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which incorporates the principles of
section 1001, gain or loss on the
disposition of an asset is taken into
account net of the taxpayer’s basis, or
investment, in the assets. In contrast,
under section 382(h)(6), an item of
income is generally a gross amount that
is not netted and therefore not
necessarily matched with the item of
deduction incurred to earn the item of
income.
Therefore, the IRS and Treasury
Department request comments on the
proposed regulations about identifying
cases where taking into account items of
income and deduction separately may
cause the 338 approach to not properly
identify whether or not an item of
income or deduction is treated as RBIG
or RBIL, and how the 338 approach
might be adapted so that in such cases
it properly identifies whether or not an
item of income or deduction is treated
as RBIG or RBIL.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12666. Therefore, a
regulatory assessment is not required.
These temporary regulations address
situations in which taxpayers
inappropriately attempt to treat deferred
prepaid income as net unrealized builtin gain for purposes of increasing the
amount of post-ownership change
income that may be offset by preownership change losses. For this
reason, it has been determined pursuant
to 5 U.S.C. 553(b)(B) that prior notice
and public procedure are impracticable
and contrary to the public interest. For
the same reason, it has been determined
pursuant to 5 U.S.C. 553(d)(3) that good
cause exists to make these temporary
regulations effective upon the date of
publication. For applicability of the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) refer to the Special Analyses
section of the preamble to the crossreference notice of the proposed
rulemaking published in the Proposed
Rules section in this issue of the Federal
Register. Pursuant to section 7805(f) of
the Code, these temporary regulations
will be submitted to the Chief Counsel
for Advocacy of the Small Business
Administration for comment on their
impact on small business.

DEPARTMENT OF THE TREASURY

IRS revenue rulings, procedures, and
notices cited in this preamble are made
available by the Superintendent of
Documents, U.S. Government Printing
Office, Washington, DC 20402.

Internal Revenue Service

List of Subjects in 26 CFR Part 1

RIN 1545–BF26

Income taxes, Reporting and
recordkeeping requirements.

Guidance Necessary To Facilitate
Business Electronic Filing and Burden
Reduction

Amendments 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 an entry
in numerical order to read as follows:

■

Authority: 26 U.S.C. 7805. * * *
Section 1.382–7T also issued under 26
U.S.C. 382(m).* * *
■ Par. 2. Section 1.382–7T is added to
read as follows:

§ 1.382–7T Built-in gains and losses
(temporary).

(a) Treatment of prepaid income. For
purposes of section 382(h), prepaid
income is not recognized built-in gain.
The term prepaid income means any
amount received prior to the change
date that is attributable to performance
occurring on or after the change date.
Examples to which this paragraph (a)
will apply include, but are not limited
to, income received prior to the change
date that is deferred under section 455,
§ 1.451–5, or Rev. Proc. 2004–34 (2004–
1 CB 991) (or any successor revenue
procedure) (see § 601.601(d)(2) of this
chapter).
(b) Effective/applicability date. (1)
This section applies to loss corporations
that have undergone an ownership
change on or after June 14, 2007.
(2) The applicability of this section
expires on or before June 14, 2010.
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Eric Solomon,
Assistant Secretary of the Treasury.
[FR Doc. E7–11438 Filed 6–13–07; 8:45 am]
BILLING CODE 4830–01–P

Drafting Information
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Availability of IRS Documents

The principal author of these
regulations is Sean McKeever, Office of
Associate Chief Counsel (Corporate).
However, other personnel from the IRS
and Treasury Department participated
in their development.

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26 CFR Parts 1, 301, and 602
[TD 9329]

Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:

SUMMARY: This document contains final
regulations that affect taxpayers filing
Federal income tax returns. They
simplify, clarify, or eliminate reporting
burdens and also eliminate regulatory
impediments to the electronic filing of
certain statements that taxpayers are
required to include on or with their
Federal income tax returns. This
document also makes conforming
changes to certain current regulations.
DATES: Effective Date: These regulations
are effective on June 14, 2007.
Applicability Date: For dates of
applicability, see §§ 1.302–2(d), 1.302–
4(h), 1.331–1(f), 1.332–6(e), 1.338–10(c),
1.351–3(f), 1.355–5(e), 1.368–3(e),
1.381(b)–1(e), 1.382–8(j)(4), 1.382–11(b),
1.1081–11(f), 1.1221–2(j), 1.1502–13(m),
1.1502–31(j), 1.1502–32(j), 1.1502–33(k),
1.1502–95(g), 1.1563–3(e) and 1.6012–
2(k).

For
all sections except § 1.6012–2, Grid
Glyer, (202) 622–7930; for § 1.6012–2,
William T. Sullivan (202) 622–7052 (not
toll-free numbers).
SUPPLEMENTARY INFORMATON:
FOR FURTHER INFORMATION CONTACT:

Paperwork Reduction Act
The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545–
2019.
The collection of information in these
final regulations is in §§ 1.302–2, 1.302–
4, 1.331–1, 1.332–6, 1.338–10, 1.351–3,
1.355–5, 1.368–3, 1.381(b)–1, 1.382–8,
1.382–11, 1.1081–11, 1.1221–2, 1.1502–
13, 1.1502–31, 1.1502–32, 1.1502–33,
1.1502–95, 1.1563–3 and 1.6012–2. This
information is required to enable the
IRS to verify that a taxpayer is reporting
the correct amount of the fair market
value of any property (including stock)
received and the basis of any property

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Federal Register / Vol. 72, No. 114 / Thursday, June 14, 2007 / Rules and Regulations
(including stock) surrendered in the
transaction described in such section.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number by the
Office of Management and Budget.
Books or records relating to a
collection of information must be
retained as long as their contents might
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.

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Background
On May 30, 2006, the IRS and
Treasury Department published
temporary regulations (TD 9264) under
26 CFR part 1 and 26 CFR part 602. See
71 FR 30591, 2006–26 IRB 1150. The
IRS and Treasury Department issued a
notice of proposed rulemaking (REG–
134317–05) cross-referencing those
temporary regulations on the same day.
See 71 FR 30640, 2006–26 IRB 1184.
In general, the regulations simplify,
clarify, or eliminate reporting burdens
for corporations and shareholders for
certain transactions, including
distributions, exchanges and
reorganizations. They also eliminate
impediments to the electronic filing of
statements that taxpayers, primarily
large corporations that are members of
consolidated or controlled groups, are
required to include on their Federal
income tax returns.
These regulations were part of a series
of regulations published by the IRS and
Treasury Department that are designed
to eliminate impediments to the
electronic filing of forms and statements
that taxpayers are required to include on
their Federal income tax returns. See,
for example, TD 9300, 71 FR 71040,
2007–2 IRB 246, and TD 9243, 71 FR
4276, 2006–8 IRB 475.
Explanation of Provisions
Except as provided in the following
paragraph, this Treasury decision
adopts the proposed regulations with no
substantive changes. In addition, this
Treasury decision removes the
corresponding temporary regulations.
This Treasury decision does not adopt
the following proposed regulations:
§ 1.1502–35(c)(4)(i), § 1.1502–
76(b)(2)(ii)(D) and § 1.1563–1(c)(2)(i)
through (iii). These proposed
regulations will be addressed as part of
other guidance projects.
The IRS and Treasury Department
received no written or electronic
comments from the public in response
to the notice of proposed rulemaking

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and no public hearing was requested or
held. However, three questions were
raised informally and are addressed in
this preamble.
Section 1.302–2
The first question involves a reporting
requirement under § 1.302–2
(redemptions not taxable as dividends).
Specifically, the question involved
proposed § 1.302–2(b)(2), which
requires all ‘‘significant holders’’
receiving property from a corporation in
exchange for the corporation’s stock
(‘‘redemption exchanges’’) to include a
brief information statement on their
return. The statement sets forth certain
information necessary to determine the
proper treatment of the redemption
exchange. Under proposed § 1.302–
2(b)(3)(i), a significant holder is any
stockholder owning 5 percent or more of
the stock of a publicly traded company
and any stockholder owning 1 percent
or more of the stock of a company that
is not publicly traded.
The specific question raised was
whether the statement is necessary in all
redemption exchanges, whether the
exchange is treated as a distribution that
is essentially equivalent to a dividend or
not. Under the proposed regulations, all
redemption exchanges are subject to this
reporting requirement. The IRS and
Treasury Department determined that
the simplified information to be
provided in the statement is necessary
for the identification and evaluation of
redemptions that are essentially
equivalent to dividends. Furthermore,
the required information is information
that taxpayers should already have or be
prepared to produce. Finally, as noted
in this preamble, the regulations limit
any remaining burden by imposing the
reporting requirement only on
significant holders. For all these
reasons, the IRS and Treasury
Department have concluded that the
requirement does not impose an
unnecessary or inappropriate burden on
taxpayers. Accordingly, the final
regulations adopt the rule proposed in
§ 1.302–2(b)(2) and do not limit the
application of the reporting
requirement.
Section 1.302–4
The second question involves a
reporting requirement under § 1.302–4
(termination of shareholder’s interest).
Specifically, the question involved the
statement in proposed § 1.302–4(a)
regarding the waiver of family
attribution. Under this section and
section 302(c)(2), a redeeming
shareholder can avoid being treated as
receiving a dividend equivalent
distribution by waiving the application

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32795

of the family attribution rules of section
318(a)(1). Prior to the promulgation of
§ 1.302–4T(a), § 1.302–4(a)(1) provided
that taxpayers were required to file
family attribution waiver agreements
and § 1.302–4(a)(2) prescribed
conditions under which a taxpayer that
had failed to timely file the agreement
could obtain an extension of time to file
from the appropriate district director.
Section 1.302–4T(a) removed the
requirement that an agreement be filed
as well as the instructions regarding late
filing. Instead, that regulation provided
that a statement must be filed and set
forth the information that must be
included. Section 1.302–4T(a) did not
include instructions for late filers.
The specific question raised was
whether the change affected taxpayers’
ability to remedy late filing. The IRS
and Treasury Department did not intend
any change to taxpayers’ ability to
remedy late filing. However, the final
regulations do not incorporate
instructions for late filing because the
statement required is a regulatory
election and the late filing of all
regulatory elections is addressed by
§ 301.9100–1. Accordingly, such
instructions are not necessary and could
inadvertently imply that the general
rules would not otherwise apply.
Section 1.6012–2
Finally, a question was also raised
concerning the reporting requirements
applicable to foreign insurance
corporations electing under section
953(d) to be treated as domestic
insurance corporations. Specifically, the
question raised was whether such
corporations have a reporting
requirement.
Section 1.6012–2(c)(1)(i) requires that
a domestic life insurance company file
with its return a copy of its annual
statement which shows the reserves
used by the company in computing the
taxable income reported on its return,
and a copy of Schedule A (real estate)
and of Schedule D (bonds and stocks),
or any successor thereto, of such annual
statement. Section 1.6012–2(c)(2)
similarly requires that a domestic
nonlife insurance company file with its
return a copy of its annual statement,
including the underwriting and
investment exhibit (or any successor
thereto), for the year covered by such
return. Section 953(d) provides that a
foreign insurance company that satisfies
the requirements of section 953(d),
including the making of an election
under section 953(d)(1)(D), shall be
treated as a domestic corporation for
purposes of the Internal Revenue Code.
Thus, a foreign insurance company that
elects under section 953(d) to be treated

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as a domestic corporation generally is
required under § 1.6012–2(c)(1) or (2), as
appropriate, to file with its return a
copy of its annual statement. Under
§ 1.6012–2(c)(5), the term ‘‘annual
statement’’ includes a pro forma annual
statement if the insurance company is
not required to file the NAIC annual
statement.
Because the reporting requirements of
electing corporations are addressed in
the current regulations, the IRS and
Treasury Department are not modifying
the regulations to address this point
further.
Special Analysis
It has been determined that this
Treasury Decision 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 §§ 1.302–2, 1.302–4, 1.331–1, 1.332–
6, 1.351–3, 1.355–5, 1.368–3, 1.381(b)–
1, 1.1081–11, 1.1563–3, and 1.6012–2.
With respect to the collections of
information in such sections, and with
respect to §§ 1.338–10, 1.382–8, 1.382–
11, 1.1221–2, 1.1502–13, 1.1502–31,
1.1502–32, 1.1502–33 and 1.1502–95, it
is hereby certified that these regulations
will not have a significant economic
impact on a substantial number of small
entities. This certification is based on
the fact that these regulations primarily
affect large corporations (which are
members of either controlled or
consolidated groups) and in the case of
all corporations will substantially
reduce or eliminate the existing
reporting burden. Therefore, a
regulatory flexibility analysis under the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Pursuant to
section 7805(f) of the Internal Revenue
Code, these regulations were submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for
comment on their impact on small
business.
Drafting Information

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The principal author of these
regulations is Grid Glyer, Office of
Associate Chief Counsel (Corporate).
However, other personnel from the IRS
and Treasury Department participated
in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.

