Part IV. Items of General Interest

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations

Substitute for Return

REG–131739–03

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY: In this issue of the Bulletin, the IRS is issuing temporary regulations (T.D. 9215) relating to the IRS preparing or executing returns for persons who fail to make required returns. The text of those regulations also serves as the text of these proposed regulations.

DATES: Written or electronically generated comments and requests for a public hearing must be received by October 17, 2005.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–131739–03), 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–131739–03), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may submit comments electronically via the IRS Internet site at www.irs.gov/regs or via the Federal eRulemaking Portal at www.regulations.gov (IRS and REG–131739–03).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Laura R. Urich, (202) 622–4940; concerning submissions of comments and requests for a public hearing, Treena Garrett of the Regulations Unit at (202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

Temporary regulations in this issue of the Bulletin amend 26 CFR part 301 relating to section 6020. The temporary regulations retain the method by which an internal revenue officer or employee prepares a return under section 6020(a). Further, the temporary regulations provide that a document (or set of documents) signed by an authorized internal revenue officer or employee is a return under section 6020(b) if the document (or set of documents) identifies the taxpayer by name and taxpayer identification number, contains sufficient information from which to compute the taxpayer’s tax liability, and the document (or set of documents) purport to be a return under section 6020(b). A Form 13496, “ IRC Section 6020(b) Certifica- tion,” or any other form that an authorized internal revenue officer or employee signs and uses to identify a document (or set of documents) containing the information set forth above as a section 6020(b) return, and the documents identified, constitute a valid section 6020(b) return. The text of those regulations also serve as the text of these proposed regulations. The preamble to the temporary regulations explains the amendments.

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 also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact.

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) and electronic comments that are submitted timely to the IRS. The IRS and Treasury specifically request comments on the clarity of the proposed regulations and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register .

Drafting Information

The principal author of these regulations is Tracey B. Leibowitz, of the Office of the Associate Chief Counsel (Procedure and Administration), Administrative Provisions and Judicial Practice Division.

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Proposed Amendments to the Regulations

Accordingly, 26 CFR part 301 is proposed to be amended to read as follows:

PART 301—PROCEDURE AND ADMINISTRATION

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

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 301.6020–1 is added to read as follows:

§301.6020–1 Returns prepared or executed by the Commissioner or other internal revenue officers.

[The text of proposed §301.6020–1 is the same as the text of §301.6020–1T published elsewhere in this issue of the Bulletin].

Mark E. Matthews, Deputy Commissioner for Services and Enforcement.

September 6, 2005 494 2005–36 I.R.B.

(Filed by the Office of the Federal Register on July 15, 2005, 8:45 a.m., and published in the issue of the Federal Register for July 18, 2005, 70 F.R. 41165)

Qualified Amended Returns; Correction

Announcement 2005–61

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to a correction to temporary regulations.

SUMMARY: This document corrects a correction to temporary regulations (T.D. 9186, published in the I.R.B. as Announcement 2005–53, 2005–31 I.R.B. 258) which was published in the Federal Register on June 23, 2005 (70 FR 36345). The temporary regulations modify the rules relating to qualified amended returns by providing additional circumstances that end the period within which a taxpayer may file an amended return that constitutes a qualified amended return.

DATES: This correction is effective on March 2, 2005.

FOR FURTHER INFORMATION CONTACT: Nancy Galib, (202) 622–4940 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The temporary regulations (T.D. 9186) that is the subject of this correction is under section 6664 of the Internal Revenue Code.

Need for Correction

As published, the correction to the temporary regulations (T.D. 9186) contains an error that may prove to be misleading and is in need of clarification.

Correction of Publication

Accordingly, the publication of the correction to the temporary regulations (T.D. 9186) that is the subject of FR. Doc. 05–12386, is corrected as follows: On page 36345, column 2, in the preamble, under the paragraph heading “Background”, line 3, the language “are under

section 6227 of the Internal” is corrected to read “are under section 6664 of the Internal”.

Cynthia E. Grigsby, Acting Chief, Publications

and Regulations Branch, Legal Processing Division,

Associate Chief Counsel (Procedure and Administration).

(Filed by the Office of the Federal Register on July 27, 2005, 8:45 a.m., and published in the issue of the Federal Register for July 28, 2005, 70 F.R. 43635)

Section 704(c) Installment Obligations and Contributed Contracts; Correction

Announcement 2005–62

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

SUMMARY: This document adds the text that was inadvertently omitted from the Code of Federal Regulations. The text was originally published in T.D. 9193, 2005–15 I.R.B. 862, which was published in the Federal Register on Friday, March 22, 2005 (70 FR 14394). The final regulations relate to the tax treatment of installment obligations and property acquired pursuant to a contract.

DATES: This correction is effective on March 22, 2005.

FOR FURTHER INFORMATION CONTACT: Christopher L. Trump, (202) 622–3070 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document adds §§1.704–3(a)(8)(ii) and (iii) and 1.737–2(d)(3)(ii) and (iii) to the Code of Federal Regulations. The final regulations that are the subject of this correction are under sections 704 and 737 of the Internal Revenue Code.

Need for Correction

As published, §§1.704–3(a)(8)(ii) and (iii) and 1.737–2(d)(3)(ii) and (iii) were

omitted from the Code of Federal Regulations as published in T.D. 9193.

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Correction of Publication

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

PART 1 — INCOME TAXES

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

Authority: 26 USC 7805 * * * Par. 2. Section 1.704–3 is amended by adding paragraphs (a)(8)(ii) and (a)(8)(iii) to read as follows:

§1.704–3 Contributed property .

