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Federal Register / Vol. 68, No. 50 / Friday, March 14, 2003 / Proposed Rules

particular, sections 5, 5a, 5b, 6(a), 6b,
8a(7), and 8c, 7 U.S.C. 7, 7a, 7b, 8(a), 8b,
12a(7), 12a(9), and 12c, the Commission
hereby proposes to amend Part 1 of
Chapter I of Title 17 of the Code of
Federal Regulations as follows:
PART 1—GENERAL REGULATIONS
UNDER THE COMMODITY EXCHANGE
ACT
1. The authority citation for Part 1
continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 2a, 4, 4a, 6, 6a,
6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6j, 6k, 6l, 6m,
6n, 6o, 6p, 7, 7a, 7b, 8, 9, 12, 12a, 12c, 13a,
13a–1, 16, 16a, 19, 21, 23, 24.

2. Section 1.35 is proposed to be
amended by revising paragraph (a–1)(5)
to read as follows:
§ 1.35 Records of cash commodity, futures
and option transactions.

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*
(a–1) * * *
(5) Post-execution allocation of
bunched orders. Specific customer
account identifiers for accounts
included in bunched orders need not be
recorded at time of order placement or
upon report of execution if the
requirements of paragraphs (a–1)(5)(i)–
(iv) are met.
(i) Eligible account managers. The
person placing and directing the
allocation of an order eligible for postexecution allocation must have been
granted written investment discretion
with regard to participating customer
accounts. The following persons shall
qualify as eligible account managers:
(A) A commodity trading advisor
registered with the Commission
pursuant to the Act or excluded or
exempt from registration under the Act
or the Commission’s rules, except for
entities exempt under § 4.14(a)(3) or
§ 4.14(a)(6) of this chapter;
(B) An investment adviser registered
with the Securities and Exchange
Commission pursuant to the Investment
Advisers Act of 1940 or with a state
pursuant to applicable state law or
excluded or exempt from registration
under such Act or applicable state law
or rule;
(C) A bank, insurance company, trust
company, or savings and loan
association subject to federal or state
regulation; or
(D) A foreign adviser that exercises
discretionary trading authority solely
over the accounts of non-U.S. persons,
as defined in § 4.7(a)(1)(iv) of this
chapter.
(ii) Information. Eligible account
managers shall make the following
information available to customers upon
request:

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(A) The general nature of the
allocation methodology the account
manager will use;
(B) Whether accounts in which the
account manager may have any interest
may be included with customer
accounts in bunched orders eligible for
post-execution allocation; and
(C) Summary or composite data
sufficient for that customer to compare
its results with those of other
comparable customers and, if
applicable, any account in which the
account manager has an interest.
(iii) Allocation. Orders eligible for
post-execution allocation must be
allocated by an eligible account manager
in accordance with the following:
(A) Allocations must be made as soon
as practicable after the entire transaction
is executed, but in any event account
managers must provide allocation
information to futures commission
merchants no later than a time
sufficiently before the end of the day the
order is executed to ensure that clearing
records identify the ultimate customer
for each trade.
(B) Allocations must be fair and
equitable. No account or group of
accounts may receive consistently
favorable or unfavorable treatment.
(C) The allocation methodology must
be sufficiently objective and specific to
permit independent verification of the
fairness of the allocations using that
methodology by appropriate regulatory
and self-regulatory authorities and by
outside auditors.
(iv) Records.
(A) Eligible account managers shall
keep and must make available upon
request of any representative of the
Commission, the United States
Department of Justice, or other
appropriate regulatory agency, the
information specified in paragraph
(a–1)(5)(ii) of this section.
(B) Eligible account managers shall
keep and must make available upon
request of any representative of the
Commission, the United States
Department of Justice, or other
appropriate regulatory agency, records
sufficient to demonstrate that all
allocations meet the standards of
paragraph (a–1)(5)(iii) of this section
and to permit the reconstruction of the
handling of the order from the time of
placement by the account manager to
the allocation to individual accounts.
(C) Futures commission merchants
that execute orders or that carry
accounts eligible for post-execution
allocation, and members of contract
markets that execute such orders, must
maintain records that, as applicable,
identify each order subject to postexecution allocation and the accounts to