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26 CFR Part 301
Administrative practice and
procedure, Bankruptcy, Income taxes.
26 CFR Part 602
Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:

■

PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by removing the
entries for §§ 1.302–2T, 1.302–4T,
1.331–1T, 1.332–6T, 1.338–10T, 1.351–
3T, 1.355–5T, 1.368–3T, 1.381(b)–1T,
1.382–8T, 1.382–11T, 1.1081–11T,
1.1221–2T, 1.1502–13T, 1.1502–31T,
1.1502–33T, 1.1502–95T, 1.1563–3T
and 1.6012–2T to read, in part, as
follows:
■

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

Par. 2. Section 1.302–2 is amended
by:
■ 1. Adding headings to paragraphs (a),
(b), (b)(1) and (c).
■ 2. Revising paragraphs (b)(2) and (d).
■ 3. Adding paragraphs (b)(3) and (b)(4).
The additions and revisions read as
follows:
■

§ 1.302–2 Redemptions not taxable as
dividends.

(a) In general. * * *
(b) Redemption not essentially
equivalent to a dividend—(1) In general.
* * *
(2) Statement. Unless § 1.331–1(d)
applies, every significant holder that
transfers stock to the issuing corporation
in exchange for property from such
corporation must include on or with
such holder’s return for the taxable year
of such exchange a statement entitled,
‘‘STATEMENT PURSUANT TO § 1.302–
2(b)(2) BY [INSERT NAME AND
TAXPAYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
SIGNIFICANT HOLDER OF THE
STOCK OF [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF ISSUING
CORPORATION].’’ If a significant
holder is a controlled foreign
corporation (within the meaning of
section 957), each United States
shareholder (within the meaning of
section 951(b)) with respect thereto
must include this statement on or with
its return. The statement must include—
(i) The fair market value and basis of
the stock transferred by the significant
holder to the issuing corporation; and

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(ii) A description of the property
received by the significant holder from
the issuing corporation.
(3) Definitions. For purposes of this
section:
(i) Significant holder means any
person that, immediately before the
exchange—
(A) Owned at least five percent (by
vote or value) of the total outstanding
stock of the issuing corporation if the
stock owned by such person is publicly
traded; or
(B) Owned at least one percent (by
vote or value) of the total outstanding
stock of the issuing corporation if the
stock owned by such person is not
publicly traded.
(ii) Publicly traded stock means stock
that is listed on—
(A) A national securities exchange
registered under section 6 of the
Securities Exchange Act of 1934 (15
U.S.C. 78f); or
(B) An interdealer quotation system
sponsored by a national securities
association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(iii) Issuing corporation means the
corporation that issued the shares of
stock, some or all of which were
transferred by a significant holder to
such corporation in the exchange
described in paragraph (b)(2) of this
section.
(4) Cross reference. See section 6043
of the Internal Revenue Code for
requirements relating to a return by a
liquidating corporation.
(c) Basis adjustments. * * *
(d) Effective/applicability date.
Paragraphs (b)(2), (b)(3) and (b)(4) of this
section apply to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply
paragraphs (b)(2), (b)(3) and (b)(4) of this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.302–2 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.302–2T

[Removed]

Par. 3. Section 1.302–2T is removed.
Par. 4. Section 1.302–4 is amended
by:
■ 1. Revising paragraphs (a) and (h).
■ 2. Adding headings to paragraphs (b),
(c), (d), (e), (f), and (g) introductory text.
The additions and revisions read as
follows:
■
■

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§ 1.302–4
interest.

Termination of shareholder’s

§ 1.302–4T

(a) Statement. The agreement
specified in section 302(c)(2)(A)(iii)
shall be in the form of a statement
entitled, ‘‘STATEMENT PURSUANT TO
SECTION 302(c)(2)(A)(iii) BY [INSERT
NAME AND TAXPAYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER OR RELATED PERSON,
AS THE CASE MAY BE], A
DISTRIBUTEE (OR RELATED PERSON)
OF [INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF DISTRIBUTING CORPORATION].’’
The distributee must include such
statement on or with the distributee’s
first return for the taxable year in which
the distribution described in section
302(b)(3) occurs. If the distributee is a
controlled foreign corporation (within
the meaning of section 957), each
United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on
or with its return. The distributee must
represent in the statement—
(1) THE DISTRIBUTEE (OR RELATED
PERSON) HAS NOT ACQUIRED,
OTHER THAN BY BEQUEST OR
INHERITANCE, ANY INTEREST IN
THE CORPORATION (AS DESCRIBED
IN SECTION 302(c)(2)(A)(i)) SINCE THE
DISTRIBUTION; and
(2) THE DISTRIBUTEE (OR RELATED
PERSON) WILL NOTIFY THE
INTERNAL REVENUE SERVICE OF
ANY ACQUISITION, OTHER THAN BY
BEQUEST OR INHERITANCE, OF
SUCH AN INTEREST IN THE
CORPORATION WITHIN 30 DAYS
AFTER THE ACQUISITION, IF THE
ACQUISITION OCCURS WITHIN 10
YEARS FROM THE DATE OF THE
DISTRIBUTION.
(b) Substantiation information. * * *
(c) Stock of parent, subsidiary or
successor corporation redeemed. * * *
(d) Redeemed shareholder as creditor.
* * *
(e) Acquisition of assets pursuant to
creditor’s rights. * * *
(f) Constructive ownership rules
applicable. * * *
(g) Avoidance of Federal income tax.
* * *
(h) Effective/applicability date.
Paragraph (a) of this section applies to
any taxable year beginning on or after
May 30, 2006. However, taxpayers may
apply paragraph (a) of this section to
any original Federal income tax return
(including any amended return filed on
or before the due date (including
extensions) of such original return)
timely filed on or after May 30, 2006.
For taxable years beginning before May
30, 2006, see § 1.302–4 as contained in
26 CFR part 1 in effect on April 1, 2006.

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[Removed]

Par. 5. Section 1.302–4T is removed.
■ Par. 6. Section 1.331–1 is amended
by:
■ 1. Adding headings to paragraphs (a),
(b), (c) and (e).
■ 2. Revising paragraphs (d) and (f).
The additions and revisions read as
follows:
■

§ 1.331–1

Corporate liquidations.

(a) In general. * * *
(b) Gain or loss. * * *
(c) Recharacterization.* * *
(d) Reporting requirement—(1)
General rule. Every significant holder
that transfers stock to the issuing
corporation in exchange for property
from such corporation must include on
or with such holder’s return for the year
of such exchange the statement
described in paragraph (d)(2) of this
section unless—
(i) The property is part of a
distribution made pursuant to a
corporate resolution reciting that the
distribution is made in complete
liquidation of the corporation; and
(ii) The issuing corporation is
completely liquidated and dissolved
within one year after the distribution.
(2) Statement. If required by
paragraph (d)(1) of this section, a
significant holder must include on or
with such holder’s return a statement
entitled, ‘‘STATEMENT PURSUANT TO
§ 1.331–1(d) BY [INSERT NAME AND
TAXPAYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
SIGNIFICANT HOLDER OF THE
STOCK OF [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF ISSUING
CORPORATION].’’ If a significant
holder is a controlled foreign
corporation (within the meaning of
section 957), each United States
shareholder (within the meaning of
section 951(b)) with respect thereto
must include this statement on or with
its return. The statement must include—
(i) The fair market value and basis of
the stock transferred by the significant
holder to the issuing corporation; and
(ii) A description of the property
received by the significant holder from
the issuing corporation.
(3) Definitions. For purposes of this
section:
(i) Significant holder means any
person that, immediately before the
exchange—
(A) Owned at least five percent (by
vote or value) of the total outstanding
stock of the issuing corporation if the
stock owned by such person is publicly
traded; or
(B) Owned at least one percent (by
vote or value) of the total outstanding

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32797

stock of the issuing corporation if the
stock owned by such person is not
publicly traded.
(ii) Publicly traded stock means stock
that is listed on—
(A) A national securities exchange
registered under section 6 of the
Securities Exchange Act of 1934 (15
U.S.C. 78f); or
(B) An interdealer quotation system
sponsored by a national securities
association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(iii) Issuing corporation means the
corporation that issued the shares of
stock, some or all of which were
transferred by a significant holder to
such corporation in the exchange
described in paragraph (d)(1) of this
section.
(4) Cross reference. See section 6043
of the Code for requirements relating to
a return by a liquidating corporation.
(e) Example. * * *
(f) Effective/applicability date.
Paragraph (d) of this section applies to
any taxable year beginning on or after
May 30, 2006. However, taxpayers may
apply paragraph (d) of this section to
any original Federal income tax return
(including any amended return filed on
or before the due date (including
extensions) of such original return)
timely filed on or after May 30, 2006.
For taxable years beginning before May
30, 2006, see § 1.331–1 as contained in
26 CFR part 1 in effect on April 1, 2006.
§ 1.331–1T

[Removed]

Par. 7. Section 1.331–1T is removed.
■ Par. 8. Section 1.332–6 is added to
read as follows:
■

§ 1.332–6 Records to be kept and
information to be filed with return.

