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Federal Register / Vol. 68, No. 244 / Friday, December 19, 2003 / Rules and Regulations
procedures set forth in 12 U.S.C. 1831r–
1(a) and (b) (branch closings).
■ 18.Add new § 28.25 to read as follows:
§ 28.25

Change in control.

(a) After-the-fact notice. In cases in
which no other filing is required under
subpart B of this part, a foreign bank
that operates a Federal branch or agency
shall inform the OCC in writing of the
direct or indirect acquisition of control
of the foreign bank by any person or
entity, or group of persons or entities
acting in concert, within 14 calendar
days after the foreign bank becomes
aware of a change in control.
(b) Additional information. The
foreign bank shall furnish the OCC with
any additional information the OCC
may require in connection with the
acquisition of control.
■ 19. Add a new § 28.26 to read as
follows:
§ 28.26

Loan production offices.

A Federal branch may establish
lending offices, make credit decisions,
and engage in other representational
activities at a site other than a Federal
branch office, subject to the same rights,
privileges, requirements and limitations
that apply to national banks under 12
CFR 7.1003, 7.1004, and 7.1005.
Dated: December 15, 2003.
John D. Hawke, Jr.,
Comptroller of the Currency.
[FR Doc. 03–31342 Filed 12–18–03; 8:45 am]
BILLING CODE 4810–33–P

DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 522
Implantation or Injectable Dosage
Form New Animal Drugs; Flunixin
Meglumine Solution
AGENCY:

Food and Drug Administration,

HHS.
ACTION:

Final rule.

SUMMARY: The Food and Drug
Administration (FDA) is amending the
animal drug regulations to reflect
approval of an abbreviated new animal
drug application (ANADA) filed by
Norbrook Laboratories, Ltd. The
ANADA provides for the veterinary
prescription use of flunixin meglumine
injectable solution for the control of
inflammation in horses, beef cattle, and
nonlactating dairy cattle.
DATES: This rule is effective December
19, 2003.

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FOR FURTHER INFORMATION CONTACT:
Lonnie W. Luther, Center for Veterinary
Medicine (HFV 104), Food and Drug
Administration, 7519 Standish Pl.,
Rockville, MD 20855, 301–827–8549, email: [email protected].

Norbrook
Laboratories, Ltd., Station Works,
Newry BT35 6JP, Northern Ireland, filed
ANADA 200–308 for the use of Flunixin
Injection by veterinary prescription for
the control of inflammation in horses,
beef cattle, and nonlactating dairy cattle.
Norbrook Laboratories’ Flunixin
Injection is approved as a generic copy
of Schering-Plough Animal Health’s
BANAMINE (flunixin) Solution,
approved under NADA 101–479. The
ANADA is approved as of November 17,
2003, and the regulations in § 522.970
(21 CFR 522.970) are amended to reflect
the approval. The basis of approval is
discussed in the freedom of information
summary.
In accordance with the freedom of
information provisions of 21 CFR part
20 and 21 CFR 514.11(e)(2)(ii), a
summary of safety and effectiveness
data and information submitted to
support approval of this application
may be seen in the Division of Dockets
Management (HFA–305), Food and Drug
Administration, 5630 Fishers Lane, rm.
1061, Rockville, MD 20852, between 9
a.m. and 4 p.m., Monday through
Friday.
The agency has determined under 21
CFR 25.33(a)(1) that this action is of a
type that does not individually or
cumulatively have a significant effect on
the human environment. Therefore,
neither an environmental assessment
nor an environmental impact statement
is required.
This rule does not meet the definition
of ‘‘rule’’ in 5 U.S.C. 804(3)(A) because
it is a rule of ‘‘particular applicability.’’
Therefore, it is not subject to the
congressional review requirements in 5
U.S.C. 801–808.

SUPPLEMENTARY INFORMATION:

§ 522.970

70701

[Amended]

2. Section 522.970 Flunixin
meglumine solution is amended in
paragraph (b)(1) by removing ‘‘000061
and 059130’’ and by adding in its place
‘‘000061, 055529, and 059130’’.
■

Dated: December 9, 2003.
Linda Tollefson,
Acting Director, Center for Veterinary
Medicine.
[FR Doc. 03–31294 Filed 12–18–03; 8:45 am]
BILLING CODE 4160–01–S

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 301 and 602
[TD 9100]
RIN 1545–BC62

Guidance Necessary To Facilitate
Business Electronic Filing
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.

SUMMARY: This document contains
regulations designed to eliminate
regulatory impediments to the
electronic filing of certain income tax
returns and other forms. These
regulations affect business taxpayers
who file income tax returns
electronically. The text of the temporary
regulations also serves as the text of the
proposed regulations set forth in the
Proposed Rules section in this issue of
the Federal Register.
DATES: Effective Date: These regulations
are effective December 19, 2003.
Applicability Date: These regulations
apply with respect to taxable years
beginning after December 31, 2002. The
applicability of §§ 1.170A–11T, 1.556–
2T. 1.565–1T, 1.936–7T, 1.1017–1T,
1.1368–1T, 1.1377–1T, 1.1502–21T,
1.1502–75T, 1.1503–2T, 1.6038B–1T,
List of Subject in 21 CFR Part 522
and 301.7701–3T will expire on or
Animal drugs.
before December 18, 2006.
FOR FURTHER INFORMATION CONTACT:
■ Therefore, under the Federal Food,
Nathan Rosen, (202) 622–4910 (not a
Drug, and Cosmetic Act and under
authority delegated to the Commissioner toll-free number).
of Food and Drugs and redelegated to the SUPPLEMENTARY INFORMATION:
Center for Veterinary Medicine, 21 CFR
Paperwork Reduction Act
part 522 is amended as follows:
These regulations are being issued
PART 522—IMPLANTATION OR
without prior notice and public
INJECTABLE DOSAGE FORM NEW
procedure pursuant to the
ANIMAL DRUGS
Administrative Procedure Act (5 U.S.C.
553). For this reason, the collection of
■ 1. The authority citation for 21 CFR
information contained in these
part 522 continues to read as follows:
regulations has been reviewed and
pending receipt and evaluation of
Authority: 21 U.S.C. 360b.

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public comments, approved by the
Office of Management and Budget under
control number 1545–1868. Responses
to this collection of information are
mandatory.
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 control number.
For further information concerning
this collection of information, and
where to submit comments on the
collection of information and the
accuracy of the estimated burden, and
suggestions for reducing this burden,
please refer to the preamble to the crossreferencing notice of proposed
rulemaking published in the Proposed
Rules section of this issue of the Federal
Register.
Books and 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
This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) and the Procedure and
Administration Regulations (26 CFR
part 301) designed to eliminate
regulatory impediments to the
electronic submission of tax returns and
other forms filed by corporations,
partnerships and other businesses.
In 1998, Congress enacted the Internal
Revenue Service Restructuring and
Reform Act of 1998 (RRA 1998), Public
Law 105–206 (112 Stat. 685) (1998). In
relevant part, RRA 1998 states that the
policy of Congress is to promote the
paperless filing of Federal tax returns.
Section 2001(a) of RRA 1998 sets a longrange goal for the IRS to have at least 80
percent of all Federal tax returns filed
electronically by 2007. Section 2001(b)
of RRA 1998 requires the IRS to
establish a 10-year strategic plan to
eliminate barriers to electronic filing.
On January 30, 2003, the IRS published
final regulations (TD 9040) eliminating
a number of regulatory impediments to
the electronic filing of Form 1040, ‘‘U.S.
Individual Income Tax Return.’’
The IRS has identified a number of
regulatory provisions that impede the
ability of business entities to file returns
electronically. Some of these
regulations, for example, impede
electronic filing by requiring taxpayers
to include third-party signatures on
their tax returns or by requiring
taxpayers to attach documents or
statements generated by a third party.

