[Federal Register Volume 71, Number 103 (Tuesday, May 30, 2006)]
[Rules and Regulations]
[Pages 30591-30608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4873]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9264]
RIN 1545-BF26


Guidance Necessary to Facilitate Business Electronic Filing and 
Burden Reduction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

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SUMMARY: These regulations affect taxpayers that file Federal income 
tax returns. They simplify, clarify, or eliminate reporting burdens and 
also eliminate regulatory impediments to the electronic filing of 
certain statements that taxpayers are required to include on or with 
their Federal income tax returns. The text of the temporary regulations 
also serves as the text of the proposed regulations set forth in the 
notice of proposed rulemaking on this subject in the Proposed Rules 
section in this issue of the Federal Register.

DATES: Effective Date: These regulations are effective on May 30, 2006.
    Applicability Date: For dates of applicability, see Sec. Sec.  
1.302-2T(d), 1.302-4T(h), 1.331-1T(f), 1.332-6T(e), 1.338-10T(c), 
1.351-3T(f), 1.355-5T(e), 1.368-3T(e), 1.381(b)-1T(e), 1.382-8T(j)(4), 
1.382-11T(b), 1.1081-11T(f), 1.1221-2T(j), 1.1502-13T(m), 1.1502-
31T(j), 1.1502-32T(j), 1.1502-33T(k), 1.1502-35T(k), 1.1502-76T(d), 
1.1502-95T(g), 1.1563-1T(e), 1.1563-3T(e) and 1.6012-2T(k). The 
applicability of these regulations will expire on May 26, 2009.

FOR FURTHER INFORMATION CONTACT: Grid Glyer, (202) 622-7930 (not a 
toll-free number).

SUPPLEMENTARY INFORMATON:

Paperwork Reduction Act

    These temporary regulations are being issued without prior notice 
and public procedure pursuant to the Administrative Procedure Act (5 
U.S.C. 553). For this reason, the collection of information contained 
in these regulations has been reviewed and, pending receipt and 
evaluation of public comments, approved by the Office of Management and 
Budget under control number 1545-2019. Responses to this collection of 
information are mandatory.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    For further information concerning this collection of information, 
and where to submit comments on the collection of information and the 
accuracy of the estimated burden, and suggestions for reducing this 
burden, please refer to the preamble to the cross-referencing notice of 
proposed rulemaking published in the Proposed Rules section of this 
issue of the Federal Register.
    Books and records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    This Treasury Decision amends Treasury regulations under sections 
279, 302, 331, 332, 338, 351, 355, 368, 381, 382, 1081, 1221, 1502, 
1563, and 6012 of the Internal Revenue Code (Code) that require 
taxpayers to include a statement on or with their Federal income tax 
returns. In some cases, these statements are the method by which 
taxpayers elect (or elect out of) a particular income tax treatment. In 
other cases, these statements are the method by which taxpayers report 
that they undertook a particular type of transaction. In both cases, 
these regulations often require taxpayers to include detailed amounts 
of information in these statements, or do

[[Page 30592]]

not clearly specify the required information.
    In addition, many of these regulations present impediments that 
prevent corporate taxpayers from submitting these statements as part of 
an electronically filed Federal income tax return (e-filing). Some of 
these regulations, for example, impede e-filing by requiring taxpayers 
to sign a statement and include it on or with the taxpayer's income tax 
return. Others require a taxpayer to include third-party signatures on 
such statements or require taxpayers to attach documents, or 
information supplied by a third party.

Explanation of Provisions

1. Reporting Requirements That Were Simplified, Clarified, or 
Eliminated

A. Regulations for Which the Reporting Requirements Were Simplified or 
Clarified
    Some regulations require a taxpayer to include a statement on or 
with its return if it undertakes certain types of transactions. In some 
cases, these regulations require the taxpayer to submit detailed 
information about the particular transaction with its return. In other 
cases, the scope of the reporting requirement was unclear. The IRS and 
Treasury Department believe that it is not useful to require taxpayers 
to attach all of this information to their returns. Accordingly, these 
regulations simplify and clarify the reporting requirements under 
several provisions.
B. Regulations for Which the Reporting Requirements Were Eliminated
    Some regulations require that all shareholders and security holders 
that receive stock or securities in certain distributions or exchanges 
file statements providing information about that distribution or 
exchange. See, e.g., Sec. Sec.  1.355-5(b) and 1.368-3(b). The IRS and 
Treasury Department have determined that for most shareholders and 
security holders these statements are no longer necessary. Accordingly, 
these temporary regulations only require that a ``significant holder'' 
file such statement. In the case of stock, a significant holder is a 
holder of stock of a corporation if at the time of the distribution or 
exchange such holder owns at least: (1) 5% (by vote or value) of the 
total outstanding stock of such corporation if the stock owned by such 
holder is publicly traded, or (2) 1% (by vote or value) of the total 
outstanding stock of such corporation if the stock owned by such holder 
is not publicly traded. See, e.g., Sec. Sec.  1.355-5T(b) and 1.368-
3T(b). These regulations use the definition of publicly traded stock 
found elsewhere in the regulations. See, e.g., Sec. Sec.  1.1092(d)-
1(b), 1.1273-2(f) and 54.4975-7(b)(1)(iv).
    In the case of securities, a significant holder is a holder of 
securities of a corporation if at the time of the distribution or 
exchange such holder owns securities with a basis of $1,000,000 or 
more.

2. Regulations That Present Impediments to E-filing

    As described in this preamble in paragraphs 2.A. and 2.B., certain 
regulations impose reporting requirements that are impediments to e-
filing. The IRS and Treasury Department are issuing these temporary 
regulations to eliminate such impediments without altering the 
substantive requirements of the current regulations.
A. Statements Required To Be Signed by the Taxpayer
    Some regulations require a taxpayer to include a statement on or 
with its return in order to make an election, or notify the IRS that 
the taxpayer is undertaking a transaction authorized by that provision. 
In the case of elections, the current regulations often require the 
taxpayer to sign such statement. In these circumstances, the 
requirement that the taxpayer sign the statement is an impediment to e-
filing and superfluous. By signing the return, a taxpayer is attesting 
to the validity of the Form 1120 as well as all of the attachments. 
Accordingly, for these types of statements, the underlying regulations 
are amended to eliminate the requirement that such statements be 
signed.
B. Statements Required To Be Signed by Both the Taxpayer and a Third 
Party
    Some regulations require that the taxpayer and another person sign 
a statement, and that the taxpayer include such jointly signed 
statement on or with its return. In some cases, the taxpayer is 
required to provide a copy of this statement, or other information, to 
the other person and that person is required to include such copy or 
information on or with its return.
    These requirements are impediments to e-filing. However, in such 
cases, the joint signature requirement cannot simply be eliminated 
because, in the absence of that requirement, the taxpayer and the other 
person might take inconsistent positions. Therefore, these regulations 
amend the provisions with a joint signature requirement to require the 
taxpayer and the other person to include a statement on or with its 
return indicating that it has entered into an agreement with the other 
party addressing the substantive matters covered by the statement 
required under the current regulations. These agreements will contain 
the same information as the jointly signed statements required by the 
current regulations. Each party will be required to retain either the 
original or a copy of this agreement as part of its records. See Sec.  
1.6001-1(e).
C. Section 1561
    Section 1561(a) provides that the component members of a controlled 
group of corporations are limited to using the amounts of the tax 
benefit items described therein in the same manner as if they were one 
corporation. Section 1561(a) generally provides that such amounts shall 
be divided equally among such members. However, section 1561(a) also 
provides that if such members adopt an apportionment plan, they are 
then permitted to allocate such amounts among themselves unequally. 
Section 1.1561-3(b) provides the mechanism by which such members may 
consent to an apportionment plan.
    Section 1.1561-3(b) presents impediments to e-filing. However, the 
IRS and Treasury Department have determined that these impediments 
cannot be eliminated without also addressing certain substantive issues 
present in these regulations. Addressing these issues is beyond the 
scope of this project. Therefore, these issues will be addressed in 
separate guidance that the IRS and Treasury Department expect to 
publish later this year.

3. Requirement That Taxpayers Provide the Fair Market Value and Basis 
of Assets or Stock

    Certain of these regulations require taxpayers to provide in their 
reporting statement the fair market value and basis of assets or stock 
distributed or exchanged in a transaction. The IRS and Treasury 
Department recognize that, in some cases, a taxpayer may not 
conveniently be able to provide a precise valuation of property 
exchanged or distributed in a transaction that is not taxable in the 
current year. In those cases, for the purposes of these statements, the 
IRS and Treasury Department will accept a taxpayer's good faith 
estimate of such fair market value.
    Similarly, the IRS and Treasury Department recognize that there are 
occasionally situations where a taxpayer may not be able to precisely 
determine its basis in a taxable year in which that basis would not be 
relevant to determining the taxpayer's taxable income. As in the case 
of fair market value, for purposes of these statements,

[[Page 30593]]

the IRS and Treasury Department will in these situations accept a 
taxpayer's good faith estimate of such basis.

4. Election To Restore Value Under Sec.  1.382-8

    In the case of a controlled group of corporations, Sec.  1.382-8 
provides that, for purposes of determining the section 382 limitation, 
the value of the stock of each component member of the controlled group 
of which the loss corporation is a component member on the change date 
must be reduced by the value of the stock of any other component member 
that such component member directly owns immediately after an ownership 
change. However, the component member's value may be increased by the 
amount of value that such other component member elects to restore.
    The IRS and Treasury Department are aware that taxpayers generally 
elect to restore value from component members that are foreign 
corporations. The IRS and Treasury Department are also aware that 
taxpayers occasionally fail to make the election timely and must file a 
request for relief under Sec.  301.9100-1. Therefore, to reduce 
unnecessary elections and section 9100 requests, Sec.  1.382-8T(h)(2) 
will deem foreign component members to elect to restore full value to 
other component members under Sec.  1.382-8. Nevertheless, should such 
members not wish to restore the full amount of such value, they may 
elect not to restore all or part of such value. Further, a foreign 
component member that has items treated as connected with the conduct 
of a trade or business in the United States that it takes into account 
in determining its value under section 382(e)(3) is not subject to this 
deemed election.
    The IRS and Treasury Department request comments regarding the 
scope and application of this deemed election to restore value.

5. Recordkeeping Requirement

    The IRS and Treasury Department emphasize that although the amount 
of information that a taxpayer is required to include on or with its 
return has, in most cases, decreased, the taxpayer's recordkeeping 
requirement remains unchanged. Certain of these regulations illustrate 
the type of information taxpayers are recommended to keep in order to 
substantiate their reporting position.

6. Rev. Proc. 2006-21

    Contemporaneously with the issuance of these temporary regulations, 
the IRS and Treasury Department are releasing Rev. Proc. 2006-21 to 
remove e-filing impediments and reduce reporting requirements currently 
found in Rev. Proc. 89-56, 1989-2 C.B. 643, Rev. Proc. 90-39, 1990-2 
C.B. 365, and Rev. Proc. 2002-32, 2002-1 C.B. 959. Each revenue 
procedure provides a method for consolidated taxpayers to request a 
specified consent or waiver from the Commissioner without submitting a 
request for a private letter ruling. In particular, Rev. Proc. 89-56 
permits taxpayers to request a consent to use a 52-53 week tax year, 
Rev. Proc. 90-39 permits taxpayers to request a consent to change the 
method for allocating tax liability to members for earnings and profits 
purposes, and Rev. Proc. 2002-32 permits taxpayers to request a waiver 
of the 60-month limitation on reconsolidation.

7. Section 1.1502-35

    These regulations also include a revision to Sec.  1.1502-35 that 
is not related to electronic filing or reporting requirements. The 
revision corrects an error in the determination of the time period 
during which suspended losses are reduced under that section. 
Specifically, these regulations provide that this time period ends on 
the day before the first date on which the subsidiary (and any 
successor) is not a member of the group.

Special Analysis

    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. For the 
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), 
refer to the Special Analyses section of the preamble to the cross-
reference notice of proposed rulemaking published in the Proposed Rules 
section in this issue of the Federal Register. Pursuant to section 
7805(f) of the Code, these temporary regulations will be submitted to 
the Chief Counsel for Advocacy of the Small Business Administration for 
comment on their impact on small business.

