[Federal Register Volume 60, Number 82 (Friday, April 28, 1995)]
[Rules and Regulations]
[Pages 20898-20899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10424]



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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 8594]
RIN 1545-AS97


Losses on Small Business Stock

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations amending regulations 
under section 1244 relating to losses on small business stock. The 
final regulations remove the requirement that a taxpayer claiming a 
section 1244 ordinary loss file an information statement with the 
taxpayer's income tax return.

DATES: These regulations are effective April 27, 1995.
    For dates of applicability of these regulations, see ``Effective 
Date'' under SUPPLEMENTARY INFORMATION portion of preamble.

FOR FURTHER INFORMATION CONTACT: Kirsten L. Simpson, (202) 622-7790 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these final regulations 
has been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act (44 U.S.C. 3504(h)) 
under control number 1545-1447. The estimated annual burden per 
recordkeeper varies from .10 hours to .30 hours, depending on 
individual circumstances, with an estimated average of .20 hours.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be sent to the Internal 
Revenue Service, Attn: IRS Reports Clearance Officer, PC:FP, 
Washington, DC 20224, and to the Office of Management and Budget, Attn: 
Desk Officer for the Department of the Treasury, Office of Information 
and Regulatory Affairs, Washington, DC 20503.

Background

    On November 15, 1994, a notice of proposed rulemaking (CO-46-94), 
amending regulations under section 1244 of the Internal Revenue Code 
relating to losses on small business stock, was published in the 
Federal Register (59 FR 58800). No public hearing was requested or 
held.
    One written comment responding to the notice was received. The 
comment was favorable. The regulations proposed by CO-46-94 are adopted 
without revision by this Treasury decision.

Explanation of Provision

    Section 1.1244(e)-1(b) of the Income Tax Regulations is revised to 
eliminate the requirement that a taxpayer file an information statement 
with the taxpayer's income tax return. However, because a taxpayer who 
claims an ordinary loss under section 1244 still bears the burden of 
establishing that the deduction is proper, Sec. 1.1244(e)-1(b) is 
revised to state that a person who claims an ordinary loss with respect 
to stock under section 1244 must have records sufficient to establish 
that the taxpayer is entitled to the loss and satisfies the 
requirements of section 1244.

Effective Date

    These regulations are effective for open taxable years beginning 
after December 31, 1953, the effective date of Treasury Decision 6495, 
which prescribed regulations under section 1244.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory assessment is not required. It has also been determined that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to 
these regulations, and, therefore, a Regulatory Flexibility Analysis is 
not required. Pursuant to section 7805(f) of the Internal Revenue Code, 
the notice of proposed rulemaking preceding these regulations was 
submitted to the Small Business Administration for comment on its 
impact on small business.

Drafting Information

    The principal author of these regulations is Kirsten L. Simpson, 
Office of Assistant Chief Counsel (Corporate), IRS. However, other 
personnel from the IRS and Treasury Department participated in their 
development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 602 are 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 1.1244(e)-1 also issued 
under 26 U.S.C. 1244(e).* * *

    Par. 2. Section 1.1244(e)-1 is amended as follows:
    1. The section heading is revised.
    2. In paragraph (a)(1), the reference in the second sentence to 
``paragraph (c)(2) of Sec. 1.1244(c)-2'' is removed and 
``Sec. 1.1244(c)-2(b)(2)'' is added in its place.
    3. Paragraph (b) is revised.
    The revisions read as follows:


Sec. 1.1244(e)-1  Records to be kept.

* * * * *
    (b) By the taxpayer. A person who claims an ordinary loss with 
respect to [[Page 20899]] stock under section 1244 must have records 
sufficient to establish that the taxpayer is entitled to the loss and 
satisfies the requirements of section 1244. See also section 6001, 
requiring records to be maintained.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

    Par. 3. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.

    Par. 4. In Sec. 602.101, paragraph (c) is amended by revising the 
entry in the table for Sec. 1.1244(e)-1 to read as follows:

                                                                        
                                                                        
                                                                        
1.1244(e)-1................................................    1545-0123
                                                               1545-1447
                                                                        

Margaret Milner Richardson,
Commissioner of the Internal Revenue.
    Dated: March 27, 1995.
Leslie Samuels,
Assistant Secretary for the Treasury.
[FR Doc. 95-10424 Filed 4-27-95; 8:45 am]
BILLING CODE 4830-01-U