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Others require a taxpayer to sign an IRS
form and file it as an attachment to the
taxpayer’s income tax return. These
regulations eliminate the impediments
for taxable years beginning after
December 31, 2002. The regulations
generally affect taxpayers who must file
any of the following forms: Form 926,
‘‘Return by a U.S. Transferor of Property
to a Foreign Corporation’’; Form 972,
‘‘Consent of Shareholder To Include
Specific Amount in Gross Income’’;
Form 973, ‘‘Corporation Claim for
Deduction for Consent Dividends’’;
Form 982, ‘‘Reduction of Tax Attributes
Due to Discharge of Indebtedness (and
Section 1082 Basis Adjustment)’’; Form
1120, ‘‘U.S. Corporation Income Tax
Return’’; Form 1120S, ‘‘U.S. Income Tax
Return for an S Corporation’’; Form
1122, ‘‘Authorization and Consent of
Subsidiary Corporation To Be Included
in a Consolidated Income Tax Return’’;
Form 5471, ‘‘Information Return of U.S.
Persons With Respect To Certain
Foreign Corporations’’; Form 5712–A,
‘‘Election and Verification of the Cost
Sharing or Profit Split Method Under
Section 936(h)(5)’’; and Form 8832,
‘‘Entity Classification Election.’’
Explanation of Provisions
1. Form 926: Return by a U.S. Transferor
of Property to a Foreign Corporation
Section 6038B provides that
transferors of property to foreign
corporations must, in certain
circumstances, file information returns
with the Secretary regarding such
transactions. Section 1.6038B–1(b)(1)(i)
requires the transferor to file the return
on Form 926 as an attachment to its
income tax return. Under § 1.6038B–
1(b)(1)(i) and (ii), filers of Form 926
must sign the form and attachments to
the form are subject to the declaration
under penalties of perjury that the
information submitted is true, correct,
and complete. The signature
requirement impedes electronic filing of
the transferor’s income tax return
because Form 926 cannot yet be signed
electronically. These regulations
eliminate the obligation to sign Form
926 and provide, instead, that Form 926
and any attachments to the form are
verified by signing the income tax
return with which the form and
attachments are filed.
2. Form 972: Consent of Shareholder To
Include Specific Amount in Gross
Income
Section 565 allows a corporation and
its shareholders to treat certain
hypothetical corporate distributions as
actual dividends. Section 1.565–1(b)(1)
requires shareholders to use Form 972

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to elect such treatment and requires
each consenting shareholder (or an
authorized agent) to sign the form.
Section 1.565–1(b)(3) requires the
corporation to attach the signed Form
972 to its income tax return for the
taxable year in which it claims the
dividends paid deduction for the
hypothetical dividends. Requiring
corporations to attach a signed Form
972 impedes electronic filing of their
income tax returns because third-party
signatures cannot be incorporated into
an electronic return. These regulations
provide that an unsigned copy of Form
972 may be submitted with the
corporation’s income tax return if the
corporation retains the signed original
in its records.
3. Form 973: Corporation Claim for
Deduction for Consent Dividends
A corporation uses Form 973 to claim
the dividend treatment permitted by
section 565. Section 1.565–1(b)(3)
requires the corporation to sign Form
973 under penalties of perjury and
submit the form with its tax return. This
signature requirement impedes
electronic filing of a corporation’s
income tax return because Form 973
cannot yet be signed electronically.
These regulations eliminate the
obligation to sign Form 973 and
provide, instead, that Form 973 is
verified by signing the income tax
return with which the form is filed.
4. Form 982: Reduction of Tax
Attributes Due to Discharge of
Indebtedness (and Section 1082 Basis
Adjustment)
Section 1017 provides for basis
reductions when income from discharge
of indebtedness is excluded from gross
income. If a partnership has income
from discharge of indebtedness,
§ 1.1017(g) permits its partners to
request that the partnership reduce the
basis of partnership depreciable
property with respect to the partners.
Section 1.1017–1(g)(2)(iii)(A) requires a
partnership that consents to this basis
reduction to prepare a statement
describing, among other things, the
amount of the reduction. Section
1.1017–1(g)(2)(iii)(B) requires the
affected partners to attach a copy of that
statement to their income tax returns.
Requiring partners to attach the
partnership consent statement impedes
the electronic filing of their income tax
returns because the partnership
statement cannot yet be incorporated
into all electronic returns. To remedy
this impediment, these regulations
eliminate the obligation to attach the
partnership consent statement and
provide, instead, that taxpayers must

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retain the consent statement in their
records.
5. Form 1120: U.S. Corporation Income
Tax Return
Section 1503 prescribes certain rules
for computing tax for corporations filing
consolidated returns. Section 1.1503–
2(g) permits dual consolidated losses of
dual resident corporations to offset the
income of domestic affiliates under
specified circumstances, including entry
into an agreement described in
§ 1.1503–2(g)(2)(i). The corporation
entering into the agreement must attach
the agreement to its timely filed U.S.
income tax return for the taxable year in
which the loss is incurred. The
agreement must be signed under
penalties of perjury by the person who
signs the income tax return. Section
1.1503–2(g)(2)(iv)(B)(3)(iii) also requires
a successor corporation to file an
agreement described in § 1.1503–
2(g)(2)(i) to prevent recapture of the
dual consolidated loss in certain
circumstances. The new agreement must
be signed under penalties of perjury by
the person who signs the income tax
return. Section 1.1503–2(g)(2)(vi)(B)
requires corporations to file annual
certifications with respect to dual
consolidated losses. The annual
certification must be signed under
penalties of perjury by the person who
signs the corporation’s income tax
return. The signature requirements in
§ 1.1503–2(g)(2)(i), (g)(2)(iv)(B)(3)(iii),
and (g)(2)(vi)(B) impede electronic filing
of the corporation’s income tax return
because neither the agreement nor the
annual certification can be signed
electronically. These regulations
eliminate the obligations under
§ 1.1503–2(g)(2)(i) and (iv)(B)(3)(iii) to
attach a signed agreement and provide,
instead, that an unsigned copy of the
agreement may be submitted with the
corporation’s income tax return if the
corporation retains the signed original
in its records. These regulations also
eliminate the obligation under § 1.1503–
2(g)(2) (vi)(B) to sign the annual
certification and provide, instead, that
the annual certification is verified by
signing the income tax return with
which the certification is filed.
Section 170 addresses the tax
deductibility of charitable contributions
and gifts. Section 1.170A–11(b)(1)
provides that, under certain conditions,
corporations may treat a charitable
contribution as paid during a taxable
year even if the contribution occurs in
the following taxable year. A
corporation claiming a charitable
deduction for a taxable year under this
provision must attach a copy of the
resolution of the board of directors