(a) Statement filed by recipient
corporation. If any recipient corporation
received a liquidating distribution from
the liquidating corporation pursuant to
a plan (whether or not that recipient
corporation has received or will receive
other such distributions from the
liquidating corporation in other tax
years as part of the same plan) during
the current tax year, such recipient
corporation must include a statement
entitled, ‘‘STATEMENT PURSUANT TO
SECTION 332 BY [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
CORPORATION RECEIVING A
LIQUIDATING DISTRIBUTION,’’ on or
with its return for such year. If any
recipient corporation is a controlled
foreign corporation (within the meaning
of section 957), each United States
shareholder (within the meaning of
section 951(b)) with respect thereto

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must include this statement on or with
its return. The statement must include—
(1) The name and employer
identification number (if any) of the
liquidating corporation;
(2) The date(s) of all distribution(s)
(whether or not pursuant to the plan) by
the liquidating corporation during the
current tax year;
(3) The aggregate fair market value
and basis, determined immediately
before the liquidation, of all of the assets
of the liquidating corporation that have
been or will be transferred to any
recipient corporation;
(4) The date and control number of
any private letter ruling(s) issued by the
Internal Revenue Service in connection
with the liquidation;
(5) The following representation: THE
PLAN OF COMPLETE LIQUIDATION
WAS ADOPTED ON [INSERT DATE
(mm/dd/yyyy)]; and
(6) A representation by such recipient
corporation either that—
(i) THE LIQUIDATION WAS
COMPLETED ON [INSERT DATE (mm/
dd/yyyy)]; or
(ii) THE LIQUIDATION IS NOT
COMPLETE AND THE TAXPAYER HAS
TIMELY FILED [INSERT EITHER FORM
952, ‘‘Consent To Extend the Time to
Assess Tax Under Section 332(b),’’ OR
NUMBER AND NAME OF THE
SUCCESSOR FORM].
(b) Filings by the liquidating
corporation. The liquidating corporation
must timely file Form 966, ‘‘Corporate
Dissolution or Liquidation,’’ (or its
successor form) and its final Federal
corporate income tax return. See also
section 6043 of the Code.
(c) Definitions. For purposes of this
section:
(1) Plan means the plan of complete
liquidation within the meaning of
section 332.
(2) Recipient corporation means the
corporation described in section
332(b)(1).
(3) Liquidating corporation means the
corporation that makes a distribution of
property to a recipient corporation
pursuant to the plan.
(4) Liquidating distribution means a
distribution of property made by the
liquidating corporation to a recipient
corporation pursuant to the plan.
(d) Substantiation information. Under
§ 1.6001–1(e), taxpayers are required to
retain their permanent records and
make such records available to any
authorized Internal Revenue Service
officers and employees. In connection
with a liquidation described in this
section, these records should
specifically include information
regarding the amount, basis, and fair
market value of all distributed property,

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and relevant facts regarding any
liabilities assumed or extinguished as
part of such liquidation.
(e) Effective/applicability date. This
section applies to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.332–6 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.332–6T

[Removed]

Par. 9. Section 1.332–6T is removed.
■ Par. 10. Section 1.338–0 is amended
by revising the entries for §§ 1.338–
10(a)(4)(iii) and 1.338–10(c) and
removing the entry for § 1.338–10T to
read as follows:
■

§ 1.338–0

*

*

Outline of topics.

*

*

*

§ 1.338–10 Filing of returns.
(a) * * *
(4) * * *
(iii) Procedure for filing a combined return.

*

*

*

*

*

(c) Effective/applicability date.

*

*
*
*
*
Par. 11. Section 1.338–10 is amended
by revising paragraphs (a)(4)(iii) and (c)
to read as follows:

■

§ 1.338–10

Filing of returns.

(a) * * *
(4) * * *
(iii) Procedure for filing a combined
return. A combined return is made by
filing a single corporation income tax
return in lieu of separate deemed sale
returns for all targets required to be
included in the combined return. The
combined return reflects the deemed
asset sales of all targets required to be
included in the combined return. If the
targets included in the combined return
constitute a single affiliated group
within the meaning of section 1504(a),
the income tax return is signed by an
officer of the common parent of that
group. Otherwise, the return must be
signed by an officer of each target
included in the combined return. Rules
similar to the rules in § 1.1502–75(j)
apply for purposes of preparing the
combined return. The combined return
must include a statement entitled,
‘‘ELECTION TO FILE A COMBINED
RETURN UNDER SECTION 338(h)(15).’’
The statement must include—
(A) The name, address, and employer
identification number of each target

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required to be included in the combined
return; and
(B) The following declaration: EACH
TARGET IDENTIFIED IN THIS
ELECTION TO FILE A COMBINED
RETURN CONSENTS TO THE FILING
OF A COMBINED RETURN.
*
*
*
*
*
(c) Effective/applicability date.
Paragraph (a)(4)(iii) of this section
applies to any taxable year beginning on
or after May 30, 2006. However,
taxpayers may apply paragraph
(a)(4)(iii) of this section to any original
Federal income tax return (including
any amended return filed on or before
the due date (including extensions) of
such original return) timely filed on or
after May 30, 2006. For taxable years
beginning before May 30, 2006, see
§ 1.338–10 as contained in 26 CFR part
1 in effect on April 1, 2006.
§ 1.338–10T

[Removed]

Par. 12. Section 1.338–10T is
removed.
■ Par. 13. Section 1.351–3 is added to
read as follows:
■

§ 1.351–3 Records to be kept and
information to be filed.

(a) Significant transferor. Every
significant transferor must include a
statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.351–3(a) BY
[INSERT NAME AND TAXPAYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER], A SIGNIFICANT
TRANSFEROR,’’ on or with such
transferor’s income tax return for the
taxable year of the section 351
exchange. If a significant transferor is a
controlled foreign corporation (within
the meaning of section 957), each
United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on
or with its return. The statement must
include—
(1) The name and employer
identification number (if any) of the
transferee corporation;
(2) The date(s) of the transfer(s) of
assets;
(3) The aggregate fair market value
and basis, determined immediately
before the exchange, of the property
transferred by such transferor in the
exchange; and
(4) The date and control number of
any private letter ruling(s) issued by the
Internal Revenue Service in connection
with the section 351 exchange.
(b) Transferee corporation. Except as
provided in paragraph (c) of this
section, every transferee corporation
must include a statement entitled,
‘‘STATEMENT PURSUANT TO § 1.351–
3(b) BY [INSERT NAME AND

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EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
TRANSFEREE CORPORATION,’’ on or
with its income tax return for the
taxable year of the exchange. If the
transferee corporation is a controlled
foreign corporation (within the meaning
of section 957), each United States
shareholder (within the meaning of
section 951(b)) with respect thereto
must include this statement on or with
its return. The statement must include—
(1) The name and taxpayer
identification number (if any) of every
significant transferor;
(2) The date(s) of the transfer(s) of
assets;
(3) The aggregate fair market value
and basis, determined immediately
before the exchange, of all of the
property received in the exchange; and
(4) The date and control number of
any private letter ruling(s) issued by the
Internal Revenue Service in connection
with the section 351 exchange.
(c) Exception for certain transferee
corporations. The transferee corporation
is not required to file a statement under
paragraph (b) of this section if all of the
information that would be included in
the statement described in paragraph (b)
of this section is included in any
statement(s) described in paragraph (a)
of this section that is attached to the
same return for the same section 351
exchange.
(d) Definitions. For purposes of this
section:
(1) Significant transferor means a
person that transferred property to a
corporation and received stock of the
transferee corporation in an exchange
described in section 351 if, immediately
after the exchange, such person—
(i) Owned at least five percent (by
vote or value) of the total outstanding
stock of the transferee corporation if the
stock owned by such person is publicly
traded, or
(ii) Owned at least one percent (by
vote or value) of the total outstanding
stock of the transferee corporation if the
stock owned by such person is not
publicly traded.
(2) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange
registered under section 6 of the
Securities Exchange Act of 1934 (15
U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities
association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(e) Substantiation information. Under
§ 1.6001–1(e), taxpayers are required to
retain their permanent records and
make such records available to any

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authorized Internal Revenue Service
officers and employees. In connection
with the exchange described in this
section, these records should
specifically include information
regarding the amount, basis, and fair
market value of all transferred property,
and relevant facts regarding any
liabilities assumed or extinguished as
part of such exchange.
(f) Effective/applicability date. This
section applies to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.351–3 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.351–3T

[Removed]

Par. 14. Section 1.351–3T is removed.
■ Par. 15. Section 1.355–0 is amended
by removing the entry for § 1.355–5T
and adding an entry for § 1.355–5.
The revision and addition read as
follows:
■

§ 1.355–0

*

*

Outline of sections.

*

*

*

§ 1.355–5 Records to be kept and
information to be filed.
(a) Distributing corporation.
(1) In general.
(2) Special rule when an asset transfer
precedes a stock distribution.
(b) Significant distributee.
(c) Definitions.
(1) Significant distributee.
(2) Publicly traded stock.
(d) Substantiation information.
(e) Effective/applicability date.

*

*
*
*
*
Par. 16. Section 1.355–5 is added to
read as follows:

■

§ 1.355–5 Records to be kept and
information to be filed.

(a) Distributing corporation—(1) In
general. Every corporation that makes a
distribution (the distributing
corporation) of stock or securities of a
controlled corporation, as described in
section 355 (or so much of section 356
as relates to section 355), must include
a statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.355–5(a) BY
[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER], A DISTRIBUTING
CORPORATION,’’ on or with its return
for the year of the distribution. If the
distributing corporation is a controlled
foreign corporation (within the meaning
of section 957), each United States

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32799

shareholder (within the meaning of
section 951(b)) with respect thereto
must include this statement on or with
its return. The statement must include—
(i) The name and employer
identification number (if any) of the
controlled corporation;
(ii) The name and taxpayer
identification number (if any) of every
significant distributee;
(iii) The date of the distribution of the
stock or securities of the controlled
corporation;
(iv) The aggregate fair market value
and basis, determined immediately
before the distribution or exchange, of
the stock, securities, or other property
(including money) distributed by the
distributing corporation in the
transaction; and
(v) The date and control number of
any private letter ruling(s) issued by the
Internal Revenue Service in connection
with the transaction.
(2) Special rule when an asset transfer
precedes a stock distribution. If the
distributing corporation transferred
property to the controlled corporation in
a transaction described in section 351 or
368, as part of a plan to then distribute
the stock or securities of the controlled
corporation in a transaction described in
section 355 (or so much of section 356
as relates to section 355), then, unless
paragraph (a)(1)(v) of this section
applies, the distributing corporation
must also include on or with its return
for the year of the distribution the
statement required by § 1.351–3(a) or
1.368–3(a). If the distributing
corporation is a controlled foreign
corporation (within the meaning of
section 957), each United States
shareholder (within the meaning of
section 951(b)) with respect thereto
must include the statement required by
§ 1.351–3(a) or 1.368–3(a) on or with its
return.
(b) Significant distributee. Every
significant distributee must include a
statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.355–5(b) BY
[INSERT NAME AND TAXPAYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER], A SIGNIFICANT
DISTRIBUTEE,’’ on or with such
distributee’s return for the year in which
such distribution is received. If a
significant distributee is a controlled
foreign corporation (within the meaning
of section 957), each United States
shareholder (within the meaning of
section 951(b)) with respect thereto
must include this statement on or with
its return. The statement must include—
(1) The names and employer
identification numbers (if any) of the
distributing and controlled
corporations;

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(2) The date of the distribution of the
stock or securities of the controlled
corporation; and
(3) The aggregate basis, determined
immediately before the exchange, of any
stock or securities transferred by the
significant distributee in the exchange,
and the aggregate fair market value,
determined immediately before the
distribution or exchange, of the stock,
securities or other property (including
money) received by the significant
distributee in the distribution or
exchange.
(c) Definitions. For purposes of this
section:
(1) Significant distributee means—
(i) A holder of stock of a distributing
corporation that receives, in a
transaction described in section 355 (or
so much of section 356 as relates to
section 355), stock of a corporation
controlled by the distributing
corporation if, immediately before the
distribution or exchange, such holder—
(A) Owned at least five percent (by
vote or value) of the total outstanding
stock of the distributing corporation if
the stock owned by such holder is
publicly traded; or
(B) Owned at least one percent (by
vote or value) of the stock of the
distributing corporation if the stock
owned by such holder is not publicly
traded; or
(ii) A holder of securities of a
distributing corporation that receives, in
a transaction described in section 355
(or so much of section 356 as relates to
section 355), stock or securities of a
corporation controlled by the
distributing corporation if, immediately
before the distribution or exchange,
such holder owned securities in such
distributing corporation with a basis of
$1,000,000 or more.
(2) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange
registered under section 6 of the
Securities Exchange Act of 1934 (15
U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities
association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(d) Substantiation information. Under
§ 1.6001–1(e), taxpayers are required to
retain their permanent records and
make such records available to any
authorized Internal Revenue Service
officers and employees. In connection
with the distribution or exchange
described in this section, these records
should specifically include information
regarding the amount, basis, and fair
market value of all property distributed
or exchanged, and relevant facts

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regarding any liabilities assumed or
extinguished as part of such distribution
or exchange.
(e) Effective/applicability date. This
section applies to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.355–5 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.355–5T

[Removed]

Par. 17. Section 1.355–5T is removed.
■ Par. 18. Section 1.368–3 is added to
read as follows:
■

§ 1.368–3 Records to be kept and
information to be filed with returns.

