Unified Rule for Loss on Subsidiary Stock; Correction

Federal Register: March 5, 2010 (Volume 75, Number 43)

Rules and Regulations

Page 10172

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

DOCID:fr05mr10-3

DEPARTMENT OF THE TREASURY

Internal Revenue Service 26 CFR Part 1

TD 9424

RIN 1545-BB61

Unified Rule for Loss on Subsidiary Stock; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

SUMMARY: This document contains a correction to final regulations (TD 9424) that were published in the Federal Register on Wednesday,

September 17, 2008 (73 FR 53934).

The regulations apply to corporations filing consolidated returns, and corporations that enter into certain tax-free reorganizations. The regulations provide rules for determining the tax consequences of a member's transfer (including by deconsolidation and worthlessness) of loss shares of subsidiary stock.

DATES: Effective Date: This correction is effective on March 5, 2010, and is applicable on September 17, 2008.

FOR FURTHER INFORMATION CONTACT: Maury Passman, (202) 622-7550 or

Theresa Abell, (202) 622-7700 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

The final regulations (TD 9424) that are the subject of this document are under sections 337, 358, 362 and 1502 of the Internal

Revenue Code.

Need for Correction

As published, the final regulations (TD 9424) contain an error that may prove to be misleading and is in need of clarification. The final regulations revised Sec. 1.1502-35(a) to provide that, in general,

Sec. 1.1502-35 would only apply to transactions completed prior to

September 17, 2008. The final regulations also revised the operative rules in Sec. 1.1502-35. However, the effective date prescribed in

Sec. 1.1502-35(j) appeared to preclude the application of the revised

Sec. 1.1502-35 to transactions completed prior to September 17, 2008.

The final regulations are clarified to provide that the revised rules in Sec. 1.1502-35 (including the ten-year termination of application of Sec. 1.1502-35 described in Background section 2.A. of the preamble) apply after September 16, 2008, to all transactions subject to that section.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Correction of Publication 0

Accordingly, 26 CFR part 1 is corrected by making the following correcting amendment:

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 1.1502-35 is amended by revising the first sentence of paragraph (j) to read as follows:

Sec. 1.1502-35 Transfers of subsidiary stock and deconsolidations of subsidiaries.

* * * * *

(j) Effective/applicability dates. This section applies after

September 16, 2008. * * *

LaNita Van Dyke,

Chief, Publications and Regulations Branch, Legal Processing Division,

Associate Chief Counsel, (Procedure and Administration).

FR Doc. 2010-4756 Filed 3-4-10; 8:45 am

BILLING CODE 4830-01-P