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authorizing the contribution to its return
for the year. In addition, the corporation
must attach a declaration, signed under
penalties of perjury, that the resolution
was adopted during the taxable year.
See § 1.170A–11(b)(2). Requiring
taxpayers to attach a signed declaration
impedes electronic filing of Form 1120
because the declaration cannot be
signed electronically. The regulations
eliminate the requirement of a signed
declaration and provide, instead, that
the declaration is verified by signing the
return. The regulations also slightly
expand the content of the declaration by
requiring that it state the date on which
the board of directors authorized the
contribution. Requiring taxpayers to
attach a copy of the resolution
authorizing the contribution may also
impede electronic filing of Form 1120
because including the resolution
increases the size of the electronic
return file in a potentially burdensome
manner. The regulations eliminate this
requirement and provide, instead, that
the resolution must be retained in the
taxpayer’s records.
Section 1.1502–21(b)(3)(i) provides
that a consolidated group of
corporations may elect to relinquish
carryback treatment with respect to a
consolidated net operating loss for any
consolidated return year. The
consolidated group elects this treatment
by attaching a statement to the group’s
income tax return for the relevant year.
The regulations require the statement to
be signed by the common parent. This
signature requirement impedes
electronic filing of Form 1120 because
the statement cannot be signed
electronically. These regulations
eliminate the signature requirement and
permit the election to be made in an
unsigned statement.
Section 1.1502–21(b)(3)(ii)(B)
provides that a group of corporations
acquiring a new member may elect to
relinquish part of the carryback period
with respect to certain net operating
losses of the new member. The election
is made in a statement attached to the
group’s income tax return. The
statement must be signed by the
common parent, the new member, and
any other corporation joining the group
with the new member. This signature
requirement impedes electronic filing of
Form 1120 because third-party
signatures cannot be incorporated into
an electronic return. These regulations
eliminate the signature requirement and
permit the election to be made in an
unsigned statement.

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70703

6. Form 1120S: U.S. Income Tax Return
for an S Corporation
Section 1377 provides that under
certain circumstances an S Corporation
may elect to treat a taxable year as if it
consisted of two separate taxable years.
Section 1.1377–1(b)(5) provides that an
S Corporation elects this treatment by
attaching a signed statement to its
income tax return. This signature
requirement impedes electronic filing of
Form 1120S because the statement
described in § 1.1377–1(b)(5) cannot be
signed electronically. These regulations
eliminate the signature requirement and
permit the election to be made in an
unsigned statement that is verified by
signing the return.
Section 1.1368–1(g)(2)(i) provides a
similar election for purposes of
determining the treatment of
distributions by an S Corporation in the
event of certain ownership changes.
Section 1.1368–1(g)(2)(iii) provides that
an S Corporation makes this election by
attaching a statement, signed by an
officer of the corporation, to its income
tax return for the relevant taxable year.
This signature requirement impedes
electronic filing of Form 1120S because
the statement described in § 1.1368–
1(g)(2)(iii) cannot be signed
electronically. These regulations
eliminate the signature requirement and
permit the election to be made in an
unsigned statement that is verified by
signing the return.
Section 1.1368–1(f) allows an S
corporation to make certain elections
relating to the source of its distributions.
Section 1.1368–1(f)(5)(iii) provides that
an S corporation makes these elections
by attaching a statement containing
specified information to its income tax
return. An officer of the corporation
must sign the statement under penalties
of perjury. This signature requirement
impedes electronic filing of Form 1120S
because the statement described in
§ 1.1368–1(f)(5)(iii) cannot be signed
electronically. These regulations
eliminate the signature requirement and
permit the election to be made in an
unsigned statement that is verified by
signing the return.
7. Form 1122: Authorization and
Consent of Subsidiary Corporation To
Be Included in a Consolidated Income
Tax Return
Section 1.1502–75(h)(2) provides that,
when an affiliated group of corporations
files a consolidated return for the first
time, each subsidiary must consent to
the filing by signing Form 1122 and the
signed consent forms must be attached
to the consolidated return. Requiring the
group to file signed consent forms

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impedes electronic filing of
consolidated returns because Form 1122
cannot yet be signed electronically.
These regulations retain the requirement
that each subsidiary consent to filing a
consolidated return but eliminate the
impediment to electronic filing by
permitting the group to submit unsigned
copies of the consents with its return if
it retains the signed originals in its
records.
8. Form 5471: Information Return of
U.S. Persons With Respect to Certain
Foreign Corporations
Section 1.556–2(e)(2) provides that
certain U.S. shareholders of a foreign
personal holding company must attach
a number of items to their income tax
returns relating to property the company
owns or operates. In particular, § 1.556–
2(e)(2)(vii) requires certain shareholders
to attach a copy of the contract, lease or
rental agreement covering the property.
A shareholder attaches these items to
Form 5471, and in turn attaches that
form to its return. Requiring
shareholders to attach a copy of these
documents to an income tax return
impedes electronic filing because the
documents cannot yet be incorporated
into all electronic returns. These
regulations eliminate this requirement
and provide, instead, that a copy of the
contract, lease or rental agreement must
be retained in the shareholder’s records.
9. Form 5712–A: Election and
Verification of the Cost Sharing or Profit
Split Method Under Section 936(h)(5)
Section 1.936–7(a), Q&A 1 provides
that a possessions corporation makes
the election under section 936(h)(5) to
use the cost sharing or profit split
method by filing a signed Form 5712–
A that includes a declaration that all
affiliated group members have
consented to the election. The electing
corporation attaches the Form 5712–A
to Form 5735, ‘‘Possessions Corporation
Tax Credit,’’ which in turn must be
attached to the corporation’s income tax
return. Requiring taxpayers to sign Form
5712–A impedes electronic filing of
corporate income tax returns because
Form 5712–A cannot yet be signed
electronically. These regulations
eliminate the signature requirement and
permit the election to be made using an
unsigned Form 5712–A that is verified
by signing the return.
10. Form 8832: Entity Classification
Election
An eligible business entity may file
Form 8832 to specify the way in which
it is to be classified for federal tax
purposes. The form must be signed
under penalties of perjury. Section

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301.7701–3(c)(1)(ii) provides that in
certain circumstances the entity must
attach a copy of Form 8832 to its tax or
information returns. The requirement to
attach a copy of Form 8832 impedes
electronic filing of tax and information
returns because a copy of the signed
form cannot yet be incorporated into all
electronic returns. These regulations
provide that the requirement to attach a
copy of Form 8832 to a return may be
satisfied with an unsigned copy.

