2006 Regulations Issued in IRS's Weekly Internal Revenue Bulletin

"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.

Regulation	Bulletin	Cross-Ref	Date of IRB

REG-208270-86(HTML)	IRB #2006-42(HTML)	N/A	October 16, 2006
Proposed regulations under section 987 of the Code provide guidance regarding the determination of the items of income or loss of a taxpayer with respect to a section 987 qualified business unit (QBU) as well as the timing, amount, character, and source of any section 987 gain or loss. A public hearing is scheduled for Nov. 21, 2006.
REG-168745-03(HTML)	IRB #2006-39(HTML)	N/A	Sept. 25, 2006
Proposed regulations under section 263 of the Code explain how section 263(a) applies to amounts paid to acquire, produce, or improve tangible property. The proposed regulations clarify what amounts must be capitalized, rather than deducted currently, and how those capitalized amounts should be treated. A public hearing is scheduled for Dec. 19, 2006.
REG-164247-05(HTML)	IRB #2006-15(HTML)	T.D. 9255	April 10, 2006
Final, temporary, and proposed regulations under section 1502 of the Code provide the IRS with the authority to designate a domestic member of a consolidated group as a substitute agent to act as the sole agent for the group where the common parent is a foreign entity that is treated as a domestic corporation pursuant to section 7874(b) or as the result of a section 953(d) election.
REG-159929-02(HTML)	IRB #2006-35(HTML)	T.D. 9272	August 28, 2006
Final, temporary, and proposed regulations under section 860G of the Code relate to income that is associated with a residual interest in a Real Estate Mortgage Investment Conduit (REMIC) and that is allocated through certain entities to foreign persons who have invested in those entities. The regulations accelerate the time when income is recognized for withholding tax purposes to conform to the timing of income recognition for general income tax purposes.
REG-157271-05(HTML)	IRB #2006-12(HTML)	T.D. 9252	March 20, 2006
Temporary and proposed regulations under section 6103 of the code are provided regarding administrative review procedures for certain government agencies and other authorized recipients of tax returns or return information (authorized recipients) whose receipt of returns and return information may be suspended or terminated because they do not maintain proper safeguards. The regulations provide guidance to responsible irs personnel and authorized recipients as to these administrative procedures.
REG-148864-03(HTML)	IRB #2006-34(HTML)	T.D. 9267	August 21, 2006
Temporary and proposed regulations under section 6103 of the Code provide additional items of return information disclosable to the Bureau of Economic Analysis of the Department of Commerce.
REG-148576-05(HTML)	IRB #2006-40(HTML)	N/A	October 2, 2006
Proposed regulations under 31 USC 9701 increase the amount of the user fees imposed under regulations sections 300.1 and 300.2 for entering into and restructuring or reinstating installment agreements. The regulations bring the fees in line with the actual costs to the IRS. Currently, the IRS charges $43 for entering into an installment agreement and $24 for restructuring or reinstating an installment agreement that is in default. The IRS recently completed a review of the installment agreement program and determined that the full cost of an installment agreement is $105, and the full cost of restructuring or reinstating an installment agreement is $45. The regulations reflect these costs, with one exception; the fee for entering into an installment agreement paid by way of a direct debit from the taxpayer's checking account will be $52, to encourage this type of payment arrangement. A public hearing is scheduled for October 17, 2006.
REG-148568-04(HTML)	IRB #2006-06(HTML)	T.D. 9239	February 6, 2006
Final, temporary, and proposed regulations under section 6011 of the Code relate to the time for employers to file returns and make deposits under the Federal Insurance Contributions Act (FICA) and returns of income tax withheld. The regulations require employers who receive notification of qualification for the Employers' Annual Federal Tax Program (Form 944) to file Form 944, Employer's Annual Federal Tax Return, annually instead of Form 941, Employer's Quarterly Federal Tax Return, quarterly beginning in the 2006 taxable year. The regulations also permit most employers who file Form 944 to remit accumulated employment taxes annually with their return and modify the lookback period and de minimis deposit rule for these employers. The proposed regulations also provide an additional method for quarterly return filers to determine whether the amount of accumulated employment taxes is considered de minimis. A public hearing on the proposed regulations is scheduled for April 26, 2006.
REG-146893-02(HTML)	IRB #2006-34(HTML)	T.D. 9278	August 21, 2006
Final, temporary, and proposed regulations deal with transfer prices in particular categories of transactions between related parties within the meaning of section 482 of the Code. They provide guidance regarding services transactions by updating regulations under section 482 issued in 1968. The regulations address determination of ownership of intangible property among related parties under section 482 and allocations with respect to "contributions" to the value of intangible property by a related party other than the owner. They also modify the treatment of stewardship expenses under regulations section 1.861-8. The temporary regulations are effective for tax years beginning after Dec. 31, 2006.
