Unified Rule for Loss on Subsidiary Stock; Correction, 62204-62205 [E8-24670]
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62204
Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations
‘‘reason for this concern was that loss’’
is corrected to read ‘‘reasons for this
concern were that loss’’.
7. On page 53943, column 1, in the
preamble, under the paragraph heading
‘‘vi. Election to Reduce Stock Basis and/
or Reattribute Attributes’’, first
paragraph of the column, line 19, the
language ‘‘to be attributed. Similar to
the rule’’ is corrected to read ‘‘to be
attributed. As in the rule’’.
8. On page 53943, column 2, in the
preamble, under the paragraph heading
‘‘vii. The Conforming Limitation’’, last
paragraph of the column, line 5, the
language ‘‘rule would then either reduce
lower-tier’’ is corrected to read ‘‘rule
could then either reduce lower-tier’’.
9. On page 53946, column 3, in the
preamble, under the paragraph heading
‘‘B. Amendments to § 1.1502–33(e)
‘‘Whole-Group’’ Exception’’, first
paragraph of the column, line 7, the
language ‘‘elect to apply each of these
modified’’ is corrected to read ‘‘apply
each of these modified’’.
LaNita Van Dyke,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel, (Procedure and Administration).
[FR Doc. E8–24672 Filed 10–17–08; 8:45 am]
BILLING CODE 4830–01–P
consolidated group. Finally, the final
regulations conform or clarify various
provisions of the consolidated return
regulations, including those relating to
adjustments to subsidiary stock basis.
DATES: Effective Date: This correction is
effective October 20, 2008 and is
applicable on September 17, 2008.
FOR FURTHER INFORMATION CONTACT:
Marcie P. Barese, (202) 622–7790, Sean
P. Duffley, (202) 622–7770, or Theresa
Abell (202) 622–7700 (none of the
numbers are toll-free).
SUPPLEMENTARY INFORMATION:
■ Par. 4. Section 1.1502–19(h)(1) is
amended by revising the second
sentence to read as follows:
Background
§ 1.1502–33
The final regulations that are the
subjects of this document are under
sections 337, 358, 362, 1502 of the
Internal Revenue Code.
*
Need for Correction
As published, final regulations (TD
9424) 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
DEPARTMENT OF THE TREASURY
Accordingly, 26 CFR part 1 is
corrected by making the following
correcting amendments:
Internal Revenue Service
PART 1—INCOME TAXES
■
26 CFR Part 1
Paragraph 1. The authority citation
for part 1 continues to read, in part, as
follows:
■
[TD 9424]
RIN 1545–BB61
Authority: 26 U.S.C. 7805 * * *
Unified Rule for Loss on Subsidiary
Stock; Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correcting amendment.
AGENCY:
This document contains
corrections to final regulations (TD
9424) that were published in the
Federal Register on Wednesday,
September 17, 2008 (73 FR 53934)
under sections 358, 362(e)(2), and 1502
of the Internal Revenue Code. The final
regulations apply to corporations filing
consolidated returns, and corporations
that enter into certain tax-free
reorganizations. The final regulations
provide rules for determining the tax
consequences of a member’s transfer
(including by deconsolidation and
worthlessness) of loss shares of
subsidiary stock. In addition, the final
regulations provide that section
362(e)(2) generally does not apply to
transactions between members of a
dwashington3 on PRODPC61 with RULES
SUMMARY:
VerDate Aug<31>2005
15:13 Oct 17, 2008
Jkt 217001
■ Par. 2. Section 1.358–6(f)(3) is
amended by revising the last sentence to
read as follows:
§ 1.358–6 Stock basis in certain triangular
reorganizations.
*
*
*
*
(f) * * *
(3) * * * However, taxpayers may
apply paragraph (b)(2)(v) of this section
to triangular reorganizations occurring
before September 17, 2008 and on or
after December 23, 1994.
■ Par. 3. Section 1.1502–13(l)(1) is
amended by revising the last sentence to
read as follows:
§ 1.1502–19
*
*
*
*
(h) * * *
(1) * * * However, taxpayers may
apply paragraph (c)(3)(i)(A) of this
section to transactions that occurred
prior to September 17, 2008. * * *
*
*
*
*
*
■ Par. 5. Section 1.1502–33(j)(1) is
amended by revising the last sentence to
read as follows:
Intercompany transactions.