It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
also has been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations. For the
applicability of the Regulatory
Flexibility Act (5 U.S.C. chapter 6), refer
to the Special Analyses section of the
preamble to the cross-reference notice of
proposed rulemaking published in the
Proposed Rules section in this issue of
the Federal Register. Pursuant to
section 7805(f) of the Code, these
temporary and final regulations will be
submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on their
impact on small business.
Drafting Information
The principal author of these
regulations is Nathan Rosen, Office of
Associate Chief Counsel (Procedure and
Administration), Administrative
Provisions and Judicial Practice
Division.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
26 CFR Part 602
Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1, 301 and
602 are amended as follows:

■

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Paragraph 1. The authority citation for
part 1 continues to read in part as
follows:

■

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.170A–11 is amended
by revising paragraph (b)(2) to read as
follows:

■

§ 1.170A–11 Limitation on, and carryover
of, contributions by corporations.

*

Special Analyses

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*
*
*
*
(b) * * *
(2) [Reserved]. For further guidance
see § 1.170A–11T(b)(2).
*
*
*
*
*
■ Par. 3. Section 1.170A–11T is added to
read as follows:
§ 1.170A–11T Limitation on, and carryover
of, contributions by corporations
(temporary).

(a) [Reserved]. For further guidance,
see § 1.170A–11(a).
(b) Election by corporations on an
accrual method—(1) [Reserved]. For
further guidance, see § 1.170A–11(b)(1).
(2) The election must be made at the
time the return for the taxable year is
filed, by reporting the contribution on
the return. There shall be attached to the
return when filed a written declaration
stating that the resolution authorizing
the contribution was adopted by the
board of directors during the taxable
year. For taxable years beginning before
January 1, 2003, the declaration shall be
verified by a statement signed by an
officer authorized to sign the return that
it is made under penalties of perjury,
and there shall also be attached to the
return when filed a copy of the
resolution of the board of directors
authorizing the contribution. For taxable
years beginning after December 31,
2002, the declaration must also include
the date of the resolution, the
declaration shall be verified by signing
the return, and a copy of the resolution
of the board of directors authorizing the
contribution is a record that the
taxpayer must retain and keep available
for inspection in the manner required by
§ 1.6001–1(e).
(c) through (d) [Reserved]. For further
guidance, see § 1.170A–11(c) through
(d).
Par. 4. Section 1.556–2 is amended by
revising paragraph (e)(2)(vii) and adding
paragraph (e)(3) to read as follows:

■

§ 1.556–2

*

Adjustments to taxable income.

*
*
(e) * * *
(2) * * *

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(vii) [Reserved]. For further guidance,
see § 1.556–2T(e)(2)(vii) and (3).
*
*
*
*
*
(3) [Reserved]. For further guidance,
see § 1.556–2T(e)(3).
*
*
*
*
*
■ Par. 5. Section 1.556–2T is added to
read as follows:
§ 1.556–2T Adjustments to taxable income
(temporary).

(a) through (e)(2)(vi) [Reserved]. For
further guidance, see § 1.556–2(a)
through (e)(2)(vi).
(e)(2)(vii) In the case of a return for a
taxable year beginning before January 1,
2003, a copy of the contract, lease, or
rental agreement;
(e)(2)(viii) through (xi) [Reserved]. For
further guidance see § 1.556–2(e)(2)(viii)
through (xi).
(3) If the statement described in
§ 1.556–2(e)(2) is attached to a
taxpayer’s income tax return for a
taxable year beginning after December
31, 2002, a copy of the applicable
contract, lease or rental agreement is not
required to be submitted with the
return, but must be retained by the
taxpayer and kept available for
inspection in the manner required by
§ 1.6001–1(e).
(f) [Reserved]. For further guidance,
see § 1.556–2(f).
■ Par. 6. Section 1.565–1 is amended by
revising paragraph (b)(3) to read as
follows:
§ 1.565–1

*
*
*
*
(b) * * *
(3) [Reserved]. For further guidance,
see § 1.565–1T(b)(3).
*
*
*
*
*
■ Par. 7. Section 1.565–1T is added to
read as follows:
General rule (temporary).

(a) through (b)(2) [Reserved]. For
further guidance, see § 1.565–1(a)
through (b)(2).
(b)(3) A consent may be filed at any
time not later than the due date of the
corporation’s income tax return for the
taxable year for which the dividends
paid deduction is claimed. With such
return, and not later than the due date
thereof, the corporation must file Forms
972 for each consenting shareholder,
and a return on Form 973 showing by
classes the stock outstanding on the first
and last days of the taxable year, the
dividend rights of such stock,
distributions made during the taxable
year to shareholders, and giving all the
other information required by the form.
For taxable years beginning before
January 1, 2003, the Form 973 filed with

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§ 1.936–7 Manner of making election under
section 936(h)(5); special election for export
sales; revocation of election under section
936(a).

*

General rule.

*

§ 1.565–1T

the corporation’s income tax return
shall contain or be verified by a written
declaration that is made under the
penalties of perjury and the Forms 972
filed with the return must be duly
executed by the consenting
shareholders. For taxable years
beginning after December 31, 2002, the
Form 973 filed with the corporation’s
income tax return shall be verified by
signing the return and the Forms 972
filed with the return must be duly
executed by the consenting shareholders
or, if unsigned, must contain the same
information as the duly executed
originals. If the corporation submits
unsigned Forms 972 with its return for
a taxable year beginning after December
31, 2002, the duly executed originals are
records that the corporation must retain
and keep available for inspection in the
manner required by § 1.6001–1(e).
(c) [Reserved]. For further guidance,
see § 1.565–1(c).
■ Par. 8. Section 1.936–7 is amended by:
■ 1. Designating the undesignated
introductory text as paragraph (a).
■ 2. Redesignating paragraphs (a)
through (c) as paragraphs (b) through (d),
respectively.
■ 3. Revising newly designated
paragraph (b), Q. & A.1.
■ The revision reads as follows:

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*
*
*
*
(b) * * *
Q. 1. [Reserved]. For further guidance,
see § 1.936–7T(b) Q. 1.
A. 1. [Reserved]. For further guidance,
see § 1.936–7T(b) A. 1.
*
*
*
*
*
■ Par. 9. Section 1.936–7T is added to
read as follows:
§ 1.936–7T Manner of making election
under section 936(h)(5); special election for
export sales; revocation of election under
section 936(a) (temporary).

