:


Sec.  1.1502-80  Applicability of other provisions of law.

    (c) [The text of this proposed Sec.  1.1502-80(c) is the same as 
the text of Sec.  1.1502-80T(c) published elsewhere in this issue of 
the Federal Register].

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 04-6141 Filed 3-17-04; 8:45 am]
BILLING CODE 4830-01-P