*
*
*
*
*
(l) * * *
(1) * * * However, taxpayers may
apply paragraph (j)(5)(i)(A) of this
section to transactions that occurred
prior to September 17, 2008.
*
*
*
*
*
PO 00000
Frm 00018
Fmt 4700
Sfmt 4700
Earnings and profits.
*
*
*
*
(j) * * *
(1) * * * However, taxpayers may
apply paragraph (e)(2)(i)(A) of this
section with respect to determinations
of the earnings and profits of a member
in consolidated return years beginning
prior to September 17, 2008.
*
*
*
*
*
■ Par. 6. Section 1.1502–36 is amended
by revising the last sentence of the
paragraph (b)(3) Example 3.(i)(D); the
fourth sentence of the paragraph (c)(8)
Example 6.(iii)(A); (d)(3)(i)(B); the third
through fifth sentences of the paragraph
(d)(5)(ii); the third sentence of the
paragraph (d)(8) Example 6.(ii)(B); the
second sentence of the paragraph (d)(8)
Example 6.(ii)(D)(3); the fifth sentence
of the paragraph (d)(8) Example 8.(i)(F);
the first sentence of the paragraph (d)(8)
Example 8.(ii)(E); the first sentence of
the paragraph (d)(8) Example 8.(ii)(F);
the first sentence of the paragraph (d)(8)
Example 9.(ii);the second sentence of
the paragraph (g)(2) Example 5.(i); and
the third sentence of the paragraph
(g)(2) Example 5.(iii) to read as follows:
§ 1.1502–36
*
*
§ 1.1502–13
Excess loss accounts.
*
Unified loss rule.
*
*
(b) * * *
(3) * * *
*
*
Example 3. * * *
(i) * * *
(D) * * * The results would be the same
if, in addition to the facts in paragraph (i)(A)
of this Example 3, M transferred its S share
to X in a fully taxable transaction and, as
permitted under paragraph (b)(1)(ii)(B) of this
section, P elected to redetermine basis under
this paragraph (b).
*
*
*
*
*
(c) * * *
(8) * * *
Example 6. * * *
(iii) * * *
(A) * * * After taking into account the
effects of all applicable rules of law, M’s
basis in the S share at the end of year 5 is
$100 (M’s original $100 basis decreased
under § 1.1502–32 by $40 at the end of the
year 1 and then increased under § 1.1502–32
E:\FR\FM\20OCR1.SGM
20OCR1
Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations
by $40 at end of the year 5 (the net of the
$100 tax exempt income from the excluded
COD applied to reduce attributes and the $60
noncapital, nondeductible expense from the
reduction of S’s portion of the CNOL)).* * *
*
*
*
*
*
(d) * * *
(3) * * *
(i) * * *
(B) S’s aggregate inside loss (as defined in
paragraph (d)(3)(iii) of this section).
*
*
*
*
*
*
*
*
(8) * * *
Example 6. * * *
(ii) * * *
(B) * * * However, S’s gain recognized on
the transfer of Share E is computed and
immediately adjusts members’ bases in
subsidiary stock under § 1.1502–32 (because
M and S are not members of the same group
immediately after the transaction, the sale is
not an intercompany transaction subject to
§ 1.1502–13).
*
*
*
*
*
(D) * * *
(3) * * * See paragraph (d)(5)(v)(A) of this
section.* * *
*
*
*
*
*
Example 8. * * *
(F) * * * Under § 1.1502–32(c)(1)(ii)(A)(1)
this $90 expense is allocated to the
transferred loss shares of S stock in
proportion to the loss in the shares, or $.90
per share.* * *
dwashington3 on PRODPC61 with RULES
*
*
*
*
*
(ii) * * *
(E) * * * The facts are the same as in
paragraph (ii)(A) of this Example 8, except
that P elects under paragraph (d)(6) of this
section to reduce M’s basis in the S shares
by the full attribute reduction amount of $22,
in lieu of S reducing its attributes.* * *
(F) * * * The facts are the same as in
paragraph (ii)(A) of this Example 8.***
Example 9. * * *
(ii) * * * However, S1’s gain recognized
on the transfer of the S2 share is computed
and immediately adjusts members’ bases in
subsidiary stock under § 1.1502–32.
