Part IV. Items of General Interest

Notice of Proposed Rulemaking and Notice of Public Hearing

Requirement of a Statement Disclosing Uncertain Tax Positions

REG–119046–10

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: This document contains proposed regulations allowing the IRS to require corporations to file a schedule disclosing uncertain tax positions related to the tax return as required by the IRS. This document also provides notice of a public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by October 12, 2010. Outlines of topics to be discussed at the public hearing scheduled for October 15, 2010, at 10 a.m., must be received by October 12, 2010.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–119046–10), room 5205, 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–119046–10), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG–119046–10). The public hearing will be held in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Kathryn Zuba at (202) 622–3400; concerning submissions of comments, the public hearing, and to be placed on the building access list to attend the public

hearing, Oluwafunmilayo Taylor of the Publications and Regulations Branch at (202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed amendments to the Income Tax Regulations (26 CFR part 1) under section 6012 relating to the returns of income corporations are required to file. Section 6011 provides that persons liable for a tax imposed by Title 26 shall make a return when required by regulations prescribed by the Secretary of the Treasury according to the forms and regulations prescribed by the Secretary. Treasury Regulation §1.6011–1 requires every person liable for income tax to make such returns as are required by regulation. Section 6012 requires corporations subject to an income tax to make a return with respect to that tax. Treasury Regulation §1.6012–2 sets out the corporations that are required to file returns and the form those returns must take.

In Announcement 2010–9, 2010–7 I.R.B. 408, and Announcement 2010–17, 2010–13 I.R.B. 515, the IRS announced it was developing a schedule requiring certain taxpayers to report uncertain tax positions on their tax returns. The IRS released the draft schedule, Schedule UTP, accompanied by draft instructions that provide a further explanation of the IRS’s proposal in conjunction with Announcement 2010–30, 2010–19 I.R.B. 668. That announcement invited public comment by June 1, 2010, on the draft schedule and instructions, which would be finalized after the IRS received and considered the comments regarding the overall proposal and the draft schedule and instructions.

The draft schedule and instructions provide that, beginning with the 2010 tax year, certain corporations with both uncertain tax positions and assets equal to or exceeding $10 million will be required to file Schedule UTP if they or a related party issued audited financial statements. The draft schedule and instructions stated that, for 2010 tax years, the IRS will require corporations filing the following returns to file Schedule UTP: Form 1120, U.S. Cor- poration Income Tax Return ; Form 1120L,

U.S. Life Insurance Company Income Tax Return ; Form 1120PC, U.S. Property and Casualty Insurance Company Income Tax Return ; and Form 1120F, U.S. Income Tax Return of a Foreign Corporation . The draft schedule and instructions do not require a Schedule UTP from any other Form 1120 series filers, pass-through entities, or tax-exempt organizations in 2010 tax years. A substantial number of public comments have been received regarding the draft schedule. The IRS and Treasury Department are currently reviewing the comments and anticipate publishing a final Schedule UTP in sufficient time to allow taxpayers to comply with the proposed effective date of these regulations.

Explanation of Provisions

These proposed regulations require corporations to file a Schedule UTP consistent with the forms, instructions, and other appropriate guidance provided by the IRS. As explained in Announcement 2010–9, the United States federal income tax system relies on taxpayers to make a self-assessment of tax and to file returns that show the facts upon which tax liability may be determined and assessed. Section 601.103 of the Procedure and Administration Regulations. To discharge its obligation to fairly and uniformly administer the tax laws, the IRS must be able to quickly and efficiently identify those returns, and the issues underlying those returns, that present a significant risk of noncompliance with the Internal Revenue Code.

Existing corporate tax returns do not currently require that taxpayers separately identify and explain the uncertain tax positions that are identified in the process of complying with generally accepted accounting principles. Instead, to identify uncertain tax positions the IRS must select a return for audit and expend a substantial amount of effort by revenue agents to determine what uncertain tax positions might relate to the return.

Corporations that prepare financial statements are required by generally accepted accounting principles to identify and quantify all uncertain tax positions as described in Financial Accounting Standards Board, Interpretation No. 48, Ac-

October 4, 2010 415 2010–40 I.R.B.

