2005 Regulations

"Regulations" are the IRS Commissioner's rules, approved by the Secretary of the Treasury, or the Secretary's delegate, for the application and administration of the Internal Revenue laws. The purpose of regulations is to provide taxpayers, their representatives, and Service personnel with rules of general application so they may clearly understand the taxpayer's rights and duties under the law.

Regulations are either in HTML or in the Adobe Acrobat PDF format. Internal Revenue Bulletin Summary pages are in HTML format.

Regulation	Bulletin	Date of IRB	Cross-Ref

REG-168892-03(PDF, 165K)	IRB #2005-25(HTML)	June 20, 2005	N/A
Proposed regulations under section 7702 of the Code define the attained age of the insured under contracts intending to qualify as life insurance contracts and explain how to use that age to test whether a contract qualifies as a life insurance contract for federal income tax purposes. A public hearing is scheduled for Sept. 14, 2005.
REG-163314-03(PDF, 175K)	IRB #2005-14(HTML)	April 4, 2005	N/A
Proposed regulations provide that a transaction will qualify for nonrecognition treatment under sections 332, 351, or 368 of the Code only if there is a transfer and a receipt of net value. The proposed regulations also provide guidance on the circumstances in which and the extent to which a creditor of an insolvent corporation may be treated as owning a proprietary interest in the target corporation for the purpose of satisfying the continuity of interest requirement. With respect to section 332, the regulations clarify that this section applies only to those cases in which the recipient corporation receives at least partial payment with respect to each class of stock which it owns in the liquidating corporation.
REG-162813-04(PDF, 64K)	IRB #2005-19(HTML)	May 9, 2005	T.D. 9196(PDF, 64K)
Final, temporary, and proposed regulations under section 3402(f) of the Code provide guidance for employers and employees relating to Form W-4, Employee�s Withholding Allowance Certificate. The regulations provide rules for the submission of copies of certain withholding exemption certificates to the IRS, the notification provided to the employer and the employee of the maximum number of exemptions permitted, and the use of substitute forms. A public hearing on the proposed regulations is scheduled for July 26, 2005.
REG-160315-03(PDF, 79K)	IRB #2005-14(HTML)	April 4, 2005	N/A
Proposed regulations under section 3121 of the Code provide guidance regarding the treatment of payments made on account of sickness or accident disability under a workers� compensation law for purposes of the Federal Insurance Contributions Act (FICA).
REG-159824-04(PDF, 109K)	IRB #2005-4(HTML)	Jan. 24, 2005	N/A
Proposed regulations under section 330 of title 31 of the U.S. Code amend provisions of Circular 230 (Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, etc.) relating to state or local bond opinions. A public hearing is scheduled for March 22, 2005.
REG-159243-03(PDF, 72K)	IRB #2005-20(HTML)	May 16, 2005	T.D. 9194(PDF, 72K)
Final, temporary, and proposed regulations under section 937 of the Code provide rules for determining whether an individual is a bona fide resident of American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands. The regulations also provide rules for determining when income is considered to be from sources within a U.S. possession and whether income is effectively connected with the conduct of a trade or business within a U.S. possession. In addition, conforming changes are made and/or proposed to regulations under related sections of the Code. A public hearing on the proposed regulations is scheduled for July 21, 2005.
REG-158138-04(PDF, 94K)	IRB #2005-25(HTML)	June 20, 2005	T.D. 9206(PDF, 94K)
Temporary and proposed regulations under section 6050L provide guidance for the filing of information returns by donees relating to qualified intellectual property contributions. The regulations affect donees receiving net income from qualified intellectual property contributions after June 3, 2004.
REG-158080-04(HTML)	IRB #2005-43(HTML)	Oct. 24, 2005	N/A
Proposed regulations under new section 409A of the Code, added as part of the American Jobs Creation Act of 2004, provide certain rules relating to nonqualified deferred compensation plans, which generally are effective as of January 1, 2005. These regulations provide general guidance with respect to what arrangements are covered by section 409A, and the requirements that must be met under section 409A with respect to initial deferral elections, subsequent deferral elections and payments. A public hearing is scheduled for January 25, 2006.
REG-156518-04(HTML)	IRB #2005-38(HTML)	Sept. 19, 2005	N/A
Proposed regulations under section 411(d)(6) of the Code provide guidance relating to the anti-cutback rules. A public hearing is scheduled for Dec. 6, 2005.
