Federal Register / Vol. 61, No. 125 / Thursday, June 27, 1996 / Proposed Rules 33393

Section 1.382–2T also issued under 26

U.S.C. 382(g)(4)(C), (i), (k)(1) and (6), (l)(3),

(m), and 26 U.S.C. 383.* * *

Section 1.382–5 also issued under 26

U.S.C. 382(m).* * *

Section 1.382–8 also issued under 26

U.S.C. 382(m).* * *

Par. 2. Section 1.382–1 is amended by

revising the entry for § 1.382–2(a)(1)(iv),

and adding §§ 1.382–5 and 1.382–8 to

read as follows:

§ 1.382–1 Table of contents.

* * * * *

§ 1.382–2 General rules for ownership

change.

(a) * * *

(1) * * *

(iv) End of separate accounting for losses

and credits of distributor or transferor loss

corporation.

* * * * *

§ 1.382–5 Section 382 limitation.

(a) Scope.

(b) Computation of value.

(c) Short taxable year.

(d) Successive ownership changes and

absorption of a section 382 limitation.

(1) In general.

(2) Recognized built-in gains and losses.

(3) Effective date.

(e) Controlled groups.

(f) Effective date.

* * * * *

§ 1.382–8 Controlled groups.

(a) Introduction.

(b) Controlled group loss and controlled

group with respect to a controlled group loss.

(c) Computation of value.

(1) Reduction in value.

(2) Restoration of value.

(3) Reduction in value by the amount

restored.

(4) Appropriate adjustments.

(5) Certain reductions in the value of

members of a controlled group.

(d) No double reduction.

(e) Definitions and nomenclature.

(1) Definitions in § 1.382–2T.

(2) Controlled group.

(3) Component member.

(4) Predecessors and successors.

(f) Coordination between consolidated

groups and controlled groups.

(g) Examples.

(h) Time and manner of filing election to

restore.

(1) Statement required.

(2) Revocation of election.

(3) Filing by component member.

(i) [Reserved]

(j) Effective date.

(1) In general.

(2) Transition rule.

(3) Corporations that are not members on

January 29, 1991.

(4) Amended returns.

Par. 3. Section 1.382–2 is amended as

follows:

§ 1.382–2 General rules for ownership

change.

[The text of the proposed amendments

to paragraphs (e)(2)(iv), (f)(1)(i), (ii) and

(iii), (f)(4), (f)(5), and (f)(18)(i) is the

same as the text of the amendments to

paragraphs (e)(2)(iv), (f)(1)(i), (ii) and

(iii), (f)(4), (f)(5), and (f)(18)(i) of

§ 1.382–2T, published elsewhere in this

issue of the Federal Register.]

Par. 4. Sections 1.382–5 and 1.382–8

are added to read as follows:

[The text of these proposed sections is

the same as the text of §§ 1.382–5T and

1.382–8T published elsewhere in this

issue of the Federal Register.]

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 96–15828 Filed 6–26–96; 8:45 am]

BILLING CODE 4830–01–U

26 CFR Part 1

[CO–24–96]

RIN 1545–AU31

Consolidated Returns—Limitations on

the Use of Certain Losses and

Deductions

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Withdrawal of prior proposed

rule, notice of proposed rulemaking by

cross-reference to temporary

regulations, and notice of public

hearing.

SUMMARY: On January 29, 1991,

proposed rules under section 1502 were

filed with the Office of the Federal

Register (CO–78–90; see 56 FR 4228;

1991–1 C.B. 757). A public hearing was

held on April 8, 1991. The IRS and

Treasury published Notice 91–27 (1991–

2 C.B. 629) to advise of intended

modifications to the proposed

regulations. The January, 1991,

proposed rules are withdrawn, and

these proposed rules are issued in their

place.

In the Rules and Regulations section

of this issue of the Federal Register, the

IRS is issuing temporary regulations

relating to the carryover and carryback

of losses to consolidated and separate

return years. The text of those

temporary regulations also serves as the

text of these proposed regulations. This

document also provides a notice of

public hearing on these proposed

regulations.

