[Federal Register Volume 69, Number 156 (Friday, August 13, 2004)]
[Proposed Rules]
[Pages 50108-50109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18480]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-116265-04]
RIN 1545-BD25


Additional Rules for Exchanges of Personal Property Under Section 
1031(a)

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 
replacing the use of the Standard Industrial Classification (SIC) 
system with the North American Industry Classification System (NAICS) 
for determining what properties are of a like class for purposes of 
section 1031 of the Internal Revenue Code (Code). The text of those 
temporary regulations also serves as the text of these proposed 
regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by November 12, 2004.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-116265-04), room 
5203, Internal Revenue Service, PO Box 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-
116265-04), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC. Alternatively, taxpayers may submit 
electronic comments directly to the IRS internet site at http://www.irs.gov/regs or via the Federal eRulemaking Portal at http://www.regulations.gov (IRS and REG-116265-04).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
J. Peter Baumgarten, 202-622-4920; concerning submissions of comments 
and/or requests for a public hearing, Guy Traynor, 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 the Federal Register amend 26 CFR part 1 relating to section 
1031(a)(1). The temporary regulations substitute NAICS classification 
codes for the SIC classification codes in the regulatory text and 
permit the use of NAICS codes for determining product classes, and 
therefore property of like kind, of depreciable tangible personal 
property exchanged under section 1031. The text of those temporary 
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 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.

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 request comments on the 
clarity of these 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 public hearing 
will be published in the Federal Register.

Drafting Information

    The principal author of these regulations is J. Peter Baumgarten, 
Office of Associate Chief Counsel (Income Tax and 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 for part 1 continues to read, in part, 
as follows:

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

    Par. 2. In Sec.  1.1031(a)-2, paragraphs (b)(3) through (b)(6), and 
Example 3 and Example 4 of paragraph (b)(7) are revised to read as 
follows:


Sec.  1.1031(a)-2  Additional rules for exchanges of personal property.

    [The text of proposed Sec.  1.1031(a)-2, paragraphs (b)(3) through 
(b)(6), and Example 3 and Example 4 of paragraph (b)(7) is the same as 
the text of Sec.  1.1031(a)-2T, paragraphs (b)(3) through (b)(6), and 
Example 3 and Example 4 of paragraph (b)(7) published elsewhere in this 
issue of the Federal Register.]


Sec.  1.1031(j)-1  [Amended]

    Par. 3. Section 1.1031(j)-1 is amended by removing the language 
``(SIC Code

[[Page 50109]]

3531)'' in Example 3(ii)(C) and Example 5(i) of paragraph (d) and 
adding the language ``(NAICS code 333120)'' in its place.

Linda M. Kroening,
Acting Deputy Commissioner for Services and Enforcement.
[FR Doc. 04-18480 Filed 8-12-04; 8:45 am]
BILLING CODE 4830-01-P