Part IV. Items — Internal Revenue Bulletin 2008-8

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations and Notice of Public Hearing

Treatment of Overall Foreign and Domestic Losses

REG–141399–07

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations and notice of public hearing.

SUMMARY: In this issue of the Bulletin, the IRS is issuing temporary regulations that provide guidance relating to the recapture of overall foreign and domestic losses. Changes to the applicable law were made by the American Jobs Creation Act of 2004, as corrected by the Gulf Opportunity Zone Act of 2005. The temporary regulations provide guidance needed to comply with these changes, as well as updated guidance with respect to overall foreign losses and separate limitation losses, and affect individuals and corporations claiming foreign tax credits. The text of those temporary regulations (T.D. 9371) published in this issue of the Bulletin also serves as the text of these proposed regulations. This document also provides a notice of public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by March 20, 2008. Outlines of topics to be discussed at the public hearing scheduled for April 10, 2008, at 10 a.m. must be received by March 20, 2008.

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG–141399–07), room 5203, Internal Revenue Service, PO 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–141399–07), Courier’s desk, Internal Revenue Service, 1111 Constitution Avenue, NW,

Washington, DC 20044, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–141399–07). The public hearing will be held in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Jeffrey L. Parry, (202) 622–3850 (not a toll-free number); concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Richard Hurst, Richard.A.Hurst@irscounsel.treas.gov .

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

Temporary regulations in this issue of the Bulletin amend the Income Tax Regulations (26 CFR Part 1) providing rules relating to the recapture of overall domestic losses under section 904(g) as well as the recapture of overall foreign losses and separate limitation losses under section 904(f). The text of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations and these proposed regulations. The regulations affect individuals and corporations claiming foreign tax credits.

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 has also 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 the 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), these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any electronic or written comments (a signed original and eight (8) copies) that are submitted timely to the IRS. The Treasury Department and the IRS specifically request comments on the clarity of the proposed regulations and how they may be made easier to understand. Moreover, the Treasury Department and the IRS are considering providing additional guidance on overall domestic losses and separate limitation losses, as well as further revisions to the overall foreign loss provisions of the 1987 regulations. Comments are welcome on this ongoing project, particularly with regard to the need to provide for guidance on the application of the overall domestic loss provisions to income earned through foreign or domestic trusts, as well as guidance regarding the recapture of overall foreign losses and separate limitation losses on the disposition of property under section 904(f)(3) and (f)(5)(F). In addition, the Treasury Department and the IRS are continuing to study whether additional rules to better coordinate the overall foreign loss and overall domestic loss regimes would be appropriate, including whether a netting rule should apply to offsetting overall foreign loss accounts and overall domestic loss accounts. The Treasury Department and the IRS welcome additional comments in this regard. All comments will be available for public inspection and copying.

A public hearing has been scheduled for April 10, 2008, in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble.

February 25, 2008 470 2008–8 I.R.B.

Par. 4. Section 1.904(f)–2(c)(1) and (c)(5) Example 4 . are revised to read as follows:

§1.904(f)–2 Recapture of overall foreign losses .

- - - (c) - - - (1) [The text of the proposed amendments to §1.904(f)–2(c)(1) is the same as the text of §1.904(f)–2T(c)(1) published elsewhere in this issue of the Bulletin.]
- - - (5) - * Example 4 . [The text of the proposed amendments to §1.904(f)–2(c)(5) Example 4 . is the same as the text of §1.904(f)–2T(c)(5) Example 4 . published elsewhere in this issue of the Bulletin.]
- - - Par. 5. Sections 1.904(f)–7 and 1.904(f)–8 are added to read as follows:

§1.904(f)–7 Separate limitation loss and the separate limitation loss account .

[The text of proposed §1.904(f)–7 is the same as the text of §1.904(f)–7T(a) through (f) published elsewhere in this issue of the Bulletin.]

§1.904(f)–8 Recapture of separate limitation loss accounts .

[The text of proposed §1.904(f)–8 is the same as the text of §1.904(f)–8T(a) through (c) published elsewhere in this issue of the Bulletin.]

Par. 6. Section 1.904(g)–0 is added to read as follows:

§1.904(g)–0 Outline of regulation provisions .

§1.904(g)–1 Overall domestic loss and the overall domestic loss account .