REG-154000-04(PDF, 56K)	IRB #2005-19(HTML)	May 9, 2005	T.D. 9199(PDF, 56K)
Final, temporary, and proposed regulations under section 4082 of the Code describe the mandatory mechanical dye injection systems for use in injection of indelible dye into diesel fuel and kerosene that is used in a nontaxable use. A public hearing on the proposed regulations is scheduled for July 19, 2005.
REG-152945-04(PDF, 109K)	IRB #2005-6(HTML)	Feb. 7, 2005	N/A
Proposed regulations under section 3402 of the Code set forth rules for withholding income tax on supplemental wages paid by an employer to an employee that, together with all previous supplemental wages paid during the calendar year to the employee by the employer, exceed one million dollars. The proposed regulations also update the rules that apply in determining liability for income tax withholding with respect to other supplemental wage payments.
REG-152914-04(PDF, 108K)	IRB #2005-9(HTML)	Feb. 28, 2005	N/A
Proposed regulations under section 417 of the Code would revise final regulations (T.D. 9099, 2004-2 I.R.B. 255) under section 417(a)(3) concerning content requirements applicable to explanations of qualified joint and survivor annuities and qualified preretirement survivor annuities payable under certain retirement plans.
REG-152354-04(PDF, 107K)	IRB #2005-13(HTML)	March 28, 2005	N/A
Proposed regulations under section 401(k) of the Code would provide guidance concerning the requirements for designated Roth contributions to qualified cash or deferred arrangements. The regulations would affect section 401(k) plans that provide for designated Roth contributions and participants eligible to make elective contributions under these plans.
REG-150091-02(HTML)	IRB #2005-43(HTML)	Oct. 24, 2005	N/A
Proposed regulations under section 6330 of the Code relate to a taxpayer�s right to a hearing before or after levy. The regulations make certain clarifying changes in the way collection due process hearings are conducted and specify the period during which a taxpayer may request an equivalent hearing. The regulations affect taxpayers against whose property or rights to property the Service proposes to levy. A public hearing is scheduled for January 19, 2006.
REG-150088-02(HTML)	IRB #2005-43(HTML)	Oct. 24, 2005	N/A
Proposed regulations under section 6320 of the Code relate to a taxpayer�s right to a hearing after the filing of a notice of federal tax lien (NFTL). The regulations make certain clarifying changes in the way collection due process hearings are conducted and specify the period during which a taxpayer may request an equivalent hearing. The regulations affect taxpayers against whose property or rights to property the Service files an NFTL. A public hearing is scheduled for January 19, 2006.
REG-149436-04(HTML)	IRB #2005-35(HTML)	August 29, 2005	N/A
Proposed regulations under section 6012 of the Code prescribe the form that cooperatives must use to file their income tax returns. The regulations affect all cooperatives that are currently required to file an income tax return on either Form 1120, U.S. Corporation Income Tax Return, or Form 990-C, Farmers' Cooperative Association Income Tax Return. Announcement 84-26 obsoleted.
REG-148867-03(PDF, 90K)	IRB #2005-9(HTML)	Feb. 28, 2005	N/A
Proposed regulations under section 6103(n) of the Code describe the circumstances under which officers and employees of the Treasury Department, a state tax agency, the Social Security Administration, or the Department of Justice may disclose returns and return information to any person to obtain property or services for tax administration purposes. The proposed regulations clarify the existing regulations with respect to redisclosures of returns or return information by contractors, especially with regard to redisclosures by contractors to agents or subcontractors, and clarify that the civil and criminal penalties for the unauthorized inspection or disclosure of returns or return information apply to the agents or subcontractors.
REG-148701-03(PDF, 104K)	IRB #2005-13(HTML)	March 28, 2005	N/A
Proposed regulations under section 6502 of the Code incorporate the changes imposed by the IRS Restructuring and Reform Act of 1988 that limit the IRS�s ability to enter into agreements extending the statute of limitations for collection. The regulations also incorporate a provision governing the continued effect of collection statute extension agreements executed prior to January 1, 2000.
REG-148521-04(PDF, 54K)	IRB #2005-18(HTML)	May 2, 2005	T.D. 9197(PDF, 54K)
Final, temporary, and proposed regulations under section 7701 of the Code add to the list of foreign business entities that are always classified as corporations, per se corporations, and, therefore, are not eligible to check the box to change their classification. A public hearing on the proposed regulations is scheduled for July 27, 2005.