Drafting Information

    The principal author of these regulations is Grid Glyer, Office of 
Associate Chief Counsel (Corporate). However, other personnel from the 
IRS and Treasury Department participated in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

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Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding 
entries in numerical order to read, in part, as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.338-10T also issued under 26 U.S.C. 338.* * *
    Section 1.1221-2T also issued under 26 U.S.C. 1502.* * *
    Section 1.1502-13T also issued under 26 U.S.C. 1502.* * *
    Section 1.1502-31T also issued under 26 U.S.C. 1502.* * *
    Section 1.1502-32T also issued under 26 U.S.C. 1502.* * *
    Section 1.1502-33T also issued under 26 U.S.C. 1502.* * *
    Section 1.1502-35T also issued under 26 U.S.C. 1502.* * *
    Section 1.1502-76T also issued under 26 U.S.C. 1502.* * *
    Section 1.1502-95T also issued under 26 U.S.C. 1502.* * *


0
Par. 2. Section 1.279-5 is amended by removing paragraph (h).

0
Par. 3. Section 1.302-2 is amended by:
0
1. Redesignating paragraph (b) as paragraph (b)(1).
0
2. Revising newly designated paragraph (b)(1).
0
3. Adding paragraphs (b)(2) and (d).
    The additions and revisions read as follows:


Sec.  1.302-2  Redemptions not taxable as dividends.

* * * * *
    (b)(1) The question whether a distribution in redemption of stock 
of a shareholder is not essentially equivalent to a dividend under 
section 302(b)(1) depends upon the facts and circumstances of each 
case. One of the facts to be considered in making this determination is 
the constructive stock ownership of such shareholder under section 
318(a). All distributions in pro rata redemptions of a part of the 
stock of a corporation generally will be treated as distributions under 
section 301 if the corporation has only one class of stock outstanding. 
However, for distributions in partial liquidation, see section 302(e). 
The redemption of all of one class of stock (except section 306 stock) 
either at one time or in a series of redemptions generally will be 
considered as a distribution under section 301 if all

[[Page 30594]]

classes of stock outstanding at the time of the redemption are held in 
the same proportion. Distributions in redemption of stock may be 
treated as distributions under section 301 regardless of the provisions 
of the stock certificate and regardless of whether all stock being 
redeemed was acquired by the stockholders from whom the stock was 
redeemed by purchase or otherwise.
    (2) [Reserved]. For further guidance, see Sec.  1.302-2T(b)(2).
* * * * *
    (d) [Reserved]. For further guidance, see Sec.  1.302-2T(d)(1).

0
Par. 4. Section 1.302-2T is added to read as follows:


Sec.  1.302-2T  Redemptions not taxable as dividends (temporary).

    (a) through (b)(1) [Reserved]. For further guidance, see Sec.  
1.302-2(a) through (b)(1).
    (2) Unless paragraph (d) of Sec.  1.331-1T applies, every 
significant holder that transfers stock to the issuing corporation in 
exchange for property from such corporation must include on or with 
such holder's return for the taxable year of such exchange a statement 
entitled, ``STATEMENT PURSUANT TO Sec.  1.302-2T(b)(2) BY [INSERT NAME 
AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT 
HOLDER OF THE STOCK OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER 
(IF ANY) OF ISSUING CORPORATION].'' If a significant holder is a 
controlled foreign corporation (within the meaning of section 957), 
each United States shareholder (within the meaning of section 951(b)) 
with respect thereto must include this statement on or with its return. 
The statement must include--
    (i) The fair market value and basis of the stock transferred by the 
significant holder to the issuing corporation; and
    (ii) A description of the property received by the significant 
holder from the issuing corporation.
    (3) Definitions. For purposes of this section:
    (i) Significant holder means any person that, immediately before 
the exchange--
    (A) Owned at least five percent (by vote or value) of the total 
outstanding stock of the issuing corporation if the stock owned by such 
person is publicly traded; or
    (B) Owned at least one percent (by vote or value) of the total 
outstanding stock of the issuing corporation if the stock owned by such 
person is not publicly traded.
    (ii) Publicly traded stock means stock that is listed on--
    (A) A national securities exchange registered under section 6 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
    (B) An interdealer quotation system sponsored by a national 
securities association registered under section 15A of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-3).
    (iii) Issuing corporation means the corporation that issued the 
shares of stock, some or all of which were transferred by a significant 
holder to such corporation in the exchange described in paragraph 
(b)(2) of this section.
    (4) Cross reference. See section 6043 of the Code for requirements 
relating to a return by a liquidating corporation.
    (c) [Reserved]. For further guidance, see Sec.  1.302-2(c).
    (d) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 5. Section 1.302-4 is amended by revising paragraph (a) and adding 
paragraph (h) to read as follows:


Sec.  1.302-4  Termination of shareholder's interest.

    (a) [Reserved]. For further guidance, see Sec.  1.302-4T(a).
* * * * *
    (h) [Reserved]. For further guidance, see Sec.  1.302-4T(h)(1).
0
Par. 6. Section 1.302-4T is added to read as follows:


Sec.  1.302-4T  Termination of shareholder's interest (temporary).

    (a) The agreement specified in section 302(c)(2)(A)(iii) shall be 
in the form of a statement entitled, ``STATEMENT PURSUANT TO SECTION 
302(c)(2)(A)(iii) BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER 
(IF ANY) OF TAXPAYER OR RELATED PERSON, AS THE CASE MAY BE], A 
DISTRIBUTEE (OR RELATED PERSON) OF [INSERT NAME AND EMPLOYER 
IDENTIFICATION NUMBER (IF ANY) OF DISTRIBUTING CORPORATION].'' The 
distributee must include such statement on or with the distributee's 
first return for the taxable year in which the distribution described 
in section 302(b)(3) occurs. If the distributee is a controlled foreign 
corporation (within the meaning of section 957), each United States 
shareholder (within the meaning of section 951(b)) with respect thereto 
must include this statement on or with its return. The distributee must 
represent in the statement--
    (1) THE DISTRIBUTEE (OR RELATED PERSON) HAS NOT ACQUIRED, OTHER 
THAN BY BEQUEST OR INHERITANCE, ANY INTEREST IN THE CORPORATION (AS 
DESCRIBED IN SECTION 302(c)(2)(A)(i)) SINCE THE DISTRIBUTION; and
    (2) THE DISTRIBUTEE (OR RELATED PERSON) WILL NOTIFY THE INTERNAL 
REVENUE SERVICE OF ANY ACQUISITION, OTHER THAN BY BEQUEST OR 
INHERITANCE, OF SUCH AN INTEREST IN THE CORPORATION WITHIN 30 DAYS 
AFTER THE ACQUISITION, IF THE ACQUISITION OCCURS WITHIN 10 YEARS FROM 
THE DATE OF THE DISTRIBUTION.
    (b) through (g) [Reserved]. For further guidance, see Sec.  1.302-
4(b) through (g).
    (h) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 7. Section 1.331-1 is amended by revising paragraph (d) and adding 
paragraph (f) to read as follows:


Sec.  1.331-1  Corporate liquidations.

* * * * *
    (d) [Reserved]. For further guidance, see Sec.  1.331-1T(d).
* * * * *
    (f) [Reserved]. For further guidance, see Sec.  1.331-1T(f)(1).

0
Par. 8. Section 1.331-1T is added to read as follows:


Sec.  1.331-1T  Corporate liquidations (temporary).

    (a) through (c) [Reserved]. For further guidance, see Sec.  1.331-
1(a) through (c).
    (d) Reporting requirement-- (1) General rule. Every significant 
holder that transfers stock to the issuing corporation in exchange for 
property from such corporation must include on or with such holder's 
return for the year of such exchange the statement described in 
paragraph (d)(2) of this section unless--
    (i) The property is part of a distribution made pursuant to a 
corporate resolution reciting that the distribution is made in complete 
liquidation of the corporation; and
    (ii) The issuing corporation is completely liquidated and dissolved 
within one year after the distribution.

[[Page 30595]]

    (2) Statement. If required by paragraph (d)(1) of this section, a 
significant holder must include on or with such holder's return a 
statement entitled, ``STATEMENT PURSUANT TO Sec.  1.331-1T(d) BY 
[INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], 
A SIGNIFICANT HOLDER OF THE STOCK OF [INSERT NAME AND EMPLOYER 
IDENTIFICATION NUMBER (IF ANY) OF ISSUING CORPORATION].'' If a 
significant holder is a controlled foreign corporation (within the 
meaning of section 957), each United States shareholder (within the 
meaning of section 951(b)) with respect thereto must include this 
statement on or with its return. The statement must include--
    (i) The fair market value and basis of the stock transferred by the 
significant holder to the issuing corporation; and
    (ii) A description of the property received by the significant 
holder from the issuing corporation.
    (3) Definitions. For purposes of this section:
    (i) Significant holder means any person that, immediately before 
the exchange--
    (A) Owned at least five percent (by vote or value) of the total 
outstanding stock of the issuing corporation if the stock owned by such 
person is publicly traded; or
    (B) Owned at least one percent (by vote or value) of the total 
outstanding stock of the issuing corporation if the stock owned by such 
person is not publicly traded.
    (ii) Publicly traded stock means stock that is listed on--
    (A) A national securities exchange registered under section 6 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
    (B) An interdealer quotation system sponsored by a national 
securities association registered under section 15A of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-3).
    (iii) Issuing corporation means the corporation that issued the 
shares of stock, some or all of which were transferred by a significant 
holder to such corporation in the exchange described in paragraph 
(d)(1) of this section.
    (4) Cross reference. See section 6043 of the Code for requirements 
relating to a return by a liquidating corporation.
    (e) [Reserved]. For further guidance, see Sec.  1.331-1(e).
    (f) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.


Sec.  1.332-6  [Removed]

0
Par. 9. Section 1.332-6 is removed.

0
Par. 10. Section 1.332-6T is added to read as follows:
    Sec.  1.332-6T Records to be kept and information to be filed with 
return (temporary).
    (a) Statement filed by recipient corporation. If any recipient 
corporation received a liquidating distribution from the liquidating 
corporation pursuant to a plan (whether or not that recipient 
corporation has received or will receive other such distributions from 
the liquidating corporation in other tax years as part of the same 
plan) during the current tax year, such recipient corporation must 
include a statement entitled, ``STATEMENT PURSUANT TO SECTION 332 BY 
[INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], 
A CORPORATION RECEIVING A LIQUIDATING DISTRIBUTION,'' on or with its 
return for such year. If any recipient corporation is a controlled 
foreign corporation (within the meaning of section 957), each United 
States shareholder (within the meaning of section 951(b)) with respect 
thereto must include this statement on or with its return. The 
statement must include--
    (1) The name and employer identification number (if any) of the 
liquidating corporation;
    (2) The date(s) of all distribution(s) (whether or not pursuant to 
the plan) by the liquidating corporation during the current tax year;
    (3) The aggregate fair market value and basis, determined 
immediately before the liquidation, of all of the assets of the 
liquidating corporation that have been or will be transferred to any 
recipient corporation;
    (4) The date and control number of any private letter ruling(s) 
issued by the Internal Revenue Service in connection with the 
liquidation;
    (5) The following representation: THE PLAN OF COMPLETE LIQUIDATION 
WAS ADOPTED ON [INSERT DATE (mm/dd/yyyy)]; and
    (6) A representation by such recipient corporation either that--
    (i) THE LIQUIDATION WAS COMPLETED ON [INSERT DATE (mm/dd/yyyy)]; or
    (ii) THE LIQUIDATION IS NOT COMPLETE AND THE TAXPAYER HAS TIMELY 
FILED [INSERT EITHER FORM 952, ``Consent To Extend the Time to Assess 
Tax Under Section 332(b),'' OR NUMBER AND NAME OF THE SUCCESSOR FORM].
    (b) Filings by the liquidating corporation. The liquidating 
corporation must timely file Form 966, ``Corporate Dissolution or 
Liquidation,'' (or its successor form) and its final Federal corporate 
income tax return. See also section 6043 of the Code.
    (c) Definitions. For purposes of this section:
    (1) Plan means the plan of complete liquidation within the meaning 
of section 332.
    (2) Recipient corporation means the corporation described in 
section 332(b)(1).
    (3) Liquidating corporation means the corporation that makes a 
distribution of property to a recipient corporation pursuant to the 
plan.
    (4) Liquidating distribution means a distribution of property made 
by the liquidating corporation to a recipient corporation pursuant to 
the plan.
    (d) Substantiation information. Under Sec.  1.6001-1(e), taxpayers 
are required to retain their permanent records and make such records 
available to any authorized Internal Revenue Service officers and 
employees. In connection with a liquidation described in this section, 
these records should specifically include information regarding the 
amount, basis, and fair market value of all distributed property, and 
relevant facts regarding any liabilities assumed or extinguished as 
part of such liquidation.
    (e) Effective date-- (1) Applicability date. This section applies 
to any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 11. Section 1.338-0 is amended by revising the entry for Sec.  
1.338-10(a)(4)(iii) and adding entries for Sec.  1.338-10(c) and Sec.  
1.338-10T to read as follows:


Sec.  1.338-0  Outline of topics.

* * * * *


Sec.  1.338-10  Filing of returns.

    (a) * * *
    (4) * * *
    (iii) [Reserved]
* * * * *
    (c) [Reserved]


Sec.  1.338-10T  Filing of returns (temporary).

    (a)(1) through (a)(4)(ii) [Reserved]
    (iii) Procedure for filing a combined return.

[[Page 30596]]

    (a)(4)(iv) through (b) [Reserved]
    (c) Effective date.
    (1) Applicability date.
    (2) Expiration date.
* * * * *

0
Par. 12. Section 1.338-10 is amended by revising paragraph (a)(4)(iii) 
and adding paragraph (c) to read as follows:


Sec.  1.338-10  Filing of returns.

    (a) * * *
    (4) * * *
    (iii) [Reserved]. For further guidance, see Sec.  1.338-
10T(a)(4)(iii).
* * * * *
    (c) [Reserved]. For further guidance, see Sec.  1.338-10T(c)(1).

0
Par. 13. Section 1.338-10T is added to read as follows:


Sec.  1.338-10T  Filing of returns (temporary).

    (a)(1) through (a)(4)(ii) [Reserved]. For further guidance, see 
Sec.  1.338-10(a)(1) through (a)(4)(ii).
    (iii) Procedure for filing a combined return. A combined return is 
made by filing a single corporation income tax return in lieu of 
separate deemed sale returns for all targets required to be included in 
the combined return. The combined return reflects the deemed asset 
sales of all targets required to be included in the combined return. If 
the targets included in the combined return constitute a single 
affiliated group within the meaning of section 1504(a), the income tax 
return is signed by an officer of the common parent of that group. 
Otherwise, the return must be signed by an officer of each target 
included in the combined return. Rules similar to the rules in Sec.  
1.1502-75(j) apply for purposes of preparing the combined return. The 
combined return must include a statement entitled, ``ELECTION TO FILE A 
COMBINED RETURN UNDER SECTION 338(h)(15).'' The statement must 
include--
    (A) The name, address, and employer identification number of each 
target required to be included in the combined return; and
    (B) The following declaration: EACH TARGET IDENTIFIED IN THIS 
ELECTION TO FILE A COMBINED RETURN CONSENTS TO THE FILING OF A COMBINED 
RETURN.
    (a)(4)(iv) through (b) [Reserved]. For further guidance, see Sec.  
1.338-10(a)(4)(iv) through (b).
    (c) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.


Sec.  1.351-3  [Removed]

0
Par. 14. Section 1.351-3 is removed.

0
Par. 15. Section 1.351-3T is added to read as follows:


Sec.  1.351-3T  Records to be kept and information to be filed 
(temporary).

    (a) Significant transferor. Every significant transferor must 
include a statement entitled, ``STATEMENT PURSUANT TO Sec.  1.351-3T(a) 
BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF 
TAXPAYER], A SIGNIFICANT TRANSFEROR,'' on or with such transferor's 
income tax return for the taxable year of the section 351 exchange. If 
a significant transferor is a controlled foreign corporation (within 
the meaning of section 957), each United States shareholder (within the 
meaning of section 951(b)) with respect thereto must include this 
statement on or with its return. The statement must include--
    (1) The name and employer identification number (if any) of the 
transferee corporation;
    (2) The date(s) of the transfer(s) of assets;
    (3) The aggregate fair market value and basis, determined 
immediately before the exchange, of the property transferred by such 
transferor in the exchange; and
    (4) The date and control number of any private letter ruling(s) 
issued by the Internal Revenue Service in connection with the section 
351 exchange.
    (b) Transferee corporation. Except as provided in paragraph (c) of 
this section, every transferee corporation must include a statement 
entitled, ``STATEMENT PURSUANT TO Sec.  1.351-3T(b) BY [INSERT NAME AND 
EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A TRANSFEREE 
CORPORATION,'' on or with its income tax return for the taxable year of 
the exchange. If the transferee corporation is a controlled foreign 
corporation (within the meaning of section 957), each United States 
shareholder (within the meaning of section 951(b)) with respect thereto 
must include this statement on or with its return. The statement must 
include--
    (1) The name and taxpayer identification number (if any) of every 
significant transferor;
    (2) The date(s) of the transfer(s) of assets;
    (3) The aggregate fair market value and basis, determined 
immediately before the exchange, of all of the property received in the 
exchange; and
    (4) The date and control number of any private letter ruling(s) 
issued by the Internal Revenue Service in connection with the section 
351 exchange.
    (c) Exception for certain transferee corporations. The transferee 
corporation is not required to file a statement under paragraph (b) of 
this section if all of the information that would be included in the 
statement described in paragraph (b) of this section is included in any 
statement(s) described in paragraph (a) of this section that is 
attached to the same return for the same section 351 exchange.
    (d) Definitions. For purposes of this section:
    (1) Significant transferor means a person that transferred property 
to a corporation and received stock of the transferee corporation in an 
exchange described in section 351 if, immediately after the exchange, 
such person--
    (i) Owned at least five percent (by vote or value) of the total 
outstanding stock of the transferee corporation if the stock owned by 
such person is publicly traded, or
    (ii) Owned at least one percent (by vote or value) of the total 
outstanding stock of the transferee corporation if the stock owned by 
such person is not publicly traded.
    (2) Publicly traded stock means stock that is listed on--
    (i) A national securities exchange registered under section 6 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
    (ii) An interdealer quotation system sponsored by a national 
securities association registered under section 15A of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-3).
    (e) Substantiation information. Under Sec.  1.6001-1(e), taxpayers 
are required to retain their permanent records and make such records 
available to any authorized Internal Revenue Service officers and 
employees. In connection with the exchange described in this section, 
these records should specifically include information regarding the 
amount, basis, and fair market value of all transferred property, and 
relevant facts regarding any liabilities assumed or extinguished as 
part of such exchange.
    (f) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.

[[Page 30597]]

    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 16. Section 1.355-0 is amended by removing the entry for Sec.  
1.355-5 and adding an entry for Sec.  1.355-5T.
    The revision and addition read as follows:


Sec.  1.355-0  Outline of sections.

* * * * *


Sec.  1.355-5T  Records to be kept and information to be filed 
(temporary).

* * * * *


Sec.  1.355-5  [Removed]

0
Par. 17. Section 1.355-5 is removed.

0
Par. 18. Section 1.355-5T is added to read as follows:


Sec.  1.355-5T  Records to be kept and information to be filed 
(temporary).

    (a) Distributing corporation--(1) In general. Every corporation 
that makes a distribution (the distributing corporation) of stock or 
securities of a controlled corporation, as described in section 355 (or 
so much of section 356 as relates to section 355), must include a 
statement entitled, ``STATEMENT PURSUANT TO Sec.  1.355-5T(a) BY 
[INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], 
A DISTRIBUTING CORPORATION,'' on or with its return for the year of the 
distribution. If the distributing corporation is a controlled foreign 
corporation (within the meaning of section 957), each United States 
shareholder (within the meaning of section 951(b)) with respect thereto 
must include this statement on or with its return. The statement must 
include--
    (i) The name and employer identification number (if any) of the 
controlled corporation;
    (ii) The name and taxpayer identification number (if any) of every 
significant distributee;
    (iii) The date of the distribution of the stock or securities of 
the controlled corporation;
    (iv) The aggregate fair market value and basis, determined 
immediately before the distribution or exchange, of the stock, 
securities, or other property (including money) distributed by the 
distributing corporation in the transaction; and
    (v) The date and control number of any private letter ruling(s) 
issued by the Internal Revenue Service in connection with the 
transaction.
    (2) Special rule when an asset transfer precedes a stock 
distribution. If the distributing corporation transferred property to 
the controlled corporation in a transaction described in section 351 or 
368, as part of a plan to then distribute the stock or securities of 
the controlled corporation in a transaction described in section 355 
(or so much of section 356 as relates to section 355), then, unless 
paragraph (a)(1)(v) of this section applies, the distributing 
corporation must also include on or with its return for the year of the 
distribution the statement required by Sec.  1.351-3T(a) or 1.368-
3T(a). If the distributing corporation is a controlled foreign 
corporation (within the meaning of section 957), each United States 
shareholder (within the meaning of section 951(b)) with respect thereto 
must include the statement required by Sec.  1.351-3T(a) or 1.368-3T(a) 
on or with its return.
    (b) Significant distributee. Every significant distributee must 
include a statement entitled, ``STATEMENT PURSUANT TO Sec.  1.355-5T(b) 
BY [INSERT NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF 
TAXPAYER], A SIGNIFICANT DISTRIBUTEE,'' on or with such distributee's 
return for the year in which such distribution is received. If a 
significant distributee is a controlled foreign corporation (within the 
meaning of section 957), each United States shareholder (within the 
meaning of section 951(b)) with respect thereto must include this 
statement on or with its return. The statement must include--
    (1) The names and employer identification numbers (if any) of the 
distributing and controlled corporations;
    (2) The date of the distribution of the stock or securities of the 
controlled corporation; and
    (3) The aggregate basis, determined immediately before the 
exchange, of any stock or securities transferred by the significant 
distributee in the exchange, and the aggregate fair market value, 
determined immediately before the distribution or exchange, of the 
stock, securities or other property (including money) received by the 
significant distributee in the distribution or exchange.
    (c) Definitions. For purposes of this section:
    (1) Significant distributee means--
    (i) A holder of stock of a distributing corporation that receives, 
in a transaction described in section 355 (or so much of section 356 as 
relates to section 355), stock of a corporation controlled by the 
distributing corporation if, immediately before the distribution or 
exchange, such holder--
    (A) Owned at least five percent (by vote or value) of the total 
outstanding stock of the distributing corporation if the stock owned by 
such holder is publicly traded; or
    (B) Owned at least one percent (by vote or value) of the stock of 
the distributing corporation if the stock owned by such holder is not 
publicly traded; or
    (ii) A holder of securities of a distributing corporation that 
receives, in a transaction described in section 355 (or so much of 
section 356 as relates to section 355), stock or securities of a 
corporation controlled by the distributing corporation if, immediately 
before the distribution or exchange, such holder owned securities in 
such distributing corporation with a basis of $1,000,000 or more.
    (2) Publicly traded stock means stock that is listed on--
    (i) A national securities exchange registered under section 6 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
    (ii) An interdealer quotation system sponsored by a national 
securities association registered under section 15A of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-3).
    (d) Substantiation information. Under Sec.  1.6001-1(e), taxpayers 
are required to retain their permanent records and make such records 
available to any authorized Internal Revenue Service officers and 
employees. In connection with the distribution or exchange described in 
this section, these records should specifically include information 
regarding the amount, basis, and fair market value of all property 
distributed or exchanged, and relevant facts regarding any liabilities 
assumed or extinguished as part of such distribution or exchange.
    (e) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.


Sec.  1.368-3  [Removed]

0
Par. 19. Section 1.368-3 is removed.
0
Par. 20. Section 1.368-3T is added to read as follows:


Sec.  1.368-3T  Records to be kept and information to be filed with 
returns (temporary).

    (a) Parties to the reorganization. The plan of reorganization must 
be adopted by each of the corporations that are parties thereto. Each 
such corporation must include a statement entitled, ``STATEMENT 
PURSUANT TO Sec.  1.368-

[[Page 30598]]

3T(a) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF 
TAXPAYER], A CORPORATION A PARTY TO A REORGANIZATION,'' on or with its 
return for the taxable year of the exchange. If any such corporation is 
a controlled foreign corporation (within the meaning of section 957), 
each United States shareholder (within the meaning of section 951(b)) 
with respect thereto must include this statement on or with its return. 
However, it is not necessary for any taxpayer to include more than one 
such statement on or with the same return for the same reorganization. 
The statement must include--
    (1) The names and employer identification numbers (if any) of all 
such parties;
    (2) The date of the reorganization;
    (3) The aggregate fair market value and basis, determined 
immediately before the exchange, of the assets, stock or securities of 
the target corporation transferred in the transaction; and
    (4) The date and control number of any private letter ruling(s) 
issued by the Internal Revenue Service in connection with this 
reorganization.
    (b) Significant holders. Every significant holder, other than a 
corporation a party to the reorganization, must include a statement 
entitled, ``STATEMENT PURSUANT TO Sec.  1.368-3T(b) BY [INSERT NAME AND 
TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT 
HOLDER,'' on or with such holder's return for the taxable year of the 
exchange. If a significant holder is a controlled foreign corporation 
(within the meaning of section 957), each United States shareholder 
(within the meaning of section 951(b)) with respect thereto must 
include this statement on or with its return. The statement must 
include--
    (1) The names and employer identification numbers (if any) of all 
of the parties to the reorganization;
    (2) The date of the reorganization; and
    (3) The fair market value, determined immediately before the 
exchange, of all the stock or securities of the target corporation held 
by the significant holder that is transferred in the transaction and 
such holder's basis, determined immediately before the exchange, in the 
stock or securities of such target corporation.
    (c) Definitions. For purposes of this section:
    (1) Significant holder means--
    (i) A holder of stock of the target corporation that receives stock 
or securities in an exchange described in section 354 (or so much of 
section 356 as relates to section 354) if, immediately before the 
exchange, such holder--
    (A) Owned at least five percent (by vote or value) of the total 
outstanding stock of the target corporation if the stock owned by such 
holder is publicly traded; or
    (B) Owned at least one percent (by vote or value) of the total 
outstanding stock of the target corporation if the stock owned by such 
holder is not publicly traded; or
    (ii) A holder of securities of the target corporation that receives 
stock or securities in an exchange described in section 354 (or so much 
of section 356 as relates to section 354) if, immediately before the 
exchange, such holder owned securities in such target corporation with 
a basis of $1,000,000 or more.
    (2) Publicly traded stock means stock that is listed on--
    (i) A national securities exchange registered under section 6 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
    (ii) An interdealer quotation system sponsored by a national 
securities association registered under section 15A of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-3).
    (d) Substantiation information. Under Sec.  1.6001-1(e), taxpayers 
are required to retain their permanent records and make such records 
available to any authorized Internal Revenue Service officers and 
employees. In connection with the reorganization described in this 
section, these records should specifically include information 
regarding the amount, basis, and fair market value of all transferred 
property, and relevant facts regarding any liabilities assumed or 
extinguished as part of such reorganization.
    (e) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 21. Section 1.381(b)-1 is amended by revising paragraph (b)(3) and 
adding paragraph (e) to read as follows:


Sec.  1.381(b)-1  Operating rules applicable to carryovers in certain 
corporate acquisitions.

* * * * *
    (b) * * *
    (3) [Reserved]. For further guidance, see Sec.  1.381(b)-1T(b)(3).
* * * * *
    (e) [Reserved]. For further guidance, see Sec.  1.381(b)-1T(e)(1).
0
Par. 22. Section 1.381(b)-1T is added to read as follows:


Sec.  1.381(b)-1T  Operating rules applicable to carryovers in certain 
corporate acquisitions (temporary).

    (a) through (b)(2) [Reserved]. For further guidance, see Sec.  
1.381(b)-1(a) through (b)(2).
    (3) Election-- (i) Content of statements. The statements referred 
to in paragraph (b)(2) of Sec.  1.381(b)-1 must be entitled, ``ELECTION 
OF DATE OF DISTRIBUTION OR TRANSFER PURSUANT TO Sec.  1.381(b)-
1(b)(2),'' and must include: [INSERT NAME AND EMPLOYER IDENTIFICATION 
NUMBER (IF ANY) OF DISTRIBUTOR OR TRANSFEROR CORPORATION] AND [INSERT 
NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF ACQUIRING 
CORPORATION] ELECT TO DETERMINE THE DATE OF DISTRIBUTION OR TRANSFER 
UNDER Sec.  1.381(b)-1(b)(2). SUCH DATE IS [INSERT DATE (mm/dd/yyyy)].
    (ii) Filing of statements. One statement must be included on or 
with the timely filed Federal income tax return of the distributor or 
transferor corporation for its taxable year ending with the date of 
distribution or transfer. An identical statement must be included on or 
with the timely filed Federal income tax return of the acquiring 
corporation for its first taxable year ending after that date. If the 
distributor or transferor corporation, or the acquiring corporation, is 
a controlled foreign corporation (within the meaning of section 957), 
each United States shareholder (within the meaning of section 951(b)) 
with respect thereto must include this statement on or with its return.
    (b)(4) through (d) [Reserved]. For further guidance, see Sec.  
1.381(b)-1(b)(4) through (d).
    (e) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 23. Section 1.382-1 is amended by:
0
1. Revising the entry for Sec.  1.382-2T(a)(2)(ii).
0
2. Revising the entry for Sec.  1.382-8(c)(2).
0
3. Redesignating the entry for Sec.  1.382-8(e)(4) as the entry for 
Sec.  1.382-8(e)(5).

[[Page 30599]]

0
4. Adding entries for paragraphs (e)(4) and (j)(4) of Sec.  1.382-8.
0
5. Revising the entry for paragraph (h), and removing the entries for 
paragraphs (h)(1), (h)(2) and (h)(3), of Sec.  1.382-8.
0
6. Adding entries for Sec.  1.382-8T.
0
7. Removing the entry for Sec.  1.382-11.
0
8. Adding entries for Sec.  1.382-11T.
    The additions and revisions read as follows:


Sec.  1.382-1  Table of contents.

* * * * *


Sec.  1.382-2T  Definition of ownership change under section 382, as 
amended by the Tax Reform Act of 1986 (temporary).

* * * * *
    (a) * * *
    (2) * * *
    (ii) [Reserved]
* * * * *


Sec.  1.382-8  Controlled groups.

* * * * *
    (c) * * *
    (2) [Reserved]
* * * * *
    (e) * * *
    (4) [Reserved]
    (5) Predecessor and successor corporation.
* * * * *
    (h) [Reserved]
* * * * *
    (j) * * *
    (4) [Reserved]


Sec.  1.382-8T  Controlled groups (temporary).

    (a) through (c)(1) [Reserved]
    (c)(2) Restoration of value.
    (c)(3) through (e)(3) [Reserved]
    (e)(4) Foreign component member.
    (i) In general.
    (ii) Exception.
    (e)(5) through (g) [Reserved]
    (h) Time and manner of filing election to restore.
    (1) Statements required.
    (i) Filing by loss corporation.
    (ii) Filing by electing member.
    (iii) Agreement.
    (2) Special rule for foreign component members.
    (i) Deemed election to restore full value.
    (ii) Election not to restore full value.
    (iii) Agreement.
    (3) Revocation of election.
    (i) through (j)(3) [Reserved]
    (j)(4) Effective date.
    (i) Applicability date.
    (ii) Expiration date.
* * * * *


Sec.  1.382-11T  Reporting requirements (temporary).

    (a) Information statement required.
    (b) Effective date.
    (1) Applicability date.
    (2) Expiration date.

0
Par. 24. Section 1.382-2T is amended by removing and reserving 
paragraph (a)(2)(ii) to read as follows:


Sec.  1.382-2T  Definition of ownership change under section 382, as 
amended by the Tax Reform Act of 1986 (temporary).

* * * * *
    (a) * * *
    (2) * * *
    (ii) [Reserved]. For further guidance, see Sec.  1.382-11T(a).
* * * * *

0
Par. 25. Section 1.382-8 is amended as follows:
0
1. Revising paragraphs (c)(2) and (h).
0
2. Redesignating paragraph (e)(4) as paragraph (e)(5).
0
3. Adding new paragraphs (e)(4) and (j)(4).
    The additions and revisions read as follows:


Sec.  1.382-8  Controlled groups.

* * * * *
    (c) * * *
    (2) [Reserved]. For further guidance, see Sec.  1.382-8T(c)(2).
* * * * *
    (e) * * *
    (4) [Reserved]. For further guidance, see Sec.  1.382-8T(e)(4).
    (5) Predecessor and successor corporation. * * *
* * * * *
    (h) [Reserved]. For further guidance, see Sec.  1.382-8T(h).
* * * * *
    (j) * * *
    (4) [Reserved]. For further guidance, see Sec.  1.382-8T(j)(4)(i).

0
Par. 26. Section 1.382-8T is added to read as follows:


Sec.  1.382-8T  Controlled groups (temporary).

    (a) through (c)(1) [Reserved]. For further guidance, see Sec.  
1.382-8(a) through (c)(1).
    (2) Restoration of value. After the value of the stock of each 
component member is reduced pursuant to paragraph (c)(1) of Sec.  
1.382-8, the value of the stock of each component member is increased 
by the amount of value, if any, restored to the component member by 
another component member (the electing member) pursuant to this 
paragraph (c)(2). The electing member may elect (or may be deemed to 
elect under paragraph (h)(2)(i) of this section in the case of a 
foreign component member) to restore value to another component member 
in an amount that does not exceed the lesser of--
    (i) The sum of--
    (A) The value, determined immediately before the ownership change, 
of the electing member's stock (after adjustment under paragraph (c)(1) 
of Sec.  1.382-8 and before any restoration of value under this 
paragraph (c)(2)); plus
    (B) Any amount of value restored to the electing member by another 
component member under this paragraph (c)(2); or
    (ii) The value, determined immediately before any ownership change, 
of the electing member's stock (without regard to any adjustment under 
this section) that is directly owned by the other component member 
immediately after the ownership change.
    (c)(3) through (e)(3) [Reserved]. For further guidance, see Sec.  
1.382-8(c)(3) through (e)(3).
    (4) Foreign component member-- (i) In general. Except as provided 
in paragraph (e)(4)(ii) of this section, foreign component member means 
a component member that is a foreign corporation.
    (ii) Exception. A foreign component member shall not include a 
foreign corporation that has items treated as connected with the 
conduct of a trade or business in the United States that it takes into 
account in determining its value pursuant to section 382(e)(3).
    (e)(5) through (g) [Reserved]. For further guidance, see Sec.  
1.382-8(e)(5) through (g).
    (h) Time and manner of filing election to restore--(1) Statements 
required--(i) Filing by loss corporation. The election to restore value 
described in paragraph (c)(2) of this section must be in the form set 
forth in this paragraph (h)(1)(i). It must be filed by the loss 
corporation by including a statement on or with its income tax return 
for the taxable year in which the ownership change occurs (or with an 
amended return for that year filed on or before the due date (including 
extensions) of the income tax return of any component member with 
respect to the taxable year in which the ownership change occurs). The 
common parent of a consolidated group must make the election on behalf 
of the group. The election is made in the form of a statement entitled, 
``STATEMENT PURSUANT TO Sec.  1.382-8T(h)(1) TO ELECT TO RESTORE ALL OR 
PART OF THE VALUE OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER 
(IF ANY) OF THE ELECTING MEMBER] TO [INSERT NAME AND EMPLOYER 
IDENTIFICATION NUMBER (IF ANY) OF THE CORPORATION TO WHICH VALUE IS 
RESTORED].'' The statement must include the amount of the value being 
restored and must also indicate that an agreement signed and dated by 
both

[[Page 30600]]

