Comment on FR Doc # 2011-08758

After reading the proposed regulation (REG-154159-09), the following questions and concerns arise: I. The proposed regulations (IRS REG-154159-09) don’t address whether the fair market value of assets and fair market value of liabilities owned by the grantor trust are directly attributed to the owner for purposes of IRC 108(d)(3). An assumption has to be made that the assets and liabilities owned by the owner include the assets and liabilities of the grantor trust. II. Another problem closely linked with the above is that an anomalous result can occur with the attribution of the disregarded entity’s assets to the owner for purposes of IRC 108(d)(3). For example, a single member LLC can have assets and liabilities at the single member LLC level, and the fair market value of those assets and liabilities can be one such amount; however, the fair market value of the LLC interest solely owned by the owner can be of a different amount because of valuation discounts. As such, an inequitable result may occur when comparing the individual fair market value of assets and liabilities of the individual assets held at the single member LLC level to the aggregate fair market value of the LLC membership interest for the sole owner. For example: single member LLC owns asset A with FMV of $50 and liability B with FMV of $100. The owner of the single member LLC recently engaged a business valuation specialist to ascertain the fair market value of the LLC membership interest. The FMV of the LLC membership interest is $10 because of certain valuation discounts. For purposes of IRC 108(d)(3) determined at the owner level, does he own, among many other assets and liabilities, an asset with FMV of $50 and liability with FMV of $100, or does he own an LLC membership interest asset, among many other assets and liabilities, with a FMV of $10? III. Lastly, another problem is that the proposed regulations (IRS REG-154159-09) don’t address the outcome in circumstances where an individu