(a) [Reserved]. For further guidance,
see § 1.936–7 (a).
(b) Manner of making election.
Q. 1: How does a possessions
corporation make an election to use the
cost sharing method or profit split
method?
A.1: A possessions corporation makes
an election to use the cost sharing or
profit split method by filing Form 5712–
A (‘‘Election and Verification of the Cost
Sharing or Profit Split Method Under
Section 936(h)(5)’’) and attaching it to
its tax return. Form 5712–A must be
filed on or before the due date
(including extensions) of the tax return
of the possessions corporation for its

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first taxable year beginning after
December 31, 1982. The electing
corporation must set forth on the form
the name and the taxpayer identification
number or address of all members of the
affiliated group (including foreign
affiliates not required to file a U.S. tax
return). All members of the affiliated
group must consent to the election. For
elections filed with respect to taxable
years beginning before January 1, 2003,
an authorized officer of the electing
corporation must sign the statement of
election and must declare that he has
received a signed statement of consent
from an authorized officer, director, or
other appropriate official of each
member of the affiliated group.
Elections filed for taxable years
beginning after December 31, 2002, will
incorporate a declaration by the electing
corporation that it has received a signed
consent from an authorized officer,
director, or other appropriate official of
each member of the affiliated group and
will be verified by signing the return.
The election is not valid for a taxable
year unless all affiliates consent. A
failure to obtain an affiliate’s written
consent will not invalidate the election
out if the possessions corporation made
a good faith effort to obtain all the
necessary consents or the failure to
obtain the missing consent was
inadvertent. Subsequently created or
acquired affiliates are bound by the
election. If an election out is revoked
under section 936(h)(5)(F)(iii), a new
election out with respect to that product
area cannot be made without the
consent of the Commissioner. The
possessions corporation shall file an
amended Form 5712–A with its timely
filed income tax return to reflect any
changes in the names or number of the
members of the affiliated group for any
taxable year after the first taxable year
to which the election out applies. By
consenting to the election out, all
affiliates agree to provide information
necessary to compute the cost sharing
payment under the cost sharing method
or combined taxable income under the
profit split method, and failure to
provide such information shall be
treated as a request to revoke the
election out under section
936(h)(5)(F)(iii).
Q. & A. 2 through 8 [Reserved]. For
further guidance, see § 1.936–7(b), Q. &
A. 2 through 8.
(c) and (d) [Reserved]. For further
guidance, see § 1.936–7(c) and (d).
Par. 10. Section 1.1017–1 is amended
by revising paragraph (g)(2)(iii)(B) to
read as follows:

■

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§ 1.1017–1 Basis reductions following a
discharge of indebtedness.

*

*
*
*
*
(g) * * *
(2) * * *
(iii) * * *
(B) [Reserved] For further guidance,
see § 1.1017–1T(g)(2)(iii)(B).
*
*
*
*
*
■ Par. 11. Section 1.1017–1T is amended
by revising paragraphs (c) through (i) to
read as follows:
§ 1.1017–1T Basis reductions following a
discharge of indebtedness (temporary).

*

*
*
*
*
(c) through (g)(2)(iii)(A) [Reserved].
For further guidance, see § 1.1017–1(c)
through (g)(2)(iii)(A).
(g)(2)(iii)(B) Taxpayer’s requirement.
For taxable years beginning before
January 1, 2003, statements described in
§ 1.1017–1(g)(2)(iii)(A) must be attached
to a taxpayer’s timely filed (including
extensions) Federal income tax return
for the taxable year in which the
taxpayer has COD income that is
excluded from gross income under
section 108(a). For taxable years
beginning after December 31, 2002,
taxpayers must retain the statements
and keep them available for inspection
in the manner required by § 1.6001–1(e),
but are not required to attach the
statements to their returns.
(g)(2)(iv) through (i) [Reserved]. For
further guidance, see § 1.1017–
1(g)(2)(iv) through (i).
■ Par. 12. Section 1.1368–1 is amended
by revising paragraphs (f)(5)(iii) and
(g)(2)(iii) to read as follows:
§ 1.1368–1 Distributions by S
corporations.

*

*
*
*
*
(f) * * *
(5) * * *
(iii) [Reserved]. For further guidance,
see § 1.1368–1T(f)(5)(iii).
*
*
*
*
*
(g) * * *
(2) * * *
(iii) [Reserved]. For further guidance,
see § 1.1368–1T(g)(2)(iii).
*
*
*
*
*
■ Par. 13. Section 1.1368–1T is added to
read as follows:
§ 1.1368–1T Distributions by S
corporations (temporary).

(a) through (f)(5)(ii) [Reserved]. For
further guidance, see § 1.1368–1(a)
through (f)(5)(ii).
(f)(5)(iii) Corporate statement
regarding elections. A corporation
makes an election for a taxable year
under § 1.1368–1(f) by attaching a
statement to a timely filed original or

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amended return required to be filed
under section 6037 for that taxable year.
In the statement, the corporation must
identify the election it is making under
§ 1.1368–1(f) and must state that each
shareholder consents to the election. In
the case of elections for taxable years
beginning before January 1, 2003, an
officer of the corporation must sign
under penalties of perjury the statement
on behalf of the corporation. In the case
of elections for taxable years beginning
after December 31, 2002, the statement
described in this paragraph (f)(5)(iii)
shall be verified by signing the return.
A statement of election to make a
deemed dividend under § 1.1368–1(f)
must include the amount of the deemed
dividend that is distributed to each
shareholder.
(f)(5)(iv) through (g)(2)(ii) [Reserved].
For further guidance, see § 1.1368–
1(f)(5)(iv) through (g)(2)(ii).
(g)(2)(iii) Time and manner of making
election. A corporation makes an
election under § 1.1368–1(g)(2)(i) for a
taxable year by attaching a statement to
a timely filed original or amended
return required to be filed under section
6037 for a taxable year (without regard
to the election under § 1.1368–
1(g)(2)(i)). In the statement, the
corporation must state that it is electing
for the taxable year under § 1.1368–
1(g)(2)(i) to treat the taxable year as if it
consisted of separate taxable years. The
corporation also must set forth facts in
the statement relating to the qualifying
disposition (e.g., sale, gift, stock
issuance, or redemption), and state that
each shareholder who held stock in the
corporation during the taxable year
(without regard to the election under
§ 1.1368–1(g)(2)(i)) consents to this
election. For purposes of this election,
a shareholder of the corporation for the
taxable year is a shareholder as
described in section 1362(a)(2). A single
election statement may be filed for all
elections made under § 1.1368–1(g)(2)(i)
for the taxable year. An election made
under § 1.1368–1(g)(2)(i) of this section
is irrevocable. In the case of elections
for taxable years beginning before
January 1, 2003, the statement through
which a corporation makes an election
under § 1.1368–1(g)(2)(i) must be signed
by an officer of the corporation under
penalties of perjury. In the case of
elections for taxable years beginning
after December 31, 2002, the statement
described in the preceding sentence
shall be verified by signing the return.
(g)(2)(iv) [Reserved]. For further
guidance, see § 1.1368–1(g)(2)(iv).
■ Par. 14. Section 1.1377–1 is amended
by revising paragraph (b)(5)(i)(C) to read
as follows:

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§ 1.1377–1

Pro rata share.

*

*
*
*
*
(b) * * *
(5) * * *
(i) * * *
(C) [Reserved]. For further guidance,
see § 1.1377–1T(b)(5)(i)(C).
*
*
*
*
*
■ Par. 15. Section 1.1377–1T is added to
read as follows:
§ 1.1377–1T

Pro rata share (temporary).

(a) through (b)(5)(i)(B) [Reserved]. For
further guidance, see § 1.1377–1(a)
through (b)(5)(i)(B).
(b)(5)(i)(C) The signature on behalf of
the S corporation of an authorized
officer of the corporation under
penalties of perjury, except that for
taxable years beginning after December
31, 2002, the election statement
described in § 1.1377–1(b)(5)(i) shall be
verified, and the requirement of this
paragraph (b)(5)(i)(C) is satisfied, by the
signature on the Form 1120S filed by
the S corporation.
(b)(5)(i)(D) through (c) [Reserved]. For
further guidance, see § 1.1377–1
(b)(5)(i)(D) through (c).
■ Par. 16. Section 1.1502–21 is amended
by revising paragraphs (b)(2)(iii), (b)(3)(i)
and (b)(3)(ii)(B) to read as follows:
§ 1.1502–21

Net operating losses.