parties, as described in paragraph (h)(1)(iii) of this section, has 
been entered into. Each such party must retain either the original or a 
copy of this agreement as part of its records. See Sec.  1.6001-1(e).
    (ii) Filing by electing member. An electing member must include a 
statement identical to the one described in paragraph (h)(1)(i) of this 
section on or with its income tax return (or with an amended return for 
that year filed on or before the due date (including extensions) of the 
income tax return of any component member with respect to the taxable 
year in which the ownership change occurs) (if any) for the taxable 
year which includes the change date in connection with which the 
election described in paragraph (c)(2) of this section is made. If the 
electing member is a controlled foreign corporation (within the meaning 
of section 957), each United States shareholder (within the meaning of 
section 951(b)) with respect thereto must include this statement on or 
with its return. It is not necessary for the electing member (or the 
United States shareholder, as the case may be) to include this 
statement on or with its return if the loss corporation includes an 
identical statement on or with the same return for the same election.
    (iii) Agreement. Both the electing member and the corporation to 
which value is restored must sign and date an agreement. The agreement 
must--
    (A) Identify the change date for the loss corporation in connection 
with which the election is made;
    (B) State the value of the electing member's stock (without regard 
to any adjustment under paragraphs (c)(1), (c)(3), (c)(4) and (c)(5) of 
Sec.  1.382-8 and paragraph (c)(2) of this section) immediately before 
the ownership change;
    (C) State the amount of any reduction required under paragraph 
(c)(1) of Sec.  1.382-8 with respect to stock of the electing member 
that is owned directly or indirectly by the corporation to which value 
is restored;
    (D) State the amount of value that the electing member elects to 
restore to the corporation; and
    (E) State whether the value of either component member's stock was 
adjusted pursuant to paragraph (c)(4) of Sec.  1.382-8.
    (2) Special rule for foreign component members--(i) Deemed election 
to restore full value. Unless the election described in paragraph 
(h)(2)(ii) of this section is made for a foreign component member, each 
foreign component member of the controlled group is deemed to have 
elected to restore to each other component member the maximum value 
allowable under paragraph (c)(2) of this section, taking into account 
the limitations of Sec.  1.382-8.
    (ii) Election not to restore full value. (A) A loss corporation may 
elect to reduce the amount of value restored from a foreign component 
member (the electing foreign component member) to another component 
member under paragraph (h)(2)(i) of this section in the form set forth 
in this paragraph (h)(2)(ii). It must be filed by the loss corporation 
by including a statement on or with its income tax return for the 
taxable year in which the ownership change occurs (or with an amended 
return for that year filed on or before the due date (including 
extensions) of the income tax return of any component member with 
respect to the taxable year in which the ownership change occurs). The 
common parent of a consolidated group must make the election on behalf 
of the group. The election is made in the form of a statement entitled, 
``STATEMENT PURSUANT TO Sec.  1.382-8T(h)(2)(ii) TO ELECT NOT TO 
RESTORE FULL VALUE OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER 
(IF ANY) OF ELECTING FOREIGN COMPONENT MEMBER] TO [INSERT NAME AND 
EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF THE CORPORATION TO WHICH 
SUCH VALUE IS NOT TO BE RESTORED].'' The statement must include the 
amount of the value not being restored and must also indicate that an 
agreement signed and dated by both parties, as described in paragraph 
(h)(2)(iii) of this section, has been entered into. Each such party 
must retain either the original or a copy of the agreement as part of 
its records. See Sec.  1.6001-1(e).
    (B) An electing foreign component member must include a statement 
identical to the one described in paragraph (h)(2)(ii)(A) of this 
section on or with its income tax return (or with an amended return for 
that year filed on or before the due date (including extensions) of the 
income tax return of any component member with respect to the taxable 
year in which the ownership change occurs) (if any) for the taxable 
year which includes the change date in connection with which the 
election described in paragraph (h)(2)(ii)(A) of this section is made. 
If the electing foreign component member is a controlled foreign 
corporation (within the meaning of section 957), each United States 
shareholder (within the meaning of section 951(b)) with respect thereto 
must include this statement on or with its return. It is not necessary 
for the electing foreign component member (or United States 
shareholder, as the case may be) to include this statement on or with 
its return if the loss corporation includes an identical statement on 
or with the same return for the same election.
    (iii) Agreement. Both the electing foreign component member and the 
corporation to which full value is not restored must sign and date an 
agreement. The agreement must--
    (A) Identify the change date for the loss corporation in connection 
with which the election is made;
    (B) State the value of the electing foreign component member's 
stock (without regard to any adjustment under paragraphs (c)(1), 
(c)(3), (c)(4) and (c)(5) of Sec.  1.382-8 and paragraph (c)(2) of this 
section) immediately before the ownership change;
    (C) State the amount of any reduction required under paragraph 
(c)(1) of Sec.  1.382-8 with respect to stock of the electing foreign 
component member that is owned directly or indirectly by the 
corporation to which value is not restored;
    (D) State the amount of value that the electing foreign component 
member elects not to restore to the corporation; and
    (E) State whether the value of either component member's stock was 
adjusted pursuant to paragraph (c)(4) of Sec.  1.382-8.
    (3) Revocation of election. An election (other than the deemed 
election described in paragraph (h)(2)(i) of this section) made under 
this section is revocable only with the consent of the Commissioner.
    (i) through (j)(3) [Reserved]. For further guidance, see Sec.  
1.382-8(i) through (j)(3).
    (4) Effective date--(i) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.


Sec.  1.382-11  [Removed]

0
Par. 27. Section 1.382-11 is removed.

0
Par. 28. Section 1.382-11T is added to read as follows:


Sec.  1.382-11T  Reporting requirements (temporary).

    (a) Information statement required. A loss corporation must include 
a statement entitled, ``STATEMENT PURSUANT TO Sec.  1.382-11T(a) BY 
[INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF

[[Page 30601]]

TAXPAYER], A LOSS CORPORATION,'' on or with its income tax return for 
each taxable year that it is a loss corporation in which an owner 
shift, equity structure shift or other transaction described in 
paragraph (a)(2)(i) of Sec.  1.382-2T occurs. The statement must 
include the date(s) of any owner shifts, equity structure shifts, or 
other transactions described in paragraph (a)(2)(i) of Sec.  1.382-2T, 
the date(s) on which any ownership change(s) occurred, and the amount 
of any attributes described in paragraph (a)(1)(i) of Sec.  1.382-2 
that caused the corporation to be a loss corporation. A loss 
corporation may also be required to include certain elections on this 
statement, including--
    (1) An election made under Sec.  1.382-2T(h)(4)(vi)(B) to disregard 
the deemed exercise of an option if the actual exercise of that option 
occurred within 120 days of the ownership change; and
    (2) An election made under Sec.  1.382-6(b)(2) to close the books 
of the loss corporation for purposes of allocating income and loss to 
periods before and after the change date for purposes of section 382.
    (b) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.


Sec.  1.1081-11  [Removed]

0
Par. 29. Section 1.1081-11 is removed.

0
Par. 30. Section 1.1081-11T is added to read as follows:


Sec.  1.1081-11T  Records to be kept and information to be filed with 
returns (temporary).

    (a) Distributions and exchanges; significant holders of stock or 
securities. Every significant holder must include a statement entitled, 
``STATEMENT PURSUANT TO Sec.  1.1081-11T(a) BY [INSERT NAME AND 
TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT 
HOLDER,'' on or with such holder's income tax return for the taxable 
year in which the distribution or exchange occurs. If a significant 
holder is a controlled foreign corporation (within the meaning of 
section 957), each United States shareholder (within the meaning of 
section 951(b)) with respect thereto must include this statement on or 
with its return. The statement must include--
    (1) The name and employer identification number (if any) of the 
corporation from which the stock, securities, or other property 
(including money) was received by such significant holder;
    (2) The aggregate basis, determined immediately before the 
exchange, of any stock or securities transferred by the significant 
holder in the exchange, and the aggregate fair market value, determined 
immediately before the distribution or exchange, of the stock, 
securities or other property (including money) received by the 
significant holder in the distribution or exchange; and
    (3) The date of the distribution or exchange.
    (b) Distributions and exchanges; corporations subject to Commission 
orders. Each corporation which is a party to a distribution or exchange 
made pursuant to an order of the Commission must include on or with its 
income tax return for its taxable year in which the distribution or 
exchange takes place a statement entitled, ``STATEMENT PURSUANT TO 
Sec.  1.1081-11T(b) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER 
(IF ANY) OF TAXPAYER], A DISTRIBUTING OR EXCHANGING CORPORATION.'' If 
the distributing or exchanging corporation is a controlled foreign 
corporation (within the meaning of section 957), each United States 
shareholder (within the meaning of section 951(b)) with respect thereto 
must include this statement on or with its return. The statement must 
include--
    (1) The date and control number of the Commission order, pursuant 
to which the distribution or exchange was made;
    (2) The names and taxpayer identification numbers (if any) of the 
significant holders;
    (3) The aggregate fair market value and basis, determined 
immediately before the distribution or exchange, of the stock, 
securities, or other property (including money) transferred in the 
distribution or exchange; and
    (4) The date of the distribution or exchange.
    (c) Sales by members of system groups. Each system group member 
must include a statement entitled, ``STATEMENT PURSUANT TO Sec.  
1.1081-11T(c) BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF 
ANY) OF TAXPAYER], A SYSTEM GROUP MEMBER,'' on or with its income tax 
return for the taxable year in which the sale is made. If any system 
group member is a controlled foreign corporation (within the meaning of 
section 957), each United States shareholder (within the meaning of 
section 951(b)) with respect thereto must include this statement on or 
with its return. The statement must include--
    (1) The dates and control numbers of all relevant Commission 
orders;
    (2) The aggregate fair market value and basis, determined 
immediately before the sale, of all stock or securities sold; and
    (3) The date of the sale.
    (d) Definitions. (1) For purposes of this section, Commission means 
the Securities and Exchange Commission.
    (2) For purposes of this section, significant holder means a person 
that receives stock or securities from a corporation (the distributing 
corporation) pursuant to an order of the Commission, if, immediately 
before the transaction, such person--
    (i) In the case of stock--
    (A) Owned at least five percent (by vote or value) of the total 
outstanding stock of the distributing corporation if the stock owned by 
such person is publicly traded, or
    (B) Owned at least one percent (by vote or value) of the total 
outstanding stock of the distributing corporation if the stock owned by 
such person is not publicly traded; or
    (ii) In the case of securities, owned securities of the 
distributing corporation with a basis of $1,000,000 or more.
    (3) Publicly traded stock means stock that is listed on--
    (i) A national securities exchange registered under section 6 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
    (ii) An interdealer quotation system sponsored by a national 
securities association registered under section 15A of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-3).
    (4) For purposes of paragraph (b) of this section, exchange means 
exchange, expenditure, or investment.
    (5) For purposes of paragraph (c) of this section, system group 
member means each corporation which is a member of a system group and 
which, pursuant to an order of the Commission, sells stock or 
securities received upon an exchange (pursuant to an order of the 
Commission) and applies the proceeds derived therefrom in retirement or 
cancellation of its own stock or securities.
    (e) Substantiation information. Under Sec.  1.6001-1(e), taxpayers 
are required to retain their permanent records and make such records 
available to any authorized Internal Revenue Service officers and 
employees. In connection with the distribution or exchange described in 
this section, these records should specifically include information

[[Page 30602]]

regarding the amount, basis, and fair market value of all property 
distributed or exchanged, and relevant facts regarding any liabilities 
assumed or extinguished as part of such distribution or exchange.
    (f) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 31. Section 1.1221-2 is amended by revising paragraph (e)(2)(iv) 
and adding paragraphs (i) through (j) to read as follows:


Sec.  1.1221-2  Hedging transactions.

* * * * *
    (e) * * *
    (2) * * *
    (iv) [Reserved]. For further guidance, see Sec.  1.1221-
2T(e)(2)(iv).
* * * * *
    (i) through (j) [Reserved]. For further guidance, see Sec.  1.1221-
2T(i) through (j)(1).
0
Par. 32. Section 1.1221-2T is added to read as follows:


Sec.  1.1221-2T  Hedging transactions (temporary).

    (a) through (e)(2)(iii) [Reserved]. For further guidance, see Sec.  
1.1221-2(a) through (e)(2)(iii).
    (iv) Making and revoking the election. Unless the Commissioner 
otherwise prescribes, the election described in paragraph (e)(2) of 
Sec.  1.1221-2 must be made in a separate statement that provides, 
``[INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF COMMON PARENT] 
HEREBY ELECTS THE APPLICATION OF Sec.  1.1221-2(e)(2) (THE SEPARATE-
ENTITY APPROACH).'' The statement must also indicate the date as of 
which the election is to be effective. The election must be filed by 
including the statement on or with the consolidated group's income tax 
return for the taxable year that includes the first date for which the 
election is to apply. The election applies to all transactions entered 
into on or after the date so indicated. The election may only be 
revoked with the consent of the Commissioner.
    (e)(3) through (h) [Reserved]. For further guidance, see Sec.  
1.1221-2(e)(3) through (h).
    (i) [Reserved]
    (j) Effective date-- (1) Applicability date. This section applies 
to any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006. However, a consolidated group may apply 
this section to any original consolidated Federal income tax return 
(including any amended return filed on or before the due date 
(including extensions) of such original return) timely filed on or 
after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 33. Section 1.1502-13 is amended by revising paragraphs 
(f)(5)(ii)(E) and (f)(6)(i)(C)(2) and adding paragraph (m) to read as 
follows:


Sec.  1.1502-13  Intercompany transactions.

* * * * *
    (f) * * *
    (5) * * *
    (ii) * * *
    (E) [Reserved]. For further guidance, see Sec.  1.1502-
13T(f)(5)(ii)(E).
    (6) * * *
    (i) * * *
    (C) * * *
    (2) [Reserved]. For further guidance, see Sec.  1.1502-
13T(f)(6)(i)(C)(2)
* * * * *
    (m) [Reserved]. For further guidance, see Sec.  1.1502-13T(m)(1).

0
Par. 34. Section 1.1502-13T is added to read as follows:


Sec.  1.1502-13T  Intercompany transactions (temporary).

