OMB # 1545-1120
SUPPORTING STATEMENT
(Treasury Decision 8351)
(Treasury Decision 8352)
CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
Section 382(a) of the Internal Revenue Code of 1986 limits the amount of a loss corporation's taxable income that can be used to offset certain loss carryovers for taxable years after an "ownership change." Section 382(g) provides that an ownership change occurs if, immediately after a transaction that results in a shift in ownership of the loss corporation's stock, the percentage of stock owned by one or more 5‑percent shareholders has increased by more than 50 percentage points over the lowest percentage of stock owned by those shareholders during the testing period (generally a 3‑year period). Thus, in order to determine whether an ownership change has occurred, it is necessary that a loss corporation keep records of certain changes in the ownership of its stock and options to acquire its stock and file an information statement describing such changes. See §1.382‑2T(a)(2)(ii).
Under §1.382-2T(a)(2)(ii) of the regulations an information statement should be completed and attached to the federal income tax return for the taxable year in which a loss corporation has an owner shift, equity structure shift, or another transaction described in paragraph (a)(2)(i) of that section. As a result of these regulations (C0-69-87; CO-68-87), corporations without net operating losses, but with capital loss carryovers and/or excess credits are required to file the information statement described in §1.382-2T(a)(2)(ii) of the regulations. These regulations apply the expanded reporting requirement to income tax returns filed after October 10, 1989. The regulations in CO-18-90 modify the regulations so that a corporation is required to provide an information statement as a result of options only if such options are described in §1.382‑4(d)(2).
Under the final regulations, a loss corporation electing to apply the rules of §1.382‑2T(h)(4) to options must so state on the information statement required by §1.382‑2T(a)(ii). The statement is attached to the corporate tax return showing the time and amount of relevant changes in stock ownership in order to more readily verify compliance with the provisions of section 382.
USE OF DATA
The reporting requirements will be used to verify compliance with section 382 of the Code.
USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
IRS Publications, 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
We have attempted to minimize burden on small business.
CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES
The reporting requirements will be used to verify compliance with section 382 of the Code. A less frequent collection will prevent the IRS from insuring compliance.
SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
There are no special circumstances requiring data collection to be inconsistent.
CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS
The notices of proposed rulemaking were published in the Federal Register on September 21, 1989 (CO-69-87 and CO-68-87) and November 5, 1992 (CO-18-90). Comments were received with respect to the notices of proposed rulemaking. A public hearing was held on February 2, 1993 with regard to CO-18-90. All comments were taken into account in the drafting of the final regulations. The final regulations were published in the Federal Register on March 18, 1994(CO-18-90) and June 27, 1991 (CO-69-87 and Co-68-87).
We received no comments during the comment period in response to the Federal Register notice (80 FR 45716), dated July 31, 2015.
EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
No gifts or payments are being provided to respondents.
ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Generally, tax returns and tax return information are confidential as required by 26 USC 6103.
JUSTIFICATION OF SENSITIVE QUESTIONS
No PII is being collected.
ESTIMATED BURDEN OF INFORMATION COLLECTION
Under §1.382-2T(a)(2)(ii) of the regulations an information statement should be completed and attached to the federal income tax return for the taxable year in which a loss corporation has an owner shift, equity structure shift, or another transaction described in paragraph (a)(2)(i) of that section. As a result of these regulations (CO-69-87;CO-68-87) corporations without net operating losses, but with capital loss carryovers and/or excess credits are required to file the information statement described in §1.382-2T(a)(2)(ii) of the regulations.
We estimate that 60,000 corporations will take .3 hours each to prepare the information statement. The reporting burden for this requirement is 18,000 hours. In addition, we estimate that 60,000 corporations will spend about 3 hours each keeping records to comply with the information reporting requirement (180,000 hours), and 15,000 corporations will spend 1.5 hours (22,500 hours) for a total burden of 202,500 hours. The estimated total annual reporting and recordkeeping burden is 220,500 hours (18,000 + 202,500).
Section 1.382‑4(h)(2)(vi) of these regulations (CO-18-90) states that a loss corporation making an election to apply the alternative look‑back rule or to elect treatment under §1.382‑2T(h)(4) is required to file a statement with its federal income tax return. We estimate that 150 corporations will make one of the elections in the final regulations, with a time per respondent for either election of .5 hours, for a total burden of 75 hours. These 75 hours are added to the 220,500 hours to make a total of 220,575 burden hours created by this regulation.
Respondents Hours Per Respondents Total Burden Hours
75,150 2.935 220, 575
ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
There is no estimated total annual cost burden to respondents.
ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
There is no estimated annualized cost to the Federal government.
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
There are no plans for tabulation, statistical analysis and publication.
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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 regulations sunset 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
There are no exceptions to the certification statement.
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 |
| Author | J11FB |
| Last Modified By | Department of Treasury |
| File Modified | 2015-09-28 |
| File Created | 2015-09-28 |