Td 8775

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of August 1998. See Rev. Rul. 98–36, page 6.

Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term
rates are set forth for the month of August 1998. See
Rev. Rul. 98–36, page 6.

Section 382.—Limitation on Net
Operating Loss Carryforwards
and Certain Built-In Losses
Following Ownership Change
The adjusted federal long-term rate is set forth
for the month of August 1998. See Rev. Rul. 98–36,
page 6.

Section 412.—Minimum Funding
Standards
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of August 1998. See Rev. Rul. 98–36, page 6.

Section 460.—Special Rules for
Long-Term Contracts
26 CFR 1.460–6: Look-back method.

T.D. 8775
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
Election Not to Apply Look-Back
Method in De Minimis Cases
A G E N C Y: Internal Revenue Service
(IRS), Treasury.
ACTION: Final and temporary regulations.
S U M M A RY: This document contains
regulations explaining how a taxpayer
elects under section 460(b)(6) not to
apply the look-back method to long-term
contracts in de minimis cases. The regulations reflect changes to the law made by

August 3, 1998

the Taxpayer Relief Act of 1997 and affect manufacturers and construction contractors whose long-term contracts otherwise are subject to the look-back method.
D ATES: Effective date: These regulations are effective July 2, 1998.
Applicability date: These regulations
apply to long-term contracts completed in
taxable years ending after August 5, 1997.
FOR FURTHER INFORMATION CONTA C T: Leo F. Nolan II or John M.
Aramburu at (202) 622-4960 (not a tollfree number).
SUPPLEMENTARYINFORMATION:
Paperwork Reduction Act
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 (44
U.S.C. 3507) under control number
1545–1572. Responses to this collection
of information are required for a taxpayer
to elect not to apply the look-back method
to long-term contracts in de minimis
cases. An agency may not conduct or
s p o n s o r, and a person is not required to
respond to, a collection of information
unless the collection of information displays a valid OMB control number. The
estimated average burden per respondent
is 0.2 hours.
Comments concerning the accuracy of
this burden estimate should be sent to the
Internal Revenue Service, Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC 20224, and to the O ffice of
Management and Budget, Attn: Desk
O fficer for the Department of the Tr e as u r y, Office of Information and Regulatory Affairs, Washington, DC 20503.
Books or records relating to a collection of information must be retained as
long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
Background
This document contains amendments to
the Income Tax Regulations (26 CFR Part

4

1). Section 460(b)(6) of the Internal Revenue Code was added by section 1211 of
the Taxpayer Relief Act of 1997, Public
Law 105–34, 111 Stat. 788, 998, to provide an election not to apply the lookback method of section 460(b)(2) to longterm contracts in de minimis cases. These
regulations provide guidance concerning
this new election.
A notice of proposed rulemaking was
published in REG–120200–97, 1998–12
I.R.B. 32 for January 13, 1998 (63 F. R .
1932). No written comments were received, and no public hearing was requested or held. The proposed regulations
under section 460 are adopted by this
Treasury decision with one revision. T h e
final regulations provide that for longterm contracts completed in taxable years
ending after August 5, 1997, an election
not to apply the look-back method under
section 460(b)(6) automatically revokes
an election under §1.460–6(e) to use the
delayed reapplication method.
Special Analyses
It has been determined that this final
regulation is not a significant regulatory
action as defined in EO 12866. T h e r efore, a regulatory assessment is not required. It also has been determined that
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not
apply to these regulations. Moreover, it is
hereby certified that the collection of information in these regulations will not
have a significant economic impact on a
substantial number of small entities. This
certification is based on the fact that the
time required to prepare and file an election statement is minimal and will not
have a significant impact on those small
entities that choose to make the election.
In addition, the election need only be
made once by a taxpayer. 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, the notice of proposed
rulemaking preceding these regulations
was submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on the impact of the
proposed regulations on small business.

1998–31 I.R.B.