[The text of the entries for this section is the same as the text for §1.904(g)–1T(a) through (f) in §1.904(g)–0T published elsewhere in this issue of the Bulletin.]

§1.904(g)–2 Recapture of overall domestic losses .

[The text of the entries for this section is the same as the text for §1.904(g)–2T(a)

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit electronic or written comments by March 20, 2008, and an outline of the topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by March 20, 2008. A period of 10 minutes will be allotted to each person for making comments.

An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

Drafting Information

The principal author of these regulations is Jeffrey L. Parry of the Office of Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.

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Proposed Amendments 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 an entry in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.904(g)–3 also issued under 26 U.S.C. 904(g)(4) * * * Par. 2. Section 1.904–0 is amended by revising the entries for §1.904(f)–1(a), (d)(2), (d)(3), and (d)(4), and for §1.904(f)–2(c) and (c)(1), and adding entries for §§1.904(f)–7 and 1.904(f)–8 to read as follows:

§1.904–0 Outline of regulation provisions for section 904 .

§1.904(f)–1 Overall foreign loss and the overall foreign loss account .

- - - (a)(1) and (a)(2) [The text of these entries is the same as the text of the entries for §1.904(f)–1T(a)(1) and (a)(2) in

§1.904(f)–0T published elsewhere in this issue of the Bulletin.]

- - - (d)(2), (d)(3), and (d)(4) [The text of these entries is the same as the text of the entries for §1.904(f)–1T(d)(2), (d)(3), and (d)(4) in §1.904(f)–0T published elsewhere in this issue of the Bulletin.]

§1.904(f)–2 Recapture of overall foreign losses .

- - - (c) and (c)(1) [The text of these entries is the same as the text of the entries for §1.904(f)–2T(c) and (c)(1) in §1.904(f)–0T published elsewhere in this issue of the Bulletin.]

§1.904(f)–7 Separate limitation loss and the separate limitation loss account .

[The text of the entries for this section is the same as the text of the entries for §1.904(f)–7T(a) through (f) in §1.904(f)–0T published elsewhere in this issue of the Bulletin.]

§1.904(f)–8 Recapture of separate limitation loss accounts .

[The text of the entries for this section is the same as the text of the entries for §1.904(f)–8T(a) through (c) in §1.904(f)–0T published elsewhere in this issue of the Bulletin.]

Par. 3. In §1.904(f)–1, paragraph (a)(2) is added, and paragraph (d)(4) is revised, to read as follows:

§1.904(f)–1 Overall foreign loss and the overall foreign loss account .

(a)(1) * - (2) [The text of the proposed amendments to §1.904(f)–1(a)(2) is the same as the text of §1.904(f)–1T(a)(2) published elsewhere in this issue of the Bulletin.]

- - - (d) - * (4) [The text of the proposed amendments to §1.904(f)–1(d)(4) is the same as the text of §1.904(f)–1T(d)(4) published elsewhere in this issue of the Bulletin.]

2008–8 I.R.B. 471 February 25, 2008

through (d) in §1.904(g)–0T published elsewhere in this issue of the Bulletin.]

§1.904(g)–3 Ordering rules for the allocation of net operating losses, net capital losses, U.S. source losses, and separate limitation losses, and for recapture of separate limitation losses, overall foreign losses, and overall domestic losses .

[The text of the entries for this section is the same as the text for §1.904(g)–3T(a) through (i) in §1.904(g)–0T published elsewhere in this issue of the Bulletin.]

Par. 7. Sections 1.904(g)–1, 1.904(g)–2, and 1.904(g)–3 are added to read as follows:

§1.904(g)–1 Overall domestic loss and the overall domestic loss account .

[The text of proposed §1.904(g)–1 is the same as the text of §1.904(g)–1T(a) through (f) published elsewhere in this issue of the Bulletin.]

§1.904(g)–2 Recapture of overall domestic losses .

[The text of proposed §1.904(g)–2 is the same as the text of §1.904(g)–2T(a) through (d) published elsewhere in this issue of the Bulletin.]

[The text of proposed §1.904(g)–3 is the same as the text of §1.904(g)–3T(a) through (i) published elsewhere in this issue of the Bulletin.]

Par. 8. Section 1.1502–9 is revised to read as follows:

§1.1502–9 Consolidated overall foreign losses and separate limitation losses .

[The text of proposed §1.1502–9 is the same as the text of §1.1502–9T(a) through (e) published elsewhere in this issue of the Bulletin.]

