SUPPORTING STATEMENT
CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
This regulation relates to losses on small business stock under Code section 1244. The regulation requires that a person who claims an ordinary loss with respect to stock under section 1244 must have records sufficient to establish that the taxpayer is entitled to the loss and satisfies the requirements of section 1244. The purpose of this recordkeeping requirement is to ensure that the taxpayer has such records as are necessary to allow the Service examiner to determine whether the taxpayer is entitled to a section 1244 loss.
2. USE OF DATA
Paragraph (b) of §1.1244(e)‑1 requires a taxpayer claiming an ordinary loss with respect to stock under section 1244 to have records sufficient to establish that the taxpayer is entitled to the loss and satisfies the requirements of section 1244. The recordkeeping requirement is necessary to enable the Service examiner to determine whether the taxpayer is entitled to the loss. The records will be used by Service examiners to verify that the stock qualifies as section 1244 stock. If such recordkeeping were not required, then taxpayers might not have records sufficient to prove that they are entitled to section 1244 ordinary loss treatment, and their losses would therefore be denied.
USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
IRS publication, regulations, notices and letters are to be electronically enabled on an as practicable basis in accordance with the IRS Reform and Restructuring Act of 1998.
EFFORTS TO IDENTIFY DUPLICATION
We have attempted to eliminate duplication within the agency wherever possible.
METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES
Not applicable.
6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES
Not applicable.
7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
Not applicable.
CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS
The notice of proposed rulemaking was published in the Federal Register on November 15, 1994 (59 FR 58800). No public hearing was requested or held. The final regulation was published in the Federal Register on April 28, 1995 (60 FR 20898).
We received no comments during the comment period in response to the Federal Register notice dated September 5, 2006 (71 FR 52373).
EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
Not applicable.
10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Generally, tax returns and tax return information are confidential as required by 26 USC 6103.
JUSTIFICATION OF SENSITIVE QUESTIONS
Not applicable.
12. ESTIMATED BURDEN OF INFORMATION COLLECTION
Paragraph (b) of §1.1244(e)‑1 requires that the taxpayer have records sufficient to establish that the taxpayer is entitled to the loss and satisfies the requirements of section 1244. We estimate that 10,000 individuals and corporations will have the records specified in §1.1244(e)‑l(b) of the regulation, with an estimated annual burden per recordkeeper of .20 hour, with an estimated total annual recordkeeping burden of 2,000 hours.
Estimates of the annualized cost to respondents for the hour burdens shown are not available at this time.
ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
As suggested by OMB, our Federal Register notice dated September 5, 2006 (71 FR 52373), requested public comments on estimates of cost burden that are not captured in the estimates of burden hours, i.e., estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. However, we did not receive any response from taxpayers on this subject. As a result, estimates of the cost burdens are not available at this time.
ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
Not applicable.
15. REASONS FOR CHANGE IN BURDEN
There is no change in the paperwork burden previously approved by OMB. We are making this submission to renew the OMB approval.
PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
Not applicable.
17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
We believe that displaying the OMB expiration date is inappropriate because it could cause confusion by leading taxpayers to believe that the regulation sunsets as of the expiration date. Taxpayers are not likely to be aware that the Service intends to request renewal of the OMB approval and obtain a new expiration date before the old one expires.
EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB FORM 83-I
Not applicable.
Note: The following paragraph applies to all of the collections of information in this submission:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
| File Type | application/msword |
| Last Modified By | J11FB |
| File Modified | 2006-11-13 |
| File Created | 2006-11-13 |