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which contracts executed for such order
are allocated.
(D) In addition to any other remedies
that may be available under the Act or
otherwise, if the Commission has reason
to believe that an account manager has
failed to provide information requested
pursuant to paragraph (a–1)(5)(iv)(A) or
(a–1)(5)(iv)(B) of this section, the
Commission may inform in writing any
designated contract market or
derivatives transaction execution
facility and that designated contract
market or derivatives transaction
execution facility shall prohibit the
account manager from submitting orders
for execution except for liquidation of
open positions and no futures
commission merchants shall accept
orders for execution on any designated
contract market or derivatives
transaction execution facility from the
account manager except for liquidation
of open positions.
(E) Any account manager that believes
he or she is or may be adversely affected
or aggrieved by action taken by the
Commission under paragraph (D) of this
section shall have the opportunity for a
prompt hearing in accordance with the
provisions of § 21.03(g) of this chapter.
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Issued in Washington, DC on March 10,
2003 by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 03–6177 Filed 3–13–03; 8:45 am]
BILLING CODE 6351–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–131478–02]
RIN 1545–BB25

Guidance Under Section 1502;
Suspension of Losses on Certain
Stock Dispositions
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary
regulations; withdrawal of notice of
proposed rulemaking; and notice of
public hearing.
SUMMARY: In the rules and regulations
section of this issue of the Federal
Register, the IRS is issuing temporary
regulations under section 1502 that
redetermine the basis of stock of a
subsidiary member of a consolidated
group immediately prior to certain

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Federal Register / Vol. 68, No. 50 / Friday, March 14, 2003 / Proposed Rules
transfers of such stock. In addition,
temporary regulations suspend certain
losses recognized on the disposition of
such stock. The regulations apply to
corporations filing consolidated returns.
The text of the temporary regulations
serves as the text of these proposed
regulations. This document also
provides notice of a public hearing on
these proposed regulations.
DATES: Written or electronic comments
must be received by June 12, 2003.
Outlines of topics to be discussed at the
public hearing scheduled for June 20,
2003, at 10 a.m., must be received by
May 30, 2003.
ADDRESSES: Send submissions to:
CC:PA:RU (REG–131478–02), room
5226, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand
delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:RU (REG–131478–02),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue,
NW., Washington, DC 20044.
Alternatively, taxpayers may submit
electronic comments directly to the IRS
Internet site at www.irs.gov/regs. The
public hearing will be held in the IRS
Auditorium, Internal Revenue Service
Building, 1111 Constitution Avenue,
NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Aimee K. Meacham, (202) 622–7530;
concerning submissions of comments,
the hearing, and/or to be placed on the
building access list to attend the
hearing, Sonya M. Cruse, (202) 622–
7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information
contained in this notice of proposed
rulemaking has been submitted to the
Office of Management and Budget for
review in accordance with the
Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)). Comments on the
collection of information should be sent
to the Office of Management and
Budget, Attn: Desk Officer for the
Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503, with copies to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer,
W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collection of
information should be received by May
13, 2003.
Comments are specifically requested
concerning:
Whether the proposed collection of
information is necessary for the proper

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performance of the functions of the IRS,
including whether the information will
have practical utility;
The accuracy of the estimated burden
associated with the proposed collection
of information (see below);
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with
the proposed collection of information
may be minimized, including through
the application of automated collection
techniques or other forms of information
technology; and
Estimates of capital or start-up costs
and costs of operation, maintenance,
and purchase of services to provide
information.
The collection of information in these
proposed regulations is in §§ 1.1502–
35T(c), 1.1502–35T(c)(5)(iii), 1.1502–
35T(f)(2) and 1.1502–35T(g)(3). This
information is required by the IRS to
verify compliance with section 1502.
This information will be used to
determine whether the amount of tax
has been calculated correctly. The
collection of information is required to
properly determine the amount
permitted to be taken into account as a
loss. The respondents are corporations
filing consolidated returns. The
collection of information is required to
obtain a benefit.
Estimated total annual reporting and/
or recordkeeping burden: 15,000 hours.
Estimated average annual burden per
respondent and/or recordkeeper: 2
hours.
Estimated number of respondents
and/or recordkeepers: 7,475.
Estimated annual frequency of
responses: On occasion.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control
number assigned by the Office of
Management and Budget.
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.
Background
Temporary regulations in the rules
and regulations section of this issue of
the Federal Register amend the Income
Tax Regulations (26 CFR part 1) relating
to section 1502. The text of those
regulations also serves as the text of
these proposed regulations. The
preamble to the temporary regulations
contains a full explanation of the

