Allocation of W-2 Wages in a Short Taxable Year and in an Acquisition or Disposition, 51939-51941 [2015-20770]
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Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Rules and Regulations
51939
TABLE 1—IDENTIFIED RISKS AND REQUIRED MITIGATIONS—Continued
Identified risks
Required mitigations
A false negative test result for an individual may lead to a potential
delay in treatment.
Failure of the test to be used or perform properly ...................................
Failure to properly interpret the test results .............................................
FDA believes that the measures set
forth in the special controls guideline
entitled ‘‘Class II Special Controls
Guideline: Toxin Gene Amplification
Assays for the Detection of Clostridium
difficile’’ are necessary, in addition to
general controls, to mitigate the risks to
health described in table 1.
A C. difficile toxin gene amplification
assay is a prescription device. Section
510(m) of the FD&C Act provides that
FDA may exempt a class II device from
the premarket notification requirements
under section 510(k) if FDA determines
that premarket notification is not
necessary to provide reasonable
assurance of the safety and effectiveness
of the device. For this type of device,
FDA has determined that premarket
notification is necessary to provide
reasonable assurance of the safety and
effectiveness of the device. Therefore,
this type of device is not exempt from
premarket notification requirements.
Persons who intend to market this type
of device must submit to FDA a
premarket notification, prior to
marketing the device, which contains
information about the C. difficile toxin
gene amplification assay they intend to
market.
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II. Environmental Impact
The Agency has determined under 21
CFR 25.34(b) that this action is of type
that does not individually or
cumulatively have a significant effect on
the human environment. Therefore,
neither an environmental assessment
nor an environmental impact statement
is required.
III. Paperwork Reduction Act of 1995
This final administrative order
establishes special controls that refer to
previously approved collections of
information found in other FDA
regulations. These collections of
information are subject to review by the
VerDate Sep<11>2014
14:03 Aug 26, 2015
Jkt 235001
Labeling.
The FDA document entitled ‘‘Class II Special Controls Guideline: Toxin
Gene Amplification Assays for the Detection of Clostridium difficile,’’
which addresses this risk through:
Specific Device Description Requirements.
Performance Studies.
Labeling.
The FDA document entitled ‘‘Class II Special Controls Guideline: Toxin
Gene Amplification Assays for the Detection of Clostridium difficile,’’
which addresses this risk through:
Labeling.
The FDA document entitled ‘‘Class II Special Controls Guideline: Toxin
Gene Amplification Assays for the Detection of Clostridium difficile,’’
which addresses this risk through:
Labeling.
Office of Management and Budget
(OMB) under the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501–3520). The
collections of information in part 807,
subpart E, regarding premarket
notification submissions have been
approved under OMB control number
0910–0120; the collections of
information in 21 CFR part 820 have
been approved under OMB control
number 0910–0073; and the collections
of information in 21 CFR parts 801 and
809 have been approved under OMB
control number 0910–0485.
List of Subjects in 21 CFR Part 866
Biologics, Laboratories, Medical
devices.
Therefore, under the Federal Food,
Drug, and Cosmetic Act and under
authority delegated to the Commissioner
of Food and Drugs, 21 CFR part 866 is
amended as follows:
(b) Classification. Class II (special
controls). The special controls are set
forth in FDA’s guideline document
entitled: ‘‘Class II Special Controls
Guideline: Toxin Gene Amplification
Assays for the Detection of Clostridium
difficile; Guideline for Industry and
Food and Drug Administration Staff.’’
See § 866.1(e) for information on
obtaining this document.
Dated: August 21, 2015.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2015–21237 Filed 8–26–15; 8:45 am]
BILLING CODE 4164–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9731]
PART 866—IMMUNOLOGY AND
MICROBIOLOGY DEVICES
RIN 1545–BM11
■
1. The authority citation for 21 CFR
part 866 continues to read as follows:
Allocation of W–2 Wages in a Short
Taxable Year and in an Acquisition or
Disposition
Authority: 21 U.S.C. 351, 360, 360c, 360e,
360j, 371.
AGENCY:
2. Add § 866.3130 to subpart D to read
as follows:
■
§ 866.3130 Clostridium difficile toxin gene
amplification assay.
