E8-24672. Unified Rule for Loss on Subsidiary Stock; Correction

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Final regulations; Correction.

SUMMARY:

This document contains corrections to final regulations (TD 9424) that were published in the Federal Register on Wednesday, September 17, 2008 (73 FR 53934) under sections 358, 362(e)(2), and 1502 of the Internal Revenue Code. The final regulations apply to corporations filing consolidated returns, and corporations that enter into certain tax-free reorganizations. The final regulations provide rules for determining the tax consequences of a member's transfer (including by deconsolidation and worthlessness) of loss shares of subsidiary stock. In addition, the final regulations provide that section 362(e)(2) generally does not apply to transactions between members of a consolidated group. Finally, the final regulations conform or clarify various provisions of the consolidated return regulations, including those relating to adjustments to subsidiary stock basis.

DATES:

This correction is effective October 20, 2008, and is applicable on September 17, 2008.

FOR FURTHER INFORMATION CONTACT:

Marcie P. Barese, [phone], Sean P. Duffley, [phone], or Theresa Abell [phone] (none of the numbers are toll-free).

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are the subject of this document are under sections 337, 358, 362, 1502 of the Internal Revenue Code.

Need for Correction

As published, final regulations (TD 9424) contain errors that may prove to be misleading and are in need of clarification.

Correction of Publication

Accordingly, the publication of the final regulations (TD 9424), which were the subject of FR Doc. E8-21006, is corrected as follows:

1. On page 53937, column 3, in the preamble, under the paragraph heading “vii. Adjustments for Section 362(e)(2) Transactions”, first paragraph, line 9, the language “not elect to apply the rule in the final” is corrected to read “not apply the rule in the final”.

2. On page 53938, column 3, in the preamble, under the paragraph heading “B. Section 1.1502-36(b): Basis Redetermination Rule”, first paragraph of the column, line 1, the language “have no correlation to unrecognized loss” is corrected to read “have no correlation to unrecognized gain or loss”.

3. On page 53938, column 3, in the preamble, under the paragraph heading “B. Section 1.1502-36(b): Basis Redetermination Rule”, first paragraph of the column, line 17, the language “contributions of assets in exchanged for” is corrected to read “contributions of assets in exchange for”.

4. On page 53938, column 3, in the preamble, under the paragraph heading “i. Exceptions to Basis Redetermination Rule”, last paragraph of the column, line 7, the language “to a nonmember in a one or more fully” is corrected to read “to a nonmember in one or more fully”.

5. On page 53939, column 3, in the preamble, under the paragraph heading “i. Treatment of Intercompany Debt”, first paragraph, line 7, the language “more like to capital transactions than” is corrected to read “more like capital transactions than”.

6. On page 53940, column 3, in the preamble, under the paragraph heading “i. Lower-Tier Subsidiary Rules”, second paragraph, line 7, the language “reason for this concern was that loss” is corrected to read “reasons for this concern were that loss”.

7. On page 53943, column 1, in the preamble, under the paragraph heading “vi. Election to Reduce Stock Basis and/or Reattribute Attributes”, first paragraph of the column, line 19, the language “to be attributed. Similar to the rule” is corrected to read “to be attributed. As in the rule”.

8. On page 53943, column 2, in the preamble, under the paragraph heading “vii. The Conforming Limitation”, last paragraph of the column, line 5, the language “rule would then either reduce lower-tier” is corrected to read “rule could then either reduce lower-tier”.

9. On page 53946, column 3, in the preamble, under the paragraph heading “B. Amendments to § 1.1502-33(e) “Whole-Group” Exception”, first paragraph of the column, line 7, the language “elect to apply each of these modified” is corrected to read “apply each of these modified”.

LaNita Van Dyke,

Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).