REG-146459-05(HTML)	IRB #2006-08(HTML)	N/A	February 21, 2006
Proposed regulations under sections 402A, 408A, and 402(g) of the Code set forth the tax treatment of designated Roth contributions (and related earnings) that are distributed from an eligible retirement plan, the requirements that must be satisfied for tax-free treatment of these amounts, and the applicable restrictions on rollovers of such amounts to a tax-favored retirement plan or Roth individual retirement account (Roth IRA). The regulations also set forth the requirements for designated Roth contributions under a section 403(b) plan and address the application of the universal availability requirement to the right of any employee to make designated Roth contributions under a section 403(b) plan.
REG-146384-05(HTML)	IRB #2006-17(HTML)	N/A	April 24, 2006
Final regulations under section 338 of the Code apply to a deemed sale or acquisition of an insurance company's assets, to a sale or acquisition of an insurance trade or business, and to the acquisition of insurance contracts through assumption reinsurance. It also contains final regulations concerning the effect of certain corporate liquidations and reorganizations on certain tax attributes of insurance companies. This document also contains temporary and proposed regulations relating to the determination of adjusted basis of amortizable section 197 intangibles, increases in reserves after a deemed asset sale, and the carryover of an election to use a company's historical loss payment pattern.
REG-145154-05(HTML)	IRB #2006-39(HTML)	N/A	Sept. 25, 2006
Proposed regulations under 31 USC 9701 implement new user fees for the Special Enrollment Examination (SEE) for enrolled agents, the application for enrollment of enrolled agents, and the renewal of such enrollment. The user fee that the IRS currently charges applicants in order to take the SEE is being modified to reflect the change in the IRS costs of administering the exam program as a result of the contracting out of the exam. The regulations establish an $11 per applicant user fee for the SEE and separate $125 user fees for the enrollment and renewal of enrollment process. A public hearing is scheduled for September 29, 2006.
REG-144784-02(HTML)	IRB #2006-23(HTML)	T.D. 9260	June 5, 2006
Temporary and proposed regulations under section 904 of the Code provide guidance relating to the look-through treatment of dividends from noncontrolled section 902 corporations (10/50 corporations). The American Jobs Creation Act (AJCA) of 2004 amended section 904(d) and repealed the separate limitation category for dividends from 10/50 corporations effective for taxable years beginning after Dec. 31, 2002. The temporary regulations also provide guidance concerning the Gulf Opportunity Zone Act of 2005, which permitted taxpayers to elect to defer the effective date of the AJCA amendments until after taxable years beginning after Dec. 31, 2004.
REG-143244-05(HTML)	IRB #2006-06(HTML)	T.D. 9238	February 6, 2006
Temporary and proposed regulations under section 7874 of the Code provide for determination of whether a foreign corporation is a surrogate foreign corporation when the foreign corporation is part of an expanded affiliated group. A public hearing on the proposed regulations is scheduled for April 27, 2006.
REG-142599-02(HTML)	IRB #2006-44(HTML)	REG-140379-02	October 30, 2006
Generally, interest on a state or local bond is excluded from gross income. However, the exclusion does not apply to a private activity bond unless the bond is a qualified bond. Proposed regulations under sections 141 and 145 of the Code provide general rules on the allocation of and accounting for bond proceeds for purposes of the private activity bond restrictions which apply to tax-exempt governmental bonds. Special rules are also provided for certain projects that are used by both a private business and government (mixed-use project). Finally, the regulations provide that a partnership in which all the partners are governmental persons are disregarded and any use of the financed property by the partnership is treated as governmental use. A public hearing is scheduled for January 11, 2007.
REG-142270-05(HTML)	IRB #2006-43(HTML)	T.D. 9286	October 23, 2006
Temporary and proposed regulations under section 45G of the Code provide guidance regarding the railroad track maintenance credit determined for qualified railroad track maintenance expenditures paid or incurred by a Class II or Class III railroad and other eligible taxpayers during the taxable year. A public hearing on the proposed regulations is scheduled for January 9, 2007.
REG-141901-05(HTML)	IRB #2006-47(HTML)	N/A	Nov. 20, 2006
Proposed regulations under section 72 of the Code provide guidance on taxation of the exchange of property for an annuity contract. The regulations would apply the same rule to exchanges for both private annuities and commercial annuities, but the regulations would not affect charitable gift annuities. A public hearing is scheduled for February 16, 2007.
REG-140379-02(HTML)	IRