Announcement 2002-34

temporary regulations contains a full
explanation of the 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 economic 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 that have
elected to file consolidated returns, which
tend to be larger businesses, and, moreover, that any burden on taxpayers is
minimal. Therefore, a Regulatory Flexibility Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) 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 business.
Comments and Public Hearing
The IRS and Treasury are undertaking
a study of the various approaches that
could be implemented to give full effect
to section 337(d) and to reflect the single
entity principles of the consolidated
return rules. Among the approaches the
IRS and Treasury are studying is one that
would deny positive investment adjustments for gain recognized and income
attributable to the disposition or consumption of built-in gain assets held by
the subsidiary at the time it joined the
consolidated group. In addition, the IRS
and Treasury are considering allowing
selling groups to deduct subsidiary stock
losses that would otherwise reflect duplicated loss, if the subsidiary reduces its
attributes (including net operating loss
carryovers and asset basis) immediately
prior to the disposition. Comments are
requested concerning any approaches that
may be employed to allow appropriate
losses in a manner that is administrable
for both taxpayers and the government.
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any electronic and writ-

2002-13 I.R.B.

ten comments (a signed original and eight
(8) copies) that are submitted timely to
the IRS. All comments will be available
for public inspection and copying. A public hearing has been scheduled for July
17, 2002, at 10 a.m., in the IRS Auditorium, IRS Building, 1111 Constitution,
NW, Washington, DC. Because of access
restrictions, visitors will not be admitted
beyond the building lobby more than 15
minutes before the hearing starts.
Drafting Information
The principal authors of these regulations are Sean P. Duffley and Lola L.
Johnson, Office of Associate Chief Counsel (Corporate). However, other personnel
from the IRS and Treasury participated in
their development.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602 are
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 * * *
Par. 2. Section 1.337(d)–2 is added to
read as follows:
§ 1.337(d)–2 Loss limitation window
period.
[The text of this proposed section is
the same as the text of § 1.337(d)–2T
published elsewhere in this issue of the
Federal Register].
Par. 3. In § 1.1502–20, paragraph (i) is
added to read as follows:
§ 1.1502–20 Disposition or deconsolidation of subsidiary stock.
[The text of this proposed section is
the same as the text of § 1.1502–20T(i)
published elsewhere in this issue of the
Federal Register].
Par. 4. In § 1.1502–32, paragraph
(b)(4)(v) is added to read as follows:

702

§ 1.1502–32 Investment adjustment.
[The text of this proposed section is
the same as the text of § 1.1502–
32T(b)(4)(v) published elsewhere in this
issue of the Federal Register].
Robert E. Wenzel,
Deputy Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on
March 7, 2002, 3:17 p.m., and published in the issue
of the Federal Register for March 12, 2002, 67 F.R.
11070)

Extension of Time to File
Form(s) 1042– S
Announcement 2002– 34
The IRS has received inquiries regarding the implementation of the new withholding and reporting requirements under
§§ 1.1441 and 1.1461 of the Income Tax
Regulations (T.D. 8734, 1997–2 C.B. 109
and T.D. 8881, 2000–23 I.R.B. 1158).
Specifically, the IRS has recently become
aware that some taxpayers (including, in
particular, small taxpayers) are experiencing difficulty implementing the changes
to the Form 1042–S reporting requirements (which require the filing of information returns to report certain payments
to nonresident aliens). Under the regulations, a withholding agent must file
Form(s) 1042–S with the IRS on or
before March 15 of the calendar year following the year in which the amount subject to reporting was paid. See § 1.1461–
1(c).
The IRS believes that ensuring the
successful implementation of these new
withholding and reporting procedures is
in the best interests of sound tax administration. Accordingly, the IRS is extending
the due date for filing 2001 Forms
1042–S from March 15, 2002, to May 15,
2002.
The principal author of this announcement is Laurie Hatten-Boyd of the Office
of Associate Chief Counsel (International). For further information regarding
this announcement, contact Ms. HattenBoyd at (202) 622–3840 (not a toll-free
call).

April 1, 2002