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12325

reasons underlying the issuance of the
proposed regulations.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a
significant regulatory action as defined
in Executive Order 12866. Therefore, a
regulatory assessment is not required. It
is hereby certified that these regulations
do not have a significant impact on a
substantial number of small entities.
This certification is based on the fact
that these regulations will primarily
affect affiliated groups of corporations,
which tend to be larger businesses.
Moreover, the number of taxpayers
affected and the average burden are
minimal. Therefore, a Regulatory
Flexibility Analysis is not required.
Pursuant to section 7805(f) of the
Internal Revenue Code, these
regulations will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on their impact on small businesses.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations,
consideration will be given to any
written (a signed original and eight
copies) or electronic comments that are
submitted timely to the IRS. The IRS
and Treasury Department request
comments on the clarity of the proposed
regulations and how they may be made
easier to understand. All comments will
be available for public inspection and
copying.
A public hearing has been scheduled
for June 20, 2003, beginning at 10 a.m.
in the IRS Auditorium, Internal Revenue
Building, 1111 Constitution Avenue,
NW., Washington, DC. Due to building
security procedures, visitors must enter
at the Constitution Avenue entrance. In
addition, all visitors must present photo
identification to enter the building.
Because of access restrictions, visitors
will not be admitted beyond the
immediate entrance area more than 30
minutes before the hearing starts. For
information about having your name
placed on the building access list to
attend the hearing, see the FOR FURTHER
INFORMATION CONTACT portion of this
preamble.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish
to present oral comments must submit
written or electronic comments and an
outline of the topics to be discussed and
the time to be devoted to each topic (a
signed original and eight copies) by May
30, 2003. A period of 10 minutes will
be allotted to each person for making
comments. An agenda showing the
scheduling of the speakers will be

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Federal Register / Vol. 68, No. 50 / Friday, March 14, 2003 / Proposed Rules

prepared after the deadline for receiving
outlines has passed. Copies of the
agenda will be available free of charge
at the hearing.
Drafting Information
The principal author of these
regulations is Aimee K. Meacham of the
Office of Associate Chief Counsel
(Corporate), IRS. However, other
personnel from the IRS and Treasury
Department participated in their
development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, proposed regulations
published on October 23, 2002 (67 FR
65066), are withdrawn, and 26 CFR part
1 is proposed to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *; 26 U.S.C.
1502 * * *

Par. 2. Section 1.1502–21 is amended
by:
1. Revising paragraph (b)(1).
2. Adding paragraph (b)(3)(v) and
(h)(7).
The revision and addition read as
follows:
§ 1.1502–21

Net operating losses.

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(b) * * *
(1) [The text of the proposed
amendment to § 1.1502–21(b)(1) is the
same as the text of § 1.1502–21T(b)(1)
published elsewhere in this issue of the
Federal Register].
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(3) * * *
(v) [The text of the proposed
amendment to § 1.1502–21(b)(3)(v) is
the same as the text of § 1.1502–
21T(b)(3)(v) published elsewhere in this
issue of the Federal Register].
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(h) * * *
(7) [The text of the proposed
amendment to § 1.1502–21(h)(7) is the
same as the text of § 1.1502–21T(h)(7)
published elsewhere in this issue of the
Federal Register].
Par. 3. Section 1.1502–32 is amended
by:
1. Revising paragraphs (a)(2) and (h).
2. Adding paragraphs (b)(3)(iii)(C),
(b)(3)(iii)(D), (b)(3)(vi) and (h)(6).
The revision and additions read as
follows:

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§ 1.1502–32

Investment adjustments.