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 Kathryn Zuba of the Office of the Associate Chief Counsel (Procedure and Administration).

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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 as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.6012–2 is also issued under the authority of 26 U.S.C. 6011 and 6012.

Par. 2. Section 1.6012–2 is amended by adding paragraphs (a)(4) and (a)(5) to read as follows:

§1.6012–2 Corporations required to make returns of income .

(a) * - (4) Disclosure of uncertain tax posi- tions. A corporation required to make a return under this section shall attach Schedule UTP, Uncertain Tax Position Statement, or any successor form, to such return, in accordance with forms, instructions, or other appropriate guidance provided by the IRS.

(5) Effective/applicability date . Paragraph (a)(4) of this section applies to returns filed for tax years beginning after December 15, 2009, and ending after the date of publication of the adoption of these rules as final regulations in the Federal Register .

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Steven T. Miller, Deputy Commissioner for Services and Enforcement.

counting for Uncertainty in Income Taxes (June 2006) (FIN 48). FIN 48 is now codified in FASB ASC Topic 740–10 Income Taxes. Income Taxes, Accounting Standards Codification Subtopic 740–10 (Fin. Accounting Standards Bd. 2010). Other corporations that file returns of income in the United States may be subject to other requirements regarding accounting for uncertain tax positions. For example, corporations may be subject to other generally accepted accounting standards, including International Financial Reporting Standards and country-specific generally accepted accounting standards.

Congress, through the Internal Revenue Code, has given the IRS broad authority and discretion to specify the form and content of returns, so long as the IRS promulgates regulations requiring persons made liable for a tax to file those returns. This regulation will authorize the IRS to require certain corporations, as set out in forms, publications, instructions, or other guidance, to provide information concerning uncertain tax positions concurrent with the filing of a return. This information will aid the IRS in identifying those returns that pose the most significant risks of noncompliance and in selecting issues for examination. The IRS intends to implement the authority provided in this regulation initially by issuing a schedule and explanatory publication that require those corporations that prepare audited financial statements to file a schedule identifying and describing the uncertain tax positions, as described in FIN 48 and other generally accepted accounting standards, that relate to the tax liability reported on the return.

Proposed Effective/Applicability Date

When adopted as a final regulation, this rule will apply to returns filed for tax years beginning after December 15, 2009, and ending after the date of publication of these rules as final regulations in the Federal Register .

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.

This regulation will only affect taxpayers that prepare or are required to issue au

dited financial statements. Small entities rarely prepare or are required to issue audited financial statements due to the expense involved. It is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6). Accordingly, a regulatory flexibility analysis is not required.

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 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. The IRS and the Treasury Department request comments on the substance of the proposed regulations, as well as on the clarity of the proposed rules and how they can be made easier to understand. All comments submitted by the public will be made available for public inspection and copying. A public hearing has been scheduled for October 15, 2010, beginning at 10 a.m. in the IRS Auditorium, of the Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, D.C. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identifications to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area 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.

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 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 October 12, 2010. A period

2010–40 I.R.B. 416 October 4, 2010

(Filed by the Office of the Federal Register on September 7, 2010, 4:15 p.m., and published in the issue of the Federal Register for September 9, 2010, 75 F.R. 54802)

Treatment of Services Under Section 482; Allocation of Income and Deductions from Intangibles; Withdrawal

Announcement 2010–60

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking.

SUMMARY: This document withdraws proposed regulations published in the Federal Register on September 10, 2003 (REG–146893–02, 2003–2 C.B. 967 [68 FR 53448]), related to the treatment of controlled services transactions under section 482 and the allocation of income from intangibles, in particular with respect to contributions by a controlled party to the value of an intangible that is owned by another controlled party. The IRS and Treasury Department are withdrawing those proposed regulations because they have been superseded.