Drafting Information
The principal author of these regulations is Leo F. Nolan II, Office of Assistant Chief Counsel (Income Tax and Accounting). However, other personnel
from the IRS and Treasury Department
participated in their development.
* * * * *
Adoption of Amendments to the
Regulations
A c c o r d i n g l y, 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 entry
for “§1.460–6T” to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
P a r. 2. In §1.460–0, the entry for
§1.460–6 is amended by adding entries
for paragraphs (i) and (j) and the entry for
§1.460–6T is removed to read as follows:
§1.460–0 Outline of regulations under
section 460.

tive or to an amended return for that year,
provided the amended return is filed on or
before March 31, 1998. This statement
must have the legend “NOTIFICAT I O N
OF ELECTION UNDER SECTION
460(b)(6)”; provide the taxpayer’s name
and identifying number and the effective
date of the election; and identify the
trades or businesses that involve longterm contracts. An election applies to all
long-term contracts completed during and
after the taxable year for which the election is effective. An election may not be
revoked without the Commissioner’s consent. For taxpayers who elected to use the
delayed reapplication method under paragraph (e) of this section, an election under
this paragraph (j) automatically revokes
the election to use the delayed reapplication method for contracts subject to section 460(b)(6). A consolidated group of
corporations, as defined in §1.1502–1(h),
is subject to consistency rules analogous
to those in paragraph (e)(2) of this section
and in paragraph (d)(4)(ii)(C) of this section (concerning election to use simplified
marginal impact method).

§602.101 OMB Control numbers.

§1.460–6T [Removed]

Section 467.—Certain Payments
for the Use of Property or
Services

* * * * *
Par. 4. Section 1.460–6T is removed.
§1.460–6 Look-back method.
* * * * *
(i) [Reserved].
(j) Election not to apply look-back
method in de minimis cases.

PART 602—OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION ACT

P a r. 3. In §1.460–6, paragraph (i) is
added and reserved and paragraph (j) is
added to read as follows:

P a r. 5. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
P a r. 6. In §602.101, paragraph (c) is
amended by:
1. Removing the following entry from
the table:

§1.460–6 Look-back method.

§602.101 OMB Control numbers.

* * * * *

* * * * *
(i) [Reserved].
(j) Election not to apply look-back
method in de minimis cases. S e c t i o n
460(b)(6) provides taxpayers with an
election not to apply the look-back
method to long-term contracts in de min imis cases, effective for contracts completed in taxable years ending after A ugust 5, 1997. To make an election, a
taxpayer must attach a statement to its
timely filed original federal income tax
return (including extensions) for the taxable year the election is to become effec-

1998–31 I.R.B.

* * * * *
(c) * * *
CFR part or section
where identified and
described

Current OMB
control No.

* * * * *
1.460–6T . . . . . . . . . . . . . . . 1545–1572
* * * * *
2. Revising the entry for §1.460–6 to
read as follows:

5

* * * * *
(c) * * *
CFR part or section
where identified and
described

Current OMB
control No.

* * * * *
1.460–6 . . . . . . . . . . . . . . . . . 1545–1031
1545–1572
* * * * *
Michael P. Dolan,
Deputy Commissioner of
Internal Revenue.
Approved June 12, 1998.
Donald C. Lubick,
Assistant Secretary of
the Treasury.
(Filed by the Office of the Federal Register on July
1, 1998, 8:45 a.m., and published in the issue of the
Federal Register for July 2, 1998, 63 F.R. 36180)

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of August 1998. See Rev. Rul. 98–36, page 6.

Section 468.—Special Rules for
Mining and Solid Waste
Reclamation and Closing Costs
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of August 1998. See Rev. Rul. 98–36, page 6.

Section 482.—Allocation of
Income and Deductions Among
Taxpayers
Federal short-term, mid-term, and long-term
rates are set forth for the month of August 1998. See
Rev. Rul. 98–36, page 6.

Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of August 1998. See Rev. Rul. 98–36, page 6.

August 3, 1998