This document contains a correction to final regulations (T.D. 9424, 2008-44 I.R.B. 1012) 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.
Effective Date: This correction is effective on March 5, 2010, and is applicable on September 17, 2008.
Maury Passman, (202) 622-7550 or Theresa Abell, (202) 622-7700 (not toll-free numbers).
The final regulations (T.D. 9424) that are the subject of this document are under sections 337, 358, 362 and 1502 of the Internal Revenue Code.
As published, the final regulations (T.D. 9424) contain an error that may prove to be misleading and is in need of clarification. The final regulations revised §1.1502-35(a) to provide that, in general, §1.1502-35 would only apply to transactions completed prior to September 17, 2008. The final regulations also revised the operative rules in §1.1502-35. However, the effective date prescribed in §1.1502-35(j) appeared to preclude the application of the revised §1.1502-35 to transactions completed prior to September 17, 2008. The final regulations are clarified to provide that the revised rules in §1.1502-35 (including the ten-year termination of application of §1.1502-35 described in Background section 2.A. of the preamble) apply after September 16, 2008, to all transactions subject to that section.
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Accordingly, 26 CFR part 1 is corrected by making the following correcting amendment:
Paragraph 1. The authority citation for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.1502-35 is amended by revising the first sentence of paragraph (j) to read as follows:
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(j) Effective/applicability dates. This section applies after September 16, 2008. * * *
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LaNita Van Dyke,The Internal Revenue Bulletin is produced and published by the Internal Revenue Service and contains IRS pronouncements affecting tax analysis under the Code and the Regulations, including but not limited to Revenue Procedures, Revenue Rulings, Notices and Announcements. Access the IRS site at https://www.irs.gov/help/irsgov-accessibility for information concerning accessibility of IRS materials. While every effort has been made to ensure that the IRB database files available through the TouchTax application are accurate, those using TouchTax for legal research should verify their results against the printed versions of the IRBs available from the IRS.