FOR FURTHER INFORMATION CONTACT: Gregory A. Spring (202) 435–5265 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

On September 10, 2003, the Treasury Department and the IRS published in the Federal Register (68 FR 53448, REG–146893–02 and REG–115037–00, 2003–2 C.B. 967) proposed regulations relating to the treatment of controlled services transactions and the allocation of income from intangible property, in particular with respect to contributions by a controlled party to the value of intangible property owned by another controlled party. On August 4, 2006, the Treasury Department and the IRS published in the Federal Register (71 FR 44466, T.D. 9278, 2006–2 C.B. 256; REG–146893–02, REG–115037–00, and REG–138603–03, 2006–2 C.B. 317) temporary regulations relating to the treatment of controlled services transactions,

the allocation of income from intangible property, and stewardship expenses under Treas. Reg. §1.861–8(e)(4). A notice of proposed rulemaking cross-referencing the temporary regulations was published in the Federal Register on the same day (REG–146893–02; REG–115037–00; REG–138603–03, 2006–2 C.B. 317

[71 FR 44247]). Written comments responding to the notice of proposed rulemaking were received, and a public hearing was held on October 27, 2006. That notice of proposed rulemaking superseded the proposed regulations published in the Federal Register on September 10, 2003.

On August 4, 2009, the Treasury Department and the IRS published in the Federal Register (74 FR 38830, T.D. 9456, 2009–2 C.B. 188) final regulations that are generally consistent with the proposed regulations that were published on August 4, 2006, in the Federal Register (REG–146893–02; REG–115037–00; REG–138603–03, 2006–2 C.B. 317 [71 FR 44247]), and removed the corresponding temporary regulations.

Withdrawal of a Notice of Proposed Rulemaking

Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (REG–146893–02 and REG–115037–00) published in the Fed- eral Register on September 10, 2003 (68 FR 53448) is withdrawn.

Steven T. Miller, Deputy Commissioner for Services and Enforcement.

(Filed by the Office of the Federal Register on September 7, 2010, 8:45 a.m., and published in the issue of the Federal Register for September 8, 2010, 75 F.R. 53448)

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–61

This announcement serves notice to donors that on February 9, 2009, the United States Tax Court entered a stipulated decision that, effective

January 1, 2002 through October 6, 2005, the organization listed below is described in I.R.C. § 501(c)(3) and is exempt from taxation under I.R.C. § 501(a). Further, effective October 7, 2005, the organization listed below is not recognized as an organization described in I.R.C. § 501(c)(3), and is not exempt from taxation under I.R.C. § 501(a).

After Bankruptcy Foundation, Inc.

Fishers, IN

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–62

This announcement serves notice to donors that on April 21, 2009, the United States Tax Court dismissed the 7428 action and determined that, effective January 1, 2003, the organization listed below is not recognized as an organization described in I.R.C. § 501(c)(3), is not exempt from taxation under I.R.C. § 501(a), and is not eligible to receive deductible charitable contributions as an organization described in I.R.C. § 170(c)(2).

America’s Faith Centered Education, Inc.

Sandy, UT

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–63

This announcement serves notice to donors that on October 27, 2009, the United States Tax Court entered a stipulated decision that, effective January 1, 2001, the organization listed below is not qualified as an organization described in I.R.C. § 501(c)(3) and is not an organization described in I.R.C. § 170(c)(2). Further, for the period January 1, 2001 through October 14, 2008, the IRS will not disallow any claimed charitable contributions deductions to petitioner on the grounds that petitioner is not an organization described in I.R.C. § 170(c)(2).

October 4, 2010 417 2010–40 I.R.B.

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–69

This announcement serves notice to donors that on April 9, 2010, the United States Tax Court entered a stipulated decision that the organization listed below is qualified as an organization described in I.R.C. § 501(c)(3) and is exempt from taxation under I.R.C. § 501(a).

Love Quest Children’s Foundation

Cincinnati, OH

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–70

This announcement serves notice to donors that on November 6, 2009, the United States Tax Court entered a stipulated decision that, effective August 1, 1998, the organization listed below is not qualified for exemption as an organization described in I.R.C. § 501(c)(3) and 509(a)(3) and is not exempt from taxation under I.R.C. § 501(a).

Newton Family Foundation

West Jordan, UT

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–71

This announcement serves notice to donors that on April 22, 2010, the United States Tax Court entered a stipulated decision that, effective January 1, 2003, the organization listed below is not recognized as an organization described in I.R.C. § 501(c)(3) and is not exempt from taxation under I.R.C. § 501(a).

