[Federal Register Volume 63, Number 145 (Wednesday, July 29, 1998)]
[Proposed Rules]
[Pages 40383-40384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20024]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-110332-98]
RIN 1545-AW43
Conversion to the Euro
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 of this issue of the Federal
Register, the IRS is issuing temporary regulations relating to the
change to the euro. The text of those temporary regulations also serves
as the text of these proposed regulations. This document also provides
a notice of public hearing on these proposed regulations.
DATES: Written comments must be received by October 1, 1998. Requests
to speak and outlines of oral comments to be discussed at the public
hearing scheduled for October 20, at 10 a.m., must be received by
September 29, 1998.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-110332-98), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered between the
hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-110332-98) Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue NW.,
Washington, DC. Alternatively, taxpayers may submit comments
electronically via the Internet by selecting the ``Tax Regs'' option of
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 room 2615, Internal
Revenue Building, 1111 Constitution Avenue NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Howard
Wiener, (202) 622-3870 or Thomas Preston, (202) 622-3930; concerning
submissions and the hearing, LaNita VanDyke, 202-622-7190 (not toll-
free numbers).
SUPPLEMENTARY INFORMATION:
Background
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
[[Page 40384]]
to sections 985 and 1001. The temporary regulations contain rules
relating to conversion to the euro.
The text of those temporary regulations also serves as the text of
these proposed regulations. The preamble to the temporary regulations
explains the temporary regulations.
Request for Additional Comments
The Treasury and IRS request additional comments on the following
issues.
(1) Whether the final regulations should contain guidance (and the
substance of any such guidance) concerning the application of sections
1092 and 1259. Comments should separately address the rules for periods
before May 3, 1998, between May 3, 1998 and December 31, 1998, and
after December 31, 1998.
(2) Whether guidance is necessary with respect to section 905,
relating to the redetermination of taxes in post-conversion years.
(3) Whether a QBU whose functional currency was a currency other
than a legacy currency, but whose functional currency should properly
be the euro after the conversion, should be deemed to have
automatically changed its functional currency to the euro.
(4) Whether the regulations adequately address QBUs with functional
currencies of countries that adopt the euro in the future. The Treasury
and IRS also request comments regarding guidance clarifying the
treatment of section 988 transactions that are held by euro functional
currency QBUs and that are denominated in a currency that is replaced
by the euro in the future.
(5) Whether guidance is necessary to address integrated section 988
hedging transactions. It is intended that these regulations be applied
to section 988 integrated hedging transactions under section 988(d) on
an integrated basis. If a QBU subsequently legs out of a position of a
section 988 integrated hedging transaction after the euro conversion, a
leg that formerly was a legacy currency position prior to the
conversion will be a euro denominated position after the conversion,
and the section 988 rules should then be applied to the euro
denominated position.
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 has also been determined
that section 553(b) of the Administrative Procedure Act (5 U.S.C.
chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do
not apply to these regulations, and, therefore, a Regulatory
Flexibility Analyses is not required. Pursuant to section 7805(f) of
the Internal Revenue Code, this notice of proposed rulemaking will be
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (preferably a
signed original and eight (8) copies) that are submitted timely to the
IRS. All comments will be available for public inspection and copying.
A public hearing has been scheduled for Tuesday, October 20, 1998,
at 10 a.m., in room 2615, Internal Revenue Building, 1111 Constitution
Avenue NW., Washington, DC. Because of access restrictions, visitors
will not be admitted beyond the 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 written comments by October 1, 1998, and submit an outline of
the topics to be discussed and the time to be devoted to each topic
(signed original and eight (8) copies) by September 29, 1998.
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 authors of these regulations are Howard A. Wiener, of
the Office of Associate Chief Counsel (International) and Thomas
Preston of the Office of Associate Chief Counsel (Domestic). 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 Amendment 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 1.985-8 is added to read as follows:
Sec. 1.985-8 Special rules applicable to the European Monetary Union
(conversion to the euro).
[The text of this proposed section is the same as the text of
Sec. 1.985-8T published elsewhere in this issue of the Federal
Register.]
Par. 3. Section 1.1001-5 is added to read as follows:
Sec. 1.1001-5 European Monetary Union (conversion to the euro).
[The text of this proposed section is the same as the text of
Sec. 1.1001-5T published elsewhere in this issue of the Federal
Register.]
Michael P. Dolan,
Deputy Commissioner of Internal Revenue Service.
[FR Doc. 98-20024 Filed 7-28-98; 8:45 am]
BILLING CODE 4830-01-P