    (a) through (f)(5)(ii)(D) [Reserved]. For further guidance, see 
Sec.  1.1502-13(a) through (f)(5)(ii)(D).
    (E) Election. An election to apply paragraph (f)(5)(ii) of Sec.  
1.1502-13 is made in a separate statement entitled, ``[INSERT NAME AND 
EMPLOYER IDENTIFICATION NUMBER OF COMMON PARENT] HEREBY ELECTS THE 
APPLICATION OF Sec.  1.1502-13(f)(5)(ii) FOR AN INTERCOMPANY 
TRANSACTION INVOLVING [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER 
OF S] AND [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF T].'' A 
separate election must be made for each such application. The election 
must be filed by including the statement on or with the consolidated 
group's income tax return for the year of T's liquidation (or other 
transaction). The Commissioner may impose reasonable terms and 
conditions to the application of paragraph (f)(5)(ii) of Sec.  1.1502-
13 that are consistent with the purposes of such section. The statement 
must--
    (1) Identify S's intercompany transaction and T's liquidation (or 
other transaction); and
    (2) Specify which provision of Sec.  1.1502-13(f)(5)(ii) applies 
and how it alters the otherwise applicable results under this section 
(including, for example, the amount of S's intercompany items and the 
amount deferred or offset as a result of Sec.  1.1502-13(f)(5)(ii)).
    (f)(6) through (f)(6)(i)(C)(1) [Reserved]. For further guidance, 
see Sec.  1.1502-13(f)(6) through (f)(6)(i)(C)(1).
    (2) Election. The election described in paragraph (f)(6)(i)(C)(1) 
of Sec.  1.1502-13 must be made in a separate statement entitled, 
``ELECTION TO REDUCE BASIS OF P STOCK UNDER Sec.  1.1502-13(f)(6) HELD 
BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF MEMBER WHOSE 
BASIS IN P STOCK IS REDUCED].'' The election must be filed by including 
the statement on or with the consolidated group's income tax return for 
the year in which the nonmember becomes a member. The statement must 
identify the member's basis in the P stock (taking into account the 
effect of this election) and the number of shares of P stock held by 
the member.
    (f)(6)(ii) through (l) [Reserved]. For further guidance, see Sec.  
1.1502-13(f)(6)(ii) through (l).
    (m) Effective date--(1) Applicability date. This section applies to 
any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006. However, a consolidated group may apply 
this section to any original consolidated Federal income tax return 
(including any amended return filed on or before the due date 
(including extensions) of such original return) timely filed on or 
after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 35. Section 1.1502-31 is amended by revising paragraph (e)(2) and 
adding paragraphs (i) through (j) to read as follows:


Sec.  1.1502-31  Stock basis after a group structure change.

* * * * *
    (e) * * *
    (2) [Reserved]. For further guidance, see Sec.  1.1502-31T(e)(2).
* * * * *
    (i) through (j) [Reserved]. For further guidance, see Sec.  1.1502-
31T(i) through (j)(1).

0
Par. 36. Section 1.1502-31T is added to read as follows:


Sec.  1.1502-31T  Stock basis after a group structure change 
(temporary).

    (a) through (e)(1) [Reserved]. For further guidance, see Sec.  
1.1502-31(a) through (e)(1).

[[Page 30603]]

    (2) Election. The election described in paragraph (e)(1) of Sec.  
1.1502-31 must be made in a separate statement entitled, ``ELECTION TO 
TREAT LOSS CARRYOVER AS EXPIRING UNDER Sec.  1.1502-31(e).'' The 
election must be filed by including the statement on or with the 
consolidated group's income tax return for the year that includes the 
group structure change. The statement must identify the amount of each 
loss carryover deemed to expire (or the amount of each loss carryover 
deemed not to expire, with any balance of any loss carryovers being 
deemed to expire).
    (f) through (h) [Reserved]. For further guidance, see Sec.  1.1502-
31(f) through (h).
    (i) [Reserved]
    (j) Effective date--(1) Applicability date. This section applies to 
any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006. However, a consolidated group may apply 
this section to any original consolidated Federal income tax return 
(including any amended return filed on or before the due date 
(including extensions) of such original return) timely filed on or 
after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 37. Section 1.1502-32 is amended by revising paragraph (b)(4)(iv) 
and adding paragraphs (i) through (j) to read as follows:


Sec.  1.1502-32  Investment adjustments.

* * * * *
    (b) * * *
    (4) * * *
    (iv) [Reserved]. For further guidance, see Sec.  1.1502-
32T(b)(4)(iv).
* * * * *
    (i) through (j) [Reserved]. For further guidance, see Sec.  1.1502-
32T(i) through (j)(1).

0
Par. 38. Section 1.1502-32T is added to read as follows:


Sec.  1.1502-32T  Investment adjustments (temporary).

    (a) through (b)(4)(iii) [Reserved]. For further guidance, see Sec.  
1.1502-32(a) through (b)(4)(iii).
    (iv) Election. The election described in paragraph (b)(4) of Sec.  
1.1502-32 must be made in a separate statement entitled, ``ELECTION TO 
TREAT LOSS CARRYOVER OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER 
OF S] AS EXPIRING UNDER Sec.  1.1502-32(b)(4).'' The election must be 
filed by including a statement on or with the consolidated group's 
income tax return for the year S becomes a member. A separate statement 
must be made for each member whose loss carryover is deemed to expire. 
The statement must identify the amount of each loss carryover deemed to 
expire (or the amount of each loss carryover deemed not to expire, with 
any balance of any loss carryovers being deemed to expire) and the 
basis of any stock reduced as a result of the deemed expiration.
    (b)(4)(v) through (h) [Reserved]. For further guidance, see Sec.  
1.1502-32(b)(4)(v) through (h).
    (i) [Reserved]
    (j) Effective date--(1) Applicability date. This section applies to 
any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006. However, a consolidated group may apply 
this section to any original consolidated Federal income tax return 
(including any amended return filed on or before the due date 
(including extensions) of such original return) timely filed on or 
after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 39. Section 1.1502-33 is amended by revising paragraph 
(d)(5)(i)(D) and adding paragraph (k) to read as follows:


Sec.  1.1502-33  Earnings and profits.

* * * * *
    (d) * * *
    (5) * * *
    (i) * * *
    (D) [Reserved]. For further guidance, see Sec.  1.1502-
33T(d)(5)(i)(D).
* * * * *
    (k) [Reserved]. For further guidance, see Sec.  1.1502-33T(k)(1).

0
Par. 40. Section 1.1502-33T is added to read as follows:


Sec.  1.1502-33T  Earnings and profits (temporary).

    (a) through (d)(5)(i)(C) [Reserved]. For further guidance, see 
Sec.  1.1502-33(a) through (d)(5)(i)(C).
    (D) If a method is permitted under paragraph (d)(4) of Sec.  
1.1502-33, provide the date and control number of the private letter 
ruling issued by the Internal Revenue Service approving such method.
    (d)(5)(ii) through (j) [Reserved]. For further guidance, see Sec.  
1.1502-33(d)(5)(ii) through (j).
    (k) Effective date--(1) Applicability date. This section applies to 
any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006. However, a consolidated group may apply 
this section to any original consolidated Federal income tax return 
(including any amended return filed on or before the due date 
(including extensions) of such original return) timely filed on or 
after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 41. Section 1.1502-35 is amended by revising paragraph (c)(4)(i) 
and adding paragraph (k) to read as follows:


Sec.  1.1502-35  Transfers of subsidiary stock and deconsolidations of 
subsidiaries.

* * * * *
    (c) * * *
    (4) * * *
    (i) [Reserved]. For further guidance, see Sec.  1.1502-
35T(c)(4)(i).
* * * * *
    (k) [Reserved]. For further guidance, see Sec.  1.1502-35T(k)(1).

0
Par. 42. Section 1.1502-35T is added to read as follows:


Sec.  1.1502-35T  Transfers of subsidiary stock and deconsolidations of 
subsidiaries (temporary).

    (a) through (c)(3) [Reserved]. For further guidance, see Sec.  
1.1502-35(a) through (c)(3).
    (4) Reduction of suspended loss-- (i) General rule. The amount of 
any loss suspended pursuant to paragraphs (c)(1) and (c)(2) of Sec.  
1.1502-35 shall be reduced, but not below zero, by the subsidiary's 
(and any successor's) items of deduction and loss, and the subsidiary's 
(and any successor's) allocable share of items of deduction and loss of 
all lower-tier subsidiaries, that are allocable to the period beginning 
on the date of the disposition that gave rise to the suspended loss and 
ending on the day before the first date on which the subsidiary (and 
any successor) is not a member of the group of which it was a member 
immediately prior to the disposition (or any successor group), and that 
are taken into account in determining consolidated taxable income (or 
loss) of such group for any taxable year that includes any date on or 
after the date of the disposition and before the first date on which 
the subsidiary (and any successor) is not a member of such group; 
provided, however, that such reduction shall not exceed the excess of 
the amount of such items over the amount of such items that are taken 
into account in determining the basis adjustments made under Sec.  
1.1502-32 to stock of the subsidiary (or any successor) owned by 
members of the group. The preceding sentence shall not apply to items 
of deduction and loss to the extent that the group can establish that 
all or a portion of such items was not reflected in the computation of 
the

[[Page 30604]]

duplicated loss with respect to the subsidiary on the date of the 
disposition of stock that gave rise to the suspended loss.
    (c)(4)(ii) through (j) [Reserved]. For further guidance, see Sec.  
1.1502-35(c)(4)(ii) through (j).
    (k) Effective date--(1) Applicability date. This section applies to 
any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.
0
Par. 43. Section 1.1502-76 is amended by revising paragraph 
(b)(2)(ii)(D) and adding paragraph (d) to read as follows:


Sec.  1.1502-76  Taxable year of members of group.

* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (D) [Reserved]. For further guidance, see Sec.  1.1502-
76T(b)(2)(ii)(D).
* * * * *
    (d) [Reserved]. For further guidance, see Sec.  1.1502-76T(d)(1).

0
Par. 44. Section 1.1502-76T is added to read as follows:


Sec.  1.1502-76T  Taxable year of members of group (temporary).

    (a) through (b)(2)(ii)(C) [Reserved]. For further guidance, see 
Sec.  1.1502-76(a) through (b)(2)(ii)(C).
    (D) Election--(1) Statement. The election to ratably allocate items 
under paragraph (b)(2)(ii) of Sec.  1.1502-76 must be made in a 
separate statement entitled, ``THIS IS AN ELECTION UNDER Sec.  1.1502-
76(b)(2)(ii) TO RATABLY ALLOCATE THE YEAR'S ITEMS OF [INSERT NAME AND 
EMPLOYER IDENTIFICATION NUMBER OF THE MEMBER].'' The election must be 
filed by including a statement on or with the returns including the 
items for the years ending and beginning with S's change in status. If 
two or more members of the same consolidated group, as a consequence of 
the same plan or arrangement, cease to be members of that group and 
remain affiliated as members of another consolidated group, an election 
under this paragraph (b)(2)(ii)(D)(1) may be made only if it is made by 
each such member. Each statement must also indicate that an agreement, 
as described in paragraph (b)(2)(ii)(D)(2) of this section, has been 
entered into. Each party signing the agreement must retain either the 
original or a copy of the agreement as part of its records. See Sec.  
1.6001-1(e).
    (2) Agreement. For each election under paragraph (b)(2)(ii) of 
Sec.  1.1502-76, the member and the common parent of each affected 
group must sign and date an agreement. The agreement must--
    (i) Identify the extraordinary items, their amounts, and the 
separate or consolidated returns in which they are included;
    (ii) Identify the aggregate amount to be ratably allocated, and the 
portion of the amount included in the separate and consolidated 
returns; and
    (iii) Include the name and employer identification number of the 
common parent (if any) of each group that must take the items into 
account.
    (b)(2)(iii) through (c) [Reserved]. For further guidance, see Sec.  
1.1502-76(b)(2)(iii) through (c).
    (d) Effective date--(1) Applicability date. This section applies to 
any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006. However, a consolidated group may apply 
this section to any original consolidated Federal income tax return 
(including any amended return filed on or before the due date 
(including extensions) of such original return) timely filed on or 
after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 45. Section 1.1502-95 is amended by revising paragraphs (e)(8) and 
(f) and adding paragraph (g) to read as follows:


Sec.  1.1502-95  Rules on ceasing to be a member of a consolidated 
group (or loss subgroup).

* * * * *
    (e) * * *
    (8) [Reserved]. For further guidance, see Sec.  1.1502-95T(e)(8).
    (f) through (g) [Reserved]. For further guidance, see Sec.  1.1502-
95T(f) through (g)(1).
    Par. 46. Section 1.1502-95T is added to read as follows:


Sec.  1.1502-95T  Rules on ceasing to be a member of a consolidated 
group (or loss subgroup) (temporary).

