[Federal Register Volume 70, Number 148 (Wednesday, August 3, 2005)]
[Proposed Rules]
[Pages 44535-44536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15362]



[[Page 44535]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-121584-05]
RIN 1545-BE57


Guidance Regarding the Simplified Service Cost Method and the 
Simplified Production Method

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 relating to 
the capitalization of costs under the simplified service cost method of 
the Income Tax Regulations and the simplified production method. The 
regulations affect taxpayers that use the simplified service cost 
method or the simplified production method for self-constructed assets 
that are constructed on a routine and repetitive basis in the ordinary 
course of their businesses. The text of those regulations also serves 
as the text of these proposed regulations.

DATES: Written or electronic comments must be received by November 1, 
2005.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-121584-05), 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-
121584-05), 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 eRulemaking 
Portal at http://www.regulations.gov (IRS and REG-121584-05 or RIN-
1545-BE57).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Scott Rabinowitz, (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

    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 of the Internal Revenue Code (Code). 
The temporary regulations provide that self-constructed property is 
considered produced on a routine and repetitive basis for purposes of 
the simplified service cost method and the simplified production method 
when numerous units of tangible personal property are mass-produced, 
i.e., substantially identical assets are manufactured within a taxable 
year using standardized designs and assembly line techniques, and the 
recovery period of the assets under section 168(c) is not longer than 3 
years. 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 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 the Treasury Department specifically request 
comments on the clarity of the proposed rules and how they can be made 
easier to understand. All comments will be available for public 
inspection and copying. The IRS and the Treasury Department also 
request comments on whether additional simplified methods should be 
made available to taxpayers in certain industries. 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 hearing will be published in the 
Federal Register.

Drafting Information

    The principal author of these regulations is Scott Rabinowitz 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-1 is amended by revising paragraph 
(h)(2)(i)(D) and adding paragraphs (k) and (l) to read as follows:


Sec.  1.263A-1  Uniform capitalization of costs.

* * * * *
    (h) * * *
    (2) * * *
    (i) * * *
    (D) [The text of this proposed paragraph (h)(2)(i)(D) is the same 
as the text of Sec.  1.263A-1T(h)(2)(i)(D) published elsewhere in this 
issue of the Federal Register.]
* * * * *
    (k) [The text of this proposed paragraph (k) is the same as the 
text of Sec.  1.263A-1T(k) published elsewhere in this issue of the 
Federal Register.]
    (l) [The text of this proposed paragraph (l) is the same as the 
text of Sec.  1.263A-1T(l) published elsewhere in this issue of the 
Federal Register.]
    Par 3. Section 1.263A-2 is amended by revising paragraph 
(b)(2)(i)(D) and adding paragraphs (e) and (f) to read as follows:


Sec.  1.263A-2  Rules relating to property produced by the taxpayer.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (D) [The text of this proposed paragraph (b)(2)(i)(D) is the same 
as the text of Sec.  1.263A-2T(b)(2)(i)(D) published elsewhere in this 
issue of the Federal Register.]
* * * * *
    (e) The text of this proposed paragraph (e) is the same as the text 
of Sec.  1.263A-2T(e) published elsewhere in this issue of the Federal 
Register.]

[[Page 44536]]

    (f) The text of this proposed paragraph (f) is the same as the text 
of Sec.  1.263A-2T(f) published elsewhere in this issue of the Federal 
Register.]

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 05-15362 Filed 8-2-05; 8:45 am]
BILLING CODE 4830-01-P