(a) Identification. A Clostridium
difficile toxin gene amplification assay
is a device that consists of reagents for
the amplification and detection of target
sequences in Clostridium difficile toxin
genes in fecal specimens from patients
suspected of having Clostridium difficile
infection (CDI). The detection of
clostridial toxin genes, in conjunction
with other laboratory tests, aids in the
clinical laboratory diagnosis of CDI
caused by Clostridium difficile.
PO 00000
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Fmt 4700
Sfmt 4700
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
This document contains final
and temporary regulations relating to
the allocation of W–2 wages for
purposes of the W–2 wage limitation on
the amount of a taxpayer’s deduction
related to domestic production
activities. Specifically, the temporary
regulations provide guidance on: the
allocation of W–2 wages paid by two or
more taxpayers that are employers of the
same employees during a calendar year;
and the determination of W–2 wages if
the taxpayer has a short taxable year.
The text of the temporary regulations
SUMMARY:
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Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Rules and Regulations
rmajette on DSK2VPTVN1PROD with RULES
also serves as the text of the proposed
regulations set forth in the notice of
proposed rulemaking (REG–136459–09)
on this subject in the Proposed Rules
section in this issue of the Federal
Register.
DATES: Effective Date: These regulations
are effective on August 27, 2015.
Applicability Date: For dates of
applicability, see § 1.199–8T(i)(10).
FOR FURTHER INFORMATION CONTACT:
James A. Holmes 202–317–4137 (not a
toll free call).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) under section 199(b) of the
Internal Revenue Code (Code). Section
199(b) was enacted by the American
Jobs Creation Act of 2004 (Pub. L. 108–
357, 118 Stat. 1418 (2004)). Subsequent
amendments to section 199(b) were
made by the Gulf Opportunity Zone Act
of 2005 (Pub. L. 109–135, 119 Stat. 25
(2005)), the Tax Increase Prevention and
Reconciliation Act of 2005 (Pub. L. 109–
222, 120 Stat. 345 (2005)), the Tax
Extenders and Alternative Minimum
Tax Relief Act of 2008 (Pub. L. 110–343,
122 Stat 3765 (2008)), and the Tax
Increase Prevention Act of 2014 (Pub. L.
113–295, 128 Stat. 4010 (2014)).
Under section 199(b)(1), the amount
of the deduction allowable under
section 199(a) for any taxable year shall
not exceed 50 percent of the W–2 wages
of the taxpayer for the taxable year.
Section 199(b)(2)(A) generally defines
W–2 wages, with respect to any person
for any taxable year of such person, as
the sum of amounts described in section
6051(a)(3) and (8) paid by such person
with respect to employment of
employees by such person during the
calendar year ending during such
taxable year. Section 199(b)(3), after its
amendment by section 219(b) of the Tax
Increase Prevention Act of 2014,
provides that the Secretary shall provide
for the application of section 199(b) in
cases of a short taxable year or where
the taxpayer acquires, or disposes of, the
major portion of a trade or business, or
the major portion of a separate unit of
a trade or business during the taxable
year. Section 219(d) of the Tax Increase
Prevention Act of 2014 provides that the
amendments made by section 219 shall
take effect as if included in the
provision of the American Jobs Creation
Act of 2004 to which they relate.
Section 1.199–2(c) provides the current
rule for acquisitions and dispositions.
Section 1.199–2(c) currently provides
that if a taxpayer (a successor) acquires
a trade or business, the major portion of
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Jkt 235001
a trade or business, or the major portion
of a separate unit of a trade or business
from another taxpayer (a predecessor),
then, for purposes of computing the
respective section 199 deduction of the
successor and of the predecessor, the
W–2 wages paid for that calendar year
shall be allocated between the successor
and the predecessor based on whether
the wages are for employment by the
successor or for employment by the
predecessor. Thus, the W–2 wages are
allocated based on whether the wages
are for employment for a period during
which the employee was employed by
the predecessor or for employment for a
period during which the employee was
employed by the successor. The W–2
wage allocation under the current
regulations is made regardless of which
permissible method is used by a
predecessor or a successor for reporting
wages on Form W–2, as provided in
Rev. Proc. 2004–53 (2004–2 CB 320) (see
§ 601.601(d)(2) of this chapter). Section
1.199–2(e)(1) provides that under
section 199(b)(2), the term W–2 wages
means, with respect to any person for
any taxable year of such person, the sum
of the amounts described in section
6051(a)(3) and (8) paid by such person
with respect to employment of
employees by such person during the
calendar year ending during such
taxable year.
