E8-16664. Farmer and Fisherman Income Averaging

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY:

In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing final and temporary regulations under section 1301 of the Internal Revenue Code (Code) relating to the averaging of farm and fishing income in computing income tax liability. The regulations reflect changes to the law made by the American Jobs Creation Act of 2004. The regulations provide guidance to individuals engaged in a farming or fishing business who elect to reduce their tax liability by treating all or a portion of the current taxable year's farm or fishing income as if one-third of it had been earned in each of the prior three taxable years. The text of those temporary regulations also serves as the text of these proposed regulations.

DATES:

Written or electronic comments and requests for a public hearing must be received by October 20, 2008.

ADDRESSES:

Send submissions to: CC:PA:LPD:PR (REG-161695-04), Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Taxpayers also may submit comments electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-161695-04).

FOR FURTHER INFORMATION CONTACT:

Concerning submission of comments or to request a hearing, Richard Hurst at [e-mail]; concerning the proposed regulations, Amy Pfalzgraf, [phone] (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

Final and temporary regulations in the Rules and Regulations section of this issue of the Federal Register amend the Income Tax Regulations (26 CFR Part 1) relating to section 1301 of the Internal Revenue Code (Code). The final and temporary regulations provide rules for averaging taxable income from a farming or fishing business under section 1301. The text of those temporary regulations also serves as the text of these proposed regulations. The preamble to the final and temporary regulations explains the amendments.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the 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 Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written (either a signed paper original with eight (8) copies or electronic) comments that are submitted timely to the IRS. The IRS and Treasury Department request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person who timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register.

Drafting Information

The principal author of these regulations is Amy Pfalzgraf of the Office of Associate Chief Counsel (Income Tax & Accounting). 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. In § 1.1301-1, paragraphs (a), (b)(1), (b)(3), (c)(1), (d)(3)(ii), (d)(4), (e), (f)(2), and (f)(4) are revised to read as follows:

§ 1.1301-1

Averaging of farm and fishing income.

(a) [The text of the proposed amendment to § 1.1301-1(a) is the same as the text of § 1.1301-1T(a) published elsewhere in this issue of the Federal Register].

(b) * * * (1) [The text of the proposed amendment to § 1.1301-1(b)(1) is the same as the text of § 1.1301-1T(b)(1) published elsewhere in this issue of the Federal Register].

* * * * *

(3) [The text of the proposed amendment to § 1.1301-1(b)(3) is the same as the text of § 1.1301-1T(b)(3) published elsewhere in this issue of the Federal Register].

(c) * * * (1) [The text of the proposed amendment to § 1.1301-1(c)(1) is the same as the text of § 1.1301-1T(c)(1) published elsewhere in this issue of the Federal Register].

* * * * *

(d) * * *

(3) * * *

(ii) [The text of the proposed amendment to § 1.1301-1(d)(3)(ii) is the same as the text of § 1.1301-1T(d)(3)(ii) published elsewhere in this issue of the Federal Register].

(4) [The text of the proposed amendment to § 1.1301-1(d)(4) is the same as the text of § 1.1301-1T(d)(4) published elsewhere in this issue of the Federal Register].

(e) [The text of the proposed amendment to § 1.1301-1(e) is the same as the text of § 1.1301-1T(e) published elsewhere in this issue of the Federal Register].

(f) * * *

(2) [The text of the proposed amendment to § 1.1301-1(f)(2) is the same as the text of § 1.1301-1T(f)(2) published elsewhere in this issue of the Federal Register].

* * * * *

(4) [The text of the proposed amendment to § 1.1301-1(f)(4) is the same as the text of § 1.1301-1T(f)(4) published elsewhere in this issue of the Federal Register].

Linda E. Stiff,

Deputy Commissioner for Services and Enforcement.