*

*
*
*
*
(b) * * *
(2) * * *
(iii) [Reserved]. For further guidance,
see § 1.1502–21T(b)(2)(iii).
*
*
*
*
*
(3) * * * (i) [Reserved]. For further
guidance, see § 1.1502–21T(b)(3)(i).
(ii) * * * (A) * * *
(b)(3)(ii)(B) [Reserved]. For further
guidance, see § 1.1502–21T(b)(3)(ii)(B).
*
*
*
*
*
■ Par. 17. Section 1.1502–21T is
amended by revising paragraphs
(b)(2)(iii) and (b)(3) through (b)(3)(ii)(B)
to read as follows:
§ 1.1502–21T
(temporary).

*

Net operating losses

*
*
*
*
(b)(2)(iii) [Reserved]. For further
guidance, see § 1.1502–21(b)(2)(iii).
*
*
*
*
*
(b)(3) Special rules—(i) Election to
relinquish carryback. A group may make
an irrevocable election under section
172(b)(3) to relinquish the entire
carryback period with respect to a
CNOL for any consolidated return year.
Except as provided in paragraph
(b)(3)(ii)(B) of this section, the election
may not be made separately for any
member (whether or not it remains a
member), and must be made in a

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separate statement entitled ‘‘THIS IS AN
ELECTION UNDER § 1.1502–21(b)(3)(i)
TO WAIVE THE ENTIRE CARRYBACK
PERIOD PURSUANT TO SECTION
172(b)(3) FOR THE [insert consolidated
return year] CNOLs OF THE
CONSOLIDATED GROUP OF WHICH
[insert name and employer
identification number of common
parent] IS THE COMMON PARENT’’.
The statement must be filed with the
group’s income tax return for the
consolidated return year in which the
loss arises. If the consolidated return
year in which the loss arises begins
before January 1, 2003, the statement
making the election must be signed by
the common parent. If the consolidated
return year in which the loss arises
begins after December 31, 2002, the
election may be made in an unsigned
statement.
(b)(3)(ii) through (b)(3)(ii)(A)
[Reserved]. For further guidance, see
§ 1.1502–21 (b)(3)(ii) through
(b)(3)(ii)(A).
(B) Acquisition of member from
another consolidated group. If one or
more members of a consolidated group
becomes a member of another
consolidated group, the acquiring group
may make an irrevocable election to
relinquish, with respect to all
consolidated net operating losses
attributable to the member, the portion
of the carryback period for which the
corporation was a member of another
group, provided that any other
corporation joining the acquiring group
that was affiliated with the member
immediately before it joined the
acquiring group is also included in the
waiver. This election is not a yearly
election and applies to all losses that
would otherwise be subject to a
carryback to a former group under
section 172. The election must be made
in a separate statement entitled ‘‘THIS
IS AN ELECTION UNDER § 1.1502–
21(b)(3)(ii)(B)(2) TO WAIVE THE PRE[insert first taxable year for which the
member (or members) was not a member
of another group] CARRYBACK PERIOD
FOR THE CNOLs attributable to [insert
names and employer identification
number of members].’’ The statement
must be filed with the acquiring
consolidated group’s original income
tax return for the year the corporation
(or corporations) became a member. If
the year in which the corporation (or
corporations) became a member begins
before January 1, 2003, the statement
must be signed by the common parent
and each of the members to which it
applies. If the year in which the
corporation (or corporations) became a
member begins after December 31, 2002,

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the election may be made in an
unsigned statement.
*
*
*
*
*
■ Par. 18. Section 1.1502–75 is amended
by revising paragraph (h)(2) to read as
follows:
§ 1.1502–75

Filing of consolidated returns.

*

*
*
*
*
(h) * * *
(2) [Reserved]. For further guidance,
see § 1.1502–75T(h)(2).
*
*
*
*
*
■ Par. 19. Section 1.1502–75T is added
to read as follows:
§ 1.1502–75T Filing of consolidated
returns (temporary).

(a) through (h)(1) [Reserved]. For
further guidance, see § 1.1502–75(a)
through (h)(1).
(2) Filing of Form 1122 for first year.
If, under the provisions of § 1.1502–75
(a)(1) , a group wishes to file a
consolidated return for a taxable year,
then a Form 1122 (‘‘Authorization and
Consent of Subsidiary Corporation To
Be Included in a Consolidated Income
Tax Return’’) must be executed by each
subsidiary. For taxable years beginning
before January 1, 2003, the executed
Forms 1122 must be attached to the
consolidated return for the taxable year.
For taxable years beginning after
December 31, 2002, the group must
attach either executed Forms 1122 or
unsigned copies of the completed Forms
1122 to the consolidated return. If the
group submits unsigned Forms 1122
with its return, it must retain the signed
originals in its records in the manner
required by § 1.6001–1(e). Form 1122 is
not required for a taxable year if a
consolidated return was filed (or was
required to be filed) by the group for the
immediately preceding taxable year.
(h)(3) through (k) [Reserved]. For
further guidance, see § 1.1502–75(h)(3)
through (k).
■ Par. 20. Section 1.1503–2 is amended
by revising paragraphs (g)(2)(i),
(g)(2)(iv)(B)(3)(iii) and (g)(2)(vi)(B) to
read as follows:
§ 1.1503–2

Dual consolidated loss.

*

*
*
*
*
(g) * * *
(2) * * *
(i) [Reserved]. For further guidance,
see § 1.1503–2T(g)(2)(i).
*
*
*
*
*
(iv) * * *
(B) * * *
(3) * * *
(iii) [Reserved]. For further guidance,
see § 1.1503–2T(g)(2)(iv)(B)(3)(iii)
*
*
*
*
*
(vi) * * *

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(B) [Reserved]. For further guidance,
see § 1.1503–2T(g)(2)(vi)(B).
*
*
*
*
*
■ Par. 21. Section 1.1503–2T is added to
read as follows:
§ 1.1503–2T Dual consolidated loss
(temporary).