Rev. Proc. 2006–47 (2006–2 CB 869)
(see § 601.601(d)(2)) is the currently
effective guidance providing methods of
calculating W–2 wages and related rules
for purposes of section 199(b). Section
6.02(A) of Rev. Proc. 2006–47 provides
that the amount of W–2 wages for a
taxpayer with a short taxable year
includes only those wages subject to
Federal income tax withholding that are
reported on Form W–2, ‘‘Wage and Tax
Statement,’’ for the calendar year ending
with or within that short taxable year.
In certain situations, a short taxable
year may not include a calendar year
ending within such short taxable year.
Section 1.199–2(c) of the current
regulations does not address these
situations and does not reflect the
amendment made by the Tax Increase
Prevention Act of 2014. In order to
provide guidance on the application of
section 199(b)(3) to a short taxable year
that does not include a calendar year
ending within the short taxable year, the
IRS and the Treasury Department are
revising the regulations to address these
situations. To provide immediate effect,
the IRS and the Treasury Department
are issuing these regulations as
temporary regulations. These temporary
regulations apply solely for purposes of
section 199.
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Explanation of Provisions
The final regulations issued in
connection with these temporary
regulations remove the current language
of § 1.199–2(c) and replace it with a
cross reference to these temporary
regulations. In the place of the current
language, these temporary regulations
provide rules for calculating W–2 wages
for purposes of the W–2 wage limitation
in the case of an acquisition or
disposition of a trade or business, the
major portion of a trade or business, the
major portion of a separate unit of a
trade or business during the taxable
year, or a short taxable year.
Specifically, these temporary
regulations provide a rule for
acquisitions and dispositions if one or
more taxpayers may be considered the
employer of the employees of the
acquired or disposed of trade or
business during that calendar year. In
that case, the temporary regulations
provide that the W–2 wages paid during
the calendar year to employees of the
acquired or disposed of trade or
business are allocated between each
taxpayer based on the period during
which the employees of the acquired or
disposed of trade or business were
employed by the taxpayer.
These temporary regulations also
provide a rule to apply in the case of a
short taxable year in which there is no
calendar year ending within such short
taxable year (short-taxable-year rule).
Wages paid by a taxpayer during the
short taxable year to employees for
employment by such taxpayer are
treated as W–2 wages for such short
taxable year for purposes of section
199(b)(1).
These temporary regulations also
describe types of transactions that are
considered either an acquisition or
disposition for purposes of section
199(b)(3). Specifically, these temporary
regulations provide that an acquisition
or disposition includes an
incorporation, a formation, a
liquidation, a reorganization, or a
purchase or sale of assets.
These regulations also contain cross
references to § 1.199–2(a), (b), (d), and
(e). The IRS and the Treasury
Department observe that these rules
continue to apply to taxpayers that use
these temporary regulations. For
example, the non-duplication rule of
§ 1.199–2(d) applies such that a
taxpayer that includes wages as W–2
wages based on these temporary
regulations, including by filing an
amended return for a short taxable year,
may not treat those wages as W–2 wages
for any other taxable year. Also, wages
qualifying as W–2 wages of one taxpayer
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Federal Register / Vol. 80, No. 166 / Thursday, August 27, 2015 / Rules and Regulations
based on these temporary regulations
cannot be treated as W–2 wages of
another taxpayer.
The temporary regulations are
applicable for taxable years beginning
on or after August 27, 2015 and expire
on August 24, 2018. A taxpayer may
apply § 1.199–2T(c) to taxable years for
which the limitations for assessment of
tax has not expired beginning before
August 27, 2015.
Special Analyses
Certain IRS regulations, including this
one, are exempt from the requirements
of Executive Order 12866 of, as
supplemented and reaffirmed by
Executive Order 13563. Therefore, a
regulatory assessment is not required. It
also has been determined that section
533(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations. For the
applicability of the Regulatory
Flexibility Act (5 U.S.C. chapter 6) refer
to the Special Analyses section of the
preamble to the cross-reference notice of
proposed rulemaking published in the
Proposed Rules section in this issue of
the Federal Register. Pursuant to
section 7805(f) of the Code, these
regulations have been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on their impact on small business.
Drafting Information
The principal author of these
regulations is James A. Holmes, Office
of Associate Chief Counsel
(Passthroughs and Special Industries).
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.
Adoption of Amendment to the
Regulations
Accordingly, 26 CFR part 1 is
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 in part as
follows:
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Authority: 26 U.S.C. 7805 * * *
Section 1.199–2T also issued under 26
U.S.C. 199(b)(3).
*
*
*
*
*
Par. 2. Section 1.199–0 is amended by
revising the entry for § 1.199–2(c) and
adding entries for §§ 1.199–2(c)(1),
(c)(2), and (c)(3), and 1.199–8(i)(10) to
read as follows:
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§ 1.199–0
Table of contents.
*
*
51941
*
*
*
*
(c) [Reserved]. For further guidance
see § 1.199–2T(c).
*
*
*
*
*
Par. 4. Section 1.199–2T is added to
read as follows:
are treated as W–2 wages for such short
taxable year for purposes of § 1.199–
2(a)(1) (if the wages would otherwise
meet the requirements to be W–2 wages
under § 1.199–2 but for the requirement
that a calendar year must end during the
short taxable year).
(3) Operating rules—(i) Acquisition or
disposition. For purposes of this
paragraph (c), the term acquisition or
disposition includes an incorporation, a
formation, a liquidation, a
reorganization, or a purchase or sale of
assets.
(ii) Trade or business. For purposes of
this paragraph (c), the term trade or
business includes a trade or business,
the major portion of a trade or business,
or the major portion of a separate unit
of a trade or business.
(iii) Application to section 199 only.
The provisions of this section apply
solely for purposes of section 199 of the
Internal Revenue Code.
(d) through (e) [Reserved]. For further
guidance, see § 1.199–2(d) through (e).
Par. 5. Section 1.199–8 is amended by
adding paragraph (i)(10) to read as
follows:
§ 1.199–2T
§ 1.199–8
*
§ 1.199–2
*
*
Wage limitation.
*
*
*
*
*
(c) Acquisitions, dispositions, and
short taxable years.
(1) Allocation of wages between more
than one taxpayer.
(2) Short taxable years.
(3) Operating rules.
(i) Acquisition or disposition.
(ii) Trade or business.
*
*
*
*
*
§ 1.199–8
Other rules.
*
*
*
*
*
(i) * * *
(10) Acquisitions, dispositions, and
short taxable years.
*
*
*
*
*
Par. 3. Section 1.199–2 is amended by
revising paragraph (c) to read as follows:
§ 1.199–2
Wage limitation.
*
Wage limitation (temporary).
(a) through (b) [Reserved]. For further
guidance, see § 1.199–2(a) through (b).
(c) Acquisitions, dispositions, and
short taxable years—(1) Allocation of
wages between more than one taxpayer.
For purposes of computing the section
199 deduction of a taxpayer, in the case
of an acquisition or disposition (as
defined in paragraph (c)(3)(i) of this
section) of a trade or business (as
defined in paragraph (c)(3)(ii) of this
section) that causes more than one
taxpayer to be an employer of the
employees of the acquired or disposed
of trade or business during the calendar
year, the W–2 wages of the taxpayer for
the calendar year of the acquisition or
disposition are allocated between each
taxpayer based on the period during
which the employees of the acquired or
disposed of trade or business were
employed by the taxpayer, regardless of
which permissible method is used for
reporting W–2 wages on Form W–2,
‘‘Wage and Tax Statement.’’ For this
purpose, the period of employment is
determined consistently with the
principles for determining whether an
individual is an employee described in
§ 1.199–2(a)(1).
(2) Short taxable years. If a taxpayer
has a short taxable year that does not
contain a calendar year ending during
such short taxable year, wages paid to
employees for employment by such
taxpayer during the short taxable year
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Other rules.
*
*
*
*
*
(i) * * *
(10) Acquisitions, dispositions, and
short taxable years. [Reserved]. For
further guidance, see § 1.199–8T(i)(10).
Par. 6. Section 1.199–8T is added to
read as follows:
§ 1.199–8T
Other rules (temporary).
(a) through (h) [Reserved]. For further
guidance, see § 1.199–8(a) through (h).
(i) Effective/applicability dates. (1)
through (9) [Reserved]. For further
guidance, see § 1.199–8(i)(1) through (9).
(10) Acquisitions, dispositions, and
short taxable years. Section 1.199–2T(c)
is applicable for taxable years beginning
on or after August 27, 2015. A taxpayer
may apply § 1.199–2T(c) to taxable years
for which the limitations for assessment
of tax has not expired beginning before
August 27, 2015.
