[Federal Register Volume 75, Number 156 (Friday, August 13, 2010)]
[Proposed Rules]
[Pages 49427-49428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20061]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-144762-09]
RIN 1545-BI99


Application of Section 108(i) to Partnerships and S Corporations

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 relating to 
the application of section 108(i) of the Internal Revenue Code (Code) 
to partnerships and S corporations. The temporary regulations provide 
rules regarding the deferral of discharge of indebtedness income and 
original issue discount deductions by a partnership or an S corporation 
with respect to reacquisitions of applicable debt instruments after 
December 31, 2008, and before January 1, 2011. The regulations affect 
partnerships and S corporations with respect to reacquisitions of 
applicable debt instruments and their partners and shareholders. The 
text of the temporary regulations published in this issue of the 
Federal Register also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by November 12, 2010.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-144762-09), Room 
5203, Internal Revenue Service, P.O. 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-
144762-09), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically, via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS REG-144762-09).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Megan A. Stoner and Joseph R. Worst, Office of Associate Chief Counsel 
(Passthroughs and Special Industries) (202) 622-3070; concerning 
submissions of comments or a request for a public hearing, Richard 
Hurst, (202) 622-7180 (not toll-free numbers) and his e-mail address is 
[email protected].

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these proposed 
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) under control number 1545-2147. The collection of 
information in these regulations are in Sec.  1.108(i)-2(b)(3)(iv). 
Under Sec.  1.108(i)-2(b)(3)(iv), a partner in a partnership that makes 
an election under section 108(i) is required to provide certain 
information to the partnership so that the partnership can correctly 
determine the partner's deferred section 752 amount with respect to an 
applicable debt instrument.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    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 
tax return information are confidential, as required by 26 U.S.C. 6103.

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) relating to section 108(i). The temporary regulations set forth 
rules for applying section 108(i) to partnerships and S corporations. 
The text of the temporary regulations also serves as the text of these 
proposed regulations. The preamble to the temporary regulations 
explains the temporary regulations and these proposed regulations.

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 is hereby 
certified that the collection of information contained in these

[[Page 49428]]

regulations will not have a significant economic impact on a 
substantial number of small entities. This certification is based on 
the fact that the collection of information imposed on partners of 
partnerships is minimal in that it requires partners to share 
information with partnerships that partners already maintain. Moreover, 
it should take a partner no more than one hour to satisfy the 
information-sharing requirement in 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 
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 Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and the 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 or electronic 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 authors of these regulations are Megan A. Stoner and 
Joseph R. Worst, Office of the Associate Chief Counsel (Passthroughs 
and Special Industries). However, other personnel from the IRS and the 
Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendment 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 as follows:

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

    Section 1.108(i)-2 also issued under 26 U.S.C. 108(i)(7). * * *

    Par. 2. Section 1.108(i)-2 is added to read as follows:


Sec.  1.108(i)-2  Application of section 108(i) to partnerships and S 
corporations.

    [The text of proposed Sec.  1.108(i)-2 is the same as the text of 
Sec.  1.108(i)-2T(a) through (f) published elsewhere in this issue of 
the Federal Register].

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2010-20061 Filed 8-11-10; 11:15 am]
BILLING CODE 4830-01-P