*
*
*
*
*
(g) * * *
(2) * * *
Example 5. * * *
(i) * * * S owns Asset 1 with a basis of
$100 and a value of $20.* * *
VerDate Aug<31>2005
*
*
*
*
*
LaNita Van Dyke,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel (Procedure and Administration).
[FR Doc. E8–24670 Filed 10–17–08; 8:45 am]
BILLING CODE 4830–01–P
*
(5) * * *
(ii) * * * S’s attribute reduction amount is
allocated proportionately (by basis) between
(among) the non-stock Category D asset and
S’s deemed single share(s) of subsidiary
stock. (See paragraphs (d)(4)(ii)(B)(2) and
(d)(4)(ii)(C) of this section regarding the
portion of S’s attribute reduction amount
allocated to the Category D assets other than
lower-tier subsidiary stock.) For allocation
purposes, S’s basis in each deemed single
share of S1 stock is its deemed basis
(determined under paragraphs (d)(5)(i)(B)
and (d)(5)(i)(C) of this section), reduced by—
*
(iii) * * * However, because all the shares
are transferred, the group’s income is clearly
reflected. * * *
16:44 Oct 17, 2008
Jkt 217001
DEPARTMENT OF THE TREASURY
31 CFR Part 30
Tarp Capital Purchase Program
Domestic Finance, Treasury.
Interim final rule.
AGENCY:
ACTION:
SUMMARY: This interim rule,
promulgated pursuant to sections
101(a)(1), 101(c)(5), and 111(b) of the
Emergency Economic Stabilization Act
of 2008, Division A of Public Law 110–
343 (EESA), provides guidance on the
executive compensation provisions
applicable to participants in the
Troubled Assets Relief Program (TARP)
Capital Purchase Program (CPP). Section
111(b) of EESA requires financial
institutions from which the Department
of the Treasury (Treasury) is purchasing
troubled assets through direct purchases
to meet appropriate standards for
executive compensation and corporate
governance. This interim final rule
includes the following standards for
purposes of the CPP: (a) Limits on
compensation that exclude incentives
for senior executive officers (SEOs) of
financial institutions to take
unnecessary and excessive risks that
threaten the value of the financial
institution; (b) required recovery of any
bonus or incentive compensation paid
to a SEO based on statements of
earnings, gains, or other criteria that are
later proven to be materially inaccurate;
(c) prohibition on the financial
institution from making any golden
parachute payment to any SEO; and (d)
agreement to limit a claim to a federal
income tax deduction for certain
executive remuneration. These rules
generally affect financial institutions
that participate in the CPP, certain
employers related to those financial
institutions, and their officers.
DATES: Effective Date: These regulations
are effective on October 20, 2008.
Comment due date: November 19, 2008.
ADDRESSES: The Treasury requests
comments on the topics addressed in
this interim rule. Comments may be
submitted to the Treasury by any of the
following methods: Submit electronic
comments through the federal
PO 00000
Frm 00019
Fmt 4700
Sfmt 4700
62205
government e-rulemaking portal, https://
www.regulations.gov or by e-mail to
executivecompensationcomments@do.
treas.gov or send paper comments in
triplicate to Executive Compensation
Comments, Office of Financial
Institutions Policy, Room 1418,
Department of the Treasury, 1500
Pennsylvania Avenue, NW.,
Washington, DC 20220.
In general, the Treasury will post all
comments to https://www.regulations.gov
without change, including any business
or personal information provided such
as names, addresses, e-mail addresses,
or telephone numbers. The Treasury
will also make such comments available
for public inspection and copying in the
Treasury’s Library, Room 1428, Main
Department Building, 1500
Pennsylvania Avenue, NW.,
Washington, DC 20220, on official
business days between the hours of 10
a.m. and 5 p.m. Eastern Time. You can
make an appointment to inspect
comments by telephoning (202) 622–
0990. All comments, including
attachments and other supporting
materials, received are part of the public
record and subject to public disclosure.
You should submit only information
that you wish to make available
publicly.
