[Federal Register Volume 73, Number 67 (Monday, April 7, 2008)]
[Rules and Regulations]
[Pages 18709-18710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-7223]



[[Page 18709]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9392]
RIN 1545-BE11


Information Returns by Donees Relating to Qualified Intellectual 
Property Contributions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains final regulations that provide guidance 
for filing information returns by donees relating to qualified 
intellectual property contributions. These final regulations reflect 
changes to the law made in 2004. The regulations affect donees 
receiving net income from qualified intellectual property contributions 
made after June 3, 2004.

DATES: Effective date: These regulations are effective April 7, 2008.
    Applicability date: For dates of applicability, see Sec.  1.6050L-
2(f).

FOR FURTHER INFORMATION CONTACT: Timothy S. Sheppard, (202) 622-4910 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these final regulations 
has been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)) under control number 1545-1932. The collection of information 
in these final regulations is in Sec.  1.6050L-2(a) and (b). Responses 
to this collection of information are required to obtain a tax benefit.
    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 OMB control number.
    Books or 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 
return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains amendments to the Income Tax Regulations (26 
CFR Part 1) relating to section 6050L of the Internal Revenue Code 
(Code). These regulations reflect changes to the law made by the 
American Jobs Creation Act of 2004, Public Law 108-357 (118 Stat. 
1418). On May 23, 2005, temporary regulations (TD 9206) relating to 
information returns by donees with respect to qualified intellectual 
property contributions under section 6050L were published in the 
Federal Register (70 FR 29450). A notice of proposed rulemaking (REG-
158138-04) cross-referencing the temporary regulations was published in 
the Federal Register (70 FR 29460) on the same date. No comments were 
received from the public in response to the notice of proposed 
rulemaking and no public hearing was requested or held. Accordingly, 
the proposed regulations are adopted as amended by this Treasury 
decision and the corresponding temporary regulations are removed. The 
final regulations generally retain the provisions of the proposed and 
temporary regulations but eliminate transition rules that are no longer 
needed and make other minor editorial changes.

Explanation of Changes

    The final regulations do not include certain transition rules that 
were included in the temporary and proposed regulations. Specifically, 
the proposed and temporary regulations provide guidance for donees on 
making the required information return before a form is prescribed by 
the IRS. The IRS has since issued a new Form 8899 on which donees must 
report qualified donee income. Thus, these transition rules are no 
longer needed and are not included in the final regulations. The 
proposed and temporary regulations also include a transition rule that 
applies to donees with taxable years to which net income from the 
qualified intellectual property is properly allocable that end prior to 
or on May 23, 2005, the issuance date of the proposed and temporary 
regulations. Under this transition rule, the donee shall furnish the 
information required under section 6050L to the donor on or before 
August 22, 2005. This transition rule is no longer needed and is not 
included in the final regulations.

Special Analyses

    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. It has also 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 upon the fact that few, if any, small entities will be required 
to file under these regulations. 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, 
the notice of proposed rulemaking preceding this regulation was 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Drafting Information

    The principal author of these regulations is Timothy S. Sheppard, 
Office of Associate Chief Counsel (Procedure and Administration).

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

0
Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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


0
Par. 2. Sec.  1.6050L-2 is added to read as follows:


Sec.  1.6050L-2  Information returns by donees relating to qualified 
intellectual property contributions.

    (a) In general. Each donee organization described in section 
170(c), except a private foundation (as defined in section 509(a)), 
other than a private foundation described in section 170(b)(1)(F), that 
receives or accrues net income during a taxable year from any qualified 
intellectual property contribution (as defined in section 170(m)(8)) 
must make an annual information return on the form prescribed by the 
IRS. The information return is required for any taxable year of the 
donee that includes any portion of the 10-year period beginning on the 
date of the contribution, but not for taxable years beginning after the 
expiration of the legal life of the qualified intellectual property.
    (b) Information required to be provided on return. The information

[[Page 18710]]

return required by section 6050L and paragraph (a) of this section 
shall include the following--
    (1) The name, address, taxable year, and employer identification 
number of the donee making the information return;
    (2) The name, address, and taxpayer identification number of the 
donor;
    (3) A description of the qualified intellectual property in 
sufficient detail to identify the qualified intellectual property 
received by such donee;
    (4) The date of the contribution to the donee;
    (5) The amount of net income of the donee for the taxable year that 
is properly allocable to the qualified intellectual property 
(determined without regard to paragraph (10)(B) of section 170(m) and 
with the modifications described in paragraphs (5) and (6) of such 
section); and
    (6) Such other information as may be specified by the form or its 
instructions.
    (c) Special rule--statement to be furnished to donors. Every donee 
making an information return under section 6050L and this section with 
respect to a qualified intellectual property contribution shall furnish 
a copy of the information return to the donor of the property. The 
information return required by section 6050L and this section shall be 
furnished to the donor on or before the date the donee is required to 
file the return with the IRS.
    (d) Place and time for filing information return--(1) Place for 
filing. The information return required by section 6050L and this 
section shall be filed with the IRS location listed on the prescribed 
form or in its instructions.
    (2) Time for filing. A donee is required to file the return 
required by section 6050L and this section on or before the last day of 
the first full month following the close of the donee's taxable year to 
which net income from the qualified intellectual property is properly 
allocable.
    (e) Penalties. For penalties for failure to comply with the 
requirements of this section, see sections 6721 through 6724.
    (f) Effective/applicability date. The rules of this section apply 
to qualified intellectual property contributions made after June 3, 
2004.


Sec.  1.6050L-2T  [Removed]

0
Par. 3. Section 1.6050L-2T is removed.

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

0
Par. 4. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.


0
Par. 5. In Sec.  602.101, paragraph (b) is amended by removing the 
following entry from the table:


Sec.  602.101  OMB Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                            Current OMB
   CFR part or section where identified and described       control No.
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                                * * * * *
1.6050L-2T..............................................       1545-1932
 
                                * * * * *
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Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
    Approved: March 31, 2008.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
 [FR Doc. E8-7223 Filed 4-4-08; 8:45 am]
BILLING CODE 4830-01-P