[Federal Register Volume 69, Number 245 (Wednesday, December 22, 2004)]
[Proposed Rules]
[Pages 76635-76636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-28012]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-139683-04]
RIN 1545-BD95


Section 1374 Effective Dates

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 concerning the applicability of section 1374 to S corporations 
that acquire assets in carryover basis transactions from C corporations 
on or after December 27, 1994, and to certain corporations that 
terminate S corporation status and later elect again to become S 
corporations. The text of these regulations also serves as the text of 
these proposed regulations.

DATES: Written or electronic comments, and a request for a public 
hearing, must be received by March 22, 2005.

ADDRESSES: Send submissions to: CC:PA:LPD:sPR (REG-139683-04), room 
5203, Internal Revenue Service, PO 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-
139683-04), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically, via the IRS 
Internet site at http://www.irs.gov/regs or via the Federal eRulemaking 
Portal at http://www.regulations.gov (indicate IRS and REG-139683-04).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Stephen R. Cleary; (202) 622-7750, concerning submissions of comments, 
Sonya Cruse, (202) 622-4693 (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 26 CFR part 1 relating to section 
1374. The temporary regulations provide that (a) section 1374(d)(8) 
applies to any transaction described in that section that occurs on or 
after December 27, 1994, regardless of the date of the S corporation's 
election under section 1362, and (b) for purposes of section 633(d)(8) 
of the Tax Reform Act of 1986, as amended by the Technical and 
Miscellaneous Revenue Act of 1988, a corporation's most recent S 
election, not an earlier election that has been revoked or terminated, 
determines whether or not it is subject to current section 1374. The 
text of those regulations also serves as the text of these proposed 
regulations. The preamble to the temporary regulations explains the 
amendments.

Special Analysis

    It has been determined that this proposed regulation is not a 
significant regulatory action as defined in Executive Order 12866. 
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 Sec.  1.1374-8(a)(2) of these 
regulations. Because Sec.  1.1374-8(a)(2) does not impose a collection 
of information on small entities, it is not subject to the provisions 
of the Regulatory Flexibility Act (5 U.S.C. chapter 6). It is hereby 
certified that Sec.  1.1374-10(c) of this regulation will not have a 
significant economic impact on a substantial number of small entities. 
This certification is based on the fact that Sec.  1.1374-10(c) of this 
regulation addresses an uncommon fact situation not likely to affect a 
significant number of small entities. Therefore, a regulatory 
flexibility analysis is not required. Pursuant to section 7805(f) of 
the Internal Revenue Code, these proposed regulations have been 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on their impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) or electronic comments that are submitted timely 
to the IRS. The IRS and Treasury Department specifically request 
comments on the clarity of the proposed rules and how they may be made 
easier to understand. All comments will be available 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,

[[Page 76636]]

time, and place for the public hearing will be published in the Federal 
Register.

Drafting Information

    The principal author of these regulations is Stephen R. Cleary of 
the Office of Associate Chief Counsel (Corporate). Other personnel from 
Treasury and the IRS 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

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

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

    Par. 2. Section 1.1374-8 is amended by redesignating paragraph (a) 
as paragraph (a)(1) and adding paragraph (a)(2) to read as follows:


Sec.  1.1374-8  Section 1374(d)(8) transactions.

    (a) (1) * * *
    (2) [The text of the proposed amendment to Sec.  1.1374-8(a)(2) is 
the same as the text of Sec.  1.1374-8T(a)(2) published elsewhere in 
this issue of the Federal Register.].
* * * * *
    Par. 3. In Sec.  1.1374-10, paragraph (c) is added to read as 
follows:


Sec.  1.1374-10  Effective date and additional rules

* * * * *
    (c) The text of proposed Sec.  1.1374-10(c) is the same as the text 
of Sec.  1.1374-10T(c) published elsewhere in this issue of the Federal 
Register].

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 04-28012 Filed 12-21-04; 8:45 am]
BILLING CODE 4820-01-P