DATES: Written comments must be

received by September 25, 1996.

Outlines of topics to be discussed at the

public hearing scheduled for Thursday,

October 17, 1996, at 10 a.m. must be

received by Thursday, September 26,

1996.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (CO–24–96), room

5228, Internal Revenue Service, POB

7604, Ben Franklin Station, Washington,

DC 20044. In the alternative,

submissions may be hand delivered

between the hours of 8 a.m. and 5 p.m.

to: CC:DOM:CORP:R (CO–24–96),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington, DC. The public hearing

will be held in the NYU Classroom,

Room 2615, Internal Revenue Building,

1111 Constitution Avenue NW.,

Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, David B.

Friedel, (202) 622–7550; concerning

submissions and the hearing,

Evangelista Lee, (202) 622–7190 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information

contained in this notice of proposed

rulemaking has been reviewed and

approved by the Office of Management

and Budget in accordance with the

Paperwork Reduction Act (44 U.S.C.

3507) under the control number 1545–

1237. Section 1.1502–21(b)(3) requires a

response from certain consolidated

groups. The IRS requires the

information to assure that an election to

relinquish a carryback period is

properly documented.

Comments concerning the collection

of information should be sent to the

Office of Management and Budget, Attn:

Desk Officer for the Department of

Treasury, Office of Information and

Regulatory Affairs, Washington, DC,

20503, with copies to the Internal

Revenue Service, Attn: IRS Reports

Clearance Officer, T:FP. Washington,

DC, 20224. Comments on the collection

of information should be received by

August 26, 1996.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information

displays a valid control number.

The collection of information is in

Proposed § 1.1502–21(b)(3). That section

permits an election to relinquish a

carryback period with respect to a

consolidated net operating loss. The

common parent of the group files the

statement evidencing the election with

the income tax return of the group. This

information is required by the IRS to

assure that an election to relinquish a

carryback period is properly

documented. The likely respondents
33394 Federal Register / Vol. 61, No. 125 / Thursday, June 27, 1996 / Proposed Rules

and/or recordkeepers are certain

consolidated groups of corporations.

Responses to this collection of

information are required to obtain a

benefit (relating to the carryover of

losses which would otherwise be

carried back).

Books or records relating to this

collection of information must be

retained as long as their contents may

become material in the administration

of any Internal Revenue law. Generally,

tax returns and tax return information

are confidential, as required by 26

U.S.C. 6103.

Estimated total annual reporting

burden: 1,000 hours. The estimated

annual burden per respondent varies

from five to thirty minutes, depending

on individual circumstances, with an

estimated average of ten minutes.

Estimated number of respondents:

6,000. Estimated annual frequency of

responses: 1.

Background

Temporary regulations in the Rules

and Regulations section of this issue of

the Federal Register amend the Income

Tax Regulations (26 CFR par. 1) relating

to deductions and losses of members.

The temporary amendments concern the

method for computing the limitations

with respect to separate return

limitation year (SRLY) losses. They also

concern the rules relating to carryover

and carryback of losses to consolidated

and separate return years and to the

built-in deductions rules. The final

regulations that are proposed to be

based on these proposed regulations

would be added to part 1 of title 26 of

the Code of Federal Regulations. Those

final regulations would provide rules for

computing the limitations with respect

to separate return limitation year (SRLY)

losses. They also concern the rules

relating to carryover and carryback of

losses to consolidated and separate

return years and to the built-in

deductions rules.

For the text of these new temporary

regulations, see TD 8677. The preamble

to the temporary regulations explains

the regulations.

Proposed Effective Date

For dates of application and special

transition rules, see the discussion of

Effective Dates under SUPPLEMENTARY

INFORMATION relating to the temporary

regulations, published elsewhere in this

issue of the Federal Register.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It is hereby

certified that these regulations do not

have a significant economic impact on

a substantial number of small entities.

