20424 Federal Register / Vol. 72, No. 79 / Wednesday, April 25, 2007 / Rules and Regulations 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey P. Cowan, (202) 622–3860 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations that are the 

subject of this document are under 

section 1503(d) of the Internal Revenue 

Code. 

Need for Correction 

As published, final regulations (TD 

9315) contain errors that may prove to 

be misleading and are in need of 

clarification. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Correction of Publication 

■ Accordingly, 26 CFR part 1 is 

corrected by making the following 

correcting amendments: 

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 1.1503(d)–0 is 

amended by revising the entries (1) and 

(2) of Section 1.1503(d)–8(b). The 

revisions read as follows: 

§ 1.1503(d)–0 Table of contents. 

* * * * * 

§ 1.1503(d)–8 Effective dates. 

* * * * * 

(b) * * * 

(1) Reduction of term of agreements 

filed under §§ 1.1503–2A(c)(3), 1.1503–

2A(d)(3), 1.1503–2(g)(2)(i), or 1.1503–

2T(g)(2)(i). 

(2) Reduction of term of agreements 

filed under §§ 1.1503–2(g)(2)(iv)(B)(2)(i) 

(1992), 1.1503–2(g)(2)(iv)(B)(3)(i), or 

Rev. Proc. 2000–42. 

* * * * * 

■ Par. 3. Section 1.1503(d)–5 is 

amended by revising the last sentence of 

paragraph (a), the second sentence of 

paragraph (c)(4)(i)(A), and the only 

sentence of paragraph (d) to read as 

follows: 

§ 1.1503(d)–5 Attribution of items and 

basis adjustments. 

(a) * * * The rules in this section 

apply for purposes of §§ 1.1503(d)–1 

through 1.1503(d)–7. 

* * * * * 

(c) * * * 

(4) * * * 

(i) * * * 

(A) * * * For purposes of 

determining items of income, gain, 

deduction, and loss of the domestic 

owner that are attributable to the 

domestic owner’s foreign branch 

separate unit described in the preceding 

sentence, only items of income, gain, 

deduction, and loss that are attributable 

to the domestic owner’s interest in the 

hybrid entity, or transparent entity, as 

provided in paragraph (c)(3) of this 

section, shall be taken into account. 

* * * 

* * * * * 

(d) * * * The fact that a particular 

item taken into account in computing 

the income or dual consolidated loss of 

a dual resident corporation or a separate 

unit, or the income or loss of an interest 

in a transparent entity, is not taken into 

account in computing income (or loss) 

subject to a foreign country’s income tax 

shall not cause such item to be excluded 

from being taken into account under 

paragraph (b), (c), or (e) of this section. 

* * * * * 

■ Par. 4. Section 1.1503(d)–7(c) is 

amended by revising the last sentence of 

paragraph (iv) of Example 5 and the last 

sentence of paragraph (C) of Example 

40(ii). 

The revisions read as follows: 

§ 1.1503(d)–7 Examples. 

* * * * * 

(c) * * * 

Example 5. * * * 

(iv) * * * In addition, pursuant to 

§ 1.1503(d)–6(f)(1) and (3), the deemed 

transfers pursuant to Rev. Rul. 99–5 as a 

result of the sale are not treated as triggering 

events described in § 1.1503(d)–6(e)(1)(iv) or 

(v). 

* * * * * 

Example 40. * * * 

(ii) * * * 

(C) * * * Pursuant to § 1.1503(d)–

6(j)(1)(iii), the domestic use agreement filed 

by the P consolidated group with respect to 

the year 1 dual consolidated loss of the 

Country X separate unit is terminated and 

has no further effect. 

* * * * * 

■ Par. 5. Section 1.1503(d)–8 is 

amended by revising the heading texts 

of paragraphs (b)(1) and (2), the only 

sentence of paragraph (b)(1), the first 

sentence of paragraph (b)(2) and the last 

sentence of paragraph (b)(4). 

The revisions read as follows: 

§ 1.1503(d)–8 Effective dates. 