Further, effective January 1, 2001, petitioner is exempt from taxation under I.R.C. § 501(a) as an organization described in I.R.C. § 501(c)(4).

Airport Working Group of Orange County

Newport Beach, CA

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–64

This announcement serves notice to donors that on January 6, 2009, the United States Tax Court entered a stipulated decision that, effective January 1, 2002, the organization listed below is not recognized as an organization described in I.R.C. § 501(c)(3) and is not exempt from taxation under I.R.C. § 501(a).

Bear Soldier Industries

Bismarck, ND

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–65

This announcement serves notice to donors that on March 20, 2009, the United States Tax Court entered a stipulated decision that, effective January 1, 2003, the organization listed below is qualified as an organization described in I.R.C. § 501(c)(3) and is exempt from taxation under I.R.C. § 501(a).

Financial Policy Forum

Washington, DC

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–66

This announcement serves notice to donors that on February 12, 2010, the

United States Tax Court entered a stipulated decision that, effective September 1, 2001, the organization listed below is not qualified as an organization described in I.R.C. § 501(c)(3), is not exempt from taxation under I.R.C. § 501(a), and is not an organization described in I.R.C. § 170(c)(2).

Golden Age Benefits Society

Westlake Village, CA

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–67

This announcement serves notice to donors that on March 24, 2010, the United States Tax Court entered a stipulated decision that, effective January 1, 2004, the organization listed below is not qualified as an organization described in I.R.C. § 501(c)(3), is not exempt from taxation under I.R.C. § 501(a), and is not an organization described in I.R.C. § 170(c)(2).

Jordan Ministries, Inc.

Dover, FL

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–68

This announcement serves notice to donors that on February 5, 2009, the United States Tax Court entered a stipulated decision that, effective December 20, 2000, the organization listed below is not qualified as an organization described in I.R.C. § 501(c)(3) and is not exempt from taxation under I.R.C. § 501(a).

Douglas and Valerie Wood Charitable

Supporting Organization Bonita Springs, FL

2010–40 I.R.B. 418 October 4, 2010

United American Housing & Education

Foundation Houston, TX

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–72

This announcement serves notice to donors that on January 20, 2010, the United States Tax Court entered a stipulated decision that, effective January 1, 2002, the organization listed below is not qualified as an organization described in I.R.C. § 501(c)(3) and is not exempt from taxation under I.R.C. § 501(a).

Wasatch Homes Charitable Foundation

Draper, UT

Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428

Announcement 2010–73

This announcement serves notice to donors that on November 21, 2008, the

United States Tax Court entered a stipulated decision that, effective January 1, 2007, the organization listed below is not recognized as an organization described in I.R.C. § 501(c)(3), is not exempt from taxation under I.R.C. § 501(a), and is not eligible to receive deductible charitable contributions as an organization described in I.R.C. § 170(c)(2).

Texas Reinvestment Corporation II

San Antonio, TX

Section 7428(c) Validation of Certain Contributions Made During Pendency of Declaratory Judgment Proceedings

Announcement 2010–74

This announcement serves notice to potential donors that the organization listed below has recently filed a timely declaratory judgment suit under section 7428 of the Code, challenging revocation of its status as an eligible donee under section 170(c)(2). Protection under section 7428(c) of the Code begins on the date that the notice of revocation is published in the Internal Revenue Bulletin and ends on the date on which a court first determines that an

organization is not described in section 170(c)(2), as more particularly set forth in section 7428(c)(1).

In the case of individual contributors, the maximum amount of contributions protected during this period is limited to $1,000.00, with a husband and wife being treated as one contributor. This protection is not extended to any individual who was responsible, in whole or in part, for the acts or omissions of the organizations that were the basis for the revocation.

This protection also applies (but without limitation as to amount) to organizations described in section 170(c)(2) which are exempt from tax under section 501(a). If the organization ultimately prevails in its declaratory judgment suit, deductibility of contributions would be subject to the normal limitations set forth under section 170.

Chadwell-Townsend Private Foundation

Bellbrook, OH

DPA Alliance Corporation

Provo, UT

Harbour Credit Counseling Services, Inc

Virginia Beach, VA

Nat Turner Legal Defense Fund

Garland, TX

October 4, 2010 419 2010–40 I.R.B.