Application of Section 108(i) to Partnerships and S Corporations; Correction

Federal Register, Volume 78 Issue 157 (Wednesday, August 14, 2013)

Federal Register Volume 78, Number 157 (Wednesday, August 14, 2013)

Rules and Regulations

Pages 49366-49367

From the Federal Register Online via the Government Printing Office www.gpo.gov

FR Doc No: 2013-19680

=======================================================================

-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

TD 9623

RIN 1545-BI99

Application of Section 108(i) to Partnerships and S Corporations; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendments.

-----------------------------------------------------------------------

SUMMARY: This document contains corrections to final regulations and removal of temporary regulations (TD 9623) that were published in the Federal Register on Wednesday, July 3, 2013 (78 FR 39973). The final regulations are relating to the application of section 108(i) of the Internal Revenue Code to partnerships and S corporations and provides rules regarding the deferral of discharge of indebtedness income and original issue discount deductions by a partnership or an S corporation with respect to reacquisitions of applicable debt instruments after December 31, 2008, and before January 1, 2011.

DATES: This correction is effective on August 14, 2013 and applicable on or after July 2, 2013.

FOR FURTHER INFORMATION CONTACT: Joseph R. Worst, at (202) 622-3070 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations and removal of temporary regulations (TD 9623) that are the subject of this correction are under section 108(i) of the Internal Revenue Code.

Need for Correction

As published, the final regulations and removal of temporary regulations (TD 9623) contains errors that may prove to be misleading and are in need of clarification.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

Accordingly, 26 CFR Part 1 is corrected by making the following correcting amendments:

PART 1--INCOME TAXES

0

Paragraph 1. The authority citation for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

0

Par. 2. Section 1.108(i)-2 is amended by revising paragraphs (b)(6)(i)(A)(4), (c)(3)(i)(A)(5), and (d)(2)(iii) Example 2. (ii) to read as follows:

Sec. 1.108(i)-2 Application of section 108(i) to partnerships and S Corporations.

* * * * *

(b) * * *

(6) * * *

(i) * * *

(A) * * *

(4) In the taxable year that includes the day before the day on which the electing partnership files a petition in a title 11 or similar case.

* * * * *

(c) * * *

(3) * * *

(i) * * *

(A) * * *

(5) In the taxable year that includes the day before the day on which the electing S corporation files a petition in a title 11 or similar case.

* * * * *

(d) * * *

(2) * * *

(iii) * * *

Example 2. * * *

(ii) Under paragraph (d)(2) of this section, ABC partnership's deferred OID deduction

Page 49367

for 2012 is the lesser of: $23.25 ($31 of OID that accrues on the new debt instrument in 2012 less $7.75 of this OID that is allowed as a deduction to A in 2012) or $9.75 (the excess of $75 (ABC partnership's deferred COD income of $150 less A's share of ABC partnership's deferred COD income that is included in A's income for 2012 of $75) over $65.25 (the aggregate amount of OID that accrued in previous taxable years of $87 less the aggregate amount of such OID that has been allowed as a deduction by A in 2012 of $21.75)). Thus, of the $31 of OID that accrues in 2012, $9.75 is deferred under section 108(i).

* * * * *

Martin V. Franks,

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

FR Doc. 2013-19680 Filed 8-13-13; 8:45 am

BILLING CODE 4830-01-P