(a) Parties to the reorganization. The
plan of reorganization must be adopted
by each of the corporations that are
parties thereto. Each such corporation
must include a statement entitled,
‘‘STATEMENT PURSUANT TO § 1.368–
3(a) BY [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
CORPORATION A PARTY TO A
REORGANIZATION,’’ on or with its
return for the taxable year of the
exchange. If any such corporation is a
controlled foreign corporation (within
the meaning of section 957), each
United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on
or with its return. However, it is not
necessary for any taxpayer to include
more than one such statement on or
with the same return for the same
reorganization. The statement must
include—
(1) The names and employer
identification numbers (if any) of all
such parties;
(2) The date of the reorganization;
(3) The aggregate fair market value
and basis, determined immediately
before the exchange, of the assets, stock
or securities of the target corporation
transferred in the transaction; and
(4) The date and control number of
any private letter ruling(s) issued by the
Internal Revenue Service in connection
with this reorganization.
(b) Significant holders. Every
significant holder, other than a
corporation a party to the
reorganization, must include a
statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.368–3(b) BY
[INSERT NAME AND TAXPAYER
IDENTIFICATION NUMBER (IF ANY)

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Sfmt 4700

OF TAXPAYER], A SIGNIFICANT
HOLDER,’’ on or with such holder’s
return for the taxable year of the
exchange. If a significant holder is a
controlled foreign corporation (within
the meaning of section 957), each
United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on
or with its return. The statement must
include—
(1) The names and employer
identification numbers (if any) of all of
the parties to the reorganization;
(2) The date of the reorganization; and
(3) The fair market value, determined
immediately before the exchange, of all
the stock or securities of the target
corporation held by the significant
holder that is transferred in the
transaction and such holder’s basis,
determined immediately before the
exchange, in the stock or securities of
such target corporation.
(c) Definitions. For purposes of this
section:
(1) Significant holder means—
(i) A holder of stock of the target
corporation that receives stock or
securities in an exchange described in
section 354 (or so much of section 356
as relates to section 354) if, immediately
before the exchange, such holder—
(A) Owned at least five percent (by
vote or value) of the total outstanding
stock of the target corporation if the
stock owned by such holder is publicly
traded; or
(B) Owned at least one percent (by
vote or value) of the total outstanding
stock of the target corporation if the
stock owned by such holder is not
publicly traded; or
(ii) A holder of securities of the target
corporation that receives stock or
securities in an exchange described in
section 354 (or so much of section 356
as relates to section 354) if, immediately
before the exchange, such holder owned
securities in such target corporation
with a basis of $1,000,000 or more.
(2) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange
registered under section 6 of the
Securities Exchange Act of 1934 (15
U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities
association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(d) Substantiation information. Under
§ 1.6001–1(e), taxpayers are required to
retain their permanent records and
make such records available to any
authorized Internal Revenue Service
officers and employees. In connection
with the reorganization described in this

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section, these records should
specifically include information
regarding the amount, basis, and fair
market value of all transferred property,
and relevant facts regarding any
liabilities assumed or extinguished as
part of such reorganization.
(e) Effective/applicability date. This
section applies to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.368–3 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.368–3T

[Removed]

Par. 19. Section 1.368–3T is removed.
■ Par. 20. Section 1.381(b)–1 is
amended by revising paragraphs (b)(3)
and (e) to read as follows:
■

§ 1.381(b)–1 Operating rules applicable to
carryovers in certain corporate
acquisitions.

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*

*
*
*
*
(b) * * *
(3) Election—(i) Content of
statements. The statements referred to
in paragraph (b)(2) of this section must
be entitled, ‘‘ELECTION OF DATE OF
DISTRIBUTION OR TRANSFER
PURSUANT TO § 1.381(b)–1(b)(2),’’ and
must include: [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF DISTRIBUTOR
OR TRANSFEROR CORPORATION]
AND [INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF ACQUIRING CORPORATION]
ELECT TO DETERMINE THE DATE OF
DISTRIBUTION OR TRANSFER UNDER
§ 1.381(b)–1(b)(2). SUCH DATE IS
[INSERT DATE (mm/dd/yyyy)].
(ii) Filing of statements. One
statement must be included on or with
the timely filed Federal income tax
return of the distributor or transferor
corporation for its taxable year ending
with the date of distribution or transfer.
An identical statement must be
included on or with the timely filed
Federal income tax return of the
acquiring corporation for its first taxable
year ending after that date. If the
distributor or transferor corporation, or
the acquiring corporation, is a
controlled foreign corporation (within
the meaning of section 957), each
United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on
or with its return.
*
*
*
*
*

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(e) Effective/applicability date.
Paragraph (b)(3) of this section applies
to any taxable year beginning on or after
May 30, 2006. However, taxpayers may
apply paragraph (b)(3) of this section to
any original Federal income tax return
(including any amended return filed on
or before the due date (including
extensions) of such original return)
timely filed on or after May 30, 2006.
For taxable years beginning before May
30, 2006, see § 1.381(b)–1 as contained
in 26 CFR part 1 in effect on April 1,
2006.
§ 1.381(b)–1T

[Removed]

Par. 21. Section 1.381(b)–1T is
removed.
■ Par. 22. Section 1.382–1 is amended
by:
■ 1. Revising the entry for § 1.382–
8(c)(2).
■ 2. Revising the entry for § 1.382–
8(e)(4).
■ 3. Revising the entry for § 1.382–8(h).
■ 4. Revising the entry for § 1.382–
8(j)(4).
■ 5. Removing the entry for § 1.382–8T.
■ 6. Adding the entry for § 1.382–11.
■ 7. Removing the entry for § 1.382–
11T.
The additions and revisions read as
follows:
■

§ 1.382–1

*

*

§ 1.382–8

*

*

Table of contents.

*

*

*

Controlled groups.

*

*

*

(c) * * *
(2) Restoration of value.

*

*

*

*

*

(e) * * *
(4) Foreign component member.
(i) In general.
(ii) Exception.

*

*

*

*

*

(h) Time and manner of filing election to
restore.
(1) Statements required.
(i) Filing by loss corporation.
(ii) Filing by electing member.
(iii) Agreement.
(2) Special rule for foreign component
members.
(i) Deemed election to restore full value.
(ii) Election not to restore full value.
(iii) Agreement.
(3) Revocation of election.

*

*

*

*

*

(j) * * *
(4) Effective/applicability date.

*

*

*

*

*

§ 1.382–11 Reporting requirements.
(a) Information statement required.
(b) Effective/applicability date.

Par. 23. Section 1.382–8 is amended
by revising paragraphs (c)(2), (e)(4), (h)
and (j)(4) to read as follows:

■

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§ 1.382–8

32801

Controlled groups.

*

*
*
*
*
(c) * * *
(2) Restoration of value. After the
value of the stock of each component
member is reduced pursuant to
paragraph (c)(1) of this section, the
value of the stock of each component
member is increased by the amount of
value, if any, restored to the component
member by another component member
(the electing member) pursuant to this
paragraph (c)(2). The electing member
may elect (or may be deemed to elect
under paragraph (h)(2)(i) of this section
in the case of a foreign component
member) to restore value to another
component member in an amount that
does not exceed the lesser of—
(i) The sum of—
(A) The value, determined
immediately before the ownership
change, of the electing member’s stock
(after adjustment under paragraph (c)(1)
of this section and before any
restoration of value under this
paragraph (c)(2)); plus
(B) Any amount of value restored to
the electing member by another
component member under this
paragraph (c)(2); or
(ii) The value, determined
immediately before any ownership
change, of the electing member’s stock
(without regard to any adjustment under
this section) that is directly owned by
the other component member
immediately after the ownership
change.
*
*
*
*
*
(e) * * *
(4) Foreign component member—(i) In
general. Except as provided in
paragraph (e)(4)(ii) of this section,
foreign component member means a
component member that is a foreign
corporation.
(ii) Exception. A foreign component
member shall not include a foreign
corporation that has items treated as
connected with the conduct of a trade
or business in the United States that it
takes into account in determining its
value pursuant to section 382(e)(3).
*
*
*
*
*
(h) Time and manner of filing election
to restore—(1) Statements required—(i)
Filing by loss corporation. The election
to restore value described in paragraph
(c)(2) of this section must be in the form
set forth in this paragraph (h)(1)(i). It
must be filed by the loss corporation by
including a statement on or with its
income tax return for the taxable year in
which the ownership change occurs (or
with an amended return for that year
filed on or before the due date
(including extensions) of the income tax

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Federal Register / Vol. 72, No. 114 / Thursday, June 14, 2007 / Rules and Regulations

return of any component member with
respect to the taxable year in which the
ownership change occurs). The common
parent of a consolidated group must
make the election on behalf of the
group. The election is made in the form
of a statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.382–8(h)(1) TO
ELECT TO RESTORE ALL OR PART OF
THE VALUE OF [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF THE ELECTING
MEMBER] TO [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF THE
CORPORATION TO WHICH VALUE IS
RESTORED].’’ The statement must
include the amount of the value being
restored and must also indicate that an
agreement signed and dated by both
parties, as described in paragraph
(h)(1)(iii) of this section, has been
entered into. Each such party must
retain either the original or a copy of
this agreement as part of its records. See
§ 1.6001–1(e).
(ii) Filing by electing member. An
electing member must include a
statement identical to the one described
in paragraph (h)(1)(i) of this section on
or with its income tax return (or with an
amended return for that year filed on or
before the due date (including
extensions) of the income tax return of
any component member with respect to
the taxable year in which the ownership
change occurs) (if any) for the taxable
year which includes the change date in
connection with which the election
described in paragraph (c)(2) of this
section is made. If the electing member
is a controlled foreign corporation
(within the meaning of section 957),
each United States shareholder (within
the meaning of section 951(b)) with
respect thereto must include this
statement on or with its return. It is not
necessary for the electing member (or
the United States shareholder, as the
case may be) to include this statement
on or with its return if the loss
corporation includes an identical
statement on or with the same return for
the same election.
(iii) Agreement. Both the electing
member and the corporation to which
value is restored must sign and date an
agreement. The agreement must—
(A) Identify the change date for the
loss corporation in connection with
which the election is made;
(B) State the value of the electing
member’s stock (without regard to any
adjustment under paragraph (c) of this
section) immediately before the
ownership change;
(C) State the amount of any reduction
required under paragraph (c)(1) of this
section with respect to stock of the