(11) Expiration date. The applicability
of § 1.199–2T(c) expires on August 24,
2018.
John M. Dalrymple,
Deputy Commissioner for Services and
Enforcement.
Approved: May 29, 2015.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2015–20770 Filed 8–26–15; 8:45 am]
BILLING CODE 4830–01–P
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]]>Agencies
[Federal Register Volume 80, Number 166 (Thursday, August 27, 2015)]
[Rules and Regulations]
[Pages 51939-51941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20770]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9731]
RIN 1545-BM11
Allocation of W-2 Wages in a Short Taxable Year and in an
Acquisition or Disposition
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final and temporary regulations
relating to the allocation of W-2 wages for purposes of the W-2 wage
limitation on the amount of a taxpayer's deduction related to domestic
production activities. Specifically, the temporary regulations provide
guidance on: the allocation of W-2 wages paid by two or more taxpayers
that are employers of the same employees during a calendar year; and
the determination of W-2 wages if the taxpayer has a short taxable
year. The text of the temporary regulations
[[Page 51940]]
also serves as the text of the proposed regulations set forth in the
notice of proposed rulemaking (REG-136459-09) on this subject in the
Proposed Rules section in this issue of the Federal Register.
DATES: Effective Date: These regulations are effective on August 27,
2015.
Applicability Date: For dates of applicability, see Sec. 1.199-
8T(i)(10).
FOR FURTHER INFORMATION CONTACT: James A. Holmes 202-317-4137 (not a
toll free call).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Income Tax Regulations (26
CFR part 1) under section 199(b) of the Internal Revenue Code (Code).
Section 199(b) was enacted by the American Jobs Creation Act of 2004
(Pub. L. 108-357, 118 Stat. 1418 (2004)). Subsequent amendments to
section 199(b) were made by the Gulf Opportunity Zone Act of 2005 (Pub.
L. 109-135, 119 Stat. 25 (2005)), the Tax Increase Prevention and
Reconciliation Act of 2005 (Pub. L. 109-222, 120 Stat. 345 (2005)), the
Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (Pub. L.
110-343, 122 Stat 3765 (2008)), and the Tax Increase Prevention Act of
2014 (Pub. L. 113-295, 128 Stat. 4010 (2014)).
Under section 199(b)(1), the amount of the deduction allowable
under section 199(a) for any taxable year shall not exceed 50 percent
of the W-2 wages of the taxpayer for the taxable year. Section
199(b)(2)(A) generally defines W-2 wages, with respect to any person
for any taxable year of such person, as the sum of amounts described in
section 6051(a)(3) and (8) paid by such person with respect to
employment of employees by such person during the calendar year ending
during such taxable year. Section 199(b)(3), after its amendment by
section 219(b) of the Tax Increase Prevention Act of 2014, provides
that the Secretary shall provide for the application of section 199(b)
in cases of a short taxable year or where the taxpayer acquires, or
disposes of, the major portion of a trade or business, or the major
portion of a separate unit of a trade or business during the taxable
year. Section 219(d) of the Tax Increase Prevention Act of 2014
provides that the amendments made by section 219 shall take effect as
if included in the provision of the American Jobs Creation Act of 2004
to which they relate. Section 1.199-2(c) provides the current rule for
acquisitions and dispositions.
Section 1.199-2(c) currently provides that if a taxpayer (a
successor) acquires a trade or business, the major portion of a trade
or business, or the major portion of a separate unit of a trade or
business from another taxpayer (a predecessor), then, for purposes of
computing the respective section 199 deduction of the successor and of
the predecessor, the W-2 wages paid for that calendar year shall be
allocated between the successor and the predecessor based on whether
the wages are for employment by the successor or for employment by the
predecessor. Thus, the W-2 wages are allocated based on whether the
wages are for employment for a period during which the employee was
employed by the predecessor or for employment for a period during which
the employee was employed by the successor. The W-2 wage allocation
under the current regulations is made regardless of which permissible
method is used by a predecessor or a successor for reporting wages on
Form W-2, as provided in Rev. Proc. 2004-53 (2004-2 CB 320) (see Sec.
601.601(d)(2) of this chapter). Section 1.199-2(e)(1) provides that
under section 199(b)(2), the term W-2 wages means, with respect to any
person for any taxable year of such person, the sum of the amounts
described in section 6051(a)(3) and (8) paid by such person with
respect to employment of employees by such person during the calendar
year ending during such taxable year.