* * * * * 

(b) * * * 

(1) Reduction of term of agreements 

filed under §§ 1.1503–2A(c)(3), 1.1503– 

2A(d)(3), 1.1503–2(g)(2)(i), or 1.1503– 

2T(g)(i). If an agreement is filed in 

accordance with §§ 1.1503–2A(c)(3), 

1.1503–2A(d)(3), 1.1503–2(g)(2)(i), or 

1.1503–2T(g)(2)(i) with respect to a dual 

consolidated loss incurred in a taxable 

year beginning prior to the application 

date and an event requiring recapture 

with respect to the dual consolidated 

loss subject to the agreement has not 

occurred as of the application date, then 

such agreement will be considered by 

the Internal Revenue Service to apply 

only for any taxable year up to and 

including the fifth taxable year 

following the year in which the dual 

consolidated loss that is the subject of 

the agreement was incurred and 

thereafter will have no effect. 

(2) Reduction of term of agreements 

filed under §§ 1.1503–2(g)(2)(iv)(B)(2)(i) 

(1992), 1.1503–2(g)(2)(iv)(B)(3)(i), or 

Rev. Proc. 2000–42. Taxpayers subject to 

the terms of a closing agreement entered 

into with the Internal Revenue Service 

pursuant to §§ 1.1503–2(g)(2)(iv)(B)(2)(i) 

(1992), 1.1503–2(g)(2)(iv)(B)(3)(i), or 

Rev. Proc. 2000–42 (2000–2 CB 394), see 

§ 601.601(d)(2)(ii)(b) of this chapter, will 

be deemed to have satisfied the closing 

agreement’s fifteen-year certification 

period requirement if the five-year 

certification period specified in 

§ 1.1503(d)–1(b)(20) has elapsed, 

provided such closing agreement is still 

in effect as of the application date, and 

provided the dual consolidated losses 

have not been recaptured. * * * 

* * * * * 

(4) * * * Notwithstanding the general 

application of this paragraph (b)(4) to 

events described in § 1.1503–

2(g)(2)(iv)(B)(1)(i) through (iii) that 

occur after April 18, 2007, a taxpayer 

may choose to apply this paragraph 

(b)(4) to events described in § 1.1503–

2(g)(2)(iv)(B)(1)(i) through (iii) that 

occur after March 19, 2007 and on or 

before April 18, 2007. 

* * * * * 

LaNita Van Dyke, 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel, (Procedure and Administration). 

[FR Doc. E7–7782 Filed 4–24–07; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9315] 

RIN 1545–BD10 

Dual Consolidated Loss Regulations; 

Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 


cprice-sewell on PRODPC61 with RULES
Federal Register / Vol. 72, No. 79 / Wednesday, April 25, 2007 / Rules and Regulations 20425 

ACTION: Correction to final regulations. 

SUMMARY: This document contains a 

correction to final regulations (TD 9315) 

that were published in the Federal 

Register on Monday, March 19, 2007 (72 

FR 12902) regarding dual consolidated 

losses. Section 1503(d) generally 

provides that a dual consolidated loss of 

a dual resident corporation cannot 

reduce the taxable income of any other 

member of the affiliated group unless, to 

the extent provided in regulations, the 

loss does not offset the income of any 

foreign corporation. 

DATES: This correction is effective April 

25, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey P. Cowan, (202) 622–3860 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The correction notice that is the 

subject of this document is under 

section 1503(d) of the Internal Revenue 

Code. 

Need for Correction 

As published, final regulations (TD 

9315) contain an error that may prove to 

be misleading and is in need of 

clarification. 

Correction of Publication 

Accordingly, the publication of the 

final regulations (TD 9315), which was 

the subject of FR Doc. E7–4618, is 

corrected as follows: 

On page 12904, column 1, in the 

preamble, under the paragraph heading 

‘‘C. Elimination of the Consistency 

Rule’’, third line from the bottom of the 

paragraph, the language ‘‘application of 

the dual consolidated’’ is corrected to 

read ‘‘application of the dual 

consolidated loss’’. 

LaNita Van Dyke 

Chief, Publications and Regulations Branch, 

Legal Processing Division, Associate Chief 

Counsel, (Procedure and Administration). 

[FR Doc. E7–7780 Filed 4–24–07; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 21 

RIN 2900–AL43 

Administration of VA Educational 

Benefits—Centralized Certification 

AGENCY: Department of Veterans Affairs. 

ACTION: Final rule. 

