Guidance Regarding Deferred Discharge of Indebtedness Income of Corporations and Deferred Original Issue Discount Deductions, 49428-49429 [2010-20059]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 75, Number 156 (Friday, August 13, 2010)]
[Proposed Rules]
[Pages 49428-49429]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-20059]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-142800-09]
RIN 1545-BI96


Guidance Regarding Deferred Discharge of Indebtedness Income of 
Corporations and Deferred Original Issue Discount Deductions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking 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 and the Treasury Department are issuing 
temporary regulations (TD 9497) under section 108(i) of the Internal 
Revenue Code (Code). These regulations primarily affect C corporations 
regarding the acceleration of deferred discharge of indebtedness (COD) 
income (deferred COD income) and deferred original issue discount (OID) 
deductions (deferred OID deductions) under section 108(i)(5)(D), and 
the calculation of earnings and profits as a result of an election 
under section 108(i). In addition, these regulations provide rules 
applicable to all taxpayers regarding deferred OID deductions under 
section 108(i) as a result of a reacquisition of an applicable debt 
instrument by an issuer or related party. The text of the temporary 
regulations also serves as the text of these proposed regulations.

DATES: Written or electronic comments and request for a public hearing 
must be received by November 12, 2010.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-142800-09), Room 
5203, Internal Revenue Service, P.O. 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-
142800-09), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically, via the Federal 
eRulemaking Portal at https://www.regulations.gov (IRS REG-142800-09).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Robert M. Rhyne (202) 622-7790 and Rubin B. Ranat (202) 622-7530; 
concerning submissions of comments and/or requests for a public 
hearing, Richard Hurst (202) 622-7180 (not toll-free numbers), or 
Richard.a.hurst@irscounsel.treas.gov.

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) 
under control number 1545-2147. Comments on 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, 
SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of 
information should be received by November 12, 2010. Comments are 
specifically requested concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal Revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information (see below);
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collections of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs of operation, maintenance, 
and purchase of service to provide information.
    The collection of information in this proposed regulation is in 
Sec.  1.108(i)-1(b)(3). This information is required by the IRS to 
allow members of a

[[Page 49429]]

consolidated group to make an election to accelerate the inclusion of 
deferred COD income under section 108(i). The likely recordkeepers are 
corporations filing consolidated income tax returns (electing members). 
The IRS and Treasury Department believe that an electing member's 
election under Sec.  1.108(i)-1(b)(3) reduces the member's overall 
reporting burden under section 108(i).
    Estimated total annual reporting burden: 0 hours.
    Estimated average annual burden per respondent: 0 hours.
    Estimated number of respondents: 5,000.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a 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.

Background and Explanation of Provisions

    The temporary regulations published in the Rules and Regulations 
section of this issue of the Federal Register amend the Income Tax 
Regulations (26 CFR parts 1 and 602) relating to section 108(i). The 
temporary regulations set forth rules for applying section 108(i) to C 
corporations. The text of those temporary regulations also serves as 
the text of these proposed regulations. The preamble to the temporary 
regulations explains the temporary regulations and these proposed 
regulations.

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 upon the fact that these regulations merely provide more specific 
guidance for the timing of the inclusion of deferred COD income that is 
otherwise includible under the Code. 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 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. In addition to the specific requests for comments made elsewhere 
in this preamble or the preamble to the temporary regulations, the IRS 
and Treasury Department request comments on the clarity of the proposed 
rules and how they can be made easier to understand. All comments will 
be available for public inspection and copying. A public hearing may be 
scheduled if requested in writing by any person who timely submits 
written comments. If a public hearing is scheduled, notice of the date, 
time, and place of the hearing will be published in the Federal 
Register.

Drafting Information

    The principal authors of these proposed regulations are Robert M. 
Rhyne and Rubin B. Ranat of the 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 Amendment 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 by adding 
entries in numerical order to read as follows:

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

    Section 1.108(i)-0T also issued under 26 U.S.C. 108(i)(7). * * *
    Section 1.108(i)-1T also issued under 26 U.S.C. 108(i)(7) and 
1502. * * *
    Section 1.108(i)-3T also issued under 26 U.S.C. 108(i)(7) and 
1502. * * *

    Par. 2. Section 1.108(i)-0 is added to read as follows:


Sec.  1.108(i)-0  Definitions.

    [The text of proposed Sec.  1.108(i)-0 is the same as the text of 
Sec.  1.108(i)-0T published elsewhere in this issue of the Federal 
Register].
    Par. 3. Section 1.108(i)-1 is added to read as follows:


Sec.  1.108(i)-1  Deferred discharge of indebtedness income and 
deferred original issue discount deductions of C corporations.

    [The text of proposed Sec.  1.108(i)-1 is the same as the text of 
Sec.  1.108(i)-1T published elsewhere in this issue of the Federal 
Register].
    Par. 4. Section 1.108(i)-3 is added to read as follows:


Sec.  1.108(i)-3  Rules for the deduction of OID.

    [The text of proposed Sec.  1.108(i)-3 is the same as the text of 
Sec.  1.108(i)-3T published elsewhere in this issue of the Federal 
Register].

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2010-20059 Filed 8-11-10; 11:15 am]
BILLING CODE 4830-01-P