This certification is based on the fact

that these regulations will primarily

affect affiliated groups of corporations

that have elected to file consolidated

returns, which tend to be larger

businesses. Therefore, 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, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its 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) that are submitted

timely to the IRS. All comments will be

available for public inspection and

copying.

A public hearing has been scheduled

for Monday, September 16, 1996, at 10

a.m. in the NYU Classroom, Room 2615,

Internal Revenue Building, 1111

Constitution Avenue NW., Washington,

DC. Because of access restrictions,

visitors will not be admitted beyond the

building lobby more than 15 minutes

before the hearing starts.

The rules of 26 CFR 601.601(a)(3)

apply to the hearing.

Persons that wish to present oral

comments at the hearing must submit

written comments by September 25,

1996 and submit an outline of the topics

to be discussed and the time to be

devoted to each topic (signed original

and eight (8) copies) by Thursday,

September 26, 1996.

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 B. Friedel, Office of

Assistant Chief Counsel (Corporate),

IRS. However, other personnel from the

IRS and Treasury Department

participated in their development.

Withdrawal of Notice of Proposed

Rulemaking

Accordingly, under the authority of

26 U.S.C. 7805, the notice of proposed

rulemaking that was published on

January 29, 1991 (56 FR 4228) is

withdrawn.

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 in part by adding

citations in numerical order to read as

follows:

Authority: 26 U.S.C. 7805

* * * * *

Section 1.1502–15 also issued under 26

U.S.C. 1502.

* * * * *

Section 1.1502–21 also issued under 26

U.S.C. 1502.

Section 1.1502–22 also issued under 26

U.S.C. 1502.

Section 1.1502–23 also issued under 26

U.S.C. 1502.

Section 1.1502–79 also issued under 26

U.S.C. 1502.

Section 1.1502–15A also issued under 26

U.S.C. 1502.

Section 1.1502–21A also issued under 26

U.S.C. 1502.

Section 1.1502–22A also issued under 26

U.S.C. 1502.

Section 1.1502–23A also issued under 26

U.S.C. 1502.

Section 1.1502–41A also issued under 26

U.S.C. 1502.

Section 1.1502–79A also issued under 26

U.S.C. 1502.

* * * * *

Par. 2. Section 1.1502–15 is added to

read as follows:

§ 1.1502–15 SRLY limitation on built-in

losses.

[The text of this proposed section is the

same as the text of § 1.1502–15T

published elsewhere in this issue of the

Federal Register.]

Par. 3. Section 1.1502–21 is added to

read as follows:

§ 1.1502–21 Net operating losses.

[The text of this proposed section is the

same as the text of § 1.1502–21T

published elsewhere in this issue of the

Federal Register.]

Par. 4. Section 1.1502–22 is added to

read as follows:

§ 1.1502–22 Consolidated capital gain and

loss.

[The text of this proposed section is the

same as the text of § 1.1502–22T

published elsewhere in this issue of the

Federal Register.]
Federal Register / Vol. 61, No. 125 / Thursday, June 27, 1996 / Proposed Rules 33395

Par. 5. Section 1.1502–23 is added to

read as follows:

§ 1.1502–23 Consolidated net section 1231

gain or loss.

[The text of this proposed section is the

same as the text of § 1.1502–23T

published elsewhere in this issue of the

Federal Register.]

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 96–15826 Filed 6–26–96; 8:45 am]

BILLING CODE 4830–01–U

26 CFR Part 1

[CO–25–96]

RIN 1545–AU32

Regulations Under Section 1502 of the

Internal Revenue Code of 1986;

Limitations on Net Operating Loss

Carryforwards and Certain Built-in

Losses and Credits Following an

Ownership Change of a Consolidated

Group

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Withdrawal of prior proposed

rule, notice of proposed rulemaking by

cross-reference to temporary

regulations, and notice of public

hearing.

SUMMARY: On February 4, 1991,

proposed rules under section 1502 were

published in the Federal Register (CO–

132–87; see 56 FR 4194; 1991–1 C.B.