REG-147195-04(PDF, 58K)	IRB #2005-15(HTML)	April 11, 2005	T.D. 9188(PDF, 58K)
Temporary and proposed regulations under section 6103 of the Code set forth changes to the list of items of return information that the IRS discloses to the Department of Commerce for the purpose of structuring censuses and national economic accounts and conducting related statistical activities authorized by law.
REG-144898-04(HTML)	IRB #2005-48(HTML)	Nov. 28, 2005	N/A
Final, temporary, and proposed regulations under section 6081 of the Code relate to the simplification of procedures for obtaining automatic extensions of time to file certain returns. The temporary regulations allow individual income taxpayers and certain other taxpayers to obtain an automatic six-month extension of time to file certain returns by filing a single request. For these returns, the regulations also remove the requirements for a signature and an explanation of the need for an extension of time to file.
REG-144620-04(HTML)	IRB #2005-50(HTML)	Dec. 12, 2005	N/A
Proposed regulations under section 704(b) of the Code provide rules for testing the substantiality of an allocation where the partners are look-through entities or members of a consolidated group, provide additional guidance on the effect of other provisions, such as section 482, upon the tax treatment of a partner with respect to the partner's distributive share under section 704(b), and revise the existing rules for determining the partners' interests in the partnership. A public hearing is scheduled for February 15, 2006.
REG-144615-02(HTML)	IRB #2005-40(HTML)	Oct. 3, 2005	N/A
Proposed regulations under section 482 of the Code provide guidance with respect to the sharing of costs and risks under cost sharing arrangements. They replace the existing guidance under regulations section 1.482-7 to provide clarification and additional guidance regarding the scope and valuation of the external inputs for which arm�s length consideration must be provided as an entry condition into cost sharing ("buy-ins" under the current regulations), as well as to address other technical and procedural issues that have arisen in the course of the administration of the cost sharing rules. A public hearing is scheduled for Nov. 16, 2005.
REG-139683-04(PDF, 60K)	IRB #2005-4(HTML)	Jan. 24, 2005	T.D. 9170(PDF, 60K)
Final, temporary, and proposed regulations under section 1374 of the Code provide that (a) section 1374(d)(8) applies to any transaction described in that section that occurs on or after Dec. 27, 1994, regardless of the date of the S corporation�s election under section 1362; and (b) for purposes of the Tax Reform Act of 1986, as amended, a corporation�s most recent S election, not an earlier election that has been revoked or terminated, determines whether or not it is subject to current section 1374.
REG-138647-04(HTML)	IRB #2005-41(HTML)	Oct. 11, 2005	N/A
Proposed regulations under section 4980G of the Code provide guidance regarding employer comparable contributions to the Health Savings Accounts (HSAs) of employees. The regulations set forth the rules for determining the applicability of the comparability rules and for determining whether an employer�s contributions satisfy the comparability rules.
REG-138362-04(HTML)	IRB #2005-33(HTML)	August 15, 2005	N/A
Proposed regulations under section 401 of the Code provide guidance on the use of electronic media to provide certain notices to recipients or to transmit participant and beneficiary elections or consents with respect to employee benefit arrangements. A public hearing is scheduled for Nov. 2, 2005.
REG-134030-04(PDF, 98K)	IRB #2005-25(HTML)	June 20, 2005	T.D. 9205(PDF, 98K)
Temporary and proposed regulations under section 41 of the Code provide rules for the computation and allocation of the credit for increasing research activities in the case of a controlled group of corporations or a group of trades or businesses under common control. The regulations also provide rules for making and revoking an election to compute the research credit using the alternative incremental research credit rules. A public hearing on the proposed regulations is scheduled for Oct. 19, 2005. REG�133791�02 withdrawn.
REG-133578-05(HTML)	IRB #2005-39(HTML)	Sept. 26, 2005	N/A
Proposed regulations under section 162(k) of the Code provide guidance concerning which corporation is entitled to the deduction for applicable dividends under section 404(k) and also clarify that a payment in redemption of employer securities held by an ESOP is not deductible.
REG-131739-03(HTML)	IRB #2005-36(HTML)	Sept. 6, 2005	N/A
Temporary and proposed regulations under section 6020 of the Code modify the provisions of the current regulations section 301.6020-1 to provide the following: (1) a document (or set of documents) signed by the Commissioner or other authorized Internal Revenue officer or employee shall be a return under section 6020(b) if the document (or set of documents) identifies the taxpayer by name and taxpayer identification number, contains sufficient information from which to compute the taxpayer�s tax liability, and the document (or set of documents) purports to be a return; (2) the document and subscription may be in written or electronic form; and (3) pursuant to section 6651(g)(2), the document that constitutes a return under section 6020(b) will be treated as the return filed by the taxpayer for purposes of determining the amount of the addition to tax under sections 6651(a)(2) and (a)(3).