    (a) through (e)(7) [Reserved]. For further guidance, see Sec.  
1.1502-95(a) through (e)(7).
    (8) Reporting requirements--(i) Common Parent. Except as provided 
in paragraph (e)(8)(iii) of this section, if a net unrealized built-in 
loss is allocated under paragraph (e) of Sec.  1.1502-95, the common 
parent must include a statement entitled, ``STATEMENT OF NET UNREALIZED 
BUILT-IN LOSS ALLOCATION PURSUANT TO Sec.  1.1502-95(e),'' on or with 
its income tax return for the taxable year in which the former 
member(s) (or a new loss subgroup that includes that member) ceases to 
be a member. The statement must include--
    (A) The name and employer identification number of the departing 
member;
    (B) The amount of the remaining NUBIL balance for the taxable year 
in which the member departs;
    (C) The amount of the net unrealized built-in loss allocated to the 
departing member; and
    (D) A representation that the common parent has delivered a copy of 
the statement to the former member (or the common parent of the group 
of which the former member is a member) on or before the day the group 
files its income tax return for the consolidated return year that the 
former member ceases to be a member.
    (ii) Former Member. Except as provided in paragraph (e)(8)(iii) of 
this section, the former member must include a statement on or with its 
first income tax return (or the first return in which the former member 
joins) that is filed after the close of the consolidated return year of 
the group of which the former member (or a new loss subgroup that 
includes that member) ceases to be a member. The statement will be 
identical to the statement filed by the common parent under paragraph 
(e)(8)(i) of this section except that instead of including the 
information described in paragraph (e)(8)(i)(A) of this section the 
former member must provide the name, employer identification number and 
tax year of the former common parent, and instead of the representation 
described in paragraph (e)(8)(i)(D) of this section the former member 
must represent that it has received and retained the copy of the 
statement delivered by the common parent as part of its records. See 
Sec.  1.6001-1(e).
    (iii) Exception. This paragraph (e)(8) does not apply if the 
required information (other than the amount of the remaining NUBIL 
balance) is included in a statement of election under paragraph (f) of 
this section (relating to apportioning a section 382 limitation).
    (f) Filing the election to apportion the section 382 limitation and 
net unrealized built-in gain--(1) Form of the election to apportion--
(i) Statement. An election under paragraph (c) of Sec.  1.1502-95 must 
be made in the form set forth in this paragraph (f)(1)(i). The election 
must be made by the common parent and the party described in paragraph 
(f)(2) of this section. It must

[[Page 30605]]

be filed in accordance with paragraph (f)(3) of this section and be 
entitled, ``THIS IS AN ELECTION UNDER Sec.  1.1502-95 TO APPORTION ALL 
OR PART OF THE [INSERT THE CONSOLIDATED SECTION 382 LIMITATION, THE 
SUBGROUP SECTION 382 LIMITATION, THE LOSS GROUP'S NET UNREALIZED BUILT-
IN GAIN, OR THE LOSS SUBGROUP'S NET UNREALIZED BUILT-IN GAIN, AS 
APPROPRIATE] IN THE AMOUNT OF [INSERT THE AMOUNT OF THE LOSS LIMITATION 
OR NET UNREALIZED BUILT-IN GAIN] TO [INSERT NAME(S) AND EMPLOYER 
IDENTIFICATION NUMBER(S) OF THE CORPORATION (OR THE CORPORATIONS THAT 
COMPOSE A NEW LOSS SUBGROUP) TO WHICH ALLOCATION IS MADE].'' The 
statement must also indicate that an agreement, as described in 
paragraph (f)(1)(ii) of this section, has been entered into.
    (ii) Agreement. Both the common parent and the party described in 
paragraph (f)(2) of this section must sign and date the agreement. The 
agreement must include, as appropriate--
    (A) The date of the ownership change that resulted in the 
consolidated section 382 limitation (or subgroup section 382 
limitation) or the loss group's (or loss subgroup's) net unrealized 
built-in gain;
    (B) The amount of the departing member's (or loss subgroup's) pre-
change net operating loss carryovers and the taxable years in which 
they arose that will be subject to the limitation that is being 
apportioned to that member (or loss subgroup);
    (C) The amount of any net unrealized built-in loss allocated to the 
departing member (or loss subgroup) under paragraph (e) of Sec.  
1.1502-95, which, if recognized, can be a pre-change attribute subject 
to the limitation that is being apportioned;
    (D) If a consolidated section 382 limitation (or subgroup section 
382 limitation) is being apportioned, the amount of the consolidated 
section 382 limitation (or subgroup section 382 limitation) for the 
taxable year during which the former member (or new loss subgroup) 
ceases to be a member of the consolidated group (determined without 
regard to any apportionment under this section);
    (E) If any net unrealized built-in gain is being apportioned, the 
amount of the loss group's (or loss subgroup's) net unrealized built-in 
gain (as determined under paragraph (c)(2)(ii) of Sec.  1.1502-95) that 
may be apportioned to members that ceased to be members during the 
consolidated return year;
    (F) The amount of the value element and adjustment element of the 
consolidated section 382 limitation (or subgroup section 382 
limitation) that is apportioned to the former member (or new loss 
subgroup) pursuant to paragraph (c) of Sec.  1.1502-95;
    (G) The amount of the loss group's (or loss subgroup's) net 
unrealized built-in gain that is apportioned to the former member (or 
new loss subgroup) pursuant to paragraph (c) of Sec.  1.1502-95;
    (H) If the former member is allocated any net unrealized built-in 
loss under paragraph (e) of Sec.  1.1502-95, the amount of any 
adjustment element apportioned to the former member that is 
attributable to recognized built-in gains (determined in a manner that 
will enable both the group and the former member to apply the 
principles of Sec.  1.1502-93(c)); and
    (I) The name and employer identification number of the common 
parent making the apportionment.
    (2) Signing the agreement. The agreement must be signed by both the 
common parent and the former member (or, in the case of a loss 
subgroup, the common parent and the loss subgroup parent) by persons 
authorized to sign their respective income tax returns. If the 
allocation is made to a loss subgroup for which an election under Sec.  
1.1502-91(d)(4) is made, and not separately to its members, the 
agreement under this paragraph (f) must be signed by the common parent 
and any member of the new loss subgroup by persons authorized to sign 
their respective income tax returns. Each party signing the agreement 
must retain either the original or a copy of the agreement as part of 
its records. See Sec.  1.6001-1(e).
    (3) Filing of the election--(i) Filing by the common parent. The 
election must be filed by the common parent of the group that is 
apportioning the consolidated section 382 limitation (or the subgroup 
section 382 limitation) or the loss group's net unrealized built-in 
gain (or loss subgroup's net unrealized built-in gain) by including the 
statement on or with its income tax return for the taxable year in 
which the former member (or new loss subgroup) ceases to be a member.
    (ii) Filing by the former member. An identical statement must be 
included on or with the first return of the former member (or the first 
return in which the former member, or the members of a new loss 
subgroup, join) that is filed after the close of the consolidated 
return year of the group of which the former member (or the members of 
a new loss subgroup) ceases to be a member.
    (4) Revocation of election. An election statement made under 
paragraph (c) of Sec.  1.1502-95 is revocable only with the consent of 
the Commissioner.
    (g) Effective date--(1) Applicability date. This section applies to 
any original consolidated Federal income tax return due (without 
extensions) after May 30, 2006. However, a consolidated group may apply 
this section to any original consolidated Federal income tax return 
(including any amended return filed on or before the due date 
(including extensions) of such original return) timely filed on or 
after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 47. Section 1.1563-1 is amended by revising paragraph (c)(2) and 
adding paragraph (e) to read as follows:


Sec.  1.1563-1  Definition of controlled group of corporations and 
component members.

* * * * *
    (c) * * *
    (2)(i) through (iii) [Reserved]. For further guidance, see Sec.  
1.1563-1T(c)(2)(i) through (iii).
* * * * *
    (e) [Reserved]. For further guidance, see Sec.  1.563-1T(e)(1).
* * * * *

0
Par. 48. Section 1.1563-1T is added to read as follows:


Sec.  1.1563-1T  Definition of controlled group of corporations and 
component members (temporary).

    (a) through (c)(1) [Reserved]. For further guidance, see Sec.  
1.1563-1(a) through (c)(1).
    (2) Brother-sister controlled groups--(i) One corporation. If on a 
December 31, a corporation would, without the application of this 
paragraph (c)(2), be a component member of more than one brother-sister 
controlled group on such date, the corporation will be treated as a 
component member of only one such group on such date. Such corporation 
may elect the group in which it is to be included by including on or 
with its income tax return for the taxable year that includes such date 
a statement entitled, ``STATEMENT TO ELECT CONTROLLED GROUP PURSUANT TO 
Sec.  1.1563-1T(c)(2).'' This statement must include--
    (A) A description of each of the controlled groups in which the 
corporation could be included. The description must include the name 
and employer identification number of each component member of each 
such group and the stock ownership of the component members of each 
such group; and
    (B) The following representation: [INSERT NAME AND EMPLOYER

[[Page 30606]]

IDENTIFICATION NUMBER OF CORPORATION] ELECTS TO BE TREATED AS A 
COMPONENT MEMBER OF THE [INSERT DESIGNATION OF GROUP].
    (ii) Multiple corporations. If more than one corporation would, 
without the application of this paragraph (c)(2), be a component member 
of more than one controlled group, those corporations electing to be 
component members of the same group must file a single statement. The 
statement must contain the information described in paragraph (c)(2)(i) 
of this section, plus the names and employer identification numbers of 
all other corporations designating the same group. The original 
statement must be included on or with the original Federal income tax 
return (including any amended return filed on or before the due date 
(including extensions) of such return) of the corporation that, among 
those corporations which would (without the application of this 
paragraph (c)(2)) belong to more than one group, has the taxable year 
including such December 31 which ends on the earliest date. That 
corporation must provide a copy of the statement to each other 
corporation included in the statement and represent in its statement 
that it has done so. Either the original or a copy of the statement 
must be retained by each corporation as part of its records. See Sec.  
1.6001-1(e).
    (iii) Election--(A) Election filed. An election filed under this 
paragraph (c)(2) is irrevocable and effective until a change in the 
stock ownership of the corporation results in termination of membership 
in the controlled group in which such corporation has been included.
    (B) Election not filed. In the event no election is filed in 
accordance with the provisions of this paragraph (c)(2), then the 
Internal Revenue Service will determine the group in which such 
corporation is to be included. Such determination will be binding for 
all subsequent years unless the corporation files a valid election with 
respect to any such subsequent year or until a change in the stock 
ownership of the corporation results in termination of membership in 
the controlled group in which such corporation has been included.
    (c)(2)(iv) through (d) [Reserved]. For further guidance, see Sec.  
1.1563-1(c)(2)(iv) through (d).
    (e) Effective date-- (1) Applicability date. This section applies 
to any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 49. Section 1.1563-3 is amended by revising paragraph (d)(2)(iv) 
and adding paragraph (e) to read as follows:


Sec.  1.1563-3  Rules for determining stock ownership.

* * * * *
    (d) * * *
    (2) * * *
    (iv) [Reserved]. For further guidance, see Sec.  1.1563-
3T(d)(2)(iv).
* * * * *
    (e) [Reserved]. For further guidance, see Sec.  1.1563-3T(e)(1).

0
Par. 50. Section 1.1563-3T is added to read as follows:


Sec.  1.1563-3T  Rules for determining stock ownership (temporary).

    (a) through (d)(2)(iii) [Reserved]. For further guidance, see Sec.  
1.1563-3(a) through (d)(2)(iii).
    (iv) Statement. If the application of paragraph (d)(2)(ii) or (iii) 
of Sec.  1.1563-3 does not result in a corporation being treated as a 
component member of only one controlled group of corporations on a 
December 31, then such corporation will be treated as a component 
member of only one such group on such date. Such corporation may elect 
the group in which it is to be included by including on or with its 
income tax return a statement entitled, ``STATEMENT TO ELECT CONTROLLED 
GROUP PURSUANT TO Sec.  1.1563-3T(d)(2)(iv).'' The statement must 
include--
    (A) A description of each of the controlled groups in which the 
corporation could be included. The description must include the name 
and employer identification number of each component member of each 
such group and the stock ownership of the component members of each 
such group; and
    (B) The following representation: [INSERT NAME AND EMPLOYER 
IDENTIFICATION NUMBER OF CORPORATION] ELECTS TO BE TREATED AS A 
COMPONENT MEMBER OF THE [INSERT DESIGNATION OF GROUP].
    (v) Election-- (A) Election filed. An election filed under 
paragraph (d)(2)(iv) of this section is irrevocable and effective until 
paragraph (d)(2)(ii) or (iii) of Sec.  1.1563-3 applies or until a 
change in the stock ownership of the corporation results in termination 
of membership in the controlled group in which such corporation has 
been included.
    (B) Election not filed. In the event no election is filed in 
accordance with the provisions of paragraph (d)(2)(iv) of this section, 
then the Internal Revenue Service will determine the group in which 
such corporation is to be included. Such determination will be binding 
for all subsequent years unless the corporation files a valid election 
with respect to any such subsequent year or until a change in the stock 
ownership of the corporation results in termination of membership in 
the controlled group in which such corporation has been included.
    (d)(3) [Reserved]. For further guidance, see Sec.  1.1563-3(d)(3).
    (e) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 51. Section 1.6012-2 is amended by revising paragraph (c) and 
adding paragraph (k) to read as follows:


Sec.  1.6012-2  Corporations required to make returns of income.

* * * * *
    (c) [Reserved]. For further guidance, see Sec.  1.6012-2T(c).
* * * * *
    (k) [Reserved]. For further guidance, see Sec.  1.6012-2T(k)(1).

0
Par. 52. Section 1.6012-2T is added to read as follows:


Sec.  1.6012-2T  Corporations required to make returns of income 
(temporary).

