Td 9329

REV. RUL. 2007–50 TABLE 3
Rates Under Section 382 for August 2007
Adjusted federal long-term rate for the current month
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)

4.50%

REV. RUL. 2007–50 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for August 2007
Appropriate percentage for the 70% present value low-income housing credit

8.21%

Appropriate percentage for the 30% present value low-income housing credit

3.52%

REV. RUL. 2007–50 TABLE 5
Rate Under Section 7520 for August 2007
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest

6.2%

Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of August 2007. See Rev. Rul. 2007-50, page 311.

Section 1502.—Regulations
26 CFR 1.1502–13: Intercompany transactions.

T.D. 9329
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 301, and 602
Guidance Necessary to
Facilitate Business Electronic
Filing and Burden Reduction
AGENCY: Internal Revenue Service
(IRS), Treasury.

clarify, or eliminate reporting burdens and
also eliminate regulatory impediments to
the electronic filing of certain statements
that taxpayers are required to include on or
with their Federal income tax returns. This
document also makes conforming changes
to certain current regulations.
DATES: Effective Date: These regulations
are effective on June 14, 2007.
Applicability Date:
For dates
of applicability, see §§1.302–2(d),
1.302–4(h),
1.331–1(f),
1.332–6(e),
1.338–10(c), 1.351–3(f), 1.355–5(e),
1.368–3(e), 1.381(b)–1(e), 1.382–8(j)(4),
1.382–11(b), 1.1081–11(f), 1.1221–2(j),
1.1502–13(m), 1.1502–31(j), 1.1502–
32(j),
1.1502–33(k),
1.1502–95(g),
1.1563–3(e) and 1.6012–2(k).
FOR
FURTHER
INFORMATION
CONTACT: For all sections except
§1.6012–2, Grid Glyer, (202) 622–7930;
for §1.6012–2, William T. Sullivan (202)
622–7052 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act

ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains final regulations that affect taxpayers filing
Federal income tax returns. They simplify,

2007–32 I.R.B.

The collection of information contained in these final regulations has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of 1995

312

4.50%

(44 U.S.C. 3507(d)) under control number
1545–2019.
The collection of information in
these final regulations is in §§1.302–2,
1.302–4, 1.331–1, 1.332–6, 1.338–10,
1.351–3, 1.355–5, 1.368–3, 1.381(b)–1,
1.382–8, 1.382–11, 1.1081–11, 1.1221–2,
1.1502–13,
1.1502–31,
1.1502–32,
1.1502–33, 1.1502–95, 1.1563–3 and
1.6012–2. This information is required to
enable the IRS to verify that a taxpayer
is reporting the correct amount of the fair
market value of any property (including
stock) received and the basis of any property (including stock) surrendered in the
transaction described in such section.
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 by the Office of Management and
Budget.
Books or records relating to a collection
of information must be retained as long
as their contents might 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
On May 30, 2006, the IRS and Treasury
Department published temporary regulations (T.D. 9264, 2006–1 C.B. 1150) under

August 6, 2007

26 CFR part 1 and 26 CFR part 602. See
71 FR 30591. The IRS and Treasury Department issued a notice of proposed rulemaking (REG–134317–05, 2006–1 C.B.
1184) cross-referencing those temporary
regulations on the same day. See 71 FR
30640.
In general, the regulations simplify,
clarify, or eliminate reporting burdens for
corporations and shareholders for certain
transactions, including distributions, exchanges and reorganizations. They also
eliminate impediments to the electronic
filing of statements that taxpayers, primarily large corporations that are members of
consolidated or controlled groups, are required to include on their Federal income
tax returns.
These regulations were part of a series of regulations published by the IRS
and Treasury Department that are designed
to eliminate impediments to the electronic
filing of forms and statements that taxpayers are required to include on their Federal
income tax returns. See, for example, T.D.
9300, 2007–2 I.R.B. 246 [71 FR 71040],
and T.D. 9243, 2006–1 C.B. 475 [71 FR
4276].
Explanation of Provisions
Except as provided in the following
paragraph, this Treasury decision adopts
the proposed regulations with no substantive changes. In addition, this Treasury
decision removes the corresponding temporary regulations.
This
Treasury
decision
does
not adopt the following proposed
regulations:
§1.1502–35(c)(4)(i),
§1.1502–76(b)(2)(ii)(D) and §1.1563–1
(c)(2)(i) through (iii). These proposed
regulations will be addressed as part of
other guidance projects.
The IRS and Treasury Department received no written or electronic comments
from the public in response to the notice of
proposed rulemaking and no public hearing was requested or held. However, three
questions were raised informally and are
addressed in this preamble.
Sec. 1.302–2
The first question involves a reporting requirement under §1.302–2 (redemptions not taxable as dividends).
Specifically, the question involved proposed §1.302–2(b)(2), which requires

August 6, 2007

all “significant holders” receiving property from a corporation in exchange for
the corporation’s stock (“redemption exchanges”) to include a brief information
statement on their return. The statement
sets forth certain information necessary
to determine the proper treatment of the
redemption exchange. Under proposed
§1.302–2(b)(3)(i), a significant holder is
any stockholder owning 5 percent or more
of the stock of a publicly traded company
and any stockholder owning 1 percent or
more of the stock of a company that is not
publicly traded.
The specific question raised was
whether the statement is necessary in
all redemption exchanges, whether the
exchange is treated as a distribution that
is essentially equivalent to a dividend
or not. Under the proposed regulations,
all redemption exchanges are subject to
this reporting requirement. The IRS and
Treasury Department determined that the
simplified information to be provided in
the statement is necessary for the identification and evaluation of redemptions that
are essentially equivalent to dividends.
Furthermore, the required information is
information that taxpayers should already
have or be prepared to produce. Finally,
as noted in this preamble, the regulations
limit any remaining burden by imposing
the reporting requirement only on significant holders. For all these reasons,
the IRS and Treasury Department have
concluded that the requirement does not
impose an unnecessary or inappropriate
burden on taxpayers. Accordingly, the
final regulations adopt the rule proposed
in §1.302–2(b)(2) and do not limit the
application of the reporting requirement.
Sec. 1.302–4
The second question involves a reporting requirement under §1.302–4 (termination of shareholder’s interest). Specifically, the question involved the statement
in proposed §1.302–4(a) regarding the
waiver of family attribution. Under this
section and section 302(c)(2), a redeeming
shareholder can avoid being treated as receiving a dividend equivalent distribution
by waiving the application of the family attribution rules of section 318(a)(1). Prior
to the promulgation of §1.302–4T(a),
§1.302–4(a)(1) provided that taxpayers
were required to file family attribution

313

waiver agreements and §1.302–4(a)(2)
prescribed conditions under which a taxpayer that had failed to timely file the
agreement could obtain an extension of
time to file from the appropriate district
director. Section 1.302–4T(a) removed
the requirement that an agreement be filed
as well as the instructions regarding late
filing. Instead, that regulation provided
that a statement must be filed and set forth
the information that must be included.
Section 1.302–4T(a) did not include instructions for late filers.
The specific question raised was
whether the change affected taxpayers’
ability to remedy late filing. The IRS and
Treasury Department did not intend any
change to taxpayers’ ability to remedy
late filing. However, the final regulations
do not incorporate instructions for late
filing because the statement required is
a regulatory election and the late filing
of all regulatory elections is addressed
by §301.9100–1. Accordingly, such instructions are not necessary and could
inadvertently imply that the general rules
would not otherwise apply.
Sec. 1.6012–2
Finally, a question was also raised
concerning the reporting requirements
applicable to foreign insurance corporations electing under section 953(d) to be
treated as domestic insurance corporations. Specifically, the question raised
was whether such corporations have a reporting requirement.
Section 1.6012–2(c)(1)(i) requires that
a domestic life insurance company file
with its return a copy of its annual statement which shows the reserves used by
the company in computing the taxable income reported on its return, and a copy of
Schedule A (real estate) and of Schedule
D (bonds and stocks), or any successor
thereto, of such annual statement. Section 1.6012–2(c)(2) similarly requires that
a domestic nonlife insurance company
file with its return a copy of its annual
statement, including the underwriting
and investment exhibit (or any successor
thereto), for the year covered by such
return. Section 953(d) provides that a
foreign insurance company that satisfies
the requirements of section 953(d), including the making of an election under
section 953(d)(1)(D), shall be treated as a

2007–32 I.R.B.

domestic corporation for purposes of the
Internal Revenue Code. Thus, a foreign
insurance company that elects under section 953(d) to be treated as a domestic
corporation generally is required under
§1.6012–2(c)(1) or (2), as appropriate, to
file with its return a copy of its annual
statement. Under §1.6012–2(c)(5), the
term “annual statement” includes a pro
forma annual statement if the insurance
company is not required to file the NAIC
annual statement.
Because the reporting requirements of
electing corporations are addressed in the
current regulations, the IRS and Treasury
Department are not modifying the regulations to address this point further.
Special Analysis
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 has also
been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to §§1.302–2,
1.302–4, 1.331–1, 1.332–6, 1.351–3,
1.355–5, 1.368–3, 1.381(b)–1, 1.1081–11,
1.1563–3, and 1.6012–2. With respect
to the collections of information in such
sections, and with respect to §§1.338–10,
1.382–8, 1.382–11, 1.1221–2, 1.1502–13,
1.1502–31, 1.1502–32, 1.1502–33 and
1.1502–95, it is hereby certified that these
regulations will not have a significant economic impact on a substantial number of
small entities. This certification is based
on the fact that these regulations primarily
affect large corporations (which are members of either controlled or consolidated
groups) and in the case of all corporations
will substantially reduce or eliminate the
existing reporting burden. 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 were 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 Grid Glyer, Office of Associate
Chief Counsel (Corporate). However,

2007–32 I.R.B.

other personnel from the IRS and Treasury
Department participated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by removing the entries
for §§1.302–2T, 1.302–4T, 1.331–1T,
1.332–6T,
1.338–10T,
1.351–3T,
1.355–5T,
1.368–3T,
1.381(b)–1T,
1.382–8T,
1.382–11T,
1.1081–11T,
1.1221–2T, 1.1502–13T, 1.1502–31T,
1.1502–33T, 1.1502–95T, 1.1563–3T and
1.6012–2T to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.302–2 is amended by:
1. Adding headings to paragraphs (a),
(b), (b)(1) and (c).
2. Revising paragraphs (b)(2) and (d).
3. Adding paragraphs (b)(3) and (b)(4).
The additions and revisions read as follows:
§1.302–2 Redemptions not taxable as
dividends.
(a) In general. * * *
(b) Redemption not essentially equivalent to a dividend—(1) In general. * * *
(2) Statement. Unless §1.331–1(d) applies, every significant holder that transfers stock to the issuing corporation in exchange for property from such corporation
must include on or with such holder’s return for the taxable year of such exchange
a statement entitled, “STATEMENT PURSUANT TO §1.302–2(b)(2) BY [INSERT
NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT HOLDER
OF THE STOCK OF [INSERT NAME
AND EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF ISSUING CORPORATION].” If a significant holder is
a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
The statement must include—

314

(i) The fair market value and basis of the
stock transferred by the significant holder
to the issuing corporation; and
(ii) A description of the property received by the significant holder from the
issuing corporation.
(3) Definitions. For purposes of this
section:
(i) Significant holder means any person
that, immediately before the exchange—
(A) Owned at least five percent (by vote
or value) of the total outstanding stock of
the issuing corporation if the stock owned
by such person is publicly traded; or
(B) Owned at least one percent (by vote
or value) of the total outstanding stock of
the issuing corporation if the stock owned
by such person is not publicly traded.
(ii) Publicly traded stock means stock
that is listed on—
(A) A national securities exchange registered under section 6 of the Securities
Exchange Act of 1934 (15 U.S.C. 78f); or
(B) An interdealer quotation system
sponsored by a national securities association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(iii) Issuing corporation means the corporation that issued the shares of stock,
some or all of which were transferred by
a significant holder to such corporation in
the exchange described in paragraph (b)(2)
of this section.
(4) Cross reference. See section 6043
of the Internal Revenue Code for requirements relating to a return by a liquidating
corporation.
(c) Basis adjustments. * * *
(d) Effective/applicability date. Paragraphs (b)(2), (b)(3) and (b)(4) of this section apply to any taxable year beginning
on or after May 30, 2006. However, taxpayers may apply paragraphs (b)(2), (b)(3)
and (b)(4) of this section to any original
Federal income tax return (including any
amended return filed on or before the due
date (including extensions) of such original return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see §1.302–2 as contained
in 26 CFR part 1 in effect on April 1, 2006.
§1.302–2T [Removed]
Par. 3. Section 1.302–2T is removed.
Par. 4. Section 1.302–4 is amended by:
1. Revising paragraphs (a) and (h).

August 6, 2007

2. Adding headings to paragraphs (b),
(c), (d), (e), (f), and (g) introductory text.
The additions and revisions read as follows:
§1.302–4 Termination of shareholder’s
interest.
(a) Statement. The agreement specified
in section 302(c)(2)(A)(iii) shall be in the
form of a statement entitled, “STATEMENT PURSUANT TO SECTION
302(c)(2)(A)(iii) BY [INSERT NAME
AND TAXPAYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER
OR RELATED PERSON, AS THE CASE
MAY BE], A DISTRIBUTEE (OR RELATED PERSON) OF [INSERT NAME
AND EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF DISTRIBUTING CORPORATION].” The distributee
must include such statement on or with
the distributee’s first return for the taxable
year in which the distribution described in
section 302(b)(3) occurs. If the distributee
is a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return. The distributee must represent in the
statement—
(1) THE DISTRIBUTEE (OR RELATED PERSON) HAS NOT ACQUIRED, OTHER THAN BY BEQUEST
OR INHERITANCE, ANY INTEREST
IN THE CORPORATION (AS DESCRIBED IN SECTION 302(c)(2)(A)(i))
SINCE THE DISTRIBUTION; and
(2) THE DISTRIBUTEE (OR RELATED PERSON) WILL NOTIFY THE
INTERNAL REVENUE SERVICE OF
ANY ACQUISITION, OTHER THAN
BY BEQUEST OR INHERITANCE, OF
SUCH AN INTEREST IN THE CORPORATION WITHIN 30 DAYS AFTER
THE ACQUISITION, IF THE ACQUISITION OCCURS WITHIN 10 YEARS
FROM THE DATE OF THE DISTRIBUTION.
(b) Substantiation information. * * *
(c) Stock of parent, subsidiary or successor corporation redeemed. * * *
(d) Redeemed shareholder as creditor.
***
(e) Acquisition of assets pursuant to
creditor’s rights. * * *

August 6, 2007

(f) Constructive ownership rules applicable. * * *
(g) Avoidance of Federal income tax.
***
(h) Effective/applicability date. Paragraph (a) of this section applies to any
taxable year beginning on or after May
30, 2006. However, taxpayers may apply
paragraph (a) of this section to any original
Federal income tax return (including any
amended return filed on or before the due
date (including extensions) of such original return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see §1.302–4 as contained
in 26 CFR part 1 in effect on April 1, 2006.
§1.302–4T [Removed]
Par. 5. Section 1.302–4T is removed.
Par. 6. Section 1.331–1 is amended by:
1. Adding headings to paragraphs (a),
(b), (c) and (e).
2. Revising paragraphs (d) and (f).
The additions and revisions read as follows:
§1.331–1 Corporate liquidations.
(a) In general. * * *
(b) Gain or loss. * * *
(c) Recharacterization. * * *
(d) Reporting requirement—(1) General rule. Every significant holder that
transfers stock to the issuing corporation in
exchange for property from such corporation must include on or with such holder’s
return for the year of such exchange the
statement described in paragraph (d)(2) of
this section unless—
(i) The property is part of a distribution made pursuant to a corporate resolution reciting that the distribution is made
in complete liquidation of the corporation;
and
(ii) The issuing corporation is completely liquidated and dissolved within
one year after the distribution.
(2) Statement. If required by paragraph (d)(1) of this section, a significant holder must include on or with
such holder’s return a statement entitled, “STATEMENT PURSUANT TO
§1.331–1(d) BY [INSERT NAME AND
TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT HOLDER OF THE STOCK
OF [INSERT NAME AND EMPLOYER

315

IDENTIFICATION NUMBER (IF ANY)
OF ISSUING CORPORATION].” If a
significant holder is a controlled foreign
corporation (within the meaning of section 957), each United States shareholder
(within the meaning of section 951(b))
with respect thereto must include this
statement on or with its return. The statement must include—
(i) The fair market value and basis of the
stock transferred by the significant holder
to the issuing corporation; and
(ii) A description of the property received by the significant holder from the
issuing corporation.
(3) Definitions. For purposes of this
section:
(i) Significant holder means any person
that, immediately before the exchange—
(A) Owned at least five percent (by vote
or value) of the total outstanding stock of
the issuing corporation if the stock owned
by such person is publicly traded; or
(B) Owned at least one percent (by vote
or value) of the total outstanding stock of
the issuing corporation if the stock owned
by such person is not publicly traded.
(ii) Publicly traded stock means stock
that is listed on—
(A) A national securities exchange registered under section 6 of the Securities
Exchange Act of 1934 (15 U.S.C. 78f); or
(B) An interdealer quotation system
sponsored by a national securities association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(iii) Issuing corporation means the corporation that issued the shares of stock,
some or all of which were transferred by
a significant holder to such corporation in
the exchange described in paragraph (d)(1)
of this section.
(4) Cross reference. See section 6043
of the Code for requirements relating to a
return by a liquidating corporation.
(e) Example. * * *
(f) Effective/applicability date. Paragraph (d) of this section applies to any
taxable year beginning on or after May
30, 2006. However, taxpayers may apply
paragraph (d) of this section to any original
Federal income tax return (including any
amended return filed on or before the due
date (including extensions) of such original return) timely filed on or after May 30,
2006. For taxable years beginning before

2007–32 I.R.B.

May 30, 2006, see §1.331–1 as contained
in 26 CFR part 1 in effect on April 1, 2006.
§1.331–1T [Removed]
Par. 7. Section 1.331–1T is removed.
Par. 8. Section 1.332–6 is added to read
as follows:
§1.332–6 Records to be kept and
information to be filed with return.
(a) Statement filed by recipient corporation. If any recipient corporation received
a liquidating distribution from the liquidating corporation pursuant to a plan (whether
or not that recipient corporation has received or will receive other such distributions from the liquidating corporation in
other tax years as part of the same plan)
during the current tax year, such recipient corporation must include a statement
entitled, “STATEMENT PURSUANT TO
SECTION 332 BY [INSERT NAME AND
EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A CORPORATION RECEIVING A LIQUIDATING DISTRIBUTION,” on or with its return for such year. If any recipient corporation is a controlled foreign corporation (within the meaning of section 957),
each United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on or
with its return. The statement must include—
(1) The name and employer identification number (if any) of the liquidating corporation;
(2) The date(s) of all distribution(s)
(whether or not pursuant to the plan) by
the liquidating corporation during the current tax year;
(3) The aggregate fair market value and
basis, determined immediately before the
liquidation, of all of the assets of the liquidating corporation that have been or will
be transferred to any recipient corporation;
(4) The date and control number of any
private letter ruling(s) issued by the Internal Revenue Service in connection with
the liquidation;
(5) The following representation: THE
PLAN OF COMPLETE LIQUIDATION
WAS ADOPTED ON [INSERT DATE
(mm/dd/yyyy)]; and
(6) A representation by such recipient
corporation either that—

2007–32 I.R.B.

(i) THE LIQUIDATION WAS
COMPLETED ON [INSERT DATE
(mm/dd/yyyy)]; or
(ii) THE LIQUIDATION IS NOT
COMPLETE AND THE TAXPAYER
HAS TIMELY FILED [INSERT EITHER
FORM 952, “Consent To Extend the Time
to Assess Tax Under Section 332(b),” OR
NUMBER AND NAME OF THE SUCCESSOR FORM].
(b) Filings by the liquidating corporation. The liquidating corporation must
timely file Form 966, “Corporate Dissolution or Liquidation,” (or its successor
form) and its final Federal corporate income tax return. See also section 6043 of
the Code.
(c) Definitions. For purposes of this
section:
(1) Plan means the plan of complete
liquidation within the meaning of section
332.
(2) Recipient corporation means the
corporation described in section 332(b)(1).
(3) Liquidating corporation means the
corporation that makes a distribution of
property to a recipient corporation pursuant to the plan.
(4) Liquidating distribution means
a distribution of property made by the
liquidating corporation to a recipient corporation pursuant to the plan.
(d) Substantiation information. Under
§1.6001–1(e), taxpayers are required to
retain their permanent records and make
such records available to any authorized
Internal Revenue Service officers and employees. In connection with a liquidation described in this section, these records
should specifically include information regarding the amount, basis, and fair market value of all distributed property, and
relevant facts regarding any liabilities assumed or extinguished as part of such liquidation.
(e) Effective/applicability date. This
section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to
any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of
such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see §1.332–6
as contained in 26 CFR part 1 in effect on
April 1, 2006.

316

§1.332–6T [Removed]
Par. 9. Section 1.332–6T is removed.
Par.
10.
Section 1.338–0 is
amended by revising the entries for
§§1.338–10(a)(4)(iii) and 1.338–10(c)
and removing the entry for §1.338–10T to
read as follows:
§1.338–0 Outline of topics.
*****
§1.338–10 Filing of returns.
(a) * * *
(4) * * *
(iii) Procedure for filing a combined return.
*****
(c) Effective/applicability date.
*****
Par. 11. Section 1.338–10 is amended
by revising paragraphs (a)(4)(iii) and (c) to
read as follows:
§1.338–10 Filing of returns.
(a) * * *
(4) * * *
(iii) Procedure for filing a combined return. A combined return is made by filing a single corporation income tax return in lieu of separate deemed sale returns for all targets required to be included
in the combined return. The combined
return reflects the deemed asset sales of
all targets required to be included in the
combined return. If the targets included
in the combined return constitute a single affiliated group within the meaning of
section 1504(a), the income tax return is
signed by an officer of the common parent of that group. Otherwise, the return
must be signed by an officer of each target included in the combined return. Rules
similar to the rules in §1.1502–75(j) apply
for purposes of preparing the combined return. The combined return must include a
statement entitled, “ELECTION TO FILE
A COMBINED RETURN UNDER SECTION 338(h)(15).” The statement must include—
(A) The name, address, and employer
identification number of each target required to be included in the combined return; and

August 6, 2007

(B) The following declaration: EACH
TARGET IDENTIFIED IN THIS ELECTION TO FILE A COMBINED RETURN
CONSENTS TO THE FILING OF A
COMBINED RETURN.
*****
(c) Effective/applicability date. Paragraph (a)(4)(iii) of this section applies to
any taxable year beginning on or after May
30, 2006. However, taxpayers may apply paragraph (a)(4)(iii) of this section to
any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of
such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see §1.338–10
as contained in 26 CFR part 1 in effect on
April 1, 2006.
§1.338–10T [Removed]
Par. 12. Section 1.338–10T is removed.
Par. 13. Section 1.351–3 is added to
read as follows:
§1.351–3 Records to be kept and
information to be filed.
(a) Significant transferor. Every significant transferor must include a statement
entitled, “STATEMENT PURSUANT
TO §1.351–3(a) BY [INSERT NAME
AND TAXPAYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
SIGNIFICANT TRANSFEROR,” on or
with such transferor’s income tax return
for the taxable year of the section 351
exchange. If a significant transferor is
a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
The statement must include—
(1) The name and employer identification number (if any) of the transferee corporation;
(2) The date(s) of the transfer(s) of assets;
(3) The aggregate fair market value and
basis, determined immediately before the
exchange, of the property transferred by
such transferor in the exchange; and
(4) The date and control number of any
private letter ruling(s) issued by the Internal Revenue Service in connection with
the section 351 exchange.

August 6, 2007

(b) Transferee corporation. Except as
provided in paragraph (c) of this section,
every transferee corporation must include
a statement entitled, “STATEMENT PURSUANT TO §1.351–3(b) BY [INSERT
NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF
TAXPAYER], A TRANSFEREE CORPORATION,” on or with its income tax
return for the taxable year of the exchange.
If the transferee corporation is a controlled
foreign corporation (within the meaning
of section 957), each United States shareholder (within the meaning of section
951(b)) with respect thereto must include
this statement on or with its return. The
statement must include—
(1) The name and taxpayer identification number (if any) of every significant
transferor;
(2) The date(s) of the transfer(s) of assets;
(3) The aggregate fair market value and
basis, determined immediately before the
exchange, of all of the property received
in the exchange; and
(4) The date and control number of any
private letter ruling(s) issued by the Internal Revenue Service in connection with
the section 351 exchange.
(c) Exception for certain transferee corporations. The transferee corporation is
not required to file a statement under paragraph (b) of this section if all of the information that would be included in the statement described in paragraph (b) of this
section is included in any statement(s) described in paragraph (a) of this section that
is attached to the same return for the same
section 351 exchange.
(d) Definitions. For purposes of this
section:
(1) Significant transferor means a person that transferred property to a corporation and received stock of the transferee
corporation in an exchange described in
section 351 if, immediately after the exchange, such person—
(i) Owned at least five percent (by vote
or value) of the total outstanding stock
of the transferee corporation if the stock
owned by such person is publicly traded,
or
(ii) Owned at least one percent (by vote
or value) of the total outstanding stock
of the transferee corporation if the stock
owned by such person is not publicly
traded.

317

(2) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(e) Substantiation information. Under
§1.6001–1(e), taxpayers are required to
retain their permanent records and make
such records available to any authorized
Internal Revenue Service officers and employees. In connection with the exchange
described in this section, these records
should specifically include information
regarding the amount, basis, and fair market value of all transferred property, and
relevant facts regarding any liabilities
assumed or extinguished as part of such
exchange.
(f) Effective/applicability date. This
section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to
any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of
such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see §1.351–3
as contained in 26 CFR part 1 in effect on
April 1, 2006.
§1.351–3T [Removed]
Par. 14. Section 1.351–3T is removed.
Par. 15. Section 1.355–0 is amended
by removing the entry for §1.355–5T and
adding an entry for §1.355–5.
The revision and addition read as follows:
§1.355–0 Outline of sections.
*****
§1.355–5 Records to be kept and
information to be filed.
(a) Distributing corporation.
(1) In general.
(2) Special rule when an asset transfer
precedes a stock distribution.
(b) Significant distributee.
(c) Definitions.
(1) Significant distributee.

2007–32 I.R.B.

(2) Publicly traded stock.
(d) Substantiation information.
(e) Effective/applicability date.
*****
Par. 16. Section 1.355–5 is added to
read as follows:
§1.355–5 Records to be kept and
information to be filed.
(a) Distributing corporation—(1) In
general. Every corporation that makes
a distribution (the distributing corporation) of stock or securities of a controlled
corporation, as described in section 355
(or so much of section 356 as relates to
section 355), must include a statement
entitled, “STATEMENT PURSUANT
TO §1.355–5(a) BY [INSERT NAME
AND EMPLOYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER], A
DISTRIBUTING CORPORATION,” on
or with its return for the year of the distribution. If the distributing corporation
is a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
The statement must include—
(i) The name and employer identification number (if any) of the controlled corporation;
(ii) The name and taxpayer identification number (if any) of every significant
distributee;
(iii) The date of the distribution of the
stock or securities of the controlled corporation;
(iv) The aggregate fair market value
and basis, determined immediately before
the distribution or exchange, of the stock,
securities, or other property (including
money) distributed by the distributing corporation in the transaction; and
(v) The date and control number of any
private letter ruling(s) issued by the Internal Revenue Service in connection with
the transaction.
(2) Special rule when an asset transfer
precedes a stock distribution. If the distributing corporation transferred property
to the controlled corporation in a transaction described in section 351 or 368, as
part of a plan to then distribute the stock or
securities of the controlled corporation in
a transaction described in section 355 (or
so much of section 356 as relates to sec-

2007–32 I.R.B.

tion 355), then, unless paragraph (a)(1)(v)
of this section applies, the distributing
corporation must also include on or with
its return for the year of the distribution
the statement required by §1.351–3(a) or
1.368–3(a). If the distributing corporation
is a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning
of section 951(b)) with respect thereto
must include the statement required by
§1.351–3(a) or 1.368–3(a) on or with its
return.
(b) Significant distributee.
Every
significant distributee must include a
statement entitled, “STATEMENT PURSUANT TO §1.355–5(b) BY [INSERT
NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT DISTRIBUTEE,” on or with such distributee’s return
for the year in which such distribution
is received. If a significant distributee is
a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
The statement must include—
(1) The names and employer identification numbers (if any) of the distributing
and controlled corporations;
(2) The date of the distribution of the
stock or securities of the controlled corporation; and
(3) The aggregate basis, determined
immediately before the exchange, of any
stock or securities transferred by the significant distributee in the exchange, and
the aggregate fair market value, determined immediately before the distribution
or exchange, of the stock, securities or
other property (including money) received
by the significant distributee in the distribution or exchange.
(c) Definitions. For purposes of this
section:
(1) Significant distributee means—
(i) A holder of stock of a distributing
corporation that receives, in a transaction
described in section 355 (or so much of
section 356 as relates to section 355), stock
of a corporation controlled by the distributing corporation if, immediately before the
distribution or exchange, such holder—
(A) Owned at least five percent (by vote
or value) of the total outstanding stock
of the distributing corporation if the stock

318

owned by such holder is publicly traded;
or
(B) Owned at least one percent (by vote
or value) of the stock of the distributing
corporation if the stock owned by such
holder is not publicly traded; or
(ii) A holder of securities of a distributing corporation that receives, in a transaction described in section 355 (or so much
of section 356 as relates to section 355),
stock or securities of a corporation controlled by the distributing corporation if,
immediately before the distribution or exchange, such holder owned securities in
such distributing corporation with a basis
of $1,000,000 or more.
(2) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(d) Substantiation information. Under
§1.6001–1(e), taxpayers are required to
retain their permanent records and make
such records available to any authorized
Internal Revenue Service officers and employees. In connection with the distribution or exchange described in this section,
these records should specifically include
information regarding the amount, basis,
and fair market value of all property distributed or exchanged, and relevant facts
regarding any liabilities assumed or extinguished as part of such distribution or exchange.
(e) Effective/applicability date. This
section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to
any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of
such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see §1.355–5
as contained in 26 CFR part 1 in effect on
April 1, 2006.
§1.355–5T [Removed]
Par. 17. Section 1.355–5T is removed.
Par. 18. Section 1.368–3 is added to
read as follows:

August 6, 2007

§1.368–3 Records to be kept and
information to be filed with returns.
(a) Parties to the reorganization. The
plan of reorganization must be adopted
by each of the corporations that are parties thereto. Each such corporation must
include a statement entitled, “STATEMENT PURSUANT TO §1.368–3(a)
BY [INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER], A CORPORATION A
PARTY TO A REORGANIZATION,” on
or with its return for the taxable year of
the exchange. If any such corporation is
a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return. However, it is not necessary for any
taxpayer to include more than one such
statement on or with the same return for
the same reorganization. The statement
must include—
(1) The names and employer identification numbers (if any) of all such parties;
(2) The date of the reorganization;
(3) The aggregate fair market value and
basis, determined immediately before the
exchange, of the assets, stock or securities
of the target corporation transferred in the
transaction; and
(4) The date and control number of any
private letter ruling(s) issued by the Internal Revenue Service in connection with
this reorganization.
(b) Significant holders. Every significant holder, other than a corporation a
party to the reorganization, must include a
statement entitled, “STATEMENT PURSUANT TO §1.368–3(b) BY [INSERT
NAME AND TAXPAYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SIGNIFICANT HOLDER,”
on or with such holder’s return for the taxable year of the exchange. If a significant
holder is a controlled foreign corporation (within the meaning of section 957),
each United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on or
with its return. The statement must include—
(1) The names and employer identification numbers (if any) of all of the parties to
the reorganization;
(2) The date of the reorganization; and

August 6, 2007

(3) The fair market value, determined
immediately before the exchange, of all the
stock or securities of the target corporation
held by the significant holder that is transferred in the transaction and such holder’s
basis, determined immediately before the
exchange, in the stock or securities of such
target corporation.
(c) Definitions. For purposes of this
section:
(1) Significant holder means—
(i) A holder of stock of the target corporation that receives stock or securities in
an exchange described in section 354 (or
so much of section 356 as relates to section
354) if, immediately before the exchange,
such holder—
(A) Owned at least five percent (by vote
or value) of the total outstanding stock of
the target corporation if the stock owned
by such holder is publicly traded; or
(B) Owned at least one percent (by vote
or value) of the total outstanding stock of
the target corporation if the stock owned
by such holder is not publicly traded; or
(ii) A holder of securities of the target corporation that receives stock or securities in an exchange described in section 354 (or so much of section 356 as relates to section 354) if, immediately before
the exchange, such holder owned securities in such target corporation with a basis
of $1,000,000 or more.
(2) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(d) Substantiation information. Under
§1.6001–1(e), taxpayers are required to
retain their permanent records and make
such records available to any authorized
Internal Revenue Service officers and employees. In connection with the reorganization described in this section, these
records should specifically include information regarding the amount, basis, and
fair market value of all transferred property, and relevant facts regarding any liabilities assumed or extinguished as part of
such reorganization.
(e) Effective/applicability date. This
section applies to any taxable year begin-

319

ning on or after May 30, 2006. However, taxpayers may apply this section to
any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of
such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see §1.368–3
as contained in 26 CFR part 1 in effect on
April 1, 2006.
§1.368–3T [Removed]
Par. 19. Section 1.368–3T is removed.
Par. 20. Section 1.381(b)–1 is amended
by revising paragraphs (b)(3) and (e) to
read as follows:
§1.381(b)–1 Operating rules applicable
to carryovers in certain corporate
acquisitions.
*****
(b) * * *
(3) Election—(i) Content of statements. The statements referred to in
paragraph (b)(2) of this section must
be entitled, “ELECTION OF DATE OF
DISTRIBUTION OR TRANSFER PURSUANT TO §1.381(b)–1(b)(2),” and
must include: [INSERT NAME AND
EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF DISTRIBUTOR OR
TRANSFEROR CORPORATION] AND
[INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF ACQUIRING CORPORATION]
ELECT TO DETERMINE THE DATE
OF DISTRIBUTION OR TRANSFER
UNDER §1.381(b)–1(b)(2). SUCH DATE
IS [INSERT DATE (mm/dd/yyyy)].
(ii) Filing of statements. One statement
must be included on or with the timely
filed Federal income tax return of the distributor or transferor corporation for its
taxable year ending with the date of distribution or transfer. An identical statement
must be included on or with the timely
filed Federal income tax return of the acquiring corporation for its first taxable year
ending after that date. If the distributor
or transferor corporation, or the acquiring
corporation, is a controlled foreign corporation (within the meaning of section 957),
each United States shareholder (within the
meaning of section 951(b)) with respect
thereto must include this statement on or
with its return.

2007–32 I.R.B.

*****
(e) Effective/applicability date. Paragraph (b)(3) of this section applies to any
taxable year beginning on or after May
30, 2006. However, taxpayers may apply paragraph (b)(3) of this section to any
original Federal income tax return (including any amended return filed on or before
the due date (including extensions) of such
original return) timely filed on or after
May 30, 2006. For taxable years beginning
before May 30, 2006, see §1.381(b)–1 as
contained in 26 CFR part 1 in effect on
April 1, 2006.
§1.381(b)–1T [Removed]
Par. 21. Section 1.381(b)–1T is removed.
Par. 22. Section 1.382–1 is amended
by:
1.
Revising the entry for
§1.382–8(c)(2).
2.
Revising the entry for
§1.382–8(e)(4).
3. Revising the entry for §1.382–8(h).
4.
Revising the entry for
§1.382–8(j)(4).
5. Removing the entry for §1.382–8T.
6. Adding the entry for §1.382–11.
7. Removing the entry for §1.382–11T.
The additions and revisions read as follows:
§1.382–1 Table of contents.
*****
§1.382–8 Controlled groups.
*****
(c) * * *
(2) Restoration of value.
*****
(e) * * *
(4) Foreign component member.
(i) In general.
(ii) Exception.
*****
(h) Time and manner of filing election
to restore.
(1) Statements required.
(i) Filing by loss corporation.
(ii) Filing by electing member.
(iii) Agreement.
(2) Special rule for foreign component
members.

2007–32 I.R.B.

(i) Deemed election to restore full
value.
(ii) Election not to restore full value.
(iii) Agreement.
(3) Revocation of election.
*****
(j) * * *
(4) Effective/applicability date.
*****
§1.382–11 Reporting requirements.
(a) Information statement required.
(b) Effective/applicability date.
Par. 23. Section 1.382–8 is amended by
revising paragraphs (c)(2), (e)(4), (h) and
(j)(4) to read as follows:
§1.382–8 Controlled groups.
*****
(c) * * *
(2) Restoration of value. After the value
of the stock of each component member
is reduced pursuant to paragraph (c)(1) of
this section, the value of the stock of each
component member is increased by the
amount of value, if any, restored to the
component member by another component
member (the electing member) pursuant to
this paragraph (c)(2). The electing member may elect (or may be deemed to elect
under paragraph (h)(2)(i) of this section
in the case of a foreign component member) to restore value to another component
member in an amount that does not exceed
the lesser of—
(i) The sum of—
(A) The value, determined immediately
before the ownership change, of the electing member’s stock (after adjustment under paragraph (c)(1) of this section and
before any restoration of value under this
paragraph (c)(2)); plus
(B) Any amount of value restored to
the electing member by another component member under this paragraph (c)(2);
or
(ii) The value, determined immediately
before any ownership change, of the electing member’s stock (without regard to
any adjustment under this section) that is
directly owned by the other component
member immediately after the ownership
change.
*****

320

(e) * * *
(4) Foreign component member—(i) In
general. Except as provided in paragraph
(e)(4)(ii) of this section, foreign component member means a component member
that is a foreign corporation.
(ii) Exception. A foreign component
member shall not include a foreign corporation that has items treated as connected
with the conduct of a trade or business in
the United States that it takes into account
in determining its value pursuant to section
382(e)(3).
*****
(h) Time and manner of filing election
to restore—(1) Statements required— (i)
Filing by loss corporation. The election to
restore value described in paragraph (c)(2)
of this section must be in the form set
forth in this paragraph (h)(1)(i). It must
be filed by the loss corporation by including a statement on or with its income
tax return for the taxable year in which
the ownership change occurs (or with an
amended return for that year filed on or
before the due date (including extensions)
of the income tax return of any component
member with respect to the taxable year in
which the ownership change occurs). The
common parent of a consolidated group
must make the election on behalf of the
group. The election is made in the form of
a statement entitled, “STATEMENT PURSUANT TO §1.382–8(h)(1) TO ELECT
TO RESTORE ALL OR PART OF THE
VALUE OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER
(IF ANY) OF THE ELECTING MEMBER] TO [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER
(IF ANY) OF THE CORPORATION TO
WHICH VALUE IS RESTORED].” The
statement must include the amount of the
value being restored and must also indicate that an agreement signed and dated
by both parties, as described in paragraph
(h)(1)(iii) of this section, has been entered
into. Each such party must retain either
the original or a copy of this agreement as
part of its records. See §1.6001–1(e).
(ii) Filing by electing member. An
electing member must include a statement
identical to the one described in paragraph
(h)(1)(i) of this section on or with its
income tax return (or with an amended return for that year filed on or before the due

August 6, 2007

date (including extensions) of the income
tax return of any component member with
respect to the taxable year in which the
ownership change occurs) (if any) for the
taxable year which includes the change
date in connection with which the election described in paragraph (c)(2) of this
section is made. If the electing member
is a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
It is not necessary for the electing member
(or the United States shareholder, as the
case may be) to include this statement on
or with its return if the loss corporation
includes an identical statement on or with
the same return for the same election.
(iii) Agreement. Both the electing
member and the corporation to which
value is restored must sign and date an
agreement. The agreement must—
(A) Identify the change date for the loss
corporation in connection with which the
election is made;
(B) State the value of the electing member’s stock (without regard to any adjustment under paragraph (c) of this section)
immediately before the ownership change;
(C) State the amount of any reduction
required under paragraph (c)(1) of this section with respect to stock of the electing
member that is owned directly or indirectly
by the corporation to which value is restored;
(D) State the amount of value that the
electing member elects to restore to the
corporation; and
(E) State whether the value of either
component member’s stock was adjusted
pursuant to paragraph (c)(4) of this section.
(2) Special rule for foreign component
members—(i) Deemed election to restore
full value. Unless the election described
in paragraph (h)(2)(ii) of this section is
made for a foreign component member,
each foreign component member of the
controlled group is deemed to have elected
to restore to each other component member the maximum value allowable under
paragraph (c)(2) of this section, taking into
account the limitations of this section.
(ii) Election not to restore full value.
(A) A loss corporation may elect to reduce
the amount of value restored from a foreign component member (the electing for-

August 6, 2007

eign component member) to another component member under paragraph (h)(2)(i)
of this section in the form set forth in this
paragraph (h)(2)(ii). It must be filed by
the loss corporation by including a statement on or with its income tax return for
the taxable year in which the ownership
change occurs (or with an amended return
for that year filed on or before the due
date (including extensions) of the income
tax return of any component member with
respect to the taxable year in which the
ownership change occurs). The common
parent of a consolidated group must make
the election on behalf of the group. The
election is made in the form of a statement
entitled, “STATEMENT PURSUANT
TO §1.382–8(h)(2)(ii) TO ELECT NOT
TO RESTORE FULL VALUE OF [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF
ELECTING FOREIGN COMPONENT
MEMBER] TO [INSERT NAME AND
EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF THE CORPORATION
TO WHICH SUCH VALUE IS NOT TO
BE RESTORED].” The statement must
include the amount of the value not being
restored and must also indicate that an
agreement signed and dated by both parties, as described in paragraph (h)(2)(iii)
of this section, has been entered into. Each
such party must retain either the original
or a copy of the agreement as part of its
records. See §1.6001–1(e).
(B) An electing foreign component
member must include a statement identical to the one described in paragraph
(h)(2)(ii)(A) of this section on or with its
income tax return (or with an amended
return for that year filed on or before
the due date (including extensions) of
the income tax return of any component
member with respect to the taxable year
in which the ownership change occurs)
(if any) for the taxable year which includes the change date in connection with
which the election described in paragraph
(h)(2)(ii)(A) of this section is made. If
the electing foreign component member
is a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning
of section 951(b)) with respect thereto
must include this statement on or with its
return. It is not necessary for the electing
foreign component member (or United

321

States shareholder, as the case may be) to
include this statement on or with its return
if the loss corporation includes an identical
statement on or with the same return for
the same election.
(iii) Agreement. Both the electing foreign component member and the corporation to which full value is not restored must
sign and date an agreement. The agreement must—
(A) Identify the change date for the loss
corporation in connection with which the
election is made;
(B) State the value of the electing foreign component member’s stock (without
regard to any adjustment under paragraph
(c) of this section) immediately before the
ownership change;
(C) State the amount of any reduction
required under paragraph (c)(1) of this section with respect to stock of the electing
foreign component member that is owned
directly or indirectly by the corporation to
which value is not restored;
(D) State the amount of value that the
electing foreign component member elects
not to restore to the corporation; and
(E) State whether the value of either
component member’s stock was adjusted
pursuant to paragraph (c)(4) of this section.
(3) Revocation of election. An election
(other than the deemed election described
in paragraph (h)(2)(i) of this section) made
under this section is revocable only with
the consent of the Commissioner.
*****
(j) * * *
(4) Effective/applicability date. Paragraphs (c)(2), (e)(4) and (h) of this section
apply to any taxable year beginning on or
after May 30, 2006. However, taxpayers
may apply paragraphs (c)(2), (e)(4) and (h)
of this section to any original Federal income tax return (including any amended
return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006.
For taxable years beginning before May
30, 2006, see §1.382–8 as contained in
26 CFR part 1 in effect on April 1, 2006.
§1.382–8T [Removed]
Par. 24. Section 1.382–8T is removed.
Par. 25. Section 1.382–11 is added to
read as follows:

2007–32 I.R.B.

§1.382–11 Reporting requirements.
(a) Information statement required. A
loss corporation must include a statement
entitled, “STATEMENT PURSUANT
TO §1.382–11(a) BY [INSERT NAME
AND EMPLOYER IDENTIFICATION
NUMBER OF TAXPAYER], A LOSS
CORPORATION,” on or with its income
tax return for each taxable year that it is a
loss corporation in which an owner shift,
equity structure shift or other transaction
described in §1.382–2T(a)(2)(i) occurs.
The statement must include the date(s)
of any owner shifts, equity structure
shifts, or other transactions described in
§1.382–2T(a)(2)(i), the date(s) on which
any ownership change(s) occurred, and
the amount of any attributes described in
§1.382–2(a)(1)(i) that caused the corporation to be a loss corporation. A loss
corporation may also be required to include certain elections on this statement,
including—
(1) An election made under
§1.382–2T(h)(4)(vi)(B) to disregard
the deemed exercise of an option if the
actual exercise of that option occurred
within 120 days of the ownership change;
and
(2) An election made under
§1.382–6(b)(2) to close the books of
the loss corporation for purposes of allocating income and loss to periods before
and after the change date for purposes of
section 382.
(b) Effective/applicability date. This
section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to
any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of
such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see §1.382–2T
as contained in 26 CFR part 1 in effect on
April 1, 2006.
§1.382–11T [Removed]
Par. 26. Section 1.382–11T is removed.
Par. 27. Section 1.1081–11 is added to
read as follows:

2007–32 I.R.B.

§1.1081–11 Records to be kept and
information to be filed with returns.
(a) Distributions and exchanges; significant holders of stock or securities. Every
significant holder must include a statement
entitled, “STATEMENT PURSUANT
TO §1.1081–11(a) BY [INSERT NAME
AND TAXPAYER IDENTIFICATION
NUMBER (IF ANY) OF TAXPAYER],
A SIGNIFICANT HOLDER,” on or with
such holder’s income tax return for the
taxable year in which the distribution or
exchange occurs. If a significant holder
is a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
The statement must include—
(1) The name and employer identification number (if any) of the corporation
from which the stock, securities, or other
property (including money) was received
by such significant holder;
(2) The aggregate basis, determined
immediately before the exchange, of any
stock or securities transferred by the significant holder in the exchange, and the
aggregate fair market value, determined
immediately before the distribution or exchange, of the stock, securities or other
property (including money) received by
the significant holder in the distribution or
exchange; and
(3) The date of the distribution or exchange.
(b) Distributions and exchanges; corporations subject to Commission orders.
Each corporation which is a party to a distribution or exchange made pursuant to an
order of the Commission must include on
or with its income tax return for its taxable
year in which the distribution or exchange
takes place a statement entitled, “STATEMENT PURSUANT TO §1.1081–11(b)
BY [INSERT NAME AND EMPLOYER
IDENTIFICATION NUMBER (IF ANY)
OF TAXPAYER], A DISTRIBUTING OR
EXCHANGING CORPORATION.” If the
distributing or exchanging corporation is
a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
The statement must include—

322

(1) The date and control number of the
Commission order, pursuant to which the
distribution or exchange was made;
(2) The names and taxpayer identification numbers (if any) of the significant
holders;
(3) The aggregate fair market value
and basis, determined immediately before
the distribution or exchange, of the stock,
securities, or other property (including
money) transferred in the distribution or
exchange; and
(4) The date of the distribution or exchange.
(c) Sales by members of system groups.
Each system group member must include
a statement entitled, “STATEMENT PURSUANT TO §1.1081–11(c) BY [INSERT
NAME AND EMPLOYER IDENTIFICATION NUMBER (IF ANY) OF TAXPAYER], A SYSTEM GROUP MEMBER,” on or with its income tax return
for the taxable year in which the sale is
made. If any system group member is
a controlled foreign corporation (within
the meaning of section 957), each United
States shareholder (within the meaning of
section 951(b)) with respect thereto must
include this statement on or with its return.
The statement must include—
(1) The dates and control numbers of all
relevant Commission orders;
(2) The aggregate fair market value and
basis, determined immediately before the
sale, of all stock or securities sold; and
(3) The date of the sale.
(d) Definitions. (1) For purposes of this
section, Commission means the Securities
and Exchange Commission.
(2) For purposes of this section, significant holder means a person that receives
stock or securities from a corporation (the
distributing corporation) pursuant to an order of the Commission, if, immediately before the transaction, such person—
(i) In the case of stock—
(A) Owned at least five percent (by vote
or value) of the total outstanding stock
of the distributing corporation if the stock
owned by such person is publicly traded,
or
(B) Owned at least one percent (by vote
or value) of the total outstanding stock of
the distributing corporation if the stock
owned by such person is not publicly
traded; or

August 6, 2007

(ii) In the case of securities, owned securities of the distributing corporation with
a basis of $1,000,000 or more.
(3) Publicly traded stock means stock
that is listed on—
(i) A national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or
(ii) An interdealer quotation system
sponsored by a national securities association registered under section 15A
of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3).
(4) For purposes of paragraph (b) of this
section, exchange means exchange, expenditure, or investment.
(5) For purposes of paragraph (c) of this
section, system group member means each
corporation which is a member of a system
group and which, pursuant to an order of
the Commission, sells stock or securities
received upon an exchange (pursuant to an
order of the Commission) and applies the
proceeds derived therefrom in retirement
or cancellation of its own stock or securities.
(e) Substantiation information. Under
§1.6001–1(e), taxpayers are required to
retain their permanent records and make
such records available to any authorized
Internal Revenue Service officers and employees. In connection with the distribution or exchange described in this section,
these records should specifically include
information regarding the amount, basis,
and fair market value of all property distributed or exchanged, and relevant facts
regarding any liabilities assumed or extinguished as part of such distribution or exchange.
(f) Effective/applicability date. This
section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to
any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of
such original return) timely filed on or after May 30, 2006. For taxable years beginning before May 30, 2006, see §1.1081–11
as contained in 26 CFR part 1 in effect on
April 1, 2006.

Par. 29. Section 1.1221–2 is amended
by revising paragraphs (e)(2)(iv) and (j) to
read as follows:
§1.1221–2 Hedging transactions.
*****
(e) * * *
(2) * * *
(iv) Making and revoking the election. Unless the Commissioner otherwise
prescribes, the election described in paragraph (e)(2) of this section must be made
in a separate statement that provides, “[INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF COMMON
PARENT] HEREBY ELECTS THE APPLICATION OF §1.1221–2(e)(2) (THE
SEPARATE-ENTITY
APPROACH).”
The statement must also indicate the date
as of which the election is to be effective.
The election must be filed by including
the statement on or with the consolidated
group’s income tax return for the taxable
year that includes the first date for which
the election is to apply. The election applies to all transactions entered into on or
after the date so indicated. The election
may only be revoked with the consent of
the Commissioner.
*****
(j) Effective/applicability date. Paragraph (e)(2)(iv) of this section applies to
any original consolidated Federal income
tax return due (without extensions) after
June 14, 2007. For original consolidated
Federal income tax returns due (without
extensions) after May 30, 2006, and on or
before June 14, 2007, see §1.1221–2T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006, see
§1.1221–2 as contained in 26 CFR part 1
in effect on April 1, 2006.
§1.1221–2T [Removed]
Par. 30. Section 1.1221–2T is removed.
Par. 31. Section 1.1502–13 is amended
by revising paragraphs (f)(5)(ii)(E),
(f)(6)(i)(C)(2) and (m) to read as follows:
§1.1502–13 Intercompany transactions.

§1.1081–11T [Removed]
Par. 28. Section 1.1081–11T is removed.

August 6, 2007

*****
(f) * * *
(5) * * *

(ii) * * *
(E) Election. An election to apply paragraph (f)(5)(ii) of this section is made in
a separate statement entitled, “[INSERT
NAME AND EMPLOYER IDENTIFICATION NUMBER OF COMMON
PARENT] HEREBY ELECTS THE APPLICATION OF §1.1502–13(f)(5)(ii)
FOR AN INTERCOMPANY TRANSACTION INVOLVING [INSERT NAME
AND EMPLOYER IDENTIFICATION
NUMBER OF S] AND [INSERT NAME
AND EMPLOYER IDENTIFICATION
NUMBER OF T].” A separate election
must be made for each such application.
The election must be filed by including
the statement on or with the consolidated
group’s income tax return for the year of
T’s liquidation (or other transaction). The
Commissioner may impose reasonable
terms and conditions to the application
of paragraph (f)(5)(ii) of this section that
are consistent with the purposes of such
section. The statement must—
(1) Identify S’s intercompany transaction and T’s liquidation (or other transaction); and
(2) Specify which provision of paragraph (f)(5)(ii) of this section applies and
how it alters the otherwise applicable results under this section (including, for example, the amount of S’s intercompany
items and the amount deferred or offset as
a result of paragraph (f)(5)(ii) of this section).
(6) * * *
(i) * * *
(C) * * *
(2) Election. The election described
in paragraph (f)(6)(i)(C)(1) of this section
must be made in a separate statement entitled, “ELECTION TO REDUCE BASIS
OF P STOCK UNDER §1.1502–13(f)(6)
HELD BY [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER
OF MEMBER WHOSE BASIS IN P
STOCK IS REDUCED].” The election
must be filed by including the statement
on or with the consolidated group’s income tax return for the year in which
the nonmember becomes a member. The
statement must identify the member’s basis in the P stock (taking into account the
effect of this election) and the number of
shares of P stock held by the member.
*****

323

2007–32 I.R.B.

(m) Effective/applicability date. Paragraphs (f)(5)(ii)(E) and (f)(6)(i)(C)(2) of
this section apply to any original consolidated Federal income tax return due (without extensions) after June 14, 2007. For
original consolidated Federal income tax
returns due (without extensions) after May
30, 2006, and on or before June 14, 2007,
see §1.1502–13T as contained in 26 CFR
part 1 in effect on April 1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see §1.1502–13 as contained in 26 CFR part 1 in effect on April
1, 2006.
§1.1502–13T [Removed]
Par. 32. Section 1.1502–13T is removed.
Par. 33. Section 1.1502–31 is amended
by revising paragraphs (e)(2) and (j) to
read as follows:
§1.1502–31 Stock basis after a group
structure change.
*****
(e) * * *
(2) Election. The election described
in paragraph (e)(1) of this section must
be made in a separate statement entitled, “ELECTION TO TREAT LOSS
CARRYOVER AS EXPIRING UNDER
§1.1502–31(e).” The election must be
filed by including the statement on or with
the consolidated group’s income tax return for the year that includes the group
structure change. The statement must
identify the amount of each loss carryover
deemed to expire (or the amount of each
loss carryover deemed not to expire, with
any balance of any loss carryovers being
deemed to expire).
*****
(j) Effective/applicability date. Paragraph (e)(2) of this section applies to any
original consolidated Federal income tax
return due (without extensions) after June
14, 2007. For original consolidated Federal income tax returns due (without extensions) after May 30, 2006, and on or before
June 14, 2007, see §1.1502–31T as contained in 26 CFR part 1 in effect on April
1, 2007. For original consolidated Federal income tax returns due (without extensions) on or before May 30, 2006, see

2007–32 I.R.B.

§1.1502–31 as contained in 26 CFR part 1
in effect on April 1, 2006.

Par. 37. Section 1.1502–33 is amended
by revising paragraphs (d)(5)(i)(D) and (k)
to read as follows:

§1.1502–31T [Removed]
Par. 34. Section 1.1502–31T is removed.
Par. 35. Section 1.1502–32 is amended
by revising paragraphs (b)(4)(iv) and (j) to
read as follows:
§1.1502–32 Investment adjustments.
*****
(b) * * *
(4) * * *
(iv) Election. The election described
in paragraph (b)(4) of this section must
be made in a separate statement entitled,
“ELECTION TO TREAT LOSS CARRYOVER OF [INSERT NAME AND
EMPLOYER IDENTIFICATION NUMBER OF S] AS EXPIRING UNDER
§1.1502–32(b)(4).” The election must be
filed by including a statement on or with
the consolidated group’s income tax return for the year S becomes a member.
A separate statement must be made for
each member whose loss carryover is
deemed to expire. The statement must
identify the amount of each loss carryover
deemed to expire (or the amount of each
loss carryover deemed not to expire, with
any balance of any loss carryovers being
deemed to expire) and the basis of any
stock reduced as a result of the deemed
expiration.
*****
(j) Effective/applicability date. Paragraph (b)(4)(iv) of this section applies to
any original consolidated Federal income
tax return due (without extensions) after
June 14, 2007. For original consolidated
Federal income tax returns due (without
extensions) after May 30, 2006, and on or
before June 14, 2007, see §1.1502–32T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006, see
§1.1502–32 as contained in 26 CFR part 1
in effect on April 1, 2006.

§1.1502–33 Earnings and profits.
*****
(d) * * *
(5) * * *
(i) * * *
(D) If a method is permitted under paragraph (d)(4) of this section, provide the
date and control number of the private letter ruling issued by the Internal Revenue
Service approving such method.
*****
(k) Effective/applicability date. Paragraph (d)(5)(i)(D) of this section applies to
any original consolidated Federal income
tax return due (without extensions) after
June 14, 2007. For original consolidated
Federal income tax returns due (without
extensions) after May 30, 2006, and on or
before June 14, 2007, see §1.1502–33T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006, see
§1.1502–33 as contained in 26 CFR part 1
in effect on April 1, 2006.
§1.1502–33T [Removed]
Par. 38. Section 1.1502–33T is removed.
Par. 39. Section 1.1502–90 is amended
by:
1.
Revising the entry for
§1.1502–95(e)(8).
2.
Revising the entry for
§1.1502–95(f).
3.
Revising the entry for
§1.1502–95(g).
4.
Removing the entry for
§1.1502–95T.
The revisions read as follows:
§1.1502–90 Table of contents.
*****

§1.1502–32T [Amended]

§1.1502–95 Rules on ceasing to be a
member of a consolidated group (or loss
subgroup).

Par.
36.
Section 1.1502–32T is
amended by removing and reserving paragraphs (b)(4)(iv) and (j).

*****
(e) * * *
(8) Reporting requirements.

324

August 6, 2007

(i) Common Parent.
(ii) Former Member.
(iii) Exception.
(f) Filing the election to apportion the
section 382 limitation and net unrealized
built-in gain.
(1) Form of the election to apportion.
(i) Statement.
(ii) Agreement.
(2) Signing the agreement.
(3) Filing the election.
(i) Filing by the common parent.
(ii) Filing by the former member.
(4) Revocation of election.
(g) Effective/applicability date.
*****
Par. 40. Section 1.1502–95 is amended
by revising paragraphs (e)(8), (f) and (g) to
read as follows:
§1.1502–95 Rules on ceasing to be a
member of a consolidated group (or loss
subgroup).
*****
(e) * * *
(8) Reporting requirements—(i) Common Parent. Except as provided in paragraph (e)(8)(iii) of this section, if a net
unrealized built-in loss is allocated under
paragraph (e) of this section, the common
parent must include a statement entitled,
“STATEMENT OF NET UNREALIZED
BUILT-IN LOSS ALLOCATION PURSUANT TO §1.1502–95(e),” on or with
its income tax return for the taxable year
in which the former member(s) (or a new
loss subgroup that includes that member)
ceases to be a member. The statement
must include—
(A) The name and employer identification number of the departing member;
(B) The amount of the remaining
NUBIL balance for the taxable year in
which the member departs;
(C) The amount of the net unrealized
built-in loss allocated to the departing
member; and
(D) A representation that the common
parent has delivered a copy of the statement to the former member (or the common parent of the group of which the former member is a member) on or before the
day the group files its income tax return for
the consolidated return year that the former
member ceases to be a member.
(ii) Former Member. Except as provided in paragraph (e)(8)(iii) of this sec-

August 6, 2007

tion, the former member must include a
statement on or with its first income tax return (or the first return in which the former
member joins) that is filed after the close of
the consolidated return year of the group
of which the former member (or a new
loss subgroup that includes that member)
ceases to be a member. The statement will
be identical to the statement filed by the
common parent under paragraph (e)(8)(i)
of this section except that instead of including the information described in paragraph (e)(8)(i)(A) of this section the former member must provide the name, employer identification number and tax year
of the former common parent, and instead
of the representation described in paragraph (e)(8)(i)(D) of this section the former member must represent that it has received and retained the copy of the statement delivered by the common parent as
part of its records. See §1.6001–1(e).
(iii) Exception. This paragraph (e)(8)
does not apply if the required information
(other than the amount of the remaining
NUBIL balance) is included in a statement
of election under paragraph (f) of this section (relating to apportioning a section 382
limitation).
(f) Filing the election to apportion the
section 382 limitation and net unrealized
built-in gain—(1) Form of the election
to apportion—(i) Statement. An election under paragraph (c) of this section
must be made in the form set forth in this
paragraph (f)(1)(i). The election must
be made by the common parent and the
party described in paragraph (f)(2) of this
section. It must be filed in accordance
with paragraph (f)(3) of this section and
be entitled, “THIS IS AN ELECTION
UNDER §1.1502–95 TO APPORTION
ALL OR PART OF THE [INSERT THE
CONSOLIDATED SECTION 382 LIMITATION, THE SUBGROUP SECTION
382 LIMITATION, THE LOSS GROUP’S
NET UNREALIZED BUILT-IN GAIN,
OR THE LOSS SUBGROUP’S NET
UNREALIZED BUILT-IN GAIN, AS
APPROPRIATE] IN THE AMOUNT
OF [INSERT THE AMOUNT OF THE
LOSS LIMITATION OR NET UNREALIZED BUILT-IN GAIN] TO [INSERT
NAME(S) AND EMPLOYER IDENTIFICATION NUMBER(S) OF THE CORPORATION (OR THE CORPORATIONS
THAT COMPOSE A NEW LOSS SUBGROUP) TO WHICH ALLOCATION IS

325

MADE].” The statement must also indicate that an agreement, as described in
paragraph (f)(1)(ii) of this section, has
been entered into.
(ii) Agreement. Both the common parent and the party described in paragraph
(f)(2) of this section must sign and date the
agreement. The agreement must include,
as appropriate—
(A) The date of the ownership change
that resulted in the consolidated section
382 limitation (or subgroup section 382
limitation) or the loss group’s (or loss subgroup’s) net unrealized built-in gain;
(B) The amount of the departing member’s (or loss subgroup’s) pre-change net
operating loss carryovers and the taxable
years in which they arose that will be subject to the limitation that is being apportioned to that member (or loss subgroup);
(C) The amount of any net unrealized
built-in loss allocated to the departing
member (or loss subgroup) under paragraph (e) of this section, which, if recognized, can be a pre-change attribute subject
to the limitation that is being apportioned;
(D) If a consolidated section 382 limitation (or subgroup section 382 limitation) is
being apportioned, the amount of the consolidated section 382 limitation (or subgroup section 382 limitation) for the taxable year during which the former member
(or new loss subgroup) ceases to be a member of the consolidated group (determined
without regard to any apportionment under
this section);
(E) If any net unrealized built-in gain is
being apportioned, the amount of the loss
group’s (or loss subgroup’s) net unrealized
built-in gain (as determined under paragraph (c)(2)(ii) of this section) that may
be apportioned to members that ceased to
be members during the consolidated return
year;
(F) The amount of the value element
and adjustment element of the consolidated section 382 limitation (or subgroup
section 382 limitation) that is apportioned
to the former member (or new loss subgroup) pursuant to paragraph (c) of this
section;
(G) The amount of the loss group’s (or
loss subgroup’s) net unrealized built-in
gain that is apportioned to the former
member (or new loss subgroup) pursuant
to paragraph (c) of this section;
(H) If the former member is allocated
any net unrealized built-in loss under para-

2007–32 I.R.B.

graph (e) of this section, the amount of any
adjustment element apportioned to the former member that is attributable to recognized built-in gains (determined in a manner that will enable both the group and the
former member to apply the principles of
§1.1502–93(c)); and
(I) The name and employer identification number of the common parent making
the apportionment.
(2) Signing the agreement. The agreement must be signed by both the common
parent and the former member (or, in the
case of a loss subgroup, the common parent and the loss subgroup parent) by persons authorized to sign their respective income tax returns. If the allocation is made
to a loss subgroup for which an election
under §1.1502–91(d)(4) is made, and not
separately to its members, the agreement
under this paragraph (f) must be signed
by the common parent and any member of
the new loss subgroup by persons authorized to sign their respective income tax
returns. Each party signing the agreement
must retain either the original or a copy of
the agreement as part of its records. See
§1.6001–1(e).
(3) Filing of the election—(i) Filing by
the common parent. The election must be
filed by the common parent of the group
that is apportioning the consolidated section 382 limitation (or the subgroup section 382 limitation) or the loss group’s net
unrealized built-in gain (or loss subgroup’s
net unrealized built-in gain) by including
the statement on or with its income tax return for the taxable year in which the former member (or new loss subgroup) ceases
to be a member.
(ii) Filing by the former member. An
identical statement must be included on or
with the first return of the former member (or the first return in which the former
member, or the members of a new loss subgroup, join) that is filed after the close of
the consolidated return year of the group
of which the former member (or the members of a new loss subgroup) ceases to be
a member.
(4) Revocation of election. An election
statement made under paragraph (c) of this
section is revocable only with the consent
of the Commissioner.
(g) Effective/applicability date. Paragraphs (e)(8) and (f) of this section apply to
any original consolidated Federal income
tax return due (without extensions) after

2007–32 I.R.B.

June 14, 2007. For original consolidated
Federal income tax returns due (without
extensions) after May 30, 2006, and on or
before June 14, 2007, see §1.1502–95T as
contained in 26 CFR part 1 in effect on
April 1, 2007. For original consolidated
Federal income tax returns due (without
extensions) on or before May 30, 2006, see
§1.1502–95 as contained in 26 CFR part 1
in effect on April 1, 2006.
§1.1502–95T [Removed]
Par. 41. Section 1.1502–95T is removed.
Par. 42. Section 1.1563–3 is amended
by revising paragraph (d)(2)(iv), adding
paragraph (d)(2)(v) and revising (e) to read
as follows:
§1.1563–3 Rules for determining stock
ownership.
*****
(d) * * *
(2) * * *
(iv) Statement. If the application of
paragraph (d)(2)(ii) or (iii) of this section does not result in a corporation being
treated as a component member of only
one controlled group of corporations on
a December 31, then such corporation
will be treated as a component member
of only one such group on such date.
Such corporation may elect the group in
which it is to be included by including
on or with its income tax return a statement entitled, “STATEMENT TO ELECT
CONTROLLED GROUP PURSUANT
TO §1.1563–3(d)(2)(iv).” The statement
must include—
(A) A description of each of the controlled groups in which the corporation
could be included. The description must
include the name and employer identification number of each component member of
each such group and the stock ownership
of the component members of each such
group; and
(B) The following representation: [INSERT NAME AND EMPLOYER IDENTIFICATION NUMBER OF CORPORATION] ELECTS TO BE TREATED AS A
COMPONENT MEMBER OF THE [INSERT DESIGNATION OF GROUP].
(v) Election—(A) Election filed. An
election filed under paragraph (d)(2)(iv) of
this section is irrevocable and effective until paragraph (d)(2)(ii) or (iii) of this sec-

326

tion applies or until a change in the stock
ownership of the corporation results in termination of membership in the controlled
group in which such corporation has been
included.
(B) Election not filed. In the event no
election is filed in accordance with the
provisions of paragraph (d)(2)(iv) of this
section, then the Internal Revenue Service
will determine the group in which such
corporation is to be included. Such determination will be binding for all subsequent years unless the corporation files a
valid election with respect to any such subsequent year or until a change in the stock
ownership of the corporation results in termination of membership in the controlled
group in which such corporation has been
included.
*****
(e) Effective/applicability date. Paragraph (d)(2)(iv) and (v) of this section apply to any taxable year beginning on or
after May 30, 2006. However, taxpayers
may apply paragraph (d)(2)(iv) and (v) of
this section to any original Federal income
tax return (including any amended return
filed on or before the due date (including
extensions) of such original return) timely
filed on or after May 30, 2006. For taxable
years beginning before May 30, 2006, see
§1.1563–3 as contained in 26 CFR part 1
in effect on April 1, 2006.
§1.1563–3T [Removed]
Par. 43. Section 1.1563–3T is removed.
Par. 44. Section 1.6012–2 is amended
by revising paragraphs (c) and (k) to read
as follows:
§1.6012–2 Corporations required to make
returns of income.
*****
(c) Insurance companies—(1) Domestic life insurance companies—(i) In general. A life insurance company subject
to tax under section 801 shall make a return on Form 1120–L, “U.S. Life Insurance
Company Income Tax Return.” Except as
provided in paragraph (c)(4) of this section, such company shall file with its return—
(A) A copy of its annual statement
which shows the reserves used by the
company in computing the taxable income
reported on its return; and

August 6, 2007

(B) A copy of Schedule A (real estate)
and of Schedule D (bonds and stocks), or
any successor thereto, of such annual statement.
(ii) Mutual savings banks. Mutual
savings banks conducting life insurance
business and meeting the requirements of
section 594 are subject to partial tax computed on Form 1120, “U.S. Corporation
Income Tax Return,” and partial tax computed on Form 1120–L. The Form 1120–L
is attached as a schedule to Form 1120,
together with the annual statement and
schedules required to be filed with Form
1120–L.
(2) Domestic nonlife insurance companies. Every domestic insurance company other than a life insurance company
shall make a return on Form 1120–PC,
“U.S. Property and Casualty Insurance
Company Income Tax Return.” This includes organizations described in section
501(m)(1) that provide commercial-type
insurance and organizations described in
section 833. Except as provided in paragraph (c)(4) of this section, such company
shall file with its return a copy of its annual statement (or a pro forma annual
statement), including the underwriting
and investment exhibit (or any successor
thereto) for the year covered by such return.
(3) Foreign insurance companies. The
provisions of paragraphs (c)(1) and (c)(2)

of this section concerning the returns and
statements of insurance companies subject
to tax under section 801 or section 831 also
apply to foreign insurance companies subject to tax under those sections, except that
the copy of the annual statement required
to be submitted with the return shall, in the
case of a foreign insurance company that
is not required to file an annual statement,
be a copy of the pro forma annual statement relating to the United States business
of such company.
(4) Exception for insurance companies
filing their Federal income tax returns
electronically. If an insurance company
described in paragraph (c)(1), (c)(2), or
(c)(3) of this section files its Federal income tax return electronically, it should
not include on or with such return its
annual statement (or pro forma annual
statement), or any portion thereof. Such
statement must be available at all times for
inspection by authorized Internal Revenue
Service officers or employees and retained
for so long as such statements may be material in the administration of any internal
revenue law. See §1.6001–1(e).
(5) Definition. For purposes of this section, the term annual statement means the
annual statement, the form of which is approved by the National Association of Insurance Commissioners (NAIC), which is
filed by an insurance company for the year
with the insurance departments of States,

Territories, and the District of Columbia.
The term annual statement also includes
a pro forma annual statement if the insurance company is not required to file the
NAIC annual statement.
*****
(k) Effective/applicability date. Paragraph (c) of this section applies to any
taxable year beginning on or after May
30, 2006. However, taxpayers may apply
paragraph (c) of this section to any original
Federal income tax return (including any
amended return filed on or before the due
date (including extensions) of such original return) timely filed on or after May 30,
2006. For taxable years beginning before
May 30, 2006, see §1.6012–2 as contained
in 26 CFR part 1 in effect on April 1, 2006.
§1.6012–2T [Removed]
Par. 45. Section 1.6012–2T is removed.
§§1.302–4, 1.338(h)(10)–1, 1.382–2T,
1.382–6, 1.382–8, 1.1502–13, 1.1502–32,
1.1502–92, 1.1502–94, 1.1502–95,
1.1563–3, and 1.6043–2 [Amended]
Par. 46. For each entry in the “Location” column of the following table, remove the language in the “Remove” column and add the language in the “Add”
column in its place:

Location

Remove

Add

The last sentence of the introductory text
to §1.302–4

The rules described in paragraph (a) of
§1.302–4T and in paragraphs (b) through
(g) of this section apply in determining
whether the specific requirements of
section 302(c)(2) are met.

The following rules shall be applicable
in determining whether the specific
requirements of section 302(c)(2) are
met:

§1.338(h)(10)–1(f)

§1.331–1T(d) and §1.332–6T

§1.331–1(d), and §1.332–6

§1.382–2T(a)(2)(ii)

§1.382–11T

§1.382–11

The last sentence of
§1.382–2T(h)(4)(vi)(B)

paragraph (a) of §1.382–11T

§1.382–11(a)

The first sentence of §1.382–6(b)(2)(i)

§1.382–11T(a)

§1.382–11(a)

The second sentence of §1.382–8(a)

paragraphs (c)(1), (c)(3), (c)(4) and (c)(5)
of this section and paragraph (c)(2) of
§1.382–8T

paragraph (c) of this section

The third sentence of §1.382–8(a)

paragraphs (c)(1), (c)(3), (c)(4) and (c)(5)
of this section and paragraph (c)(2) of
§1.382–8T

paragraph (c) of this section

§1.382–8(c)(3)

paragraph (c)(2) of §1.382–8T

paragraph (c)(2) of this section

August 6, 2007

327

2007–32 I.R.B.

Location

Remove

Add

The first sentence of §1.382–8(c)(4)

paragraphs (c)(1) and (c)(3) of this section
and paragraph (c)(2) of §1.382–8T

paragraphs (c)(1), (2), and (3) of this
section

§1.382–8(c)(5)

paragraphs (c)(1), (c)(3), (c)(4), and
(c)(5) of this section, and paragraph (c)(2)
of §1.382–8T

this paragraph (c)

The fifth sentence of §1.382–8(f)

paragraphs (c)(1), (c)(3), (c)(4), and
(c)(5) of this section, and paragraph (c)(2)
of §1.382–8T

paragraph (c) of this section

§1.382–8(g), Example (1)(b)(2)

paragraphs (c)(1), (c)(3), (c)(4), and
(c)(5) of this section, and paragraph (c)(2)
of §1.382–8T

paragraph (c) of this section

The second sentence of §1.382–8(g),
Example (1)(c)

paragraphs (c)(1), (c)(3), (c)(4), and
(c)(5) of this section, and paragraph (c)(2)
of §1.382–8T

paragraph (c) of this section

§1.382–8(g), Example (2)(c)

paragraph (c)(2) of §1.382–8T

paragraph (c)(2) of this section

The first sentence of §1.382–8(g),
Example (2)(e)

paragraph (c)(2) of §1.382–8T

paragraph (c)(2) of this section

§1.382–8(g), Example (3)(b)

paragraph (c)(2) of §1.382–8T

paragraph (c)(2) of this section

§1.382–8(g), Example (3)(c)(1)(B)

paragraph (c)(1) of this section and
paragraph (c)(2) of §1.382–8T

paragraphs (c)(1) and (2) of this section

The second sentence of §1.382–8(g),
Example (4)(c)

paragraph (c)(2) of §1.382–8T

paragraph (c)(2) of this section

The second sentence of §1.382–8(g),
Example (5)(c)

paragraph (c)(2) of §1.382–8T

paragraph (c)(2) of this section

§1.1502–13(a)(6)(ii), Matching rule,
Example 13.

Manufacturer incentive payments.

[Reserved]

The first sentence of
§1.1502–32(b)(4)(v)(A)

paragraph (b)(4)(iv) of §1.1502–32T

paragraph (b)(4)(iv) of this section

The first sentence of
§1.1502–32(b)(4)(v)(B)

paragraph (b)(4)(iv) of §1.1502–32T

paragraph (b)(4)(iv) of this section

§1.1502–92(e)(1)

§1.382–11T(a)

§1.382–11(a)

The first sentence of §1.1502–92(e)(2)

§1.382–11T(a)

§1.382–11(a)

The first sentence of §1.1502–94(d)

§1.382–11T(a)

§1.382–11(a)

The second sentence of §1.1502–94(d)

§1.382–11T(a)

§1.382–11(a)

The last sentence of §1.1502–95(b)(3)

paragraph (f) of §1.1502–95T

paragraph (f) of this section

The second sentence of
§1.1563–3(d)(2)(i)

paragraphs (d)(2)(ii) and (iii) of this
section, and paragraph (d)(2)(iv) of
§1.1563–3T

paragraphs (d)(2)(ii), (iii) and (iv) of this
section

The first sentence of §1.6043–2(a)

§1.332–6T(a), §1.368–3T(a), or
§1.1081–11T

§1.332–6(b), 1.368–3(a), or 1.1081–11

PART 301—PROCEDURE AND
ADMINISTRATION

Section 301.6011–5T also issued under
26 U.S.C. 6011.

Par. 46a. The authority citation for part
300 continues to read in part as follows:
Authority: 26 U.S.C. 7805* * *

2007–32 I.R.B.

328

§301.6011–5T [Amended]
Par. 46b. In the following table, remove the language in the “remove” column and add the text from the “add” column in its place.

August 6, 2007

Location

Remove

Add

The first sentence of §301.6011–5T(a)
(twice)

paragraphs (a), (b) and (d) through (j)
of §1.6012–2, and paragraph (c) of
§1.6012–2T

§1.6012–2

PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT

Authority: 26 U.S.C. 7805.
§602.101 [Amended]

Par. 48.
1. In §602.101(b), the following entries
to the table are removed:

Par. 47. The authority citation for part
602 continues to read as follows:

1.302–2T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.302–4T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.331–1T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.332–6T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.338–10T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.351–3T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.355–5T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.368–3T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.381(b)–1T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.382–8T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.382–11T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1081–11T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1221–2T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1502–13T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1502–31T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1502–32T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1502–33T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1502–95T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1563–3T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.6012–2T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019

2. In §602.101(b), the following entries
to the table are added:

1.332–6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.351–3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.355–5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.368–3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.382–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1081–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kevin M. Brown,
Deputy Commissioner for
Services and Enforcement.
Approved June 4, 2007.
Eric Solomon,
Assistant Secretary
of the Treasury.

August 6, 2007

(Filed by the Office of the Federal Register on June 13, 2007,
8:45 a.m., and published in the issue of the Federal Register
for June 14, 2007, 72 F.R. 32794)

1545–2019
1545–2019
1545–2019
1545–2019
1545–2019
1545–2019

with their Federal income tax returns. See T.D. 9329,
page 312.

Section 1563.—Definitions
and Special Rules

Section 6012.—Persons
Required to Make Returns
of Income

Final regulations simplify, clarify, or eliminate taxpayer reporting burdens. They also eliminate regulatory impediments to the electronic filing of certain
statements that taxpayers are required to include on or

Final regulations simplify, clarify, or eliminate taxpayer reporting burdens. They also eliminate regulatory impediments to the electronic filing of certain
statements that taxpayers are required to include on or

329

2007–32 I.R.B.