For
further information regarding this
interim rule, contact the Office of
Domestic Finance, the Treasury, at (202)
927–6618.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Background
This document adds 31 CFR Part 30
under section 111(b) of the Emergency
Economic Stabilization Act of 2008, Div.
A of Public Law No. 110–343 (EESA)
with respect to the Troubled Assets
Relief Program (TARP) Capital Purchase
Program (CPP) established by the
Department of the Treasury (Treasury)
under EESA. Section 101(a) of EESA
authorizes the Secretary of the Treasury
to establish a TARP to ‘‘purchase, and
to make and fund commitments to
purchase, troubled assets from any
financial institution, on such terms and
conditions as are determined by the
Secretary, and in accordance with this
Act and policies and procedures
developed and published by the
Secretary.’’ Section 120 of EESA
provides that the TARP authorities
generally terminate on December 31,
2009, unless extended upon
certification by the Secretary of the
Treasury to Congress, but in no event
later than two years from the date of
enactment of EESA (October 3, 2008)
E:\FR\FM\20OCR1.SGM
20OCR1
]]>Agencies
[Federal Register Volume 73, Number 203 (Monday, October 20, 2008)]
[Rules and Regulations]
[Pages 62204-62205]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24670]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9424]
RIN 1545-BB61
Unified Rule for Loss on Subsidiary Stock; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendment.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to final regulations (TD
9424) that were published in the Federal Register on Wednesday,
September 17, 2008 (73 FR 53934) under sections 358, 362(e)(2), and
1502 of the Internal Revenue Code. The final regulations apply to
corporations filing consolidated returns, and corporations that enter
into certain tax-free reorganizations. The final regulations provide
rules for determining the tax consequences of a member's transfer
(including by deconsolidation and worthlessness) of loss shares of
subsidiary stock. In addition, the final regulations provide that
section 362(e)(2) generally does not apply to transactions between
members of a consolidated group. Finally, the final regulations conform
or clarify various provisions of the consolidated return regulations,
including those relating to adjustments to subsidiary stock basis.
DATES: Effective Date: This correction is effective October 20, 2008
and is applicable on September 17, 2008.
FOR FURTHER INFORMATION CONTACT: Marcie P. Barese, (202) 622-7790, Sean
P. Duffley, (202) 622-7770, or Theresa Abell (202) 622-7700 (none of
the numbers are toll-free).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the subjects of this document are
under sections 337, 358, 362, 1502 of the Internal Revenue Code.
Need for Correction
As published, final regulations (TD 9424) 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 1.358-6(f)(3) is amended by revising the last sentence
to read as follows:
Sec. 1.358-6 Stock basis in certain triangular reorganizations.
* * * * *
(f) * * *
(3) * * * However, taxpayers may apply paragraph (b)(2)(v) of this
section to triangular reorganizations occurring before September 17,
2008 and on or after December 23, 1994.
0
Par. 3. Section 1.1502-13(l)(1) is amended by revising the last
sentence to read as follows:
Sec. 1.1502-13 Intercompany transactions.
* * * * *
(l) * * *
(1) * * * However, taxpayers may apply paragraph (j)(5)(i)(A) of
this section to transactions that occurred prior to September 17, 2008.
* * * * *
0
Par. 4. Section 1.1502-19(h)(1) is amended by revising the second
sentence to read as follows:
Sec. 1.1502-19 Excess loss accounts.
* * * * *
(h) * * *
(1) * * * However, taxpayers may apply paragraph (c)(3)(i)(A) of
this section to transactions that occurred prior to September 17, 2008.
* * *
* * * * *
0
Par. 5. Section 1.1502-33(j)(1) is amended by revising the last
sentence to read as follows:
Sec. 1.1502-33 Earnings and profits.
* * * * *
(j) * * *
(1) * * * However, taxpayers may apply paragraph (e)(2)(i)(A) of
this section with respect to determinations of the earnings and profits
of a member in consolidated return years beginning prior to September
17, 2008.