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electing member that is owned directly
or indirectly by the corporation to
which value is restored;
(D) State the amount of value that the
electing member elects to restore to the
corporation; and
(E) State whether the value of either
component member’s stock was
adjusted pursuant to paragraph (c)(4) of
this section.
(2) Special rule for foreign component
members—(i) Deemed election to restore
full value. Unless the election described
in paragraph (h)(2)(ii) of this section is
made for a foreign component member,
each foreign component member of the
controlled group is deemed to have
elected to restore to each other
component member the maximum value
allowable under paragraph (c)(2) of this
section, taking into account the
limitations of this section.
(ii) Election not to restore full value.
(A) A loss corporation may elect to
reduce the amount of value restored
from a foreign component member (the
electing foreign component member) to
another component member under
paragraph (h)(2)(i) of this section in the
form set forth in this paragraph
(h)(2)(ii). It must be filed by the loss
corporation by including a statement on
or with its income tax return for the
taxable year in which the ownership
change occurs (or with an amended
return for that year filed on or before the
due date (including extensions) of the
income tax return of any component
member with respect to the taxable year
in which the ownership change occurs).
The common parent of a consolidated
group must make the election on behalf
of the group. The election is made in the
form of a statement entitled,
‘‘STATEMENT PURSUANT TO § 1.382–
8(h)(2)(ii) TO ELECT NOT TO RESTORE
FULL VALUE OF [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF ELECTING
FOREIGN COMPONENT MEMBER] TO
[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF THE CORPORATION TO WHICH
SUCH VALUE IS NOT TO BE
RESTORED].’’ The statement must
include the amount of the value not
being restored and must also indicate
that an agreement signed and dated by
both parties, as described in paragraph
(h)(2)(iii) of this section, has been
entered into. Each such party must
retain either the original or a copy of the
agreement as part of its records. See
§ 1.6001–1(e).
(B) An electing foreign component
member must include a statement
identical to the one described in
paragraph (h)(2)(ii)(A) of this section on
or with its income tax return (or with an

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amended return for that year filed on or
before the due date (including
extensions) of the income tax return of
any component member with respect to
the taxable year in which the ownership
change occurs) (if any) for the taxable
year which includes the change date in
connection with which the election
described in paragraph (h)(2)(ii)(A) of
this section is made. If the electing
foreign component member is a
controlled foreign corporation (within
the meaning of section 957), each
United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on
or with its return. It is not necessary for
the electing foreign component member
(or United States shareholder, as the
case may be) to include this statement
on or with its return if the loss
corporation includes an identical
statement on or with the same return for
the same election.
(iii) Agreement. Both the electing
foreign component member and the
corporation to which full value is not
restored must sign and date an
agreement. The agreement must—
(A) Identify the change date for the
loss corporation in connection with
which the election is made;
(B) State the value of the electing
foreign component member’s stock
(without regard to any adjustment under
paragraph (c) of this section)
immediately before the ownership
change;
(C) State the amount of any reduction
required under paragraph (c)(1) of this
section with respect to stock of the
electing foreign component member that
is owned directly or indirectly by the
corporation to which value is not
restored;
(D) State the amount of value that the
electing foreign component member
elects not to restore to the corporation;
and
(E) State whether the value of either
component member’s stock was
adjusted pursuant to paragraph (c)(4) of
this section.
(3) Revocation of election. An election
(other than the deemed election
described in paragraph (h)(2)(i) of this
section) made under this section is
revocable only with the consent of the
Commissioner.
*
*
*
*
*
(j) * * *
(4) Effective/applicability date.
Paragraphs (c)(2), (e)(4) and (h) of this
section apply to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply
paragraphs (c)(2), (e)(4) and (h) of this
section to any original Federal income

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Federal Register / Vol. 72, No. 114 / Thursday, June 14, 2007 / Rules and Regulations
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.382–8 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.382–8T

[Removed]

Par. 24. Section 1.382–8T is removed.
■ Par. 25. Section 1.382–11 is added to
read as follows:
■

§ 1.382–11

Reporting requirements.

pwalker on PROD1PC71 with RULES

(a) Information statement required. A
loss corporation must include a
statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.382–11(a) BY
[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER OF
TAXPAYER], A LOSS
CORPORATION,’’ on or with its income
tax return for each taxable year that it
is a loss corporation in which an owner
shift, equity structure shift or other
transaction described in § 1.382–
2T(a)(2)(i) occurs. The statement must
include the date(s) of any owner shifts,
equity structure shifts, or other
transactions described in § 1.382–
2T(a)(2)(i), the date(s) on which any
ownership change(s) occurred, and the
amount of any attributes described in
§ 1.382–2(a)(1)(i) that caused the
corporation to be a loss corporation. A
loss corporation may also be required to
include certain elections on this
statement, including—
(1) An election made under § 1.382–
2T(h)(4)(vi)(B) to disregard the deemed
exercise of an option if the actual
exercise of that option occurred within
120 days of the ownership change; and
(2) An election made under § 1.382–
6(b)(2) to close the books of the loss
corporation for purposes of allocating
income and loss to periods before and
after the change date for purposes of
section 382.
(b) Effective/applicability date. This
section applies to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.382–2T as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.382–11T

[Removed]

Par. 26. Section 1.382–11T is
removed.
■ Par. 27. Section 1.1081–11 is added to
read as follows:
■

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§ 1.1081–11 Records to be kept and
information to be filed with returns.

(a) Distributions and exchanges;
significant holders of stock or securities.
Every significant holder must include a
statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.1081–11(a) BY
[INSERT NAME AND TAXPAYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER], A SIGNIFICANT
HOLDER,’’ on or with such holder’s
income tax return for the taxable year in
which the distribution or exchange
occurs. If a significant holder is a
controlled foreign corporation (within
the meaning of section 957), each
United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on
or with its return. The statement must
include—
(1) The name and employer
identification number (if any) of the
corporation from which the stock,
securities, or other property (including
money) was received by such significant
holder;
(2) The aggregate basis, determined
immediately before the exchange, of any
stock or securities transferred by the
significant holder in the exchange, and
the aggregate fair market value,
determined immediately before the
distribution or exchange, of the stock,
securities or other property (including
money) received by the significant
holder in the distribution or exchange;
and
(3) The date of the distribution or
exchange.
(b) Distributions and exchanges;
corporations subject to Commission
orders. Each corporation which is a
party to a distribution or exchange made
pursuant to an order of the Commission
must include on or with its income tax
return for its taxable year in which the
distribution or exchange takes place a
statement entitled, ‘‘STATEMENT
PURSUANT TO § 1.1081–11(b) BY
[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER], A DISTRIBUTING OR
EXCHANGING CORPORATION.’’ If the
distributing or exchanging corporation
is a controlled foreign corporation
(within the meaning of section 957),
each United States shareholder (within
the meaning of section 951(b)) with
respect thereto must include this
statement on or with its return. The
statement must include—
(1) The date and control number of
the Commission order, pursuant to
which the distribution or exchange was
made;
(2) The names and taxpayer
identification numbers (if any) of the
significant holders;

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32803

(3) The aggregate fair market value
and basis, determined immediately
before the distribution or exchange, of
the stock, securities, or other property
(including money) transferred in the
distribution or exchange; and
(4) The date of the distribution or
exchange.
(c) Sales by members of system
groups. Each system group member
must include a statement entitled,
‘‘STATEMENT PURSUANT TO
§ 1.1081–11(c) BY [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
SYSTEM GROUP MEMBER,’’ on or with
its income tax return for the taxable year
in which the sale is made. If any system
group member is a controlled foreign
corporation (within the meaning of
section 957), each United States
shareholder (within the meaning of
section 951(b)) with respect thereto
must include this statement on or with
its return. The statement must include—
(1) The dates and control numbers of
all relevant Commission orders;
(2) The aggregate fair market value
and basis, determined immediately
before the sale, of all stock or securities
sold; and
(3) The date of the sale.
(d) Definitions. (1) For purposes of
this section, Commission means the
Securities and Exchange Commission.
(2) For purposes of this section,
significant holder means a person that
receives stock or securities from a
corporation (the distributing
corporation) pursuant to an order of the
Commission, if, immediately before the
transaction, such person—
(i) In the case of stock—
(A) Owned at least five percent (by
vote or value) of the total outstanding
stock of the distributing corporation if
the stock owned by such person is
publicly traded, or
(B) Owned at least one percent (by
vote or value) of the total outstanding
stock of the distributing corporation if
the stock owned by such person is not
publicly traded; or
(ii) In the case of securities, owned
securities of the distributing corporation
with a basis of $1,000,000 or more.
(3) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange
registered under section 6 of the
Securities Exchange Act of 1934 (15
U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities
association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).

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(4) For purposes of paragraph (b) of
this section, exchange means exchange,
expenditure, or investment.
(5) For purposes of paragraph (c) of
this section, system group member
means each corporation which is a
member of a system group and which,
pursuant to an order of the Commission,
sells stock or securities received upon
an exchange (pursuant to an order of the
Commission) and applies the proceeds
derived therefrom in retirement or
cancellation of its own stock or
securities.
(e) Substantiation information. Under
§ 1.6001–1(e), taxpayers are required to
retain their permanent records and
make such records available to any
authorized Internal Revenue Service
officers and employees. In connection
with the distribution or exchange
described in this section, these records
should specifically include information
regarding the amount, basis, and fair
market value of all property distributed
or exchanged, and relevant facts
regarding any liabilities assumed or
extinguished as part of such distribution
or exchange.
(f) Effective/applicability date. This
section applies to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.1081–11 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.1081–11T

[Removed]

Par. 28. Section 1.1081–11T is
removed.
■ Par. 29. Section 1.1221–2 is amended
by revising paragraphs (e)(2)(iv) and (j)
to read as follows:
■

§ 1.1221–2

Hedging transactions.

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*

*
*
*
*
(e) * * *
(2) * * *
(iv) Making and revoking the election.
Unless the Commissioner otherwise
prescribes, the election described in
paragraph (e)(2) of this section must be
made in a separate statement that
provides, ‘‘[INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER OF COMMON PARENT]
HEREBY ELECTS THE APPLICATION
OF § 1.1221–2(e)(2) (THE SEPARATEENTITY APPROACH).’’ The statement
must also indicate the date as of which
the election is to be effective. The
election must be filed by including the
statement on or with the consolidated

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17:11 Jun 13, 2007

Jkt 211001

group’s income tax return for the taxable
year that includes the first date for
which the election is to apply. The
election applies to all transactions
entered into on or after the date so
indicated. The election may only be
revoked with the consent of the
Commissioner.
*
*
*
*
*
(j) Effective/applicability date.
Paragraph (e)(2)(iv) of this section
applies to any original consolidated
Federal income tax return due (without
extensions) after June 14, 2007. For
original consolidated Federal income
tax returns due (without extensions)
after May 30, 2006, and on or before
June 14, 2007, see § 1.1221–2T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006,
see § 1.1221–2 as contained in 26 CFR
part 1 in effect on April 1, 2006.
§ 1.1221–2T

[Removed]

Par. 30. Section 1.1221–2T is
removed.
■ Par. 31. Section 1.1502–13 is
amended by revising paragraphs
(f)(5)(ii)(E), (f)(6)(i)(C)(2) and (m) to read
as follows:
■

§ 1.1502–13

Intercompany transactions.