    (a) through (b) [Reserved]. For further guidance, see Sec.  1.6012-
2(a) through (b).
    (c) Insurance companies--(1) Domestic life insurance companies--(i) 
In general. A life insurance company subject to tax under section 801 
shall make a return on Form 1120L. Except as provided in paragraph 
(c)(4) of this section, such company shall file with its return--
    (A) A copy of its annual statement which shows the reserves used by 
the company in computing the taxable income reported on its return; and
    (B) A copy of Schedule A (real estate) and of Schedule D (bonds and 
stocks), or any successor thereto, of such annual statement.
    (ii) Mutual savings banks. Mutual savings banks conducting life 
insurance business and meeting the requirements of section 594 are 
subject to partial tax computed on Form 1120 and partial tax computed 
on Form 1120L. The Form 1120L is attached as a schedule to Form

[[Page 30607]]

1120, together with the annual statement and schedules required to be 
filed with Form 1120L.
    (2) Domestic nonlife insurance companies. Every domestic insurance 
company other than a life insurance company shall make a return on Form 
1120PC. This includes organizations described in section 501(m)(1) that 
provide commercial-type insurance and organizations described in 
section 833. Except as provided in paragraph (c)(4) of this section, 
such company shall file with its return a copy of its annual statement 
(or a pro forma annual statement), including the underwriting and 
investment exhibit for the year covered by such return.
    (3) Foreign insurance companies. The provisions of paragraphs 
(c)(1) and (c)(2) of this section concerning the returns and statements 
of insurance companies subject to tax under section 801 or section 831 
also apply to foreign insurance companies subject to tax under those 
sections, except that the copy of the annual statement required to be 
submitted with the return shall, in the case of a foreign insurance 
company that is not required to file an annual statement, be a copy of 
the pro forma annual statement relating to the United States business 
of such company.
    (4) Exception for insurance companies filing their Federal income 
tax returns electronically. If an insurance company described in 
paragraph (c)(1), (c)(2), or (c)(3) of this section files its Federal 
income tax return electronically, it should not include on or with such 
return its annual statement (or pro forma annual statement), or any 
portion thereof. Such statement must be available at all times for 
inspection by authorized Internal Revenue Service officers or employees 
and retained for so long as such statements may be material in the 
administration of any internal revenue law. See Sec.  1.6001-1(e).
    (5) Definition. For purposes of this section, the term annual 
statement means the annual statement, the form of which is approved by 
the National Association of Insurance Commissioners (NAIC), which is 
filed by an insurance company for the year with the insurance 
departments of States, Territories, and the District of Columbia. The 
term annual statement also includes a pro forma annual statement if the 
insurance company is not required to file the NAIC annual statement.
    (d) through (j) [Reserved]. For further guidance, see Sec.  1.6012-
2(d) through (j).
    (k) Effective date--(1) Applicability date. This section applies to 
any original Federal income tax return (including any amended return 
filed on or before the due date (including extensions) of such original 
return) timely filed on or after May 30, 2006.
    (2) Expiration date. The applicability of this section will expire 
on May 26, 2009.

0
Par. 53. For each entry in the ``Location'' column of the following 
table, remove the language in the ``Remove'' column and add the 
language in the ``Add'' column in its place:

------------------------------------------------------------------------
          Location                   Remove                  Add
------------------------------------------------------------------------
The last sentence of the      The following rules   The rules described
 introductory text to Sec.     shall be applicable   in paragraph (a) of
 1.302-4.                      in determining        Sec.   1.302-4T and
                               whether the           in paragraphs (b)
                               specific              through (g) of this
                               requirements of       section apply in
                               section 302(c)(2)     determining whether
                               are met:              the specific
                                                     requirements of
                                                     section 302(c)(2)
                                                     are met.
Sec.   1.338(h)(10)-1(f)....  Sec.   1.331-1(d),    Sec.   1.331-1T(d)
                               and Sec.   1.332-6.   and Sec.   1.332-6T
The last sentence of Sec.     paragraph (a)(2)(ii)  paragraph (a) of
 1.382-2T(h)(4)(vi)(B).        of this section.      Sec.   1.382-11T
The first sentence of Sec.    Sec.   1.382-         Sec.   1.382-11T(a)
 1.382-6(b)(2)(i).             2T(a)(2)(ii).
The second sentence of Sec.   paragraph (c) of      paragraphs (c)(1),
  1.382-8(a).                  this section.         (c)(3), (c)(4) and
                                                     (c)(5) of this
                                                     section and
                                                     paragraph (c)(2) of
                                                     Sec.   1.382.8T
The third sentence of Sec.    paragraph (c) of      paragraphs (c)(1),
 1.382-8(a).                   this section.         (c)(3), (c)(4) and
                                                     (c)(5) of this
                                                     section and
                                                     paragraph (c)(2) of
                                                     Sec.   1.382-8T
Sec.   1.382-8(c)(3)........  paragraph (c)(2) of   paragraph (c)(2) of
                               this section.         Sec.   1.382-8T
The first sentence of Sec.    paragraphs (c)(1),    paragraphs (c)(1)
 1.382-8(c)(4).                (2), and (3) of       and (c)(3) of this
                               this section.         section and
                                                     paragraph (c)(2) of
                                                     Sec.   1.382-8T
Sec.   1.382-8(c)(5)........  this paragraph (c)..  paragraphs (c)(1),
                                                     (c)(3), (c)(4), and
                                                     (c)(5) of this
                                                     section, and
                                                     paragraph (c)(2) of
                                                     Sec.   1.382-8T
The fifth sentence of Sec.    paragraph (c) of      paragraphs (c)(1),
 1.382-8(f).                   this section.         (c)(3), (c)(4), and
                                                     (c)(5) of this
                                                     section, and
                                                     paragraph (c)(2) of
                                                     Sec.   1.382-8T
Sec.   1.382-8(g), Example    paragraph (c) of      paragraphs (c)(1),
 (1)(b)(2).                    this section.         (c)(3), (c)(4), and
                                                     (c)(5) of this
                                                     section, and
                                                     paragraph (c)(2) of
                                                     Sec.   1.382-8T
The second sentence of Sec.   paragraph (c) of      paragraphs (c)(1),
  1.382-8(g), Example (1)(c).  this section.         (c)(3), (c)(4), and
                                                     (c)(5) of this
                                                     section, and
                                                     paragraph (c)(2) of
                                                     Sec.   1.382-8T
Sec.   1.382-8(g), Example    paragraph (c)(2) of   paragraph (c)(2) of
 (2)(c).                       this section.         Sec.   1.382-8T
The first sentence of Sec.    paragarph (c)(2) of   paragraph (c)(2) of
 1.382-8(g), Example (2)(e).   this section.         Sec.   1.382-8T
Sec.   1.382-8(g), Example    paragraph (c)(2) of   paragraph (c)(2) of
 (3)(b).                       this section.         Sec.   1.382-8T
Sec.   1.382-8(g), Example    paragraphs (c)(1)     paragraph (c)(1) of
 (3)(c)(1)(B).                 and (2) of this       this section and
                               section.              paragraph (c)(2) of
                                                     Sec.   1.382-8T
The second sentence of Sec.   paragraph (c)(2) of   paragraph (c)(2) of
  1.382-8(g), Example (4)(c).  this section.         Sec.   1.382-8T
The second sentence of Sec.   paragraph (c)(2) of   paragraph (c)(2) of
  1.382-8(g), Example (5)(c).  this section.         Sec.   1.382-8T
The first sentence of Sec.    paragraph (b)(4)(iv)  paragraph (b)(4)(iv)
 1.1502-32(b)(4)(v)(A).        of this section.      of Sec.   1.1502-
                                                     32T
The first sentence of Sec.    paragraph (b)(4)(iv)  paragraph (b)(4)(iv)
 1.1502-32(b)(4)(v)(B).        of this section.      of Sec.   1.1502-
                                                     32T
Sec.   1.1502-                Sec.   1.1502-        Sec.   1.1502-
 35(c)(4)(ii)(B).              76(b)(2)(ii)(D).      76T(b)(2)(ii)(D)
Sec.   1.1502-                paragraph             paragraph
 76(b)(2)(ii)(A)(2).           (b)(2)(ii)(D) of      (b)(2)(ii)(D) of
                               this section.         Sec.   1.1502-76T

[[Page 30608]]

 
Sec.   1.1502-92(e)(1)......  Sec.   1.382-         Sec.   1.382-11T(a)
                               2T(a)(2)(ii).
The first sentence of Sec.    Sec.   1.382-         Sec.   1.382-11T(a)
 1.1502-92(e)(2).              2T(a)(2)(ii).
The first sentence of Sec.    Sec.   1.382-         Sec.   1.382-11T(a)
 1.1502-94(d).                 2T(a)(2)(ii).
The second sentence of Sec.   Sec.   1.382-         Sec.   1.382-11T(a)
  1.1502-94(d).                2T(a)(2)(ii).
The last sentence of Sec.     paragraph (f) of      paragraph (f) of
 1.1502-95(b)(3).              this section.         Sec.   1.1502-95T
The last sentence of Sec.     subdivision (ii) of   paragraph (c)(2)(i)
 1.1563-1(c)(2)(iv), Example   this subparagraph.    of Sec.   1.1563-1T
 (1).
The last sentence of Sec.     the district          the Internal Revenue
 1.1563-1(c)(2)(iv), Example   director with audit   Service
 (1).                          jurisdiction of N's
                               return.
The third sentence of Sec.    subdivision (iii) of  paragraph (c)(2)(ii)
 1.1563-1(c)(2)(iv), Example   this subparagraph.    of Sec.   1.1563-1T
 (2).
The third sentence of Sec.    the district          the Internal Revenue
 1.1563-1(c)(2)(iv), Example   director with audit   Service
 (2).                          jurisdiction of the
                               return of the
                               corporation whose
                               taxable year ends
                               on the earliest
                               date.
The last sentence of Sec.     district director...  Internal Revenue
 1.1563-1(c)(2)(iv), Example                         Service
 (2).
The second sentence of Sec.   subdivisions (ii),    paragraphs
  1.1563-3(d)(2)(i).           (iii), and (iv) of    (d)(2)(ii) and
                               this subparagraph.    (iii) of this
                                                     section, and
                                                     paragraph
                                                     (d)(2)(iv) of Sec.
                                                      1.1563-3T
The first sentence of Sec.    Sec.   1.332-6(b),    Sec.   1.332-6T(a),
 1.6043-2(a).                  Sec.   1.368-3(a),    Sec.   1.368-3T(a),
                               or Sec.   1.1081-11.  or Sec.   1.1081-
                                                     11T
The first sentence of Sec.    Sec.   1.6012-2.....  paragraphs (a), (b)
 301.6011-5T(a) (twice).                             and (d) through (j)
                                                     of Sec.   1.6012-2,
                                                     and paragraph (c)
                                                     of Sec.   1.6012-2T
------------------------------------------------------------------------

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 54. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.

0
Par. 55. In Sec.  602.101, paragraph (b) is amended to read as follows:
0
1. The following entries to the table are removed:


Sec.  602.101  OMB Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                            Current OMB
    CFR part or section where identified or described       control No.
------------------------------------------------------------------------
 
                                * * * * *
1.332-6.................................................       1545-2019
1.382-11................................................       1545-2019
1.351-3.................................................       1545-2019
1.355-5.................................................       1545-2019
1.368-3.................................................       1545-2019
1.1081-11...............................................       1545-2019
 
                                * * * * *
------------------------------------------------------------------------

0
2. The following entries are added in numerical order to the table:


Sec.  602.101  OMB Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                            Current OMB
    CFR part or section where identified or described       control No.
------------------------------------------------------------------------
 
                                * * * * *
1.302-2T................................................       1545-2019
1.302-4T................................................       1545-2019
1.331-1T................................................       1545-2019
1.332-6T................................................       1545-2019
1.338-10T...............................................       1545-2019
1.351-3T................................................       1545-2019
1.355-5T................................................       1545-2019
1.368-3T................................................       1545-2019
1.381(b)-1T.............................................       1545-2019
1.382-8T................................................       1545-2019
1.382-11T...............................................       1545-2019
1.1081-11T..............................................       1545-2019
1.1221-2T...............................................       1545-2019
1.1502-13T..............................................       1545-2019
1.1502-31T..............................................       1545-2019
1.1502-32T..............................................       1545-2019
1.1502-33T..............................................       1545-2019
1.1502-35T..............................................       1545-2019
1.1502-76T..............................................       1545-2019
1.1502-95T..............................................       1545-2019
1.1563-1T...............................................       1545-2019
1.1563-3T...............................................       1545-2019
1.6012-2T...............................................       1545-2019
 
                                * * * * *
------------------------------------------------------------------------


Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
    Approved: May 19, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 06-4873 Filed 5-26-06; 8:45 am]
BILLING CODE 4830-01-P