[Federal Register Volume 69, Number 98 (Thursday, May 20, 2004)]
[Proposed Rules]
[Pages 29113-29114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11361]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-148399-02]
RIN 1545-BB62


Uniform Capitalization of Interest Expense in Safe Harbor Sale 
and Leaseback Transactions

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 final and temporary regulations 
relating to the capitalization of interest expense in sale and 
leaseback transactions under the Economic Recovery Tax Act of 1981 
(ERTA) safe harbor leasing provisions. The regulations affect taxpayers 
that provide purchase money obligations in connection with these 
transactions. The text of those regulations also serves as the text of 
these proposed regulations.

DATES: Written or electronic comments must be received by August 18, 
2004.

ADDRESSES: Send submissions to: CC:PA:LPD:RU (REG-148399-02), 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:RU (REG-
148399-02), 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 or the Federal

[[Page 29114]]

eRulemaking Portal at http://www.regulations.gov (indicate IRS and REG-
148399-02 or RIN 1545-BB62).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Grant Anderson, (202) 622-4970; concerning submission of comments and/
or requests for a public hearing, LaNita VanDyke, (202) 622-7180 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    Final and 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 263A(f) of the Internal 
Revenue Code (Code). The temporary regulations generally provide that a 
purchase money obligation given by the lessor to the lessee (or a party 
related to the lessee) in a safe harbor sale and leaseback transaction 
under former section 168(f)(8) is not ``eligible debt'' as defined in 
Sec.  1.263A-9(a)(4). The text of those regulations also serves as the 
text of these proposed regulations. The preamble to the final and 
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 also has 
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 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 Treasury Department specifically request 
comments on the clarity of the proposed rule and how it 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 
public hearing will be published in the Federal Register.

Drafting Information

    The principal author of these regulations is Grant Anderson of the 
Office of Associate Chief Counsel (Income Tax & Accounting). 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 part 1 continues to read in 
part as follows:

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

    Par. 2. Section 1.263A-9 is revised by adding a new paragraph 
(a)(4)(ix) to read as follows:
    [The text of proposed Sec.  1.263A-9(a)(4)(ix) is the same as the 
text of Sec.  1.263A-9T(a)(4)(ix) published elsewhere in this issue of 
the Federal Register.]
    Par. 3. Section 1.263A-15 is amended by adding a new paragraph 
(a)(3) to read as follows:


Sec.  1.263A-15  Effective dates, transitional rules, and anti-abuse 
rules.

    (a) * * *
    (3) [The text of proposed paragraph (a)(3) of Sec.  1.263A-15 is 
the same as the text of Sec.  1.263A-15T(a)(3) published elsewhere in 
this issue of the Federal Register.]
* * * * *

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 04-11361 Filed 5-19-04; 8:45 am]
BILLING CODE 4830-01-P