REG-131128-04(PDF, 133K)	IRB #2005-11(HTML)	March 14, 2005	N/A
Proposed regulations under section 1502 of the Code provide guidance regarding the manner in which the intercompany items of a liquidating corporation are succeeded to and taken into account in cases where more than one distributee member acquires the assets of the liquidating corporation in a complete liquidation to which section 332 applies. The regulations also provide guidance regarding the manner in which more than one distributee member succeeds to the items (including the items described in section 381(c)) of the liquidating corporation.
REG-130671-04(PDF, 89K)	IRB #2005-10(HTML)	March 7, 2005	T.D. 9175(PDF, 89K)
Temporary and proposed regulations under sections 6011, 6033, and 6037 of the Code affect certain corporations and organizations filing returns. These regulations require certain corporations and organizations to file their Forms 1120, 1120S, 990, and 990-PF electronically. A public hearing on the proposed regulations is scheduled for March 16, 2005.
REG-130370-04(PDF, 45K)	IRB #2005-8(HTML)	Feb. 22, 2005	N/A
Proposed regulations under section 9801of the Code would provide guidance on the HIPAA portability requirements relating to interaction with the Family and Medical Leave Act of 1993, special enrollment procedures, and miscellaneous issues.
REG�130241�04(PDF, 560K)	IRB #2005-27(HTML)	July 5, 2005	N/A
Proposed regulations under section 415 of the Code contain proposed amendments to regulations regarding limitation on benefits and contributions under qualified plans. The proposed amendments provide comprehensive guidance regarding the limitations of section 415, including updates to the regulations for numerous statutory changes since regulations were last published. The proposed regulations also make conforming changes to regulations under sections 401(A)(9), 401(k), 403(b), and 457, and make other minor corrective changes to regulations under section 457. A public hearing is scheduled for August 17, 2005.
REG-129782-05(HTML)	IRB #2005-40(HTML)	Oct. 3, 2005	N/A
Proposed regulations under section 951 of the Code prescribe rules under which a United States shareholder of a controlled foreign corporation (CFC) determines its pro rata share of the subpart F income, previously excluded subpart F income withdrawn from investment in less developed countries, and previously excluded subpart F income withdrawn from foreign base company shipping operations, when a CFC�s earnings and profits for a taxable year substantially exceed its net income under United States generally accepted accounting principles (US GAAP).
REG-129709-03(PDF, 58K)	IRB #2005-3(HTML)	Jan. 18, 2005	T.D. 9164(PDF, 58K)
Temporary and proposed regulations under section 409(p) of the Code provide guidance on the definition and effects of a prohibited allocation under section 409(p), identification of disqualified persons and determination of a nonallocation year, calculation of synthetic equity under section 409(p)(5), and standards for determining whether a transaction is an avoidance or evasion of section 409(p). A public hearing on the proposed regulations is scheduled for April 20, 2005.
REG-127740-04(PDF, 154K)	IRB #2005-24(HTML)	June 13, 2005	N/A
Proposed regulations under sections 367(a) and (b) of the Code relate to certain transfers of stock involving foreign corporations pursuant to section 304(a)(1).
REG-125628-01(PDF, 256K)	IRB #2005-7(HTML)	Feb. 14, 2005	N/A
Proposed regulations amending the income tax regulations under various provisions of the Code to account for statutory mergers and consolidations under section 368(a)(1)(A) (including reorganizations described in section 368(a)(2)(D) and (E)) involving one or more foreign corporations. The regulations are issued concurrently with proposed regulations (REG-117969-00) that would amend the definition of a reorganization under section 368(a)(1)(A) to include certain statutory mergers or consolidations effected pursuant to foreign law. A public hearing is scheduled for May 19, 2005.
REG-125443-01(PDF, 112K)	IRB #2005-16(HTML)	April 18, 2005	N/A
Proposed regulations under section 1441 of the Code would implement certain changes announced in Notice 2001-4, 2001-1 C.B. 267; Notice 2001-11, 2001-1 C.B. 464; and Notice 2001-43, 2001-2 C.B. 72. In addition, these regulations would provide guidance under section 411 of the American Jobs Creation Act of 2004. A public hearing is scheduled for July 20, 2005.