Rev. Proc. 2006-47 (2006-2 CB 869) (see Sec. 601.601(d)(2)) is the
currently effective guidance providing methods of calculating W-2 wages
and related rules for purposes of section 199(b). Section 6.02(A) of
Rev. Proc. 2006-47 provides that the amount of W-2 wages for a taxpayer
with a short taxable year includes only those wages subject to Federal
income tax withholding that are reported on Form W-2, ``Wage and Tax
Statement,'' for the calendar year ending with or within that short
taxable year.
In certain situations, a short taxable year may not include a
calendar year ending within such short taxable year. Section 1.199-2(c)
of the current regulations does not address these situations and does
not reflect the amendment made by the Tax Increase Prevention Act of
2014. In order to provide guidance on the application of section
199(b)(3) to a short taxable year that does not include a calendar year
ending within the short taxable year, the IRS and the Treasury
Department are revising the regulations to address these situations. To
provide immediate effect, the IRS and the Treasury Department are
issuing these regulations as temporary regulations. These temporary
regulations apply solely for purposes of section 199.
Explanation of Provisions
The final regulations issued in connection with these temporary
regulations remove the current language of Sec. 1.199-2(c) and replace
it with a cross reference to these temporary regulations. In the place
of the current language, these temporary regulations provide rules for
calculating W-2 wages for purposes of the W-2 wage limitation in the
case of an acquisition or disposition of a trade or business, the major
portion of a trade or business, the major portion of a separate unit of
a trade or business during the taxable year, or a short taxable year.
Specifically, these temporary regulations provide a rule for
acquisitions and dispositions if one or more taxpayers may be
considered the employer of the employees of the acquired or disposed of
trade or business during that calendar year. In that case, the
temporary regulations provide that the W-2 wages paid during the
calendar year to employees of the acquired or disposed of trade or
business are allocated between each taxpayer based on the period during
which the employees of the acquired or disposed of trade or business
were employed by the taxpayer.
These temporary regulations also provide a rule to apply in the
case of a short taxable year in which there is no calendar year ending
within such short taxable year (short-taxable-year rule). Wages paid by
a taxpayer during the short taxable year to employees for employment by
such taxpayer are treated as W-2 wages for such short taxable year for
purposes of section 199(b)(1).
These temporary regulations also describe types of transactions
that are considered either an acquisition or disposition for purposes
of section 199(b)(3). Specifically, these temporary regulations provide
that an acquisition or disposition includes an incorporation, a
formation, a liquidation, a reorganization, or a purchase or sale of
assets.
These regulations also contain cross references to Sec. 1.199-
2(a), (b), (d), and (e). The IRS and the Treasury Department observe
that these rules continue to apply to taxpayers that use these
temporary regulations. For example, the non-duplication rule of Sec.
1.199-2(d) applies such that a taxpayer that includes wages as W-2
wages based on these temporary regulations, including by filing an
amended return for a short taxable year, may not treat those wages as
W-2 wages for any other taxable year. Also, wages qualifying as W-2
wages of one taxpayer
[[Page 51941]]
based on these temporary regulations cannot be treated as W-2 wages of
another taxpayer.
The temporary regulations are applicable for taxable years
beginning on or after August 27, 2015 and expire on August 24, 2018. A
taxpayer may apply Sec. 1.199-2T(c) to taxable years for which the
limitations for assessment of tax has not expired beginning before
August 27, 2015.
Special Analyses
Certain IRS regulations, including this one, are exempt from the
requirements of Executive Order 12866 of, as supplemented and
reaffirmed by Executive Order 13563. Therefore, a regulatory assessment
is not required. It also has been determined that section 533(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these regulations. For the applicability of the Regulatory Flexibility
Act (5 U.S.C. chapter 6) refer to the Special Analyses section of the
preamble to the cross-reference notice of proposed rulemaking published
in the Proposed Rules section in this issue of the Federal Register.
Pursuant to section 7805(f) of the Code, these regulations have been
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on their impact on small business.
Drafting Information
The principal author of these regulations is James A. Holmes,
Office of Associate Chief Counsel (Passthroughs and Special
Industries). 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.
Adoption of Amendment to the Regulations
Accordingly, 26 CFR part 1 is 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 in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.199-2T also issued under 26 U.S.C. 199(b)(3).
* * * * *
Par. 2. Section 1.199-0 is amended by revising the entry for Sec.
