[Federal Register Volume 72, Number 68 (Tuesday, April 10, 2007)]
[Proposed Rules]
[Pages 17814-17815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-6534]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-156420-06]
RIN 1545-BG25


Anti-Avoidance and Anti-Loss Reimportation Rules Applicable 
Following a Loss on Disposition of Stock of Consolidated Subsidiaries

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal

[[Page 17815]]

Register, the IRS is issuing temporary regulations under section 1502 
of the Internal Revenue Code (Code). The temporary regulations provide 
guidance to corporations filing consolidated returns. The temporary 
regulations apply an anti-avoidance rule and revise an anti-loss 
reimportation rule that applies after a disposition of stock of a 
subsidiary at a loss. The text of those regulations also serves as the 
text of these proposed regulations.

DATES: Written or electronic comments or a request for a public hearing 
must be received by July 9, 2007.

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-156420-06), room 5203 
Internal Revenue Service, PO Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
156420-06), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at www.regulations.gov (IRS-REG-156420-06).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Theresa Abell (202) 622-7700 or Phoebe Bennett (202) 622-7770; 
concerning submission of comments and request for public hearing, 
Richard Hurst at [email protected] or (202) 622-7180 
(not toll free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to section 1502. The temporary regulations provide 
guidance to corporations filing consolidated returns. The temporary 
regulations apply an anti-avoidance rule and revise an anti-loss 
reimportation rule that applies following a disposition of stock of a 
subsidiary at a loss. The text of those regulations also serves as the 
text of these proposed regulations. The preamble to the temporary 
regulations explains the amendments.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12666. Therefore, a regulatory assessment is not required. It is hereby 
certified that these regulations will not have a significant economic 
impact on a substantial number of small entities. This certification is 
based on the fact that these regulations primarily will affect 
affiliated groups of corporations that have elected to file 
consolidated returns, which tend to be larger entities. Therefore, a 
Regulatory Flexibility Analysis under Regulatory Flexibility Act (5 
U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the 
Code, this notice of proposed rulemaking will be submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on its impact on small business.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and Treasury Department request comments on the clarity of 
the proposed rules and how they can be made easier to understand. All 
comments will be available for public inspection and copying. A public 
hearing will be scheduled if requested in writing by any person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the public hearing will be 
published in the Federal Register.

Drafting Information

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

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

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

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

    Par. 2. Section 1.1502-32 is amended by revising paragraph 
(b)(3)(iii)(D) and adding paragraph (k) to read as follows:


Sec.  1.1502-32  Investment adjustments.

* * * * *
    (b) * * *
    (3) * * *
    (iii)* * *
    (D) [The text of the proposed amendment to Sec.  1.1502-
32(b)(3)(iii)(D) is the same as the text of Sec.  1.1502-
32T(b)(3)(iii)(D) published elsewhere in this issue of the Federal 
Register].
* * * * *
    (k) [The text of the proposed amendment to Sec.  1.1502-32(k) is 
the same as the text of Sec.  1.1502-32T(k) published elsewhere in this 
issue of the Federal Register].
    Par. 3. Section 1.1502-35 is amended by:
    1. Revising paragraphs (g)(3) and (h).
    2. Adding new paragraph (g)(6).
    3. Revising paragraph (j).
    The revisions and additions read as follows:


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

* * * * *
    (g) * * *
    (3) [The text of the proposed amendment to Sec.  1.1502-35(g)(3) is 
the same as the text of Sec.  1.1502-35T(g)(3) published elsewhere in 
this issue of the Federal Register].
* * * * *
    (6) [The text of the proposed amendment to Sec.  1.1502-35(g)(6) is 
the same as the text of Sec.  1.1502-35T(g)(6) published elsewhere in 
this issue of the Federal Register].
    (h) [The text of the proposed amendment to Sec.  1.1502-35(h) is 
the same as the text of Sec.  1.1502-35T(h) published elsewhere in this 
issue of the Federal Register].
* * * * *
    (j) [The text of the proposed amendment to Sec.  1.1502-35(j) is 
the same as the text of Sec.  1.1502-35T(j) published elsewhere in this 
issue of the Federal Register].
* * * * *

Linda M. Kroening,
Acting Deputy Commissioner for Services and Enforcement.
 [FR Doc. E7-6534 Filed 4-9-07; 8:45 am]
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