Dual Consolidated Loss Regulations; Correction, 20423-20424 [E7-7782]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 72, Number 79 (Wednesday, April 25, 2007)]
[Rules and Regulations]
[Pages 20423-20424]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-7782]


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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.

ACTION: Correcting amendments.

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SUMMARY: This document contains corrections 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: These correcting amendments are effective April 25, 2007.

[[Page 20424]]


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

0
Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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


0
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:


Sec.  1.1503(d)-0  Table of contents.

* * * * *


Sec.  1.1503(d)-8  Effective dates.

* * * * *
    (b) * * *
    (1) Reduction of term of agreements filed under Sec. Sec.  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 Sec. Sec.  1.1503-
2(g)(2)(iv)(B)(2)(i) (1992), 1.1503-2(g)(2)(iv)(B)(3)(i), or Rev. Proc. 
2000-42.
* * * * *

0
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:


Sec.  1.1503(d)-5  Attribution of items and basis adjustments.

    (a) * * * The rules in this section apply for purposes of 
Sec. Sec.  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.
* * * * *

0
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:


Sec.  1.1503(d)-7  Examples.

* * * * *
    (c) * * *

    Example 5. * * *
    (iv) * * * In addition, pursuant to Sec.  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 Sec.  
1.1503(d)-6(e)(1)(iv) or (v).
* * * * *
    Example 40. * * *
    (ii) * * *
    (C) * * * Pursuant to Sec.  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.
* * * * *

0
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:


Sec.  1.1503(d)-8  Effective dates.

* * * * *
    (b) * * *
    (1) Reduction of term of agreements filed under Sec. Sec.  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 Sec. Sec.  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 Sec. Sec.  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 Sec. Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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