* * * * *
0
Par. 6. Section 1.1502-36 is amended by revising the last sentence of
the paragraph (b)(3) Example 3.(i)(D); the fourth sentence of the
paragraph (c)(8) Example 6.(iii)(A); (d)(3)(i)(B); the third through
fifth sentences of the paragraph (d)(5)(ii); the third sentence of the
paragraph (d)(8) Example 6.(ii)(B); the second sentence of the
paragraph (d)(8) Example 6.(ii)(D)(3); the fifth sentence of the
paragraph (d)(8) Example 8.(i)(F); the first sentence of the paragraph
(d)(8) Example 8.(ii)(E); the first sentence of the paragraph (d)(8)
Example 8.(ii)(F); the first sentence of the paragraph (d)(8) Example
9.(ii);the second sentence of the paragraph (g)(2) Example 5.(i); and
the third sentence of the paragraph (g)(2) Example 5.(iii) to read as
follows:
Sec. 1.1502-36 Unified loss rule.
* * * * *
(b) * * *
(3) * * *
Example 3. * * *
(i) * * *
(D) * * * The results would be the same if, in addition to the
facts in paragraph (i)(A) of this Example 3, M transferred its S
share to X in a fully taxable transaction and, as permitted under
paragraph (b)(1)(ii)(B) of this section, P elected to redetermine
basis under this paragraph (b).
* * * * *
(c) * * *
(8) * * *
Example 6. * * *
(iii) * * *
(A) * * * After taking into account the effects of all
applicable rules of law, M's basis in the S share at the end of year
5 is $100 (M's original $100 basis decreased under Sec. 1.1502-32
by $40 at the end of the year 1 and then increased under Sec.
1.1502-32
[[Page 62205]]
by $40 at end of the year 5 (the net of the $100 tax exempt income
from the excluded COD applied to reduce attributes and the $60
noncapital, nondeductible expense from the reduction of S's portion
of the CNOL)).* * *
* * * * *
(d) * * *
(3) * * *
(i) * * *
(B) S's aggregate inside loss (as defined in paragraph
(d)(3)(iii) of this section).
* * * * *
(5) * * *
(ii) * * * S's attribute reduction amount is allocated
proportionately (by basis) between (among) the non-stock Category D
asset and S's deemed single share(s) of subsidiary stock. (See
paragraphs (d)(4)(ii)(B)(2) and (d)(4)(ii)(C) of this section
regarding the portion of S's attribute reduction amount allocated to
the Category D assets other than lower-tier subsidiary stock.) For
allocation purposes, S's basis in each deemed single share of S1
stock is its deemed basis (determined under paragraphs (d)(5)(i)(B)
and (d)(5)(i)(C) of this section), reduced by--
* * * * *
(8) * * *
Example 6. * * *
(ii) * * *
(B) * * * However, S's gain recognized on the transfer of Share
E is computed and immediately adjusts members' bases in subsidiary
stock under Sec. 1.1502-32 (because M and S are not members of the
same group immediately after the transaction, the sale is not an
intercompany transaction subject to Sec. 1.1502-13).
* * * * *
(D) * * *
(3) * * * See paragraph (d)(5)(v)(A) of this section.* * *
* * * * *
Example 8. * * *
(F) * * * Under Sec. 1.1502-32(c)(1)(ii)(A)(1) this $90 expense
is allocated to the transferred loss shares of S stock in proportion
to the loss in the shares, or $.90 per share.* * *
* * * * *
(ii) * * *
(E) * * * The facts are the same as in paragraph (ii)(A) of this
Example 8, except that P elects under paragraph (d)(6) of this
section to reduce M's basis in the S shares by the full attribute
reduction amount of $22, in lieu of S reducing its attributes.* * *
(F) * * * The facts are the same as in paragraph (ii)(A) of this
Example 8.***
Example 9. * * *
(ii) * * * However, S1's gain recognized on the transfer of the
S2 share is computed and immediately adjusts members' bases in
subsidiary stock under Sec. 1.1502-32.
* * * * *
(g) * * *
(2) * * *
Example 5. * * *
(i) * * * S owns Asset 1 with a basis of $100 and a value of
$20.* * *
(iii) * * * However, because all the shares are transferred, the
group's income is clearly reflected. * * *
* * * * *
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. E8-24670 Filed 10-17-08; 8:45 am]
BILLING CODE 4830-01-P
