[Federal Register Volume 73, Number 27 (Friday, February 8, 2008)]
[Proposed Rules]
[Pages 7503-7504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2307]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-153589-06]
RIN 1545-BG34


Time and Manner for Electing Capital Asset Treatment for Certain 
Self-Created Musical Works

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing a temporary regulation that 
provides the time and manner for making an election to treat the sale 
or exchange of musical compositions or copyrights in musical works 
created by the taxpayer (or received by the taxpayer from the works' 
creator in a transferred basis transaction) as the sale or exchange of 
a capital asset. The temporary regulation reflects changes to the law 
made by the Tax Increase Prevention and Reconciliation Act of 2005 and 
the Tax Relief and Health Care Act of 2006. The temporary regulation 
affects taxpayers making the election under section 1221(b)(3) of the 
Internal Revenue Code (Code) to treat gain or loss from such a sale or 
exchange as capital gain or loss. The text of the temporary regulation 
also serves as the text of this proposed regulation.

DATES: Written or electronic comments and requests for a public hearing 
must be received by May 8, 2008.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-153589-06), 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-
153589-06), 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-153589-06).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulation, 
Jamie Kim, (202) 622-4950; concerning submission of comments or 
requesting a hearing, Richard.A.Hurst@irscounsel. treas.gov, (202) 622-
7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    Temporary regulation in the Rules and Regulations section of this 
issue of the Federal Register amends the Income Tax Regulations (26 CFR 
part 1) relating to section 1221(b)(3) of the Internal Revenue Code 
(Code). The temporary regulation provides rules regarding the time and 
manner for making an election under section 1221(b)(3) to treat the 
sale or exchange of certain musical compositions or copyrights in 
musical works as the sale or exchange of a capital asset. The text of 
the temporary regulation also serves as the text of this proposed 
regulation. The preamble to the temporary regulation explains the 
amendments.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to this regulation, and because the 
regulation does not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, this 
regulation has been submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Comments and Requests for a Public Hearing

    Before this proposed regulation is adopted as a final regulation, 
consideration will be given to any

[[Page 7504]]

written comments (a signed original and eight (8) copies) or electronic 
comments that are submitted timely to the IRS. The IRS and Treasury 
Department request comments on the clarity of 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 Jamie Kim of the 
Office of Associate Chief Counsel (Income Tax & Accounting). However, 
other personnel from the IRS and Treasury Department participated in 
their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

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

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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

    Par. 2. Section 1.1221-3 is added to read as follows:


Sec.  1.1221-3  Time and manner for electing capital asset treatment 
for certain self-created musical works.

    [The text of proposed Sec.  1.1221-3 is the same as the text of 
Sec.  1.1221-3T(a) through (d)(1) published elsewhere in this issue of 
the Federal Register.]

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
 [FR Doc. E8-2307 Filed 2-7-08; 8:45 am]
BILLING CODE 4830-01-P