Guidance Under Section 1502; Amendment of Tacking Rule Requirements of Life-Nonlife Consolidated Regulations, 23882 [06-3883]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 71, Number 79 (Tuesday, April 25, 2006)]
[Proposed Rules]
[Page 23882]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-3883]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-133036-05]
RIN 1545-BE85


Guidance Under Section 1502; Amendment of Tacking Rule 
Requirements of Life-Nonlife Consolidated Regulations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rule making 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 relating to 
the requirements for including insurance companies in a life-nonlife 
consolidated return. The text of those regulations also serves as the 
text of these proposed regulations. These regulations affect 
corporations filing life-nonlife consolidated returns.

DATES: Written or electronic comments and requests for a public hearing 
must be received by July 24, 2006.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-133036-05), 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-
133036-05), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically, via the IRS 
Internet site at https://www.irs.gov/regs or via the Federal eRulemaking 
Portal at https://www.regulations.gov (IRS-REG-133036-05).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Drafting Attorney, Ross Poulsen, (202) 622-7770; concerning submission 
of comments and/or requests for a public hearing, Richard Hurst, 
Richard.A.Hurst@irscounsel.treas.gov, (202) 622-7180 (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 the Income Tax Regulations (26 CFR 
part 1) under section 1502 relating to the life-nonlife consolidated 
return regulations. The temporary regulations contain an exception (the 
tacking rule) to the five-year affiliation rules of sections 1503(c)(2) 
and 1504(c)(2). The temporary regulations replace the tacking rule of 
Sec.  1.1502-47(d)(12)(v) with a rule that does not contain a condition 
relating to the separation of profitable activities from loss 
activities. The text of those regulations also serves as the text of 
these proposed regulations. The preamble to the temporary regulations 
explains the amendments.

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 is hereby 
certified that these regulations will not have a significant economic 
impact on a substantial number of small entities. This certification is 
based on the fact that these regulations primarily affect affiliated 
groups of corporations with one or more life insurance company members, 
which tend to be larger businesses. Moreover, the number of taxpayers 
affected is minimal. 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 Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (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. 
A public hearing will be scheduled if requested in writing by any 
person that timely submits written comments. If a public hearing is 
scheduled, notice of the date, time, and place for the public hearing 
will be published in the Federal Register.

Drafting Information

    The principal author of these regulations is Ross Poulsen, Office 
of Associate Chief Counsel (Corporate). However, other personnel from 
the IRS and 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 continues to read, 
in part, as follows:

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

    Par. 2. Section 1.1502-47 is amended by:
    1. Adding paragraphs (b)(2)(i) and (b)(2)(ii).
    2. Removing paragraph (d)(12)(v)(C).
    3. Redesignating paragraph (d)(12)(v)(D) and (d)(12)(v)(E) as 
(d)(12)(v)(C) and (d)(12)(v)(D).
    4. Revising paragraph (d)(12)(v), and newly-designated paragraphs 
(d)(12)(v)(C) and (d)(12)(v)(D).
    The revisions and additions read as follows:


Sec.  1.1502-47  Consolidated returns by life-nonlife groups.

    [The text of this proposed section is the same as the text of Sec.  
1.1502-47T published elsewhere in this issue of the Federal Register]
    Par. 3. Section 1.1502-76 is amended by:
    1. Removing paragraph (a)(2).
    2. Redesignating paragraph (a)(1) as paragraph (a).
    3. Revising the paragraph heading for newly-designated paragraph 
(a).
    The revision reads as follows:


Sec.  1.1502-76  Taxable year of members of group.

    [The text of this proposed section is the same as the text of Sec.  
1.1502-76T published elsewhere in this issue of the Federal Register.]

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 06-3883 Filed 4-24-06; 8:45 am]
BILLING CODE 4830-01-P