REG-124988-05(HTML)	IRB #2005-51(HTML)	Dec. 19, 2005	N/A
Proposed regulations under section 412 of the Code provide guidance regarding mortality tables to be used in determining the current liability of a qualified defined benefit plan under section 412(l)(7). A public hearing is scheduled for April 19, 2006.
REG-122857-05(HTML)	IRB #2005-39(HTML)	Sept. 26, 2005	N/A
Temporary and proposed regulations under section 408A of the Code provide guidance concerning the tax consequences of converting a non-Roth IRA annuity to a Roth IRA. The regulations affect individuals establishing Roth IRAs, beneficiaries under Roth IRAs, and trustees, custodians and issuers of Roth IRAs.
REG-122847-04(PDF, 95K)	IRB #2005-13(HTML)	March 28, 2005	T.D. 9186(PDF, 95K)
Temporary and proposed regulations under section 6664 of the Code provide additional circumstances that end the period within which a taxpayer may file an amended return that constitutes a qualified amended return. The regulations provide that the period for filing a qualified amended return is terminated once the IRS has served a John Doe summons on a third party with respect to the taxpayer�s tax liability. In addition, for taxpayers who have claimed tax benefits from undisclosed listed transactions, the regulations provide that the period for filing a qualified amended return is terminated once the IRS contacts a promoter, organizer, seller, or material advisor concerning the listed transaction. The regulations also provide that the date on which published guidance is issued announcing a settlement initiative for a listed transaction in which penalties are compromised or waived is an additional date by which a taxpayer must file a qualified amended return. Notice 2004-38 obsoleted.
REG-121584-05(HTML)	IRB #2005-37(HTML)	Sept. 12, 2005	N/A
Final, temporary, and proposed regulations under section 263A of the Code relate to the definition of self-constructed property that is considered produced on a "routine and repetitive" basis in the ordinary course of a taxpayer�s trade or business for purposes of the simplified service cost method and the simplified production method provided by the regulations. For purposes of these methods, property is produced on a routine and repetitive basis only if numerous substantially identical assets are manufactured within a taxable year using standardized designs and assembly line techniques, and the applicable recovery period of the property determined under section 168(c) is not longer than 3 years.
REG-117969-00(PDF, 83K)	IRB #2005-7(HTML)	Feb. 14, 2005	N/A
Proposed regulations amend previously proposed regulations that provided a functional definition of "statutory merger or consolidation" under section 368(a)(1)(A) of the Code. These proposed regulations delete the requirement that transactions must be carried out under domestic law in order to qualify as statutory mergers or consolidations. A public hearing is scheduled for May 19, 2005.
REG-114444-05(HTML)	IRB #2005-45(HTML)	Nov. 7, 2005	T.D. 9227(HTML)
Final, temporary, and proposed regulations under section 7804 of the Code amend 26 CFR Part 801 to clarify when quantity measures, which are not tax enforcement results, may be used in measuring organizational and employee performance.
REG-114371-05(HTML)	IRB #2005-45(HTML)	Nov. 7, 2005	N/A
Proposed regulations under section 7701 of the Code explain that certain disregarded entities (qualified subchapter S subsidiaries and single owner eligible entities) are to be treated as entities separate from their owners for purposes of paying and reporting federal employment and certain excise taxes.
REG-111257-05(HTML)	IRB #2005-42(HTML)	Oct. 17, 2005	N/A
Proposed regulations clarify the substantive requirements for tax exemption under section 501(c)(3) of the Code. This document also contains provisions that clarify the relationship between the substantive requirements for tax exemption under section 501(c)(3) and the imposition of section 4958 excise taxes.
REG-108524-00(PDF, 135K)	IRB #2005-23(HTML)	June 6, 2005	T.D. 9200(PDF, 135K)
Final, temporary, and proposed regulations under section 1446 of the Code provide guidance on the withholding tax liability of a partnership with income that is effectively connected with its U.S. trade or business, all or a portion of which is allocable under section 704 to foreign partners. The regulations also provide rules permitting a partnership under certain circumstances to consider partner-level deductions and losses when computing its section 1446 withholding tax obligation with respect to a foreign partner. A public hearing on the proposed regulations is scheduled for Oct. 3, 2005.
