[Federal Register Volume 69, Number 59 (Friday, March 26, 2004)]
[Proposed Rules]
[Pages 15753-15755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6620]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-129447-01]
RIN 1545-BA02


Allocation and Apportionment of Expenses; Alternative Method for 
Determining Tax Book Value of Assets

AGENCY: Internal Revenue Service (IRS), Treasury.

[[Page 15754]]


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

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations providing an 
alternative method of valuing assets for purposes of apportioning 
expenses under the tax book value method of Sec.  1.861-9T. The 
alternative tax book value method, which is elective, allows taxpayers 
to determine, for purposes of apportioning expenses, the tax book value 
of all tangible property that is subject to a depreciation deduction 
under section 168 by using the straight line method, conventions, and 
recovery periods of the alternative depreciation system under section 
168(g)(2). The alternative method provided in the temporary regulations 
is intended to minimize basis disparities between foreign and domestic 
assets of taxpayers that may arise when taxpayers use adjusted tax 
basis to value assets under the tax book value method of expense 
apportionment. The text of those temporary regulations also serves as 
the text of these proposed regulations. This document also provides a 
notice of public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by June 24, 
2004. Outlines of topics to be discussed at the public hearing 
scheduled for July 19, 2004, at 10 a.m. must be received by June 28, 
2004.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-129447-01), Room 
5203, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered between the 
hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-129447-01), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC or sent electronically, via the IRS Internet site at 
http://www.irs.gov/regs. The public hearing will be held in the IRS 
Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., 
Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Margaret A. Hogan, (202) 622-3850; concerning submissions of comments, 
the hearing, and/or to be placed on the building access list to attend 
the hearing, Robin Jones, (202) 622-7180 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    The temporary regulations in the Rules and Regulations section of 
this issue of the Federal Register amend 26 CFR part 1. The temporary 
regulations provide an alternative method of valuing assets for 
purposes of apportioning expenses under the tax book value method of 
Sec.  1.861-9T. The text of the temporary regulations also serves as 
the text of these regulations. The preamble of the temporary 
regulations explains the temporary regulations and 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 has also 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations, and because 
the regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, this 
notice of proposed rulemaking will be submitted to the Chief Counsel of 
Advocacy of the Small Business Administration for comment on its impact 
on small businesses.

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 the Treasury Department request comments on the 
clarity of the proposed rule and how it can be made easier to 
understand. All comments will be available for public inspection and 
copying.
    A public hearing has been scheduled for July 19, 2004, beginning at 
10 a.m. in the IRS Auditorium of the Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC. Due to building security 
procedures, visitors must enter at the Constitution Avenue entrance. 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 30 minutes before the 
hearing starts. For more 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 electronic or 
written comments by June 24, 2004, 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 June 28, 2004. 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 proposed regulations is Margaret A. 
Hogan, Office of Associate Chief Counsel (International). 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 Sec.  1.861-9 is amended by 
adding entries in numerical order to read in part as follows:

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

    Sections 1.861-9 and 1.861-9T also issued under 26 U.S.C. 863(a), 
26 U.S.C. 864(e), 26 U.S.C. 865(i), and 26 U.S.C 7701(f). * * *

    Par. 2. Section 1.861-9 is amended by revising paragraph (g)(1)(ii) 
introductory text, and adding paragraphs (h)(6), (i) and (j) to read as 
follows:


Sec.  1.861-9  Allocation and apportionment of interest expense.

* * * * *
    (g) * * * (1) * * * (i) * * *
    (ii) * * * [The text of the proposed revision of Sec.  1.861-
9(g)(1)(ii) is the same as the second sentence of Sec.  1.861-
9T(g)(1)(ii) published elsewhere in this issue of the Federal 
Register.] * * *
* * * * *
    (h)(6) [Reserved]. For further guidance see, Sec.  1.861-9T(h)(6).
    (i) [The text of the proposed addition of Sec.  1.861-9(i) is the 
same as Sec.  1.861-9T(i)(1) through (i)(3)(i) published

[[Page 15755]]

elsewhere in this issue of the Federal Register.]
    (j) [Reserved]. For further guidance, see Sec.  1.861-9T(j).

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 04-6620 Filed 3-25-04; 8:45 am]
BILLING CODE 4830-01-P