1.199-2(c) and adding entries for Sec. Sec. 1.199-2(c)(1), (c)(2), and
(c)(3), and 1.199-8(i)(10) to read as follows:
Sec. 1.199-0 Table of contents.
* * * * *
Sec. 1.199-2 Wage limitation.
* * * * *
(c) Acquisitions, dispositions, and short taxable years.
(1) Allocation of wages between more than one taxpayer.
(2) Short taxable years.
(3) Operating rules.
(i) Acquisition or disposition.
(ii) Trade or business.
* * * * *
Sec. 1.199-8 Other rules.
* * * * *
(i) * * *
(10) Acquisitions, dispositions, and short taxable years.
* * * * *
Par. 3. Section 1.199-2 is amended by revising paragraph (c) to
read as follows:
Sec. 1.199-2 Wage limitation.
* * * * *
(c) [Reserved]. For further guidance see Sec. 1.199-2T(c).
* * * * *
Par. 4. Section 1.199-2T is added to read as follows:
Sec. 1.199-2T Wage limitation (temporary).
(a) through (b) [Reserved]. For further guidance, see Sec. 1.199-
2(a) through (b).
(c) Acquisitions, dispositions, and short taxable years--(1)
Allocation of wages between more than one taxpayer. For purposes of
computing the section 199 deduction of a taxpayer, in the case of an
acquisition or disposition (as defined in paragraph (c)(3)(i) of this
section) of a trade or business (as defined in paragraph (c)(3)(ii) of
this section) that causes more than one taxpayer to be an employer of
the employees of the acquired or disposed of trade or business during
the calendar year, the W-2 wages of the taxpayer for the calendar year
of the acquisition or disposition are allocated between each taxpayer
based on the period during which the employees of the acquired or
disposed of trade or business were employed by the taxpayer, regardless
of which permissible method is used for reporting W-2 wages on Form W-
2, ``Wage and Tax Statement.'' For this purpose, the period of
employment is determined consistently with the principles for
determining whether an individual is an employee described in Sec.
1.199-2(a)(1).
(2) Short taxable years. If a taxpayer has a short taxable year
that does not contain a calendar year ending during such short taxable
year, wages paid to employees for employment by such taxpayer during
the short taxable year are treated as W-2 wages for such short taxable
year for purposes of Sec. 1.199-2(a)(1) (if the wages would otherwise
meet the requirements to be W-2 wages under Sec. 1.199-2 but for the
requirement that a calendar year must end during the short taxable
year).
(3) Operating rules--(i) Acquisition or disposition. For purposes
of this paragraph (c), the term acquisition or disposition includes an
incorporation, a formation, a liquidation, a reorganization, or a
purchase or sale of assets.
(ii) Trade or business. For purposes of this paragraph (c), the
term trade or business includes a trade or business, the major portion
of a trade or business, or the major portion of a separate unit of a
trade or business.
(iii) Application to section 199 only. The provisions of this
section apply solely for purposes of section 199 of the Internal
Revenue Code.
(d) through (e) [Reserved]. For further guidance, see Sec. 1.199-
2(d) through (e).
Par. 5. Section 1.199-8 is amended by adding paragraph (i)(10) to
read as follows:
Sec. 1.199-8 Other rules.
* * * * *
(i) * * *
(10) Acquisitions, dispositions, and short taxable years.
[Reserved]. For further guidance, see Sec. 1.199-8T(i)(10).
Par. 6. Section 1.199-8T is added to read as follows:
Sec. 1.199-8T Other rules (temporary).
(a) through (h) [Reserved]. For further guidance, see Sec. 1.199-
8(a) through (h).
(i) Effective/applicability dates. (1) through (9) [Reserved]. For
further guidance, see Sec. 1.199-8(i)(1) through (9).
(10) Acquisitions, dispositions, and short taxable years. Section
1.199-2T(c) is applicable for taxable years beginning on or after
August 27, 2015. A taxpayer may apply Sec. 1.199-2T(c) to taxable
years for which the limitations for assessment of tax has not expired
beginning before August 27, 2015.
(11) Expiration date. The applicability of Sec. 1.199-2T(c)
expires on August 24, 2018.
John M. Dalrymple,
Deputy Commissioner for Services and Enforcement.
Approved: May 29, 2015.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2015-20770 Filed 8-26-15; 8:45 am]
BILLING CODE 4830-01-P
