2012-21987. Integrated Hedging Transactions of Qualifying Debt

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 and the Treasury Department are issuing temporary regulations (TD 9598) under section 988(d) of the Internal Revenue Code. These regulations address certain integrated transactions that involve a foreign currency denominated debt instrument and multiple associated hedging transactions. The text of the 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 December 5, 2012.

ADDRESSES:

Send submissions to: CC:PA:LPD:PR (REG-138489-09), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-138489-09), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS and REG-138489-09).

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Sheila Ramaswamy, at [phone]; concerning submissions and delivery of comments, Oluwafunmilayo Taylor, 202-622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

The temporary regulations published in the Rules and Regulations section of this issue of the Federal Register provide guidance regarding certain integrated transactions that involve a foreign currency denominated debt instrument and multiple associated hedging transactions. 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 and these proposed regulations.

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 has also 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 these regulations do not impose a collection of information on small entities, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. 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 (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and the 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 may be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for a public hearing will be published in the Federal Register.

Drafting Information

The principal author of these proposed regulations is Sheila Ramaswamy, Office of Associate Chief Counsel (International). However, other personnel from the IRS and the 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 1.988-5 is amended by revising paragraph (a)(6)(ii) and adding paragraph (a)(9)(iv) Example 11 and paragraph (h) to read as follows:

§ 1.988-5

Section 988(d) hedging transactions.

(a) * * *

(6) * * *

(ii) [The text of these proposed amendments to § 1.988-5(a)(6)(ii) is the same as the text of § 1.988-5T(a)(6)(ii) published elsewhere in this issue of the Federal Register.]

* * * * *

(9) * * *

(iv) * * *

* * * * *

Example 11: [The text of these proposed amendments to § 1.988-5(a)(9)(iv) Example 11 is the same as the text of § 1.988-5T(a)(9)(iv) Example 11 published elsewhere in this issue of the Federal Register.]

* * * * *

(h) [The text of these proposed amendments to § 1.988-5(h) is the same as the text of § 1.988-5T(h) published elsewhere in this issue of the Federal Register.]

Steven T. Miller,

Deputy Commissioner for Services and Enforcement.