728). A public hearing was held on

April 8, 1991. The IRS and Treasury

published Notice 91–27 (1991–2 C.B.

629) to advise of intended modifications

to the proposed regulations. The

February, 1991, proposed rules are

withdrawn and these proposed

regulations are issued in their place.

In the Rules and Regulations section

of this issue of the Federal Register, the

IRS is issuing temporary regulations

regarding the operation of sections 382

and 383 of the Internal Revenue Code of

1986 (relating to limitations on net

operating loss carryforwards and certain

built-in losses and credits following an

ownership change) with respect to

consolidated groups. The text of those

temporary regulations also serves as the

text of these proposed regulations. This

document also provides a notice of

public hearing on these proposed

regulations.

DATES: Written comments must be

received by September 25, 1996.

Outlines of topics to be discussed at the

public hearing scheduled for Thursday,

October 17, 1996, at 10 a.m. must be

received by Thursday, September 26,

1996.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (CO–25–96), room

5228, Internal Revenue Service, POB

7604, Ben Franklin Station, Washington,

DC 20044. In the alternative,

submissions may be hand delivered

between the hours of 8 a.m. and 5 p.m.

to: CC:DOM:CORP:R (CO–25–96),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington, DC. The public hearing

will be held in the NYU Classroom,

Room 2615, Internal Revenue Building,

1111 Constitution Avenue NW.,

Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, David B.

Friedel, (202) 622–7550; concerning

submissions and the hearing,

Evangelista Lee, (202) 622–7190 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information

contained in this notice of proposed

rulemaking has been reviewed and

approved by the Office of Management

and Budget in accordance with the

Paperwork Reduction Act (44 U.S.C.

3507) under the control number 1545–

1218. The collection requires a response

from certain consolidated groups. The

IRS requires the information described

in Proposed § 1.1502–95(e) to assure

that a section 382 limitation is properly

determined in cases of corporations that

cease to be members of a group.

Comments concerning the collection

of information should be sent 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, with copies to the Internal

Revenue Service, Attn: IRS Reports

Clearance Officer, T:FP. Washington,

DC, 20224. Comments on the collection

of information should be received by

August 26, 1996.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless the collection of information

displays a valid control number.

The collection of information is in

Proposed § 1.1502–95(e). That section

permits an election with respect to the

apportionment of a group section 382

limitation to a departing member. A

statement evidencing the apportionment

must be filed by the group and the

departing member indicating relevant

information regarding the

apportionment. The likely respondents

and/or recordkeepers are corporations

that are members of certain consolidated

groups. Responses to this collection of

information are required to obtain a

benefit (relating to the section 382

limitation applicable to the departing

member(s)).

Books or records relating to this

collection of information must be

retained as long as their contents may

become material in the administration

of any Internal Revenue law. Generally,

tax returns and tax return information

are confidential, as required by 26

U.S.C. 6103.

Estimated total annual reporting

burden: 380 hours. The estimated

annual burden per respondent varies

from ten to thirty minutes, depending

on individual circumstances, with an

estimated average of fifteen minutes.

Estimated number of respondents:

9,125. Estimated frequency of responses:

once every six years.

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) under

section 1502, relating to limitations on

net operating loss carryforwards and

certain built-in losses and credits

following an ownership change with

respect to consolidated groups. The

final regulations that are proposed to be

based on these proposed regulations

would be added to part 1 of title 26 of

the Code of Federal Regulations. Those

final regulations would provide rules

relating to limitations on net operating

loss carryforwards and certain built-in

losses following an ownership change.

For the text of these new temporary

regulations, see TD 8678. The preamble

to the temporary regulations explains

the regulations.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It is hereby

certified that these regulations do not

have a significant economic impact on

a substantial number of small entities.

This certification is based on the fact

that these regulations will primarily

affect affiliated groups of corporations

that have elected to file consolidated

returns, which tend to be larger

businesses. Therefore, 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, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small