*

*
*
*
*
(f) * * *
(5) * * *
(ii) * * *
(E) Election. An election to apply
paragraph (f)(5)(ii) of this section is
made in a separate statement entitled,
‘‘[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER OF
COMMON PARENT] HEREBY ELECTS
THE APPLICATION OF § 1.1502–
13(f)(5)(ii) FOR AN INTERCOMPANY
TRANSACTION INVOLVING [INSERT
NAME AND EMPLOYER
IDENTIFICATION NUMBER OF S] AND
[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER OF T].’’ A
separate election must be made for each
such application. The election must be
filed by including the statement on or
with the consolidated group’s income
tax return for the year of T’s liquidation
(or other transaction). The
Commissioner may impose reasonable
terms and conditions to the application
of paragraph (f)(5)(ii) of this section that
are consistent with the purposes of such
section. The statement must—
(1) Identify S’s intercompany
transaction and T’s liquidation (or other
transaction); and
(2) Specify which provision of
paragraph (f)(5)(ii) of this section
applies and how it alters the otherwise

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applicable results under this section
(including, for example, the amount of
S’s intercompany items and the amount
deferred or offset as a result of
paragraph (f)(5)(ii) of this section).
(6) * * *
(i) * * *
(C) * * *
(2) Election. The election described in
paragraph (f)(6)(i)(C)(1) of this section
must be made in a separate statement
entitled, ‘‘ELECTION TO REDUCE
BASIS OF P STOCK UNDER § 1.1502–
13(f)(6) HELD BY [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER OF MEMBER WHOSE BASIS
IN P STOCK IS REDUCED].’’ The
election must be filed by including the
statement on or with the consolidated
group’s income tax return for the year in
which the nonmember becomes a
member. The statement must identify
the member’s basis in the P stock (taking
into account the effect of this election)
and the number of shares of P stock held
by the member.
*
*
*
*
*
(m) Effective/applicability date.
Paragraphs (f)(5)(ii)(E) and (f)(6)(i)(C)(2)
of this section apply to any original
consolidated Federal income tax return
due (without extensions) after June 14,
2007. For original consolidated Federal
income tax returns due (without
extensions) after May 30, 2006, and on
or before June 14, 2007, see § 1.1502–
13T as contained in 26 CFR part 1 in
effect on April 1, 2007. For original
consolidated Federal income tax returns
due (without extensions) on or before
May 30, 2006, see § 1.1502–13 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.1502–13T

[Removed]

Par. 32. Section 1.1502–13T is
removed.
■ Par. 33. Section 1.1502–31 is
amended by revising paragraphs (e)(2)
and (j) to read as follows:
■

§ 1.1502–31 Stock basis after a group
structure change.

*

*
*
*
*
(e) * * *
(2) Election. The election described in
paragraph (e)(1) of this section must be
made in a separate statement entitled,
‘‘ELECTION TO TREAT LOSS
CARRYOVER AS EXPIRING UNDER
§ 1.1502–31(e).’’ The election must be
filed by including the statement on or
with the consolidated group’s income
tax return for the year that includes the
group structure change. The statement
must identify the amount of each loss
carryover deemed to expire (or the
amount of each loss carryover deemed

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not to expire, with any balance of any
loss carryovers being deemed to expire).
*
*
*
*
*
(j) Effective/applicability date.
Paragraph (e)(2) of this section applies
to any original consolidated Federal
income tax return due (without
extensions) after June 14, 2007. For
original consolidated Federal income
tax returns due (without extensions)
after May 30, 2006, and on or before
June 14, 2007, see § 1.1502–31T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006,
see § 1.1502–31 as contained in 26 CFR
part 1 in effect on April 1, 2006.
§ 1.1502–31T

[Removed]

Par. 34. Section 1.1502–31T is
removed.
■ Par. 35. Section 1.1502–32 is
amended by revising paragraphs
(b)(4)(iv) and (j) to read as follows:
■

§ 1.1502–32

Investment adjustments.

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*

*
*
*
*
(b) * * *
(4) * * *
(iv) Election. The election described
in paragraph (b)(4) of this section must
be made in a separate statement
entitled, ‘‘ELECTION TO TREAT LOSS
CARRYOVER OF [INSERT NAME AND
EMPLOYER IDENTIFICATION
NUMBER OF S] AS EXPIRING UNDER
§ 1.1502–32(b)(4).’’ The election must be
filed by including a statement on or
with the consolidated group’s income
tax return for the year S becomes a
member. A separate statement must be
made for each member whose loss
carryover is deemed to expire. The
statement must identify the amount of
each loss carryover deemed to expire (or
the amount of each loss carryover
deemed not to expire, with any balance
of any loss carryovers being deemed to
expire) and the basis of any stock
reduced as a result of the deemed
expiration.
*
*
*
*
*
(j) Effective/applicability date.
Paragraph (b)(4)(iv) of this section
applies to any original consolidated
Federal income tax return due (without
extensions) after June 14, 2007. For
original consolidated Federal income
tax returns due (without extensions)
after May 30, 2006, and on or before
June 14, 2007, see § 1.1502–32T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006,
see § 1.1502–32 as contained in 26 CFR
part 1 in effect on April 1, 2006.

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§ 1.1502–32T

(3) Filing the election.
(i) Filing by the common parent.
(ii) Filing by the former member.
(4) Revocation of election.
(g) Effective/applicability date.

[Amended]

Par. 36. Section 1.1502–32T is
amended by removing and reserving
paragraphs (b)(4)(iv) and (j).
■ Par. 37. Section 1.1502–33 is
amended by revising paragraphs
(d)(5)(i)(D) and (k) to read as follows:
■

§ 1.1502–33

Earnings and profits.

*

*
*
*
*
(d) * * *
(5) * * *
(i) * * *
(D) If a method is permitted under
paragraph (d)(4) of this section, provide
the date and control number of the
private letter ruling issued by the
Internal Revenue Service approving
such method.
*
*
*
*
*
(k) Effective/applicability date.
Paragraph (d)(5)(i)(D) of this section
applies to any original consolidated
Federal income tax return due (without
extensions) after June 14, 2007. For
original consolidated Federal income
tax returns due (without extensions)
after May 30, 2006, and on or before
June 14, 2007, see § 1.1502–33T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006,
see § 1.1502–33 as contained in 26 CFR
part 1 in effect on April 1, 2006.
§ 1.1502–33T

[Removed]

Par. 38. Section 1.1502–33T is
removed.
■ Par. 39. Section 1.1502–90 is
amended by:
■ 1. Revising the entry for § 1.1502–
95(e)(8).
■ 2. Revising the entry for § 1.1502–
95(f).
■ 3. Revising the entry for § 1.1502–
95(g).
■ 4. Removing the entry for § 1.1502–
95T.
The revisions read as follows:
■

§ 1.1502–90

*

*

Table of contents.

*

*

*

§ 1.1502–95 Rules on ceasing to be a
member of a consolidated group (or loss
subgroup).

*

*

*

*

*

(e) * * *
(8) Reporting requirements.
(i) Common parent.
(ii) Former member.
(iii) Exception.
(f) Filing the election to apportion the
section 382 limitation and net unrealized
built-in gain.
(1) Form of the election to apportion.
(i) Statement.
(ii) Agreement.
(2) Signing the agreement.

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32805

*

*
*
*
*
Par. 40. Section 1.1502–95 is
amended by revising paragraphs (e)(8),
(f) and (g) to read as follows:

■

§ 1.1502–95 Rules on ceasing to be a
member of a consolidated group (or loss
subgroup).

*

*
*
*
*
(e) * * *
(8) Reporting requirements—(i)
Common Parent. Except as provided in
paragraph (e)(8)(iii) of this section, if a
net unrealized built-in loss is allocated
under paragraph (e) of this section, the
common parent must include a
statement entitled, ‘‘STATEMENT OF
NET UNREALIZED BUILT-IN LOSS
ALLOCATION PURSUANT TO
§ 1.1502–95(e),’’ on or with its income
tax return for the taxable year in which
the former member(s) (or a new loss
subgroup that includes that member)
ceases to be a member. The statement
must include—
(A) The name and employer
identification number of the departing
member;
(B) The amount of the remaining
NUBIL balance for the taxable year in
which the member departs;
(C) The amount of the net unrealized
built-in loss allocated to the departing
member; and
(D) A representation that the common
parent has delivered a copy of the
statement to the former member (or the
common parent of the group of which
the former member is a member) on or
before the day the group files its income
tax return for the consolidated return
year that the former member ceases to
be a member.
(ii) Former member. Except as
provided in paragraph (e)(8)(iii) of this
section, the former member must
include a statement on or with its first
income tax return (or the first return in
which the former member joins) that is
filed after the close of the consolidated
return year of the group of which the
former member (or a new loss subgroup
that includes that member) ceases to be
a member. The statement will be
identical to the statement filed by the
common parent under paragraph
(e)(8)(i) of this section except that
instead of including the information
described in paragraph (e)(8)(i)(A) of
this section the former member must
provide the name, employer
identification number and tax year of
the former common parent, and instead
of the representation described in

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Federal Register / Vol. 72, No. 114 / Thursday, June 14, 2007 / Rules and Regulations

paragraph (e)(8)(i)(D) of this section the
former member must represent that it
has received and retained the copy of
the statement delivered by the common
parent as part of its records. See
§ 1.6001–1(e).
(iii) Exception. This paragraph (e)(8)
does not apply if the required
information (other than the amount of
the remaining NUBIL balance) is
included in a statement of election
under paragraph (f) of this section
(relating to apportioning a section 382
limitation).
(f) Filing the election to apportion the
section 382 limitation and net
unrealized built-in gain—(1) Form of the
election to apportion—(i) Statement. An
election under paragraph (c) of this
section must be made in the form set
forth in this paragraph (f)(1)(i). The
election must be made by the common
parent and the party described in
paragraph (f)(2) of this section. It must
be filed in accordance with paragraph
(f)(3) of this section and be entitled,
‘‘THIS IS AN ELECTION UNDER
§ 1.1502–95 TO APPORTION ALL OR
PART OF THE [INSERT THE
CONSOLIDATED SECTION 382
LIMITATION, THE SUBGROUP
SECTION 382 LIMITATION, THE LOSS
GROUP’S NET UNREALIZED BUILT-IN
GAIN, OR THE LOSS SUBGROUP’S
NET UNREALIZED BUILT-IN GAIN, AS
APPROPRIATE] IN THE AMOUNT OF
[INSERT THE AMOUNT OF THE LOSS
LIMITATION OR NET UNREALIZED
BUILT-IN GAIN] TO [INSERT NAME(S)
AND EMPLOYER IDENTIFICATION
NUMBER(S) OF THE CORPORATION
(OR THE CORPORATIONS THAT
COMPOSE A NEW LOSS SUBGROUP)
TO WHICH ALLOCATION IS MADE].’’
The statement must also indicate that an
agreement, as described in paragraph
(f)(1)(ii) of this section, has been entered
into.
(ii) Agreement. Both the common
parent and the party described in
paragraph (f)(2) of this section must sign
and date the agreement. The agreement
must include, as appropriate—
(A) The date of the ownership change
that resulted in the consolidated section
382 limitation (or subgroup section 382
limitation) or the loss group’s (or loss
subgroup’s) net unrealized built-in gain;
(B) The amount of the departing
member’s (or loss subgroup’s) prechange net operating loss carryovers and
the taxable years in which they arose
that will be subject to the limitation that
is being apportioned to that member (or
loss subgroup);
(C) The amount of any net unrealized
built-in loss allocated to the departing
member (or loss subgroup) under
paragraph (e) of this section, which, if