(a) through (g)(1) [Reserved]. For
further guidance, see § 1.1503–2(a)
through (g)(1).
(2) Elective relief provision—(i) In
general. Paragraph (b) of this section
shall not apply to a dual consolidated
loss if the consolidated group,
unaffiliated dual resident corporation,
or unaffiliated domestic owner elects to
be bound by the provisions of § 1.1503–
2(g)(2) and this paragraph (g)(2). In
order to elect relief under § 1.1503–
2(g)(2) and this paragraph (g)(2), the
consolidated group, unaffiliated dual
resident corporation, or unaffiliated
domestic owner must attach to its
timely filed U.S. income tax return for
the taxable year in which the dual
consolidated loss is incurred an
agreement described in paragraph
(g)(2)(i)(A) of this section. The
agreement must be signed under
penalties of perjury by the person who
signs the return. For taxable years
beginning after December 31, 2002, the
agreement attached to the income tax
return of the consolidated group,
unaffiliated dual resident corporation or
unaffiliated domestic owner pursuant to
the preceding sentence may be an
unsigned copy. If an unsigned copy is
attached to the return, the consolidated
group, unaffiliated dual resident
corporation, or unaffiliated domestic
owner must retain the original in its
records in the manner specified by
§ 1.6001–1(e). The agreement must
include the following items, in
paragraphs labeled to correspond with
the items set forth in paragraphs
(g)(2)(i)(A) through (F) of this section:
(A) A statement that the document
submitted is an election and an
agreement under the provisions of
§ 1.1503–2(g)(2) of the Income Tax
Regulations.
(B) The name, address, identifying
number, and place and date of
incorporation of the dual resident
corporation, and the country or
countries that tax the dual resident
corporation on its worldwide income or
on a residence basis, or, in the case of
a separate unit, identification of the
separate unit, including the name under
which it conducts business, its principal
activity, and the country in which its
principal place of business is located.
(C) An agreement by the consolidated
group, unaffiliated dual resident

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corporation, or unaffiliated domestic
owner to comply with all of the
provisions of paragraphs (g)(2)(iii)
through (vii) of § 1.1503–2 and this
section.
(D) A statement of the amount of the
dual consolidated loss covered by the
agreement.
(E) A certification that no portion of
the dual resident corporation’s or
separate unit’s losses, expenses, or
deductions taken into account in
computing the dual consolidated loss
has been, or will be, used to offset the
income of any other person under the
income tax laws of a foreign country.
(F) A certification that arrangements
have been made to ensure that no
portion of the dual consolidated loss
will be used to offset the income of
another person under the laws of a
foreign country and that the
consolidated group, unaffiliated dual
resident corporation, or unaffiliated
domestic owner will be informed of any
such foreign use of any portion of the
dual consolidated loss.
(g)(2)(ii) through (iv)(B)(3)(ii)
[Reserved] For further guidance, see
§ 1.1503–2(g)(2)(ii) through (iv)(B)(3)(ii).
(g)(2)(iv)(B)(3)(iii) The unaffiliated
domestic corporation or new
consolidated group must file, with its
timely filed income tax return for the
taxable year in which the event
described in § 1.1503–2(g)(2)(iv)(B)(1) or
(2) occurs, an agreement described in
paragraph (g)(2)(i) of this section (new
(g)(2)(i) agreement), whereby it assumes
the same obligations with respect to the
dual consolidated loss as the
corporation or consolidated group that
filed the original (g)(2)(i) agreement
with respect to that loss. The new
(g)(2)(i) agreement must be signed under
penalties of perjury by the person who
signs the return and must include a
reference to § 1.1503–2(g)(2)(iv)(B)(3)(iii)
or this paragraph (g)(2)(iv)(B)(3)(iii). For
taxable years beginning after December
31, 2002, the agreement attached to the
return pursuant to the preceding
sentence may be an unsigned copy. If an
unsigned copy is attached to the return,
the corporation or consolidated group
must retain the original in its records in
the manner specified by § 1.6001–1(e).
(g)(2)(iv)(C) through (vi)(A)
[Reserved]. For further guidance, see
§ 1.1503–2(g)(2)(iv)(C) through (vi)(A).
(B) Annual certification. Except as
provided in § 1.1503–2(g)(2)(vi)(C), until
and unless Form 1120 or the Schedules
thereto contain questions pertaining to
dual consolidated losses, the
consolidated group, unaffiliated dual
resident corporation, or unaffiliated
domestic owner must file with its
income tax return for each of the 15

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taxable years following the taxable year
in which the dual consolidated loss is
incurred a certification that the losses,
expenses, or deductions that make up
the dual consolidated loss have not been
used to offset the income of another
person under the tax laws of a foreign
country. For taxable years beginning
before January 1, 2003, the annual
certification must be signed under
penalties of perjury by a person
authorized to sign the agreement
described in paragraph (g)(2)(i) of this
section. For taxable years beginning
after December 31, 2002, the
certification is verified by signing the
return with which the certification is
filed. The certification for a taxable year
must identify the dual consolidated loss
to which it pertains by setting forth the
taxpayer’s year in which the loss was
incurred and the amount of such loss.
In addition, the certification must
warrant that arrangements have been
made to ensure that the loss will not be
used to offset the income of another
person under the laws of a foreign
country and that the taxpayer will be
informed of any such foreign use of any
portion of the loss. If dual consolidated
losses of more than one taxable year are
subject to the rules of this paragraph
(g)(2)(vi)(B), the certifications for those
years may be combined in a single
document but each dual consolidated
loss must be separately identified.
(g)(2)(vii) through (h) [Reserved]. For
further guidance, see § 1.1503–
2(g)(2)(vi) through (h).
■ Par. 22. Section 1.6038B–1 is amended
by revising paragraphs (b)(1)(i) and
(b)(1)(ii) to read as follows:
§ 1.6038B–1 Reporting of certain transfers
to foreign corporations.

*

*
*
*
*
(b)(1)(i) and (ii) [Reserved]. For
further guidance, see § 1.6038B–
1T(b)(1)(i) and (ii).
*
*
*
*
*
■ Par. 23. Section 1.6038B–1T is
amended by revising paragraphs (a)
through (b)(3) to read as follows:
§ 1.6038B–1T Reporting of certain
transactions to foreign corporations
(temporary).

(a) [Reserved]. For further guidance,
see § 1.6038B–1(a).
(b) Time and manner of reporting—(1)
Ingeneral—(i) Reporting procedure.
Except for stock or securities qualifying
under the special reporting rule of
§ 1.6038B–1(b)(2) , and certain
exchanges described in section 354
(listed below), any U.S. person that
makes a transfer described in section
6038B(a)(1)(A), 367(d) or (e), is required
to report pursuant to section 6038B and

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the rules of § 1.6038B–1 and this section
and must attach the required
information to Form 926, ‘‘Return by
Transferor of Property to a Foreign
Corporation.’’ For special rules
regarding cash transfers made in tax
years beginning after February 5, 1999,
see § 1.6038B–1(b)(3) and (g) . For
purposes of determining a U.S.
transferor that is subject to section
6038B, the rules of § 1.367(a)–1T(c) and
§ 1.367(a)–3(d) shall apply with respect
to a transfer described in section 367(a),
and the rules of § 1.367(a)–1T(c) shall
apply with respect to a transfer
described in section 367(d).
Additionally, if in an exchange
described in section 354, a U.S. person
exchanges stock of a foreign corporation
in a reorganization described in section
368(a)(1)(E), or a U.S. person exchanges
stock of a domestic or foreign
corporation for stock of a foreign
corporation pursuant to an asset
reorganization described in section
368(a)(1)(C), (D), or (F), that is not
treated as an indirect stock transfer
under section 367(a), then the U.S.
person exchanging stock is not required
to report under section 6038B.
Notwithstanding any statement to the
contrary on Form 926, the form and
attachments must be attached to, and
filed by the due date (including
extensions) of the transferor’s income
tax return for the taxable year that
includes the date of the transfer (as
defined in § 1.6038B–1T(b)(4)). For
taxable years beginning before January
1, 2003, any attachment to Form 926
required under the rules of this section
is filed subject to the transferor’s
declaration under penalties of perjury
on Form 926 that the information
submitted is true, correct and complete
to the best of the transferor’s knowledge
and belief. For taxable years beginning
after December 31, 2002, Form 926 and
any attachments shall be verified by
signing the income tax return with
which the form and attachments are
filed.
(ii) Reporting by corporate transferor.
For transfers by corporations in taxable
years beginning before January 1, 2003,
Form 926 must be signed by an
authorized officer of the corporation if
the transferor is not a member of an
affiliated group under section 1504(a)(1)
that files a consolidated Federal income
tax return and by an authorized officer
of the common parent corporation if the
transferor is a member of such an
affiliated group. For transfers by
corporations in taxable years beginning
after December 31, 2002, Form 926 shall
be verified by signing the income tax
return to which the form is attached.

