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Section 1367 Regarding Open Account Debt; Correction

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Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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Internal Revenue Service (IRS), Treasury.


Correcting amendment.


This document contains corrections to final regulations (TD 9428) that were published in the Federal Register on Monday, October 20, 2008 (73 FR62199) relating to the treatment of open account debt between S corporations and their shareholders. These final regulations provide rules regarding the definition of open account debt and the adjustments in basis of any indebtedness of an S corporation to a shareholder under section 1367(b)(2) of the Internal Revenue Code for shareholder advances and repayments on advances of open account debt. The regulations affect shareholders of S corporations and are necessary to provide guidance needed to comply with the applicable tax law.


Effective Date: This correction is effective November 14, 2008, and is applicable on October 20, 2008.

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Stacy L. Short or Deane M. Burke, (202) 622-3070 (not a toll-free number).

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The final regulations that are the subjects of this document are under section 1367 of the Internal Revenue Code.

Need for Correction

As published, final regulations (TD 9428) contain errors that may prove to be misleading and are in need of clarification.

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List of Subjects in 26 CFR Part 1

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Correction of Publication

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Start Printed Page 67389 Authority: 26 U.S.C. 7805 * * *

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and the first sentence of paragraph Example 7. (i) to read as follows:

Adjustments to basis of indebtedness to shareholder.
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(e) * * *

Example 6. The $25,000 aggregate principal amount applies to each shareholder. * * *

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Example 7. * * *

(i) The facts are the same as in Example 6, in addition to which, on December 31, 2009, A's basis in the open account debt is reduced under paragraph (b) of this section to $8,000. * * *

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LaNita Van Dyke,

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

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[FR Doc. E8-27024 Filed 11-13-08; 8:45 am]