VerDate Aug<31>2005

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Jkt 211001

recognized, can be a pre-change
attribute subject to the limitation that is
being apportioned;
(D) If a consolidated section 382
limitation (or subgroup section 382
limitation) is being apportioned, the
amount of the consolidated section 382
limitation (or subgroup section 382
limitation) for the taxable year during
which the former member (or new loss
subgroup) ceases to be a member of the
consolidated group (determined without
regard to any apportionment under this
section);
(E) If any net unrealized built-in gain
is being apportioned, the amount of the
loss group’s (or loss subgroup’s) net
unrealized built-in gain (as determined
under paragraph (c)(2)(ii) of this section)
that may be apportioned to members
that ceased to be members during the
consolidated return year;
(F) The amount of the value element
and adjustment element of the
consolidated section 382 limitation (or
subgroup section 382 limitation) that is
apportioned to the former member (or
new loss subgroup) pursuant to
paragraph (c) of this section;
(G) The amount of the loss group’s (or
loss subgroup’s) net unrealized built-in
gain that is apportioned to the former
member (or new loss subgroup)
pursuant to paragraph (c) of this section;
(H) If the former member is allocated
any net unrealized built-in loss under
paragraph (e) of this section, the amount
of any adjustment element apportioned
to the former member that is attributable
to recognized built-in gains (determined
in a manner that will enable both the
group and the former member to apply
the principles of § 1.1502–93(c)); and
(1) The name and employer
identification number of the common
parent making the apportionment.
(2) Signing the agreement. The
agreement must be signed by both the
common parent and the former member
(or, in the case of a loss subgroup, the
common parent and the loss subgroup
parent) by persons authorized to sign
their respective income tax returns. If
the allocation is made to a loss subgroup
for which an election under § 1.1502–
91(d)(4) is made, and not separately to
its members, the agreement under this
paragraph (f) must be signed by the
common parent and any member of the
new loss subgroup by persons
authorized to sign their respective
income tax returns. Each party signing
the agreement must retain either the
original or a copy of the agreement as
part of its records. See § 1.6001–1(e).
(3) Filing of the election—(i) Filing by
the common parent. The election must
be filed by the common parent of the
group that is apportioning the

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consolidated section 382 limitation (or
the subgroup section 382 limitation) or
the loss group’s net unrealized built-in
gain (or loss subgroup’s net unrealized
built-in gain) by including the statement
on or with its income tax return for the
taxable year in which the former
member (or new loss subgroup) ceases
to be a member.
(ii) Filing by the former member. An
identical statement must be included on
or with the first return of the former
member (or the first return in which the
former member, or the members of a
new loss subgroup, join) that is filed
after the close of the consolidated return
year of the group of which the former
member (or the members of a new loss
subgroup) ceases to be a member.
(4) Revocation of election. An election
statement made under paragraph (c) of
this section is revocable only with the
consent of the Commissioner.
(g) Effective/applicability date.
Paragraphs (e)(8) and (f) of this section
apply to any original consolidated
Federal income tax return due (without
extensions) after June 14, 2007. For
original consolidated Federal income
tax returns due (without extensions)
after May 30, 2006, and on or before
June 14, 2007, see § 1.1502–95T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006,
see § 1.1502–95 as contained in 26 CFR
part 1 in effect on April 1, 2006.
§ 1.1502–95T

[Removed]

Par. 41. Section 1.1502–95T is
removed.
■ Par. 42. Section 1.1563–3 is amended
by revising paragraph (d)(2)(iv), adding
paragraph (d)(2)(v) and revising (e) to
read as follows:
■

§ 1.1563–3 Rules for determining stock
ownership.

*

*
*
*
*
(d) * * *
(2) * * *
(iv) Statement. If the application of
paragraph (d)(2)(ii) or (iii) of this section
does not result in a corporation being
treated as a component member of only
one controlled group of corporations on
a December 31, then such corporation
will be treated as a component member
of only one such group on such date.
Such corporation may elect the group in
which it is to be included by including
on or with its income tax return a
statement entitled, ‘‘STATEMENT TO
ELECT CONTROLLED GROUP
PURSUANT TO § 1.1563–3(d)(2)(iv).’’
The statement must include—
(A) A description of each of the
controlled groups in which the

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Federal Register / Vol. 72, No. 114 / Thursday, June 14, 2007 / Rules and Regulations
corporation could be included. The
description must include the name and
employer identification number of each
component member of each such group
and the stock ownership of the
component members of each such
group; and
(B) The following representation:
[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER OF
CORPORATION] ELECTS TO BE
TREATED AS A COMPONENT
MEMBER OF THE [INSERT
DESIGNATION OF GROUP].
(v) Election—(A) Election filed. An
election filed under paragraph (d)(2)(iv)
of this section is irrevocable and
effective until paragraph (d)(2)(ii) or (iii)
of this section applies or until a change
in the stock ownership of the
corporation results in termination of
membership in the controlled group in
which such corporation has been
included.
(B) Election not filed. In the event no
election is filed in accordance with the
provisions of paragraph (d)(2)(iv) of this
section, then the Internal Revenue
Service will determine the group in
which such corporation is to be
included. Such determination will be
binding for all subsequent years unless
the corporation files a valid election
with respect to any such subsequent
year or until a change in the stock
ownership of the corporation results in
termination of membership in the
controlled group in which such
corporation has been included.
*
*
*
*
*
(e) Effective/applicability date.
Paragraph (d)(2)(iv) and (v) of this
section apply to any taxable year
beginning on or after May 30, 2006.
However, taxpayers may apply
paragraph (d)(2)(iv) and (v) of this
section to any original Federal income
tax return (including any amended
return filed on or before the due date
(including extensions) of such original
return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see § 1.1563–3 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§ 1.1563–3T

[Removed]

Par. 43. Section 1.1563–3T is
removed.
■ Par. 44. Section 1.6012–2 is amended
by revising paragraphs (c) and (k) to
read as follows:
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■

VerDate Aug<31>2005

17:11 Jun 13, 2007

Jkt 211001

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

*

*
*
*
*
(c) Insurance companies—(1)
Domestic life insurance companies—(i)
In general. A life insurance company
subject to tax under section 801 shall
make a return on Form 1120–L, ‘‘U.S.
Life Insurance Company Income Tax
Return.’’ Except as provided in
paragraph (c)(4) of this section, such
company shall file with its return—
(A) A copy of its annual statement
which shows the reserves used by the
company in computing the taxable
income reported on its return; and
(B) A copy of Schedule A (real estate)
and of Schedule D (bonds and stocks),
or any successor thereto, of such annual
statement.
(ii) Mutual savings banks. Mutual
savings banks conducting life insurance
business and meeting the requirements
of section 594 are subject to partial tax
computed on Form 1120, ‘‘U.S.
Corporation Income Tax Return,’’ and
partial tax computed on Form 1120–L.
The Form 1120–L is attached as a
schedule to Form 1120, together with
the annual statement and schedules
required to be filed with Form 1120–L.
(2) Domestic nonlife insurance
companies. Every domestic insurance
company other than a life insurance
company shall make a return on Form
1120–PC, ‘‘U.S. Property and Casualty
Insurance Company Income Tax
Return.’’ This includes organizations
described in section 501(m)(1) that
provide commercial-type insurance and
organizations described in section 833.
Except as provided in paragraph (c)(4)
of this section, such company shall file
with its return a copy of its annual
statement (or a pro forma annual
statement), including the underwriting
and investment exhibit (or any
successor thereto) for the year covered
by such return.
(3) Foreign insurance companies. The
provisions of paragraphs (c)(1) and (c)(2)
of this section concerning the returns
and statements of insurance companies
subject to tax under section 801 or
section 831 also apply to foreign
insurance companies subject to tax
under those sections, except that the
copy of the annual statement required to
be submitted with the return shall, in
the case of a foreign insurance company
that is not required to file an annual
statement, be a copy of the pro forma

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32807

annual statement relating to the United
States business of such company.
(4) Exception for insurance
companies filing their Federal income
tax returns electronically. If an
insurance company described in
paragraph (c)(1), (c)(2), or (c)(3) of this
section files its Federal income tax
return electronically, it should not
include on or with such return its
annual statement (or pro forma annual
statement), or any portion thereof. Such
statement must be available at all times
for inspection by authorized Internal
Revenue Service officers or employees
and retained for so long as such
statements may be material in the
administration of any internal revenue
law. See § 1.6001–1(e).
(5) Definition. For purposes of this
section, the term annual statement
means the annual statement, the form of
which is approved by the National
Association of Insurance Commissioners
(NAIC), which is filed by an insurance
company for the year with the insurance
departments of States, Territories, and
the District of Columbia. The term
annual statement also includes a pro
forma annual statement if the insurance
company is not required to file the
NAIC annual statement.
*
*
*
*
*
(k) Effective/applicability date.
Paragraph (c) of this section applies to
any taxable year beginning on or after
May 30, 2006. However, taxpayers may
apply paragraph (c) of this section to
any original Federal income tax return
(including any amended return filed on
or before the due date (including
extensions) of such original return)
timely filed on or after May 30, 2006.
For taxable years beginning before May
30, 2006, see § 1.6012–2 as contained in
26 CFR part 1 in effect on April 1, 2006.
§ 1.6012–2T

[Removed]

Par. 45. Section 1.6012–2T is
removed.

■

§§ 1.338(h)(10)–1, 1.382–2T, 1.382–8,
1.1502–13, 1.1502–32, 1.502–92, 1.502–94,
1.502–95, 1.563–3, and 1.6043–2
[Amended]

Par. 46. For each entry in the
‘‘Location’’ column of the following
table, remove the language in the
‘‘Remove’’ column and add the language
in the ‘‘Add’’ column in its place:
■

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Location

Remove

Add

The last sentence of the introductory text to
§ 1.302–4.

The rules described in paragraph (a) of
§ 1.302–4T and in paragraphs (b) through
(g) of this section apply in determining
whether the specific requirements of section
302(c)(2) are met.
§ 1.331–1T(d) and § 1.332–6T .........................
§ 1.382–11T .....................................................
paragraph (a) of § 1.382–11T ..........................
§ 1.382–11T(a) .................................................
paragraphs (c)(1), (c)(3), (c)(4) and (c)(5) of
this section and paragraph (c)(2) of
§ 1.382–8T.
paragraphs (c)(1), (c)(3), (c)(4) and (c)(5) of
this section and paragraph (c)(2) of
§ 1.382–8T.
paragraph (c)(2) of § 1.382–8T ........................
paragraphs (c)(1) and (c)(3) of this section
and paragraph (c)(2) of § 1.382–8T.
paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of
this section, and paragraph (c)(2) of
§ 1.382–8T.
paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of
this section, and paragraph (c)(2) of
§ 1.382–8T.
paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of
this section, and paragraph (c)(2) of
§ 1.382–8T.
paragraphs (c)(1), (c)(3), (c)(4), and (c)(5) of
this section, and paragraph (c)(2) of
§ 1.382–8T.
paragraph (c)(2) of § 1.382–8T ........................
paragraph (c)(2) of § 1.382–8T ........................