REG�106736�00(PDF, 128K)	IRB #2005-26(HTML)	June 27, 2005	T.D. 9207(PDF, 128K)
Final, temporary, and proposed regulations under section 752 of the Code relate to the definition of liabilities. These regulations provide rules regarding a partnership�s assumption of certain fixed and contingent obligations in connection with the issuance of a partnership interest and provide conforming changes to certain regulations. These regulations also provide rules under section 358(h) for assumptions of liabilities by corporations from partners and partnerships. In addition, to prevent the abuse that section 358(h) was designed to prevent, these regulations also provide rules that, with respect to an exchange to which section 358(a)(1) applies, remove the exception for transfers in which substantially all of the assets associated with a liability are transferred to the person assuming the liability as part of the exchange.
REG-106030-98(HTML)	IRB #2005-42(HTML)	Oct. 17, 2005	N/A
Proposed regulations under section 863 of the Code govern the source of income from certain space and ocean activities. It also contains proposed regulations governing the source of income from certain communications activities. The regulations affect persons who derive income from activities conducted in space, or on or under water not within the jurisdiction of a foreign country, possession of the United States, or the United States (in international water). It also affects persons who derive income from transmission of communications. A public hearing is scheduled for Dec. 15, 2005.
REG-105847-05(HTML)	IRB #2005-47(HTML)	Nov. 21, 2005	N/A
Proposed regulations under section 199 of the Code relate to the deduction for income attributable to domestic production activities. Section 199 was enacted as part of the American Jobs Creation Act of 2004, and allows a deduction equal to 3 percent (for 2005 and 2006) of the lesser of the qualified production activities income of the taxpayer for the taxable year, or the taxable income of the taxpayer for the taxable year, subject to certain limits. The applicable percentage rises to 6 percent for 2007, 2008, and 2009, and 9 percent for 2010 and subsequent years. A public hearing is scheduled for January 11, 2006.
REG-105346-03(PDF, 174K)	IRB #2005-24(HTML)	June 13, 2005	N/A
Proposed regulations under section 83 of the Code withdraw the remaining portion of the notice of proposed rulemaking published in the Federal Register on June 3, 1971 (36 FR 10787) and contain proposed regulations relating to the tax treatment of certain transfers of partnership equity in connection with the performance of services. The regulations provide that the transfer of a partnership interest in connection with the performance of services is subject to section 83 and provide rules for coordinating section 83 with partnership taxation principles. The regulations also provide that no gain or loss is recognized by a partnership on the transfer or vesting of an interest in the transferring partnership in connection with the performance of services for the transferring partnership. A public hearing is scheduled for Oct. 5, 2005.
REG-104143-05(HTML)	IRB #2005-41(HTML)	Oct. 11, 2005	N/A
Proposed regulations under section 3121 of the Code amend existing regulations as to the dollar threshold amounts and time periods used to determine whether payments for 1) domestic service in a private home of the employer, 2) agricultural labor, 3) service not in the course of the employer�s trade or business, and 4) services provided by home workers described in section 3121(d)(3)(C) are wages subject to Federal Insurance Contributions Act (FICA) taxes.
REG-102144-04(PDF, 2358K)	IRB #2005-25(HTML)	June 20, 2005	N/A
Proposed regulations under section 1503(d) of the Code address various dual consolidated loss issues, including exceptions to the general prohibition against using a dual consolidated loss to reduce the taxable income of any other member of the affiliated group. Section 1503(d) generally provides that a dual consolidated loss of a dual resident corporation cannot reduce the taxable income of any other member of the affiliated group unless, to the extent provided in regulations, such loss does not offset the income of any foreign corporation. Similar rules apply to losses of separate units of domestic corporations. A public hearing is scheduled for Sept. 7, 2005.
REG-100420-03(PDF, 356K)	IRB #2005-24(HTML)	June 13, 2005	N/A
Proposed regulations under section 475 of the Code set forth an elective safe harbor for dealers in securities and/or commodities and traders in securities and commodities that permits these taxpayers to make an election pursuant to which the values of the positions reported on certain financial statements are the fair market values of those positions. The safe harbor is based upon the principle that if the mark-to-market method used for financial reporting is sufficiently consistent with the mark-to-market method required by section 475, then the values used for financial reporting should be acceptable values for purposes of section 475, even if those values are not fair market values under general tax principles. To ensure minimal divergence from fair market values under tax principles, the regulations impose certain restrictions on the financial accounting methods and statements that are eligible for the safe harbor and may require certain adjustments to values used in the safe harbor. This safe harbor attempts to reduce the compliance burden upon taxpayers and to improve the administrability of valuations for the IRS. A public hearing is scheduled for Sept. 15, 2005.

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