Consolidated HUD Hearing Procedures for Civil Rights Matters, 79324 [E8-30942]
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79324
Federal Register / Vol. 73, No. 249 / Monday, December 29, 2008 / Rules and Regulations
December 18, 2008.
Michele M. Leonhart,
Acting Administrator.
[FR Doc. E8–30800 Filed 12–24–08; 8:45 am]
BILLING CODE 4410–09–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Part 180
Consolidated HUD Hearing Procedures
for Civil Rights Matters
CFR Correction
In title 24 of the Code of Federal
Regulations, parts 0 to 199, revised as of
April 1, 2008, on pages 733 and 734, in
§ 180.670, remove paragraphs
(b)(3)(iii)(A) through (b)(3)(iii)(C).
[FR Doc. E8–30942 Filed 12–24–08; 8:45 am]
BILLING CODE 1505–01–D
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9442]
RIN 1545–BA11
§ 1.1502–13(g) (regarding the treatment
of transactions involving obligations
between members of a consolidated
group) and to add § 1.1502–
13(e)(2)(ii)(C) (regarding the treatment of
certain transactions involving the
provision of insurance between
members of a consolidated group). The
2007 Proposed Regulations replaced an
earlier proposal (REG–105964–98) [63
FR 70354], published in the Federal
Register on December 21, 1998, which
was withdrawn.
On February 25, 2008, the IRS and the
Treasury Department published a notice
(Announcement 2008–25) in the
Federal Register (73 FR 9972)
withdrawing the portion of the 2007
Proposed Regulations relating to the
treatment of intercompany insurance
transactions. No public hearing
regarding the remaining portion of the
2007 Proposed Regulations was
requested or held. However, written,
electronic, and oral comments were
received. After consideration of all of
the comments, the 2007 Proposed
Regulations are adopted as revised by
this Treasury decision. The principal
comments and changes are discussed in
this preamble.
Explanation of Provisions
Consolidated Returns; Intercompany
Obligations
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations under section 1502 of the
Internal Revenue Code (Code). The
regulations provide guidance regarding
the treatment of transactions involving
obligations between members of a
consolidated group. These final
regulations will affect affiliated groups
of corporations filing consolidated
returns.
dwashington3 on PROD1PC60 with RULES
DATES: Effective Date: These regulations
are effective on December 24, 2008.
Applicability Date: For dates of
applicability, see §§ 1.1502–13(g)(8) and
1.1502–28(d).
FOR FURTHER INFORMATION CONTACT:
Frances Kelly, (202) 622–7770 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On September 28, 2007, the IRS and
the Treasury Department published a
notice of proposed rulemaking (REG–
107592–00) in the Federal Register (72
FR 55139) (the 2007 Proposed
Regulations) which proposed to amend
VerDate Aug<31>2005
13:28 Dec 24, 2008
Jkt 217001
Former Regulations Under § 1.1502–
13(g) (the Former Regulations)
An intercompany obligation is
generally defined as an obligation
between members of a consolidated
group, but only for the period during
which both the creditor and debtor are
members of the group. The Former
Regulations under § 1.1502–13(g) (the
1995 regulations and the 1998 proposed
regulations, as in effect before these
final regulations), prescribe rules
relating to the treatment of transactions
involving such obligations, and apply
generally to three broad categories of
transactions; transactions in which an
obligation between a group member and
a nonmember becomes an intercompany
obligation (inbound transactions),
transactions in which an intercompany
obligation ceases to be an intercompany
obligation (outbound transactions), and
transactions in which an intercompany
obligation is assigned or extinguished
within the consolidated group
(intragroup transactions).
For all three types of transactions, the
intercompany obligation is treated as
satisfied and, if it remains outstanding,
reissued as a new obligation (the
deemed satisfaction-reissuance model).
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Significant Changes Made by the 2007
Proposed Regulations
The 2007 Proposed Regulations make
several significant changes to the
Former Regulations, principally with
respect to intragroup and outbound
transactions.
First, the 2007 Proposed Regulations
simplify the mechanics of the deemed
satisfaction-reissuance model by
separating the deemed transactions from
the actual transaction. In general, the
new model deems the following
sequence of events to occur immediately
before, and independently of, the actual
transaction: (i) the debtor is deemed to
satisfy the obligation for a cash amount
equal to the obligation’s fair market
value, and (ii) the debtor is deemed to
immediately reissue the obligation to
the original creditor for that same cash
amount. The parties are then treated as
engaging in the actual transaction but
with the new obligation.
Second, the 2007 Proposed
Regulations provide that for transactions
where it is appropriate to require a
deemed satisfaction and reissuance, the
intercompany obligation generally
should be deemed satisfied and reissued
for its fair market value (rather than
issue price determined under the
original issue discount principles of
sections 1273 and 1274).
Third, the 2007 Proposed Regulations
narrow the scope of intragroup and
outbound transactions that trigger the
deemed satisfaction-reissuance model
by providing a number of exceptions to
its application. A deemed satisfaction
and reissuance generally is not required
for these excepted transactions either
because it is not necessary to apply the
deemed satisfaction-reissuance model to
carry out the purposes of § 1.1502–13(g)
or because the burdens associated with
valuing the obligation or applying the
mechanics of the deemed satisfactionreissuance model outweigh the benefits
achieved by its application.
Finally, the 2007 Proposed
Regulations include two anti-abuse
rules, the ‘‘material tax benefit rule’’ and
the ‘‘off-market issuance rule,’’ which
are intended to prevent distortions of
consolidated taxable income resulting
from the shifting of built-in items from
intercompany obligations, or from the
issuance of obligations at a materially
off-market rate of interest through the
manipulation of a member’s tax
attributes or stock basis. These rules are
aimed at intragroup transactions
otherwise excepted from the deemed
satisfaction-reissuance model (to ensure
that the exceptions cannot be used to
distort consolidated taxable income
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29DER1
Agencies
[Federal Register Volume 73, Number 249 (Monday, December 29, 2008)]
[Rules and Regulations]
[Page 79324]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30942]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 180
Consolidated HUD Hearing Procedures for Civil Rights Matters
CFR Correction
In title 24 of the Code of Federal Regulations, parts 0 to 199,
revised as of April 1, 2008, on pages 733 and 734, in Sec. 180.670,
remove paragraphs (b)(3)(iii)(A) through (b)(3)(iii)(C).
[FR Doc. E8-30942 Filed 12-24-08; 8:45 am]
BILLING CODE 1505-01-D