[Federal Register Volume 78, Number 3 (Friday, January 4, 2013)]
[Proposed Rules]
[Pages 687-688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31746]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-140437-12]
RIN 1545-BL28


Bond Premium Carryforward

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 that provide 
guidance on the tax treatment of a debt instrument with a bond premium 
carryforward in the holder's final accrual period, including a Treasury 
bill acquired at a premium. The text of those regulations also serves 
as the text of these proposed regulations.

DATES: Written or electronic comments must be received by April 4, 
2013.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-140437-12), 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-
140437-12), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at www.regulations.gov (IRS REG-140437-12).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
William E. Blanchard, (202) 622-3900; concerning submissions of 
comments, Oluwafunmilayo (Funmi) Taylor, (202) 622-7180 (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) relating to section 171. The temporary regulations provide 
guidance on the tax treatment of a taxable debt instrument with a bond 
premium carryforward in the holder's final accrual period, including a 
Treasury bill acquired at a premium. In general, the temporary 
regulations provide that, upon the sale, retirement, or other 
disposition of a taxable bond, the holder treats the amount of any bond 
premium carryforward determined as of the end of the accrual period 
under Sec.  1.171-2(a)(4)(i)(B) as a bond premium deduction under 
section 171(a)(1) for the holder's taxable year in which the sale, 
retirement, or other disposition occurs. The text of the temporary 
regulations also serves as the text of 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, as supplemented by Executive Order 13563. 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, and because the regulations do not 
impose a collection of information on small entities, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to 
section 7805(f) of the Internal Revenue Code, this notice of proposed 
rulemaking has been submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
businesses.

Comments

    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 
as prescribed in the preamble under the ``Addresses'' heading. The 
Treasury Department and the IRS welcome comments on the clarity of the 
proposed rules and how they can be made easier to understand. All 
comments will be available at www.regulations.gov for public inspection 
and copying. A public hearing may 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 a public hearing 
will be published in the Federal Register.

Drafting Information

    The principal author of these regulations is William E. Blanchard, 
Office of Associate Chief Counsel (Financial Institutions and 
Products). 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 Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be 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 * * *


[[Page 688]]


0
Par. 2. Section 1.171-2 is amended by adding a new paragraph 
(a)(4)(i)(C) to read as follows:


Sec.  1.171-2  Amortization of bond premium.

    (a) * * *
    (4) * * *
    (i) * * *
    (C) [The text of the proposed amendment to Sec.  1.171-
2(a)(4)(i)(C) is the same as the text for Sec.  1.171-2T(a)(4)(i)(C) 
published elsewhere in this issue of the Federal Register].
* * * * *

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2012-31746 Filed 1-3-13; 8:45 am]
BILLING CODE 4830-01-P