[Federal Register Volume 73, Number 70 (Thursday, April 10, 2008)]
[Proposed Rules]
[Pages 19450-19451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-7515]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-168745-03]
RIN 1545-BE18


Guidance Regarding Deduction and Capitalization of Expenditures 
Related to Tangible Property; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to a notice of proposed rulemaking.

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SUMMARY: This document contains corrections to a notice of proposed 
rulemaking (REG-168745-03) that was published in the Federal Register 
on Monday, March 10, 2008 (73 FR 12838) explaining how section 263(a) 
of the Internal Revenue Code applies to amounts paid to acquire, 
produce, or improve tangible property. The proposed regulations clarify 
and expand the standards in the current regulations under section 
263(a), as well as provide some bright-line tests (for example, a de 
minimis rule for acquisitions). The proposed regulations will affect 
all taxpayers that acquire, produce, or improve tangible property.

FOR FURTHER INFORMATION CONTACT: Merrill D. Feldstein or Mon L. Lam, 
(202) 622-4950 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The correction notice that is the subject of this document is under 
sections 162 and 263(a) of the Internal Revenue Code.

Need for Correction

    As published, a notice of proposed rulemaking (REG-168745-03) 
contains errors that may prove to be misleading and are in need of 
clarification.

Correction of Publication

    Accordingly, the publication of a notice of proposed rulemaking 
(REG-168745-03), which was the subject of FR Doc. E8-4466, is corrected 
as follows:
    1. On page 12838, column 2, in the preamble, under the paragraph 
heading ``I. Overview'', line 9 from the bottom of the column, the 
language ``to the rules relating to unit of property,'' is corrected to 
read ``to the rules relating to unit of property and''.
    2. On page 12839, column 1, in the preamble, under the paragraph 
heading ``III. Materials and Supplies under Sec.  1.162-3'', line 2 
from the bottom of the column, the language ``material and supplies 
regulations, the'' is corrected to read ``materials and supplies 
regulations, the''.
    3. On page 12839, column 2, in the preamble, under the paragraph 
heading ``III. Materials and Supplies under Sec.  1.162-3'', first 
paragraph, line 7, the language ``economic useful life of the asset 
for'' is corrected to read ``economic useful life of the asset for 
purposes of''.
    4. On page 12840, column 3, in the preamble, under the paragraph 
heading ``B. Transaction Costs'', first paragraph, line 7, the language 
``T.C. 106, 110 (1950), acq., 1951-1 CB 3.'' is corrected to read 
``T.C. 106, 110 (1950), acq., (1951-1 CB 3).''.
    5. On page 12841, column 2, in the preamble, under the paragraph 
heading ``C. De Minimis Rule'', line 18 from the bottom of the column, 
the language ``is provided in Sec.  1.263A-1(b)(14) of the'' is 
corrected to read ``is provided in Sec.  1.263A-1(b)(14) of''.
    6. On page 12842, column 1, in the preamble, under the paragraph 
heading ``VIII. Improvements'', sixth paragraph of the column, the 
language ``(ii) Adapt a unit of property to a new or different use.'' 
is corrected to read ``(iii) Adapt a unit of property to a new or 
different use.''.
    7. On page 12842, column 2, in the preamble, under the paragraph 
heading ``VIII. Improvements'', first paragraph of the column, line 3, 
the language ``263A(b), which states that section 263A'' is corrected 
to read ``263A(b)(1), which states that section 263A''.
    8. On page 12842, column 3, in the preamble, under the paragraph 
heading ``A. Unit of Property'', second paragraph of the column, lines 
9 through 10, the language ``used in certain regulated industries; 
network assets were excluded from the'' is corrected to read ``used in 
certain regulated industries. Network assets were excluded from the''.


Sec.  1.162-3  [Corrected]

    9. On page 12848, column 2, Sec.  1.162-3(c), line 9, the language 
``sections. For example, see section'' is corrected to read ``sections. 
For example, see''.
    10. On page 12848, column 2, Sec.  1.162-3(d)(1)(i), last line, the 
language ``unit of property; or'' is corrected to read ``unit of 
property;''.
    11. On page 12848, column 2, Sec.  1.162-3(d)(1)(ii), last line, 
the language ``taxpayer's operations; or'' is corrected to read 
``taxpayer's operations;''.


Sec.  1.263(a)-0  [Corrected]

    12. On page 12851, column 1, Sec.  1.263(a)-3(g)(2)(i)(A), the 
language ``(1) Like-new condition.'' is corrected to read ``(A) Like-
new condition.''.
    13. On page 12851, column 1, Sec.  1.263(a)-3(g)(2)(i)(B), the 
language ``(2) Economic useful life.'' is corrected to read ``(B) 
Economic useful life.''.


Sec.  1.263(a)-2  [Corrected]

    14. On page 12855, column 2, Sec.  1.263(a)-2(d)(4)(vi), line 8, 
the language ``(including within paragraph (d)(4)(iv)(B)'' is corrected 
to read ``(including within paragraph (d)(4)(vi)(B)''.
    15. On page 12855, column 3, Sec.  1.263(a)-2(d)(4)(vii) Example 
3., line 12, the language ``under Sec.  1.162-3(a)(1) and Sec.  1.163-
3(d)(1)(iii),'' is corrected to

[[Page 19451]]

read ``under Sec.  1.162-3(a)(1) and Sec.  1.162-3(d)(1)(iii),''.
    16. On page 12855, column 3, Sec.  1.263(a)-2(d)(4)(vii) Example 
4., the language ``an election under Sec.  1.162-3(d) to capitalize'' 
is corrected to read ``an election under Sec.  1.162-3(e) to 
capitalize''.


Sec.  1.263(a)-3  [Corrected]

    17. On page 12856, column 3, Sec.  1.263(a)-3(c)(1), line 4 from 
the bottom of the paragraph, the language ``of the production or resale 
activities,'' is corrected to read ``of production or resale 
activities,''.
    18. On page 12858, column 2, Sec.  1.263(a)-3(d)(2)(iv) Example 4., 
line 5, the language ``business. Within the plant X utilizes an'' is 
corrected to read ``business. Within the plant, X utilizes an''.
    19. On page 12860, column 1, Sec.  1.263(a)-3(e)(5) Example 1. (i), 
line 10, the language ``replacement part. After the ESVs the engines'' 
is corrected to read `` replacement part. After the ESVs, the 
engines''.
    20. On page 12861, column 1, Sec.  1.263(a)-3(e)(5) Example 7., 
lines 22 through 25, the language ``costs. Because the scheduled 
maintenance involves recurring activities that X expects to perform 
more than once during the 18 year class life of the towboat. This 
maintenance'' is corrected to read ``costs. The scheduled maintenance 
involves recurring activities that X expects to perform more than once 
during the 18 year class life of the towboat. Because this 
maintenance''.
    21. On page 12861, column 2, Sec.  1.263(a)-3(e)(5) Example 9., 
line 9 from the bottom of the paragraph, the language ``ordinary 
efficient operating condition if the'' is corrected to read 
``ordinarily efficient operating condition if the''.
    22. On page 12861, column 3, Sec.  1.263(a)-3(f)(2)(i), line 13, 
the language ``financial statement (as described in'' is corrected to 
read ``financial statement (as defined in''.
    23. On page 12862, column 1, Sec.  1.263(a)-3(f)(3) Example 3. (i), 
lines 4 and 5, the language ``for use its manufacturing operations. 
Assume that the machine is a unit of property and it'' is corrected to 
read ``for use in its manufacturing operations. Assume that the machine 
is a unit of property and''.
    24. On page 12862, column 3, Sec.  1.263(a)-3(f)(3) Example 6. (i), 
line 1, the language ``Example 6. Not a betterment. X owns a'' is 
corrected to read ``Example 6. Not a betterment. (i) X owns a''.
    25. On page 12863, column 2, Sec.  1.263(a)-3(f)(3) Example 8., 
line 2, the language ``quality of the plant or its output of compared'' 
is corrected to read ``quality of the plant or its output compared''.
    26. On page 12864, column 1, Sec.  1.263(a)-3(g)(2)(i)(A), line 1, 
the language ``(1) Like-new condition. A unit of'' is corrected to read 
``(A) Like-new condition. A unit of''.
    27. On page 12864, column 1, Sec.  1.263(a)-3(g)(2)(i)(B), line 1, 
the language ``(2) Economic useful life. The'' is corrected to read 
``(B) Economic useful life. The''.
    28. On page 12864, column 2, Sec.  1.263(a)-3(g)(3)(i)(A), line 1, 
the language ``(1) A part or a combination of parts'' is corrected to 
read ``(A) A part or a combination of parts''.
    29. On page 12864, column 2, Sec.  1.263(a)-3(g)(3)(i)(B), line 1, 
the language ``(2) A part or a combination of parts'' is corrected to 
read ``(B) A part or a combination of parts''.
    30. On page 12864, column 3, Sec.  1.263(a)-3(g)(4) Example 2., 
line 4, the language ``for which it had property taken into account'' 
is corrected to read ``for which it had properly taken into account''.
    31. On page 12865, column 1, Sec.  1.263(a)-3(g)(4) Example 6., 
first paragraph of the column, line 4, the language ``rebuild, the 
freight car has been restored to'' is corrected to read ``rebuild, the 
freight car has been restored to a''.
    32. On page 12865, column 1, Sec.  1.263(a)-3(g)(4) Example 6., 
line 11, the language ``paid restore the freight car to like-new'' is 
corrected to read ``paid restore the freight car to a like-new''.
    33. On page 12865, column 1, Sec.  1.263(a)-3(g)(4) Example 7., 
line 9, the language ``the freight car to like-new condition after 
the'' is corrected to read ``the freight car to a like-new condition 
after the''.

LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. E8-7515 Filed 4-9-08; 8:45 am]
BILLING CODE 4830-01-P