97-655. Intangibles Under Sections 1060 and 338

[Federal Register Volume 62, Number 11 (Thursday, January 16, 1997)]
[Proposed Rules]
[Pages 2335-2336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-655]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-252665-96]
RIN 1545-AU82


Intangibles Under Sections 1060 and 338

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS amends the temporary regulations under 
sections 1060 and 338(b) of the Internal Revenue Code (Code) relating 
to purchase price allocations in taxable asset acquisitions and deemed 
asset purchases. The amendments revise the treatment of intangible 
assets in such acquisitions to take into account the enactment of 
section 197 by the Omnibus Budget Reconciliation Act of 1993. The 
regulations provide guidance to parties to taxable asset acquisitions 
and to deemed asset purchases resulting from elections under section 
338. The text of those temporary regulations also serves as the text of 
these proposed regulations. This document also provides notice of a 
public hearing on these proposed regulations.

DATES: Written comments must be received by April 16, 1997. Outlines of 
topics to be discussed at the public hearing scheduled for Thursday, 
May 22, 1997, at 10 a.m. must be received by May 1, 1997.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG 252665-96), room 
5228, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. In the alternative, submissions may be hand 
delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG 
252665-96), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC. Taxpayers may also submit comments 
electronically via the internet by selecting the ``Tax Regs'' option on 
the IRS Home Page, or by submitting comments directly to the IRS 
internet site at http://www.irs.ustreas.gov/prod/tax__regs/
comments.html. The public hearing will be held in the Commissioner's 
Conference Room, room 3313, Internal Revenue Building, 1111 
Constitution Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Brendan 
O'Hara at [phone]; concerning submissions and the hearing, 
Michael Slaughter, [phone] (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    The temporary and final regulations published in the Rules and 
Regulations section of this issue of the Federal Register amend the 
current temporary regulations under sections 1060 (Sec. 1.1060-1T) and 
338(b) (Secs. 1.338(b)-2T and 1.338(b)-3T), and related examples in the 
final regulations under section 338 (Sec. 1.338-3), concerning the 
treatment of acquired intangible assets.
    The text of those temporary regulations also serves as the text of 
these proposed regulations. The preamble to the temporary and final 
regulations explains the reasons for the amendments.
    The amendments only address the effect of the enactment of section 
197. The IRS and Treasury also intend to study other aspects of the 
current regulations under sections 1060 and 338(b). The current 
regulations have been the subject of public comments. The IRS and 
Treasury welcome further comments on all issues raised by the current 
regulations concerning purchase price allocation under sections 338(b) 
and 1060.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a regulatory assessment is not required. It also has been determined 
that section 553(b) of the Administrative Procedure Act (5 U.S.C. 
chapter 5) does not apply to these regulations, and, because the 
regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, this 
notice of rulemaking will be submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS. All comments will be available for public inspection and 
copying.
    A public hearing has been scheduled for Thursday, May 22, 1997, at 
10 a.m. in the Commissioner's Conference

[[Page 2336]]

Room, room 3313, Internal Revenue Building, 1111 Constitution Avenue 
NW., Washington, DC. Because of access restrictions, visitors will not 
be admitted beyond the Internal Revenue Service Building lobby more 
than 15 minutes before the hearing starts.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing.
    Persons that wish to present oral comments at the hearing must 
submit comments by April 16, 1997 and submit an outline of the topics 
to be discussed and the time to be devoted to each topic by May 1, 
1997.
    A period of 10 minutes will be allotted to each person for making 
comments.
    An agenda showing the scheduling of the speakers will be prepared 
after the deadline for receiving outlines has passed. Copies of the 
agenda will be available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is Brendan P. O'Hara, 
Office of the Assistant Chief Counsel (Corporate), IRS. However, other 
personnel from the IRS and Treasury Department participated in their 
development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

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

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

    Par. 2. Section 1.338(b)-2 is added to read as follows:


Sec. 1.338(b)-2  Allocation of adjusted grossed-up basis among target 
assets.

    [The text of this section is the same as the text of the amendments 
to Sec. 1.338(b)-2T published elsewhere in this issue of the Federal 
Register].
    Par. 3. Section 1.338(b)-3 is added to read as follows:


Sec. 1.338(b)-3  Subsequent adjustments to adjusted grossed-up basis.

    [The text of this section is the same as the text of the amendments 
to Sec. 1.338(b)-3T published elsewhere in this issue of the Federal 
Register].
    Par. 4. Section 1.1060-1 is added to read as follows:


Sec. 1.1060-1  Special allocation rules for certain asset acquisitions.

    [The text of this section is the same as the text of the amendments 
to Sec. 1.1060-1T published elsewhere in this issue of the Federal 
Register].
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 97-655 Filed 1-9-97; 2:53 pm]
BILLING CODE 4830-01-U