(a) * - (8) * * * (i) * * * (ii) Disposition in an installment sale . If a partnership disposes of section 704(c) property in an installment sale as defined in section 453(b), the installment obligation received by the partnership is treated as the section 704(c) property with the same amount of built-in gain as the section 704(c) property disposed of by the partnership (with appropriate adjustments for any gain recognized on the installment sale). The allocation method for the installment obligation must be consistent with the allocation method chosen for the original property.

(iii) Contributed contracts . If a partner contributes to a partnership a contract that is section 704(c) property, and the partnership subsequently acquires property pursuant to the contract in a transaction in which less than all of the gain or loss is recognized, then the acquired property is treated as the section 704(c) property with the same amount of built-in gain or loss as the contract (with appropriate adjustments for any gain or loss recognized on the acquisition). For this purpose, the term contract includes, but is not limited to, options, forward contracts, and futures contracts. The allocation method for the acquired property must be consistent with the allocation method chosen for the contributed contract.

• • • • Par. 3. Section 1.737–2 is amended by adding paragraphs (d)(3)(ii) and (d)(3)(iii) to read as follows:

2005–36 I.R.B. 495 September 6, 2005

§1.737–2 Exceptions and special rules.

(d) - * (3) * * * (i) * * * (ii) Installment sales . An installment obligation received by the partnership in an installment sale (as defined in section 453(b)) of section 704(c) property is treated as the contributed property with regard to the contributing partner for purposes of section 737 to the extent that the installment obligation received is treated as section 704(c) property under §1.704–3(a)(8). See §1.704–4(d)(1) for a similar rule in the context of section 704(c)(1)(B). (iii) Contributed contracts . Property acquired by a partnership pursuant to a contract that is section 704(c) property is treated as the contributed property with regard to the contributing partner for purposes of section 737 to the extent that the acquired property is treated as section 704(c) property under §1.704–3(a)(8). See §1.704–4(d)(1) for a similar rule in the context of section 704(c)(1)(B).

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Guy Traynor, Acting Chief, Publications

and Regulations Branch, Legal Processing Division,

Associate Chief Counsel (Procedure and Administration).

(Filed by the Office of the Federal Register on August 5, 2005, 8:45 a.m., and published in the issue of the Federal Register for August 8, 2005, 70 F.R. 45530)

Credit for Increasing Research Activities; Correction

Announcement 2005–63

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

SUMMARY: This document corrects temporary regulations (T.D. 9205, 2005–25 I.R.B. 1267) that were published in the Federal Register on Tuesday, May 24, 2005 (70 FR 29596). The document contains temporary regulations relating to the computation and allocation of the credit for increasing research activities for members of a controlled group of corporations or a group of trades or businesses under common control.

DATES: This correction is effective on May 24, 2005.

FOR FURTHER INFORMATION CONTACT: Nicole R. Cimino, (202) 622–3120 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The temporary regulations (T.D. 9205) that is the subject of this correction are under section 41(f).

Need for Correction

As published, the temporary regulations (T.D. 9205) contain errors that may prove to be misleading and are in need of clarification.

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Correction of Publication

Accordingly, 26 CFR Part 1 is corrected by making the following correcting amendment:

PART 1—INCOME TAXES

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

Authority: 26 USC 7805 * * *

§1.41–6T [Corrected]

1. Section 1.41–6T(e) Example 2 (i), the first line in the table is revised to read as follows:

2. Section 1.41–6T(e) Example 2 (i), second line in the table needs to be revised to read “$25x”.

4. Section 1.41–6T(e) Example 2 (iii), the eighth sentence is revised to read as follows: “Because the group credit of $29.76x is greater than the sum of the stand-alone entity credits of all the mem

5. Section 1.41–6T(e) Example 2 (ii)(B)( 1 ), the first sentence is revised to read as follows: “The group’s base amount equals the greater of: the group’s fixed-base percentage (3.10 percent) mul

tiplied by the group’s aggregate average annual gross receipts for the 4 taxable years preceding the credit year ($17,000x), or the group’s minimum base amount ($337.50x).”

September 6, 2005 496 2005–36 I.R.B.

sum of the QREs of all the members of the group.”

6. Section 1.41–6T(e) Example 2 (iii), the fourth line in the table is revised to read as follows:

bers of the group ($21.67x), each member of the group is allocated an amount of the group credit equal to that member’s stand-alone equity credit.”

5. Section 1.41–6T(e) Example 2 (iii), the ninth sentence is revised to read as fol

lows: “The excess of the group credit over the sum of the members’ stand alone entity credits ($8.09x) is allocated among the members of the group based on the ratio that each member’s QREs bear to the

8. Section 1.41–6T(e) Example 3 (ii)(C), the fourth line in the table is revised to read as follows:

9. Section 1.41–6T(e) Example 3 (ii)(C), the second sentence is revised to read as follows: “The excess of the group credit over the sum of the members’ stand-alone entity credits ($10.00x) is al

located among the members of the group based on the ratio that each member’s QREs bear to the sum of the QREs of all the members of the group.”

9. Section 1.41–6T(e) Example 3 (iii)(C), the fourth line in the table is revised to read as follows:

10. Section 1.41–6T(e) Example 5 (iii), the first sentence is revised to read as follows: “Under paragraph (c)(2) of this section, the stand-alone entity credit for each member of the group must be computed using the method that results in the greater stand-alone entity credit for that member.”

11. Section 1.41–6T(j), the second sentence is revised to read as follows: “Generally, a taxpayer may use any reasonable

method of computing and allocating the credit for taxable years ending before May 24, 2005.”

Guy Traynor, Acting Chief, Publications

and Regulations Branch, Legal Processing Division,

Associate Chief Counsel (Procedure and Administration).

(Filed by the Office of the Federal Register on August 11, 2005, 8:45 a.m., and published in the issue of the Federal Register for August 12, 2005, 70 F.R. 47108)

2005–36 I.R.B. 497 September 6, 2005