SUMMARY: This document adopts as a 

final rule a proposed rule amending 

Department of Veterans Affairs (VA) 

rules governing certification of 

enrollment in approved courses for the 

training of veterans and other eligible 

persons under the education benefit 

programs VA administers. Under this 

rule, educational institutions with 

multi-state campuses may submit 

certifications to VA from a centralized 

location. 

DATES: This final rule is effective June 

25, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Lynn M. Nelson, Education Advisor, 

Veterans Benefits Administration, 

Department of Veterans Affairs (225C), 

810 Vermont Avenue, NW., 

Washington, DC 20420, 202–273–7187. 

SUPPLEMENTARY INFORMATION: In a 

document published in the Federal 

Register on February 22, 2006 (71 FR 

9052), VA proposed a rule that would 

amend subpart D of 38 CFR part 21 

regarding approval criteria for branches 

and extensions of educational 

institutions. VA is adopting as final the 

proposed rule with only minor nonsubstantive changes. The rule permits 

educational institutions with multi-state 

campuses to submit required 

certifications to VA from a centralized 

location (centralized certification). 

Interested persons were given 60 days 

to submit comments on the proposed 

rule. VA addresses the comments below. 

I. Background 

VA initially published a notice of 

proposed rulemaking (NPRM) in the 

Federal Register on June 30, 2003 (68 

FR 38657), proposing to amend VA 

regulations to permit centralized 

certification of courses. VA received 

several comments concerning the 

NPRM. Many of the comments opposing 

the proposed amendments came from 

individual State Approving Agencies 

(SAA), and a national association of 

SAAs. VA contracts with SAAs to 

perform course approval functions 

under 38 U.S.C. chapter 36. Based on 

the comments received, VA withdrew 

the initial NPRM and published a new 

NPRM taking into consideration all the 

comments received. (The new NPRM 

was published in the Federal Register 

on February 22, 2006 (71 FR 9052) for 

comment.) 

II. Favorable Comments on NPRM 

Published February 22, 2006 

VA received four favorable comments. 

Two were from educational institutions, 

one was from a national association of 

SAAs, and one was from an individual 

SAA. 

One commenter, the national 

association, supported the proposed 

rule and commended VA for addressing 

the issues raised in response to the prior 

NPRM. In addition, the commenter 

requested that VA amend proposed 38 

CFR 21.4266(f)(3) to add a requirement 

for teaching locations that do not have 

a certifying official present. Specifically, 

the commenter requested that VA 

require the educational institution’s 

designated employee, who has access to 

VA’s Internet-based educational 

certification application for purposes of 

providing certification information to 

VA, to also have access to other records 

the SAA may require. The commenter 

suggested that the designated employee 

should also have access to and provide 

academic records information to 

veterans, servicemembers, reservists or 

other eligible persons. (Another SAA 

individually submitted a similar 

comment.) 

While VA understands the 

commenter’s concern, we did not make 

the recommended change in this final 

rule because VA already has a 

regulation (38 CFR 21.4209) that 

requires educational institutions to 

make certain records available for 

review by VA and duly authorized 

Government representatives, such as 

SAAs. Since § 21.4209 presently 

requires institutions to make the records 

available, VA believes that the change 

suggested by the commenter is 

unnecessary. If the educational 

institution does not make the required 

records available, § 21.4209(e) provides 

that such failure is grounds for 

discontinuing the payment of 

educational assistance allowance (or 

special training allowance). An 

institution that does not comply would 

also be subject to losing approval of its 

courses for veterans’ training. 

III. Unfavorable Comments on the 

NPRM Published February 22, 2006 

One commenter, a State veterans 

affairs office, opposed the NPRM 

speculating that the amendments would 

be a step backward in maintaining the 

quality of education and veteran 

education services and would lead to a 

decline in service to veterans. As stated 

in the preamble of the NPRM at 71 FR 

9052, 9053–9058, and despite the 

commenter’s concerns, VA has no 

evidence that service would diminish if 

schools submitted certifications from a 

central location. 

In contrast to the above commenter’s 

critical comment, we also received 

favorable comments from school 

officials asserting that centralization 

would improve service to veteran 

students. These officials stated that they 

could maintain a better trained staff if 

they were permitted to centralize their 


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