Linda E. Stiff, Deputy Commissioner for Services and Enforcement.

(Filed by the Office of the Federal Register on December 20, 2007, 8:45 a.m., and published in the issue of the Federal Register for December 21, 2007, 72 F.R. 72646)

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations

Disclosure of Return Information to the Bureau of the Census

REG–147832–07

AGENCY: Internal Revenue Service (IRS), Treasury.

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

SUMMARY: In this issue of the Bulletin, the IRS is issuing a regulation (T.D. 9373) that would add an additional item of return information that may be disclosed to the Bureau of the Census (Bureau) for use in the Bureau’s annual Survey of Industrial Research and Development. This proposed regulation provides guidance to IRS personnel responsible for disclosing the information. This regulation facilitates the assistance of the IRS to the Bureau in its statistics programs and requires no action by taxpayers and has no effect on their tax liabilities.

DATES: Written and electronic comments and requests for a public hearing must be received by March 31, 2008.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–147832–07), 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–147832–07), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW,

Washington, DC, or sent electronically via the Federal eRulemaking Portal at www.regulations.gov (IRS and REG–147832–07).

FOR FURTHER INFORMATION CONTACT: Concerning submission of comments, Richard Hurst, (202) 622–7180 (not a toll-free number); concerning the notice of proposed rulemaking, Glenn Melcher, (202) 622–4570 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

Under section 6103(j)(1)(A), upon written request from the Secretary of Commerce, the Treasury Secretary is to furnish to the Bureau of the Census (Bureau) return information as may be prescribed by Treasury regulations for the purpose of, but only to the extent necessary in, structuring censuses and conducting related statistical activities authorized by law. Section 301.6103(j)(1)–1 of the regulation provides an itemized description of the items of return information authorized to be disclosed for this purpose. Periodically, the disclosure regulation is amended to reflect the changing needs of the Bureau for data for its statutorily authorized statistical activities.

This document contains a proposed regulation authorizing IRS personnel to disclose an additional item of return information that has been requested by the Secretary of Commerce.

A temporary regulation in this issue of the Bulletin amends the Procedure and Administration Regulations (26 CFR Part 301) relating to Internal Revenue Code (Code) section 6103(j). The amendments to the regulation contain rules relating to the disclosure of return information reflected on returns to officers and employees of the Department of Commerce for structuring censuses and conducting related statistical activities authorized by law. Specifically, the amendment to the regulation authorizes the IRS to disclose an additional item of return information that has been requested by the Secretary of Commerce that is necessary for the Bureau’s annual Survey of Industrial Research and Development.

February 25, 2008 472 2008–8 I.R.B.

Authority: 26 U.S.C. 7805 * * * Par. 2. Section §301.6103(j)(1)–1 is amended by revising paragraphs (b)(3)(xxv) and (e) to read as follows:

§301.6103(j)(1)–1 Disclosure of return information reflected on returns to officers and employees of the Department of Commerce for certain statistical purposes and related activities .

- - - (b) - * (3) - * (xxv) [The text of proposed amended paragraph (b)(3)(xxv) is the same as the text of §301.6103(j)(1)–1T(b)(3)(xxv) published elsewhere in this issue of the Bulletin].
- - - (e) [The text of proposed amended paragraph (e) is the same as the text of §301.6103(j)(1)–1T(e) published elsewhere in this issue of the Bulletin].

Linda E. Stiff, Deputy Commissioner for Services and Enforcement.

(Filed by the Office of the Federal Register on December 28, 2007, 8:45 a.m., and published in the issue of the Federal Register for December 31, 2007, 72 F.R. 74246)

The text of the temporary regulation also serves as the text of this proposed regulation. The preamble to the temporary regulation explains the proposed regulation.

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 the regulation does 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 Code, this proposed regulation has been 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 the proposed regulation is adopted as a final regulation, consideration will be given to any electronic and written comments (a signed original and

eight (8) copies) that are submitted timely to the IRS. The IRS and Treasury Department specifically request comments on the clarity of the proposed regulation and how it 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 a person who timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the Federal Register .

Drafting Information

The principal author of this proposed regulation is Glenn Melcher, Office of the Associate Chief Counsel (Procedure & Administration).

- - - -

Proposed Amendments to the Regulations

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

PART 301—PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 continues to read in part as follows: