90 FR 125 pgs. 28946-28947 - Regulations Under Section 382(h) Related to Built-In Gain and Loss; Withdrawal
Type: PRORULEVolume: 90Number: 125Pages: 28946 - 28947
Pages: 28946, 28947Docket number: [REG-125710-18]
FR document: [FR Doc. 2025-12193 Filed 7-1-25; 8:45 am]
Agency: Treasury Department
Sub Agency: Internal Revenue Service
Official PDF Version: PDF Version
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-125710-18]
RIN 1545-BP07
Regulations Under Section 382(h) Related to Built-In Gain and Loss; Withdrawal
AGENCY:
Internal Revenue Service (IRS), Treasury.
ACTION:
Withdrawal of notices of proposed rulemaking.
SUMMARY:
This document withdraws two notices of proposed rulemaking containing proposed regulations on the treatment of built-in items of income, gain, deduction, and loss taken into account by a loss corporation after an ownership change. The proposed regulations would have affected corporations that experience an ownership change under section 382(h) of the Internal Revenue Code (Code).
DATES:
As of July 2, 2025, the notices of proposed rulemaking that were published in the Federal Register on September 10, 2019 (84 FR 47455), and January 14, 2020 (85 FR 2061), are withdrawn.
ADDRESSES:
Send paper submissions to CC:PA:01:PR (REG-125710-18), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT:
Lilia D. Stamm at (202) 317-3598 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On September 10, 2019, the Department of the Treasury (Treasury Department) and the IRS published a notice of proposed rulemaking (REG-125710-18) in the Federal Register (84 FR 47455) under section 382(h) (2019 proposed regulations) that would have modified §§?1.382-2 and 1.382-7 of the Income Tax Regulations (26 CFR part 1). On January 14, 2020, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-125710-18) in the Federal Register (85 FR 2061) under section 382(h) (2020 proposed regulations) that modified certain provisions in the 2019 proposed regulations.
The 2019 proposed regulations would have adopted as mandatory, with certain modifications, (i) the safe harbor net unrealized built-in gain (NUBIG) and net unrealized built-in loss (NUBIL) computation provided in Notice 2003-65, 2003-40 I.R.B. 747, based on the principles of section 1374 of the Code, and (ii) the "1374 approach" (as described in Notice 2003-65) with respect to the identification of recognized built-in gain (RBIG) and recognized built-in loss (RBIL).
The 2019 proposed regulations would have modified the rules in §§?1.382-2 and 1.382-7: (i) to eliminate the treatment of depreciation deductions on certain built-in gain assets as RBIG, in the absence of actual gain or income recognized by the loss corporation; (ii) to exclude adequately secured nonrecourse liabilities and all recourse liabilities from the initial NUBIG/NUBIL calculation, and treat post-change cancellation-of-indebtedness income as RBIG only in certain circumstances; (iii) to introduce a "consistency rule" in order to exclude certain change-date items allocated to the pre-change period (as defined in §?1.382-6(g)(2)) from the calculation of NUBIG and NUBIL; (iv) to exclude prepaid income as an item of RBIG; (v) to exclude dividends paid on stock during the recognition period (as defined in section 382(h)(7)) as RBIG; and (vi) to exclude section 382 disallowed business interest carryforwards (as defined in §?1.382-2(a)(7)) as items of RBIL under section 382(h)(6)(B).
[top] The 2019 proposed regulations reflected the view that the certainty
The Treasury Department and the IRS received several comments in response to the 2019 proposed regulations, many of which were critical of the foregoing view. In response to the comments received, the Treasury Department and the IRS are withdrawing the 2019 proposed regulations and the 2020 proposed regulations.
The Treasury Department and the IRS are continuing to study the issues addressed in the 2019 proposed regulations and expect to issue a revised notice of proposed rulemaking regarding such issues. By the terms of Notice 2003-65, taxpayers may continue to rely on the approaches set forth therein for purposes of applying section 382(h) to an ownership change that occurs prior to the effective date of temporary or final regulations under section 382(h). See Notice 2003-65, Part V.
Drafting Information
The principal author of this notice is Brian R. Loss of the Office of Associate Chief Counsel (Corporate). However, other personnel from the Treasury Department and the IRS participated in its development.
List of Subjects in 26 CFR Part 1
Income Taxes, Reporting and recordkeeping requirements.
Withdrawal of Proposed Amendments to the Regulations
Under the authority of 26 U.S.C. 7805, the notices of proposed rulemaking (REG-125710-18) that were published in the Federal Register on September 10, 2019 (84 FR 47455), and January 14, 2020 (85 FR 2061), are withdrawn.
Edward T. Killen,
Acting Chief Tax Compliance Officer.
[FR Doc. 2025-12193 Filed 7-1-25; 8:45 am]
BILLING CODE 4830-01-P