This document withdraws a notice of proposed rulemaking (REG-109367-06, 2006-2 C.B. 683) relating to the circumstances in which accounts or notes receivable are “acquired ... for services rendered” within the meaning of section 1221(a)(4).
On August 7, 2006, the Treasury Department and the IRS published in the Federal Register (71 FR 44600) proposed regulations § 1.1221-1(e) under section 1221(a)(4) of the Internal Revenue Code. These regulations sought to clarify the circumstances in which accounts or notes receivable are “acquired ... for services rendered” within the meaning of section 1221(a)(4).
Written comments were received from interested parties, and public hearings to discuss these regulations were held on November 7, 2006, and August 22, 2007. Most of the comments focused on the decisions in Burbank Liquidating Corp. v. Commissioner, 39 T.C. 999 (1963), acq. sub nom. United Assocs., Inc., 1965-1 C.B. 3, aff’d in part and rev’d in part on other grounds, 335 F.2d 125 (9th Cir. 1964) and Federal National Mortgage Association v. Commissioner, 100 T.C. 541 (1993). The Treasury Department and the IRS considered the comments and have decided to withdraw the proposed regulations.
The IRS will not challenge return reporting positions of taxpayers under section 1221(a)(4) that apply existing law, including Burbank Liquidating; Federal National Mortgage Association; and Bieldfeldt v. Commissioner, 231 F.3d 1035 (7th Cir. 2000), cert. denied, 534 U.S. 813 (2001). See also Rev. Rul. 80-56, 1980-1 C.B. 154, and Rev. Rul. 80-57, 1980-1 C.B. 157. The IRS and the Treasury Department will continue to study this area and may issue guidance in the future.
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Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (REG-109367-06) published in the Federal Register on August 7, 2006 (71 FR 44600) is withdrawn.
Linda E. Stiff,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.