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(a)(2) [The proposed amendment to
§ 1.1502–32(a)(2) is the same as
§ 1.1502–32T(a)(2) published elsewhere
in this issue of the Federal Register].
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(b) * * * (1) * * *
(3) * * *
(iii) * * *
(C) and (D) [The proposed amendment
to § 1.1502–32(b)(3)(iii)(C) and
(b)(3)(iii)(D) are the same as § 1.1502–
32T(b)(3)(iii)(C) and (b)(3)(iii)(D)
published elsewhere in this issue of the
Federal Register].
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(4)(i) * * *
(vi) [The proposed amendment to
§ 1.1502–32(b)(4)(vi) is the same as
§ 1.1502–32T(b)(4)(vi) published
elsewhere in this issue of the Federal
Register].
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(h)(6) [The proposed amendment to
§ 1.1502–32(h)(6) is the same as
§ 1.1502–32T(h)(6) published elsewhere
in this issue of the Federal Register].
Par. 4. Section 1.1502–35 is added to
read as follows:
§ 1.1502–35 Transfers and issuances of
subsidiary member stock.

[The text of proposed § 1.1502–35 is
the same as the text of § 1.1502–35T
published elsewhere in this issue of the
Federal Register].
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David A. Mader,
Assistant Deputy Commissioner of Internal
Revenue.
[FR Doc. 03–6118 Filed 3–11–03; 1:04 pm]
BILLING CODE 4830–01–P

DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
RIN 1018–AI69

Endangered and Threatened Wildlife
and Plants; Proposed Designation of
Critical Habitat for Yermo
xanthocephalus (Desert Yellowhead)
AGENCY: Fish and Wildlife Service,
Interior.
ACTION: Proposed rule.
SUMMARY: We, the Fish and Wildlife
Service (Service), propose to designate
critical habitat for Yermo
xanthocephalus (desert yellowhead)
pursuant to the Endangered Species Act
(Act) of 1973. Y. xanthocephalus was

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federally listed as threatened throughout
its range in central Wyoming in 2002.
Approximately 146 hectares (ha) (360
acres (ac)) in Fremont County,
Wyoming, are proposed for designation
as critical habitat for Y. xanthocephalus.
The proposed critical habitat occurs
entirely on land managed by the Bureau
of Land Management (BLM).
If this proposal is made final, section
7 of the Act requires Federal agencies to
ensure that actions they fund, authorize,
or carry out do not destroy or adversely
modify critical habitat to the extent that
the action appreciably diminishes the
value of the critical habitat for the
survival and recovery of the species.
Section 4 of the Act requires us to
consider economic and other impacts of
specifying any particular area as critical
habitat.
DATES: We will accept comments until
the close of business on May 13, 2003.
Public hearing requests must be
received by April 28, 2003.
ADDRESSES: If you wish to comment,
you may submit your comments and
materials concerning this proposal by
any one of several methods:
(1) You may submit written comments
and information to the Field Supervisor,
Wyoming Field Office, U.S. Fish and
Wildlife Service, 4000 Airport Parkway,
Cheyenne, Wyoming 82001.
(2) You may hand-deliver written
comments to our Wyoming Field Office
at the address given above.
(3) You may send comments by
electronic mail (e-mail) to
[email protected]. See the
Public Comments Solicited section
below for file format and other
information about electronic filing.
Comments and materials received, as
well as supporting documentation used
in the preparation of this proposed rule,
will be available for public inspection,
by appointment, during normal business
hours at the above address.
FOR FURTHER INFORMATION CONTACT: Jodi
Bush, Assistant Field Supervisor,
Wyoming Field Office, U.S. Fish and
Wildlife Service, at the above address
(telephone: 307–772–2374; facsimile:
307–772–2358; e-mail:
[email protected]).
SUPPLEMENTARY INFORMATION:
Background
Wyoming botanist Robert Dorn
discovered Yermo xanthocephalus
(desert yellowhead) while conducting
field work in the Beaver Rim area of
central Wyoming in 1990. Dorn
discovered a small population of an
unusual species of Composite
(Asteraceae). Dorn’s closer examination
revealed that the species was unknown

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