[Federal Register Volume 73, Number 117 (Tuesday, June 17, 2008)]
[Proposed Rules]
[Pages 34237-34239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-1363]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-149405-07]
RIN 1545-BH32


Alternative Simplified Credit under Section 41(c)(5)

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations and notice of public hearing.

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SUMMARY: In the Rules and Regulations section in this issue of the 
Federal Register, the IRS is issuing temporary regulations relating to 
the election and calculation of the alternative simplified credit under 
section 41(c)(5) of the Internal Revenue Code (ASC). The regulations 
implement changes to the credit for increasing research activities 
under section 41 made by the Tax Relief and Health Care Act of 2006 and 
will affect certain taxpayers claiming the section 41 credit. The text 
of those regulations also serves as the text of these proposed 
regulations. This document also provides notice of a public hearing on 
these proposed regulations.

DATES: Written or electronic comments must be received by September 15, 
2008. Outlines of topics to be discussed at the public hearing 
scheduled for September 25, 2008, must be received by September 4, 
2008.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-149405-07), room 
5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, 
Washington,

[[Page 34238]]

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-149405-
07), 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-149405-07). 
The public hearing will be held in the IRS Auditorium, Internal Revenue 
Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
David Selig, (202) 622-3040; concerning submission of comments, the 
hearing, and/or to be placed on the building access list to attend the 
hearing, Regina Johnson, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    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 41. The temporary regulations provide 
guidance concerning the election and calculation of the alternative 
simplified credit under section 41(c)(5). The text of those regulations 
also serves as the text of these proposed regulations. The preamble to 
the temporary regulations explains 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 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. It is hereby 
certified that these regulations will not have a significant economic 
impact on a substantial number of small entities. Although a 
substantial number of small entities may make an election under these 
regulations, any economic impact is minimal because an election under 
these regulations generally will simplify the calculation of the credit 
and may result in a benefit to the taxpayer. Accordingly, 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 Internal 
Revenue Code, these regulations will be submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on their 
impact on small business.

Comments and 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. All comments will be available for public inspection and 
copying. The IRS and the Treasury Department invite taxpayers to submit 
comments on the proposed regulations and issues relating to the 
election and calculation of the ASC under section 41(c)(5). In 
particular, the IRS and the Treasury Department encourage taxpayers to 
submit comments on the following issues:
    Should the regulations allow a controlled group to make an election 
to use the ASC both for computation of the group credit and computation 
of every member's stand-alone entity credit, even if the ASC does not 
provide the greatest stand-alone entity credit?
    If so, how should that election be made and by whom?
    What relief should be made available to taxpayers that have used 
methodologies inconsistent with the short taxable year rules provided 
in these regulations on tax returns filed after the effective date of 
section 41(c)(5) and prior to the publication of these regulations?
    A public hearing has been scheduled for September 25, 2008, at 10 
a.m. in the IRS Auditorium, Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC. Due to building security 
procedures, visitors must enter at the Constitution Avenue entrance. In 
addition, all visitors must present photo identification to enter the 
building. Because of access restrictions, visitors will not be admitted 
beyond the immediate entrance area more than 30 minutes before the 
hearing starts. For information about having your name placed on the 
building access list to attend the hearing, see the FOR FURTHER 
INFORMATION CONTACT section of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit electronic or 
written comments by September 15, 2008, and an outline of the topics to 
be discussed and the time to be devoted to each topic (a signed 
original and eight (8) copies) by September 4, 2008. A period of 10 
minutes will be allotted to each person for making comments. An agenda 
showing the scheduling of the speakers will be prepared after the 
deadline for receiving outlines has passed. Copies of the agenda will 
be available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is David Selig, Office of 
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 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 is amended by adding 
entries in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.41-8 also issued under 26 U.S.C. 41(c)(4)(B); Section 
1.41-9 also issued under 26 U.S.C. 41(c)(5)(C); * * *

    Par. 2. Section 1.41-6 is amended by revising paragraphs (b)(1), 
(c)(2), (e) and (j) to read as follows:

Sec.  1.41-6  Aggregation of expenditures.

* * * * *
    (b)(1) [The text of the proposed amendment to Sec.  1.41-6(b)(1) is 
the same as the text of Sec.  1.41-6T(b)(1) published elsewhere in this 
issue of the Federal Register.]
* * * * *
    (c) * * *
    (2) [The text of the proposed amendment to Sec.  1.41-6(c)(2) is 
the same as the text of Sec.  1.41-6T(c)(2) published elsewhere in this 
issue of the Federal Register].
* * * * *
    (e) [The text of the proposed amendment to Sec.  1.41-6(e) is the 
same as the text of Sec.  1.41-6T(e) published elsewhere in this issue 
of the Federal Register].
* * * * *
    (j) [The text of the proposed amendment to Sec.  1.41-6(j) is the 
same as the text of Sec.  1.41-6T(j) published elsewhere in this issue 
of the Federal Register].
    Par. 3. Section 1.41-8 is amended by revising paragraphs (b)(2), 
(b)(3), (b)(4) and (b)(5) to read as follows:


Sec.  1.41-8  Alternative incremental credit.

* * * * *
    (b)(2) through (b)(5) [The text of proposed Sec.  1.41-8(b)(2) 
through (b)(5) is

[[Page 34239]]

the same as the text of Sec.  1.41-8T(b)(2) through (b)(5) published 
elsewhere in this issue of the Federal Register.]
* * * * *
    Par. 4. Section 1.41-9 is added to read as follows:


Sec.  1.41-9  Alternative simplified credit.

    [The text of proposed Sec.  1.41-9 is the same as the text of Sec.  
1.41-9T (a) through (d) published elsewhere in this issue of the 
Federal Register.]

Steven T. Miller,
Acting Deputy Commissioner for Services and Enforcement.
[FR Doc. 08-1363 Filed 6-13-08; 11:51am]
BILLING CODE 4830-01-P