The following rules shall be applicable in determining whether the specific requirements
of section 302(c)(2) are met:

§ 1.338(h)(10)–1(f) ..............................................
§ 1.382–2T(a)(2)(ii) .............................................
The last sentence of § 1.382–2T(h)(4)(vi)(B) .....
The first sentence of § 1.382–6(b)(2)(i) ..............
The second sentence of § 1.382–8(a) ...............
The third sentence of § 1.382–8(a) ....................
§ 1.382–8(c)(3) ...................................................
The first sentence of § 1.382–8(c)(4) .................
§ 1.382–8(c)(5) ...................................................
The fifth sentence of § 1.382–8(f) ......................
§ 1.382–8(g), Example (1)(b)(2) .........................
The second sentence of § 1.382–8(g), Example
(1)(c).
§ 1.382–8(g), Example (2)(c) ..............................
The first sentence of § 1.382–8(g), Example
(2)(e).
§ 1.382–8(g), Example (3)(b) .............................
§ 1.382–8(g), Example (3)(c)(1)(B) .....................
The second sentence of § 1.382–8(g), Example
(4)(c).
The second sentence of § 1.382–8(g), Example
(5)(c).
§ 1.1502–13(a)(6)(ii), Matching rule, Example
13.
The first sentence of § 1.1502–32(b)(4)(v)(A) ....
The first sentence of § 1.1502–32(b)(4)(v)(B) ....
§ 1.1502–92(e)(1) ...............................................
The first sentence of § 1.1502–92(e)(2) .............
The first sentence of § 1.1502–94(d) .................
The second sentence of § 1.1502–94(d) ...........
The last sentence of § 1.1502–95(b)(3) .............
The second sentence of § 1.1563–3(d)(2)(i) ......
The first sentence of § 1.6043–2(a) ...................

paragraph
paragraph
(c)(2) of
paragraph

(c)(2) of § 1.382–8T ........................
(c)(1) of this section and paragraph
§ 1.382–8T.
(c)(2) of § 1.382–8T ........................

pwalker on PROD1PC71 with RULES

paragraph (c) of this section.
paragraph (c) of this section.
paragraph (c) of this section.
paragraph (c)(2) of this section.
paragraph (c)(2) of this section.
paragraph (c)(2) of this section.
paragraphs (c)(1) and (2) of this section.
paragraph (c)(2) of this section.

[Reserved].

paragraph (b)(4)(iv) of § 1.1502–32T ...............
paragraph (b)(4)(iv) of § 1.1502–32T ...............
§ 1.382–11T(a) .................................................
§ 1.382–11T(a) .................................................
§ 1.382–11T(a) .................................................
§ 1.382–11T(a) .................................................
paragraph (f) of § 1.1502–95T .........................
paragraphs (d)(2)(ii) and (iii) of this section,
and paragraph (d)(2)(iv) of § 1.1563–3T.
§ 1.332–6T(a), § 1.368–3T(a), or § 1.1081–
11T.

paragraph (b)(4)(iv) of this section.
paragraph (b)(4)(iv) of this section.
§ 1.382–11(a).
§ 1.382–11(a).
§ 1.382–11(a).
§ 1.382–11(a).
paragraph (f) of this section.
paragraphs (d)(2)(ii), (iii) and (iv) of this section.
§ 1.332–6(b), 1.368–3(a), or 1.1081–11.

Location

Remove

The first sentence of § 301.6011–5T(a)(twice) ...

paragraphs (a), (b) and (d) through (j) of
§ 1.6012–2, and paragraph (c) of § 1.6012–
2T.

Jkt 211001

this paragraph (c).

Manufacturer incentive payments ....................

Par. 46a. The authority citation for
part 300 continues to read in part as
follows:

17:11 Jun 13, 2007

paragraph (c)(2) of this section.
paragraphs (c)(1), (2), and (3) of this section.

paragraph (c)(2) of this section.

■

VerDate Aug<31>2005

paragraph (c) of this section.

paragraph (c)(2) of § 1.382–8T ........................

Authority: 26 U.S.C. 7805. * * *
Section 301.6011–5T also issued under 26
U.S.C. 6011.

PART 301—PROCEDURE AND
ADMINISTRATION

§ 1.331–1(d) and § 1.332–6.
§ 1.382–11.
§ 1.382–11(a).
§ 1.382–11(a).
paragraph (c) of this section.

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§ 301.6011–5T

[Amended]

Par. 46b. In the following table
remove the language in the ‘‘remove’’
column and add the text from the ‘‘add’’
column in its place.
■

Add
§ 1.6012–2.

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Federal Register / Vol. 72, No. 114 / Thursday, June 14, 2007 / Rules and Regulations
PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
Par. 47. The authority citation for part
602 continues to read as follows:

■

Authority: 26 U.S.C. 7805.
§ 602.101

[Amended]

Par. 48.
1. In § 602.101(b), the following
entries to the table are removed:

■
■

pwalker on PROD1PC71 with RULES

1.302–2T ...............................
1.302–4T ...............................
1.331–1T ...............................
1.332–6T ...............................
1.338–10T .............................
1.351–3T ...............................
1.355–5T ...............................
1.368–3T ...............................
1.381(b)–1T ..........................
1.382–8T ...............................
1.382–11T .............................
1.1081–11T ...........................
1.1221–2T .............................
1.1502–13T ...........................
1.1502–31T ...........................
1.1502–32T ...........................
1.1502–33T ...........................
1.1502–95T ...........................
1.1563–3T .............................
1.6012–2T .............................

1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019

SUMMARY: The Office of Federal
Procurement Policy, Cost Accounting
Standards (CAS) Board, is revising the
threshold for the application of CAS to
negotiated Government contracts. This
rulemaking is authorized pursuant to
Section 26 of the Office of Federal
Procurement Policy Act. The Board is
taking final action on this topic in order
to adjust the CAS applicability
threshold in accordance with Section
822 of the 2006 National Defense
Authorization Act (Pub. L. 109–163).
Section 822 amended 41 U.S.C.
422(f)(2)(A) to require that the threshold
for CAS applicability be the same as the
threshold for compliance with the Truth
in Negotiations Act (TINA).
DATES: This final rule is effective June
14, 2007.
FOR FURTHER INFORMATION CONTACT:
Laura Auletta, Manager, Cost
Accounting Standards Board, 725 17th
Street, NW., Room 9013, Washington,
DC 20503 (telephone: 202–395–3256).
SUPPLEMENTARY INFORMATION:

A. Background
On December 15, 2005, the CAS
Board issued a proposed rule with
request for comment (70 FR 73423) for
the purpose of implementing Sec. 807 of
■ 2. The following entries are added in
the Ronald W. Reagan National Defense
numerical order to the table:
Authorization Act for Fiscal Year 2005,
Pub. L. 108–375, ‘‘Inflation Adjustment
1.332–6 .................................
1545–2019 of Acquisition-Related Dollar
1.351–3 .................................
1545–2019 Thresholds.’’ Section 807 of Pub. L.
1.355–5 .................................
1545–2019 108–375 requires the periodic
1.368–3 .................................
1545–2019 adjustment of acquisition-related
1.382–11 ...............................
1545–2019
thresholds contained in statutes that
1.1081–11 .............................
1545–2019
were in effect on October 1, 2000, with
certain exceptions. The Federal
Kevin M. Brown,
Acquisition Regulation (FAR) Council is
Deputy Commissioner for Services and
authorized to adjust these thresholds
Enforcement.
based on increases in the Consumer
Approved: June 4, 2007.
Price Index for all-urban consumers
Eric Solomon,
(CPI) and as prescribed in the Public
Assistant Secretary of the Treasury.
Law.
Based on further review, the Board
[FR Doc. E7–11148 Filed 6–13–07; 8:45 am]
has determined that its thresholds are
BILLING CODE 4830–01–P
not subject to the provisions of Section
807 of the Pub. L 108–375 because these
thresholds are not ‘‘acquisition related,’’
OFFICE OF MANAGEMENT AND
as defined by Section 807. Therefore,
BUDGET
this final rule does not adjust the CAS
thresholds to reflect the provisions of
Office of Federal Procurement Policy
Section 807.
However, subsequent to the issuance
48 CFR Parts 9901 and 9903
of the CAS Board’s proposed rule,
Section 822 of the 2006 National
Cost Accounting Standards Board
Defense Authorization Act (Pub. L. 109–
(CAS) Changes to Acquisition
163) amended 41 U.S.C. 422(f)(2)(A) to
Thresholds
require that the threshold for CAS
applicability be the same as the
AGENCY: Cost Accounting Standards
threshold for compliance with the Truth
Board, Office of Federal Procurement
in Negotiations Act (TINA). The TINA
Policy, OMB.
threshold is currently $650,000 (71 FR
ACTION: Final rule.
57363). Accordingly, the Board is

VerDate Aug<31>2005

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increasing the CAS applicability
threshold to $650,000 to comply with
Public Law 109–163.
B. Public Comments
The Board received three sets of
public comments in response to the
proposed rule.
1. PL 108–375 Does Not Require
Threshold Adjustments
Comment: Two commenters opined
that Section 807 of Public Law 108–375
does not apply to statutory thresholds in
the Board’s rules, regulations and
standards. These commenters asserted
that the law applies only to acquisitionrelated statutory dollar thresholds
contained in the FAR. Thus, the Board
is not required to adjust its statutory
thresholds in response to Pub. L. 108–
375.
Response: After further review of this
issue, the Board agrees that Section 807
does not apply to the CAS thresholds.
Section 807 of Public Law 108–375
requires the Federal Acquisition
Regulatory Council to adjust each
‘‘acquisition-related dollar threshold.’’
Section 807 defines an acquisitionrelated dollar threshold as ‘‘a dollar
threshold that is specified in law as a
factor in defining the scope of the
applicability of a policy, procedure,
requirement, or restriction provided in
that law to the procurement of property
or services by an executive agency, as
determined by the Federal Acquisition
Regulatory Council.’’ The scope and
applicability of the CAS is within the
sole purview of the CAS Board. The
Federal Acquisition Regulatory Council
does not determine the scope or
applicability of the Cost Accounting
Standards. Therefore, for purposes of
applying Section 807, the thresholds in
the CAS do not meet the definition of
an ‘‘acquisition threshold.’’ Thus, the
requirements of Public Law 108–375 do
not apply to the CAS thresholds.
However, the Board is issuing a final
rule to adjust the CAS applicability
threshold required by Public Law 109–
163.
2. Consistency Between CAS
Applicability and TINA Thresholds
Comment: One commenter
recommended that the CAS
applicability threshold be modified to
adopt the Truth in Negotiations Act
(TINA) threshold for requiring cost or
pricing data (FAR 15.403–4) since it will
be very difficult to administer the
impact of CAS issues associated with
such contracts.
Response: As previously noted,
shortly after the publication of the
proposed rule, 41 U.S.C. 422(f)(2)(A)

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