Internal Revenue Service (IRS), Treasury.
This document contains corrections to final regulations (TD 9442) that were published in the Federal Register on Monday, December 29, 2008 (73 FR 79324) under section 1502 of the Internal Revenue Code providing guidance regarding the treatment of transactions involving obligations between members of a consolidated group.
This correction is effective February 11, 2009, and is applicable on December 29, 2008.Start Further Info Start Printed Page 6829
FOR FURTHER INFORMATION CONTACT:
Frances Kelly, (202) 622-7770 (not a toll-free number).End Further Info End Preamble Start Supplemental Information
The final regulations that are the subject of this document are under section 1502 of the Internal Revenue Code.
Need for Correction
As published, final regulations (TD 9442) contains errors that may prove to be misleading and are in need of clarification.Start List of Subjects
List of Subjects in 26 CFR Part 1End List of Subjects
Correction of PublicationStart Amendment Part
Accordingly,End Amendment Part Start Part
PART 1—INCOME TAXESEnd Part Start Amendment Part
End Amendment Part Start Amendment Part
End Amendment Part
1. The second sentence of paragraph (g)(3)(i)(B) is revised.
2. Paragraph (g)(3)(i)(B)(1)(vi) is revised.
3. Paragraph (g)(7)(ii) Example 4. (ii) is revised.
4. The paragraph title for paragraph (g)(7)(ii) Example 4. (iv) is added.
5. The sixth sentence of paragraph (g)(7)(ii) Example 5. (i) is revised.
(g) * * *
(3) * * *
(i) * * *
(B) * * * In making this determination, if a creditor or debtor realizes an amount in a transaction in which a creditor assigns all or part of its rights under an intercompany obligation to the debtor, or a debtor assigns all or part of its obligations under an intercompany obligation to the creditor, the transaction will be treated as an extinguishment and will be excepted from the definition of “triggering transaction” only if either of the exceptions in paragraphs (g)(3)(i)(B)(5) or (6) of this section apply. * * *
(1) * * *
(vi) The stock of the transferee member (or a higher-tier member other than a higher-tier member of an 80-percent chain that includes the transferor and transferee) is disposed of within 12 months from the assignment of the intercompany obligation, unless at the time of the assignment, the transferor member, transferee member (or in the case of successive section 351 exchanges, each transferor and transferee member) and the debtor member are all in the same 80-percent chain; and all of the stock of the transferee (or in the case of successive section 351 exchanges, the lowest-tier transferee) held by members of the group is disposed of as part of the same plan or arrangement, either directly or indirectly, to persons that are not members of the group.
(7) * * *
(ii) * * *
* * *
(ii) No deemed satisfaction and reissuance. Because the assignment of the B note is an exchange to which section 351 applies and neither S nor B recognize gain or loss, the transaction is not a triggering transaction under paragraph (g)(3)(i)(B)(1) of this section, and the note is not treated as satisfied and reissued under paragraph (g)(3)(ii) of this section.
(iv) Transferee loss subject to limitation. * * *
* * *
(i) * * * The terms and conditions of the note are not modified in connection with the sales transaction, the transaction does not result in a change in payment expectations, and no amount of income, gain, deduction, or loss is recognized by S, B, or T with respect to the note.
Acting Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).
[FR Doc. E9-2828 Filed 2-10-09; 8:45 am]
BILLING CODE 4830-01-P