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Federal Register / Vol. 68, No. 244 / Friday, December 19, 2003 / Rules and Regulations
(b)(2) through (b)(3) [Reserved]. For
further guidance, see § 1.6038B–1(b)(2)
through (b)(3).
*
*
*
*
*
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 24. The authority citation for part
301 continues to read as follows:

■

Authority: 26 U.S.C. 7805.

Par. 25. Section 301.7701–3 is
amended by revising paragraph (c)(1)(ii)
to read as follows:

■

§ 301.7701–3 Classification of certain
business entities.

*

*
*
*
*
(c) * * * (1) * * *
(ii) [Reserved]. For further guidance,
see § 301.7701–3T(c)(1)(ii).
*
*
*
*
*
Par. 26. Section 301.7701–3T is added
to read as follows:

■

§ 301.7701–3T Classification of certain
business entities (temporary).

(a) through (c)(1)(i) [Reserved]. For
further guidance, see § 301.7701–3(a)
through (c)(1)(i).
(ii) Further notification of elections.
An eligible entity required to file a
federal tax or information return for the
taxable year for which an election is
made under § 301.7701–3(c)(1)(i) must
attach a copy of its Form 8832 to its
federal tax or information return for that
year. If the entity is not required to file
a return for that year, a copy of its Form
8832 (‘‘Entity Classification Election’’)
must be attached to the federal income
tax or information return of any direct
or indirect owner of the entity for the
taxable year of the owner that includes
the date on which the election was
effective. An indirect owner of the
entity does not have to attach a copy of
the Form 8832 to its return if an entity
in which it has an interest is already
filing a copy of the Form 8832 with its
return. If an entity, or one of its direct
or indirect owners, fails to attach a copy
of a Form 8832 to its return as directed
in this section, an otherwise valid
election under § 301.7701–3(c)(1)(i) will
not be invalidated, but the non-filing
party may be subject to penalties,
including any applicable penalties if the
federal tax or information returns are
inconsistent with the entity’s election
under § 301.7701–3(c)(1)(i). In the case
of returns for taxable years beginning
after December 31, 2002, the copy of
Form 8832 attached to a return pursuant
to this paragraph (c)(1)(ii) is not
required to be a signed copy.

VerDate jul<14>2003

14:22 Dec 18, 2003

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(c)(1)(iii) through (h) [Reserved]. For
further guidance, see § 301.7701–
3(c)(1)(iii) through (h).

70709

participate in a revocation hearing. This
rule can result in the indefinite
detention of the mentally incompetent
parolee, without any provision for
PART 602—OMB CONTROL NUMBERS bringing the revocation matter to
UNDER THE PAPERWORK
resolution. The interim rule authorizes
REDUCTION ACT
the Commission to conduct a revocation
hearing notwithstanding the parolee’s
■ Par. 27. The authority citation for part
lack of mental competency, so long as
602 continues to read in part as follows: the Commission obtains a current
mental health report, ensures that the
Authority: 26 U.S.C. 7805 * * *
parolee has counsel to present a
■ Par. 28. In § 602.101, paragraph (b) is
defense, and takes the parolee’s mental
amended by adding the following entry
condition into account in its
in numerical order to the table to read as determination.
follows:
DATES: Effective date: January 20, 2004.
§ 602.101 OMB Control numbers.
Comments must be received by
February 17, 2004.
*
*
*
*
*
ADDRESSES: Send comments to Office of
(b) * * *
General Counsel, U.S. Parole
Current
Commission, 5550 Friendship Blvd.,
CFR part or section where
OMB control Chevy Chase, Maryland 20815.
identified and described
No.
FOR FURTHER INFORMATION CONTACT:
Office of General Counsel, U.S. Parole
Commission, 5550 Friendship Blvd.,
*
*
*
*
*
1.170A–11T ..............................
1545–1868 Chevy Chase, Maryland 20815,
telephone (301) 492–5959. Questions
*
*
*
*
*
about this publication are welcome, but
inquiries concerning individual cases
cannot be answered over the telephone.
Robert E. Wenzel,
SUPPLEMENTARY INFORMATION: A recent
Deputy Commission for Services and
Enforcement.
case in the District of Columbia has
illustrated the problems that can arise
Approved: December 2, 2003.
when the Commission finds that a
Gregory Jenner,
parolee who is charged with parole
Deputy Assistant Secretary of the Treasury
violations is not mentally competent to
(Tax Policy).
participate a revocation hearing, and
[FR Doc. 03–31238 Filed 12–18–03; 8:45 am]
successive efforts to hold a revocation
BILLING CODE 4830–01–P
hearing are frustrated by the parolee’s
inability to regain competency. Other
pending revocation cases potentially
DEPARTMENT OF JUSTICE
raise similar difficulties. Under the
Commission’s present regulation, 28
Parole Commission
CFR 2.8, such a parolee must be kept in
prison with a report as to his mental
28 CFR Part 2
competency submitted every six
months. A revocation hearing is
Paroling, Recommitting, and
attempted only when the mental health
Supervising Federal Prisoners:
report indicates that the parolee may be
Prisoners Serving Sentences Under
competent to proceed. The regulation
the United States and District of
can result in indefinite delays in
Columbia Codes
holding the revocation hearing, because
AGENCY: United States Parole
the rule lacks any provision for
Commission, Justice.
resolving the parolee’s situation.
The rule at § 2.8 is grounded, in part,
ACTION: Interim rule with request for
on the policy judgment that the
comments.
Commission cannot responsibly return
SUMMARY: This interim rule is designed
accused parole violators to parole
to provide a fair and expeditious means supervision solely by reason of their
of handling the case of an accused
mental incompetency. This result would
parole violator who is found to be
be incompatible with a primary purpose
mentally incompetent to proceed with a of parole, i.e., to promote the
scheduled parole revocation hearing.
reintegration of criminal offenders into
Under the Commission’s present rule,
society as law-abiding citizens through
such a parolee is sent to the Bureau of
closely supervising their activities in the
Prisons for a mental health examination, community and facilitating their
with a report every six months, until the rehabilitation. Effective supervision can
parolee regains sufficient competence to only be carried out when parolees

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