Income taxes: Corporate reorganizations and tax-free liquidations; accounting method changes Correction,

[Federal Register: December 3, 2007 (Volume 72, Number 231)]

[Proposed Rules]

[Page 67878]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr03de07-20]

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-151884-03]

RIN 1545-BD81

Update and Revision of Sections 1.381(c)(4)-1 and 1.381(c)(5)-1; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to notice of proposed rulemaking.

SUMMARY: This document contains corrections to a notice of proposed rulemaking (REG-151884-03) that was published in the Federal Register on Friday, November 16, 2007, (72 FR 64545) providing guidance under sections 381(c)(4) and (c)(5) of the Internal Revenue Code relating to the accounting method or combination of methods, including the inventory method, to use after certain corporate reorganizations and tax-free liquidations.

These proposed regulations clarify and simplify the existing regulations under sections 381(c)(4) and (c)(5). The regulations affect corporations that acquire the assets of other corporations in transactions described in section 381(a).

FOR FURTHER INFORMATION CONTACT: Cheryl Oseekey at (202) 622-4970 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The correction notice that is the subject of this document is under sections 381 and 446 of the Internal Revenue Code.

Need for Correction

As published, the notice of proposed rulemaking (REG-151884-03) contains errors that may prove to be misleading and are in need of clarification.

Correction of Publication

Accordingly, the publication of proposed rulemaking (REG-151884- 03), which was the subject of FR Doc. E7-22411, is corrected as follows:

Sec. 1.381(c)(5)-1 [Corrected]

1. On page 64553, column 3, Sec. 1.381(c)(5)-1(a)(2)(i), lines three through thirteen, the language ``section 381(a) applies, if the acquiring corporation operates the trades or businesses of the parties to the section 381(a) transaction as separate and distinct trades or businesses after the date of the distribution or transfer, then the acquiring corporation generally must use the same accounting method(s) for inventory used by the distributor or transferor corporation(s) on the date of the section 381(a) transaction (carryover'' is corrected to read ``section 381(a) applies, if an acquiring corporation operates the trades or businesses of the parties to the section 381(a) transaction as separate and distinct trades or businesses after the date of distribution or transfer, then the acquiring corporation generally must use the same accounting method(s) for inventory used by the distributor or transferor corporation(s) on the date of distribution or transfer for the acquired trade or business (carryover''.

2. On page 64556, column 1, Sec. 1.381(c)(5)-1(c)(2), Example 4.(ii), fourteenth line from the top of the column, the language ``method on a cut-off basis as provided in'' is corrected to read ``method on a cut-off basis and will take into account the change in the inventory amount resulting from the valuing of the inventory at cost as required under section 472(d) as provided in''.

3. On page 64557, column 2, Sec. 1.381(c)(5)-1(e)(6)(ii)(B), fourteenth line of the paragraph, the language ``having been acquired at average unit'' is corrected to read ``having been acquired at their average unit''.

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

[FR Doc. E7-23277 Filed 11-30-07; 8:45 am]

BILLING CODE 4830-01-P