[Federal Register Volume 73, Number 79 (Wednesday, April 23, 2008)]
[Proposed Rules]
[Page 21861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-8817]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-109367-06]
RIN 1545-BF52


Section 1221(a)(4) Capital Asset Exclusion for Accounts and Notes 
Receivable

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking.

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SUMMARY: This document withdraws a notice of proposed rulemaking 
relating to the circumstances in which accounts or notes receivable are 
``acquired * * * for services rendered'' within the meaning of section 
1221(a)(4).

FOR FURTHER INFORMATION CONTACT: K. Scott Brown, (202) 622-7454 (not a 
toll-free call).

SUPPLEMENTARY INFORMATION:

Background

    On August 7, 2006, the Treasury Department and the IRS published in 
the Federal Register (71 FR 44600) proposed regulations Sec.  1.1221-
1(e) under section 1221(a)(4) of the Internal Revenue Code. These 
regulations sought to clarify the circumstances in which accounts or 
notes receivable are ``acquired * * * for services rendered'' within 
the meaning of section 1221(a)(4).
    Written comments were received from interested parties, and public 
hearings to discuss these regulations were held on November 7, 2006, 
and August 22, 2007. Most of the comments focused on the decisions in 
Burbank Liquidating Corp. v. Commissioner, 39 T.C. 999 (1963), acq. sub 
nom. United Assocs., Inc., 1965-1 C.B. 3, aff'd in part and rev'd in 
part on other grounds, 335 F.2d 125 (9th Cir. 1964) and Federal 
National Mortgage Association v. Commissioner, 100 T.C. 541 (1993). The 
Treasury Department and the IRS considered the comments and have 
decided to withdraw the proposed regulations.
    The IRS will not challenge return reporting positions of taxpayers 
under section 1221(a)(4) that apply existing law, including Burbank 
Liquidating; Federal National Mortgage Association; and Bieldfeldt v. 
Commissioner, 231 F.3d 1035 (7th Cir. 2000), cert. denied, 534 U.S. 813 
(2001). See also Rev. Rul. 80-56 (1980-1 C.B. 154) and Rev. Rul. 80-57 
(1980-1 C.B. 157). The IRS and the Treasury Department will continue to 
study this area and may issue guidance in the future.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirement.

Withdrawal of Notice of Proposed Rulemaking

    Accordingly, under the authority of 26 U.S.C. 7805, the notice of 
proposed rulemaking (REG-109367-06) published in the Federal Register 
on August 7, 2006 (71 FR 44600) is withdrawn.

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E8-8817 Filed 4-22-08; 8:45 am]
BILLING CODE 4830-01-P