[Federal Register Volume 70, Number 28 (Friday, February 11, 2005)]
[Rules and Regulations]
[Pages 7176-7177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2725]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9177]
RIN 1545-BC04


Return of Partnership Income

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains final regulations that authorize the 
Commissioner to provide exceptions to the requirements of section 
6031(a) of the Internal Revenue Code for certain partnerships by 
guidance published in the Internal Revenue Bulletin. The regulations 
adopt the rules of the temporary regulations without any changes.

DATES: Effective Date: These regulations are effective November 5, 
2003.

FOR FURTHER INFORMATION CONTACT: David A. Shulman, (202) 622-3070 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    On November 10, 2003, the IRS and Treasury published a notice of 
proposed rulemaking by cross reference to temporary regulations (REG-
115472-03) in the Federal Register, and temporary regulations in TD 
9094 (68 FR 63733), under section 6031 of the Internal Revenue Code 
(Code). Written comments and requests for a public hearing were 
solicited. No public hearing was requested, and no comments were 
received. Therefore, the proposed regulations under section 6031 are 
adopted as final regulations without any changes. The temporary 
regulations are removed.

Explanation of Provisions

    The following is a general explanation of the provisions in the 
final regulations, which are the same as the provisions in the 
temporary regulations.
    The Commissioner may, in published guidance, provide an exception 
to the reporting requirements of section 6031(a) for partnerships in 
situations in which all or substantially all of the partnership's 
income is derived from the holding or disposition of tax-exempt 
obligations (as defined in section 1275(a)(3) and Sec.  1.1275-1(e)) or 
shares in a RIC that pays exempt-interest dividends (as defined in 
section 852(b)(5)). The exception may be conditioned on substitute 
reporting and eligibility and other requirements. In conjunction with 
issuance of the temporary regulations, the Commissioner published Rev. 
Proc. 2003-84 (2003-48 I.R.B. 1159), which provides for an exception to 
section 6031 for specified eligible partnerships.

Special Analyses

    It has been determined that this Treasury decision 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. These 
regulations impose no new collection of information on small entities; 
therefore 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 Code, the proposed regulations preceding these 
regulations were submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Drafting Information

    The principal author of these regulations is David A. Shulman of 
the Office of the Associate Chief Counsel (Passthroughs & Special 
Industries), IRS. 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.

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by removing 
the entry for Sec.  1.6031(a)-1T, and revising the entry for Sec.  
1.6031(a)-1 to read, in part, as follows:

    Authority: 26 U.S.C. 7805. * * *
    Section 1.6031(a)-1 also issued under section 404 of the Tax 
Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248; 96 
Stat. 324, 669) (TEFRA). * * *


0
Par. 2. Section 1.6031(a)-1 is amended as follows:
0
1. In paragraph (a)(1), the first sentence is amended by removing the 
language ``and Sec.  1.6031(a)-1T'' immediately following the language 
``of this section''.
0
2. Paragraphs (a)(3)(ii) and (f) are revised to read as follows:


Sec.  1.6031(a)-1  Return of partnership income.

    (a) * * *
    (3) * * *
    (ii) The Commissioner may, in guidance published in the Internal 
Revenue Bulletin (see Sec.  601.601(d)(2)(ii)(b) of this chapter), 
provide for an exception to partnership reporting under section 6031 
and for conditions for the exception, if all or substantially all of a 
partnership's income is derived from the holding or disposition of tax-
exempt obligations (as defined in section 1275(a)(3) and Sec.  1.1275-
1(e)) or shares in a regulated investment company (as defined in 
section 851(a)) that pays exempt-interest dividends (as defined in 
section 852(b)(5)).
* * * * *
    (f) Effective dates. This section applies to taxable years of a 
partnership beginning after December 31, 1999, except that--
    (1) Paragraph (b)(3) of this section applies to taxable years of a 
foreign partnership beginning after December 31, 2000; and
    (2) Paragraph (a)(3)(ii) of this section applies to taxable years 
of a partnership beginning on or after November 5, 2003.

[[Page 7177]]

Sec.  1.6031(a)-1T  [Removed]

0
Par. 3. Section 1.6031(a)-1T is removed.

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
    Approved: January 26, 2005.
Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 05-2725 Filed 2-10-05; 8:45 am]
BILLING CODE 4830-01-P