[Federal Register Volume 73, Number 46 (Friday, March 7, 2008)]
[Proposed Rules]
[Pages 12312-12313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-4571]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-137573-07]
RIN 1545-BH20


Guidance Under Section 1502; Amendment of Matching Rule for 
Certain Gains on Member Stock

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations concerning 
the treatment of certain intercompany gains with respect to member 
stock within a consolidated group. The text of those regulations also 
serves as the text of these proposed regulations. These regulations 
affect corporations filing consolidated returns.

DATES: Written or electronic comments and requests for a public hearing 
must be received by June 5, 2008.

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-137573-07), 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-
137573-07), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC 20224, or sent electronically via the 
Federal eRulemaking Portal at www.regulations.gov (IRS REG-137573-07).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
John F. Tarrant or Ross E. Poulsen, (202) 622-7790; concerning 
submission of comments and/or requests for a public hearing, Kelly 
Banks, (202) 622-0932 (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) under section 1502 relating to the filing of consolidated 
returns. The temporary regulations revise Sec.  1.1502-13(c)(6)(ii)(C) 
to provide for the redetermination of an intercompany gain as excluded 
from gross income in certain member stock transactions. The text of 
those regulations also serves as the text of these proposed 
regulations. The preamble to the temporary regulations explains the 
amendments.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations. 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 affect affiliated 
groups of corporations, which tend to be larger businesses. Moreover, 
the number of taxpayers affected is minimal and the regulations provide 
relief in certain narrow circumstances. Therefore, a Regulatory 
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. 
chapter 6) is not required. Pursuant to section 7805(f) of the Internal 
Revenue Code, these regulations have been submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on their impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and 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. In 
particular, the IRS and Treasury Department do not foresee situations 
in which it should be necessary to invoke Sec.  1.1502-13(c)(6)(ii)(C) 
(the ``Commissioner's Discretionary Rule'') with respect to 
intercompany gain on property other than stock. Nevertheless, the IRS 
and Treasury Department request comments on whether any such situations 
are not appropriately addressed by other provisions of Sec.  1.1502-13. 
The Commissioner's Discretionary Rule will be retained while the IRS 
and Treasury Department consider such comments. However, absent 
compelling comments, the IRS and Treasury Department anticipate 
ultimately eliminating the Commissioner's Discretionary Rule. 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 John F. Tarrant, 
Office of 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 in part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.1502-13 also issued under 26 U.S.C. 1502. * * *

    Par. 2. Section 1.1502-13 is amended by revising paragraphs 
(c)(6)(ii)(C),

[[Page 12313]]

(f)(7)(i) and (f)(7)(ii)(A) to read as follows:


Sec.  1.1502-13  Intercompany transactions.

    (c) * * *
    (6) * * *
    (ii) * * *
    (C) [The text of proposed Sec.  1.1502-13(c)(6)(ii)(C) is the same 
as the text of Sec.  1.1502-13T(c)(6)(ii)(C) published elsewhere in 
this issue of the Federal Register].
    (1) [The text of proposed Sec.  1.1502-13(c)(6)(ii)(C)(1) is the 
same as the text of Sec.  1.1502-13T(c)(6)(ii)(C)(1) published 
elsewhere in this issue of the Federal Register.
    (C)(2) [The text of proposed Sec.  1.1502-13(c)(6)(ii)(C)(2) is the 
same as the text of Sec.  1.1502-13T(c)(6)(ii)(C)(2) published 
elsewhere in this issue of the Federal Register.
    (C)(2)(i) [The text of proposed Sec.  1.1502-13(c)(6)(ii)(C)(2)(i) 
is the same as the text of Sec.  1.1502-13T(c)(6)(ii)(C)(2)(i) 
published elsewhere in this issue of the Federal Register].
* * * * *
    (f) * * *
    (7) [The text of proposed Sec.  1.1502-13(f)(7) is the same as the 
text of Sec.  1.1502-13T(f)(7) published elsewhere in this issue of the 
Federal Register].
    (i) [The text of proposed Sec.  1.1502-13(f)(7)(i) is the same as 
the text of Sec.  1.1502-13T(f)(7)(i) published elsewhere in this issue 
of the Federal Register].
    (ii) [The text of proposed Sec.  1.1502-13(f)(7)(ii) is the same as 
the text of Sec.  1.1502-13T(f)(7)(ii) published elsewhere in this 
issue of the Federal Register].
    (A) [The text of proposed Sec.  1.1502-13(f)(7)(ii)(A) is the same 
as the text of Sec.  1.1502-13T(f)(7)(ii)(A) published elsewhere in 
this issue of the Federal Register].
* * * * *

 Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E8-4571 Filed 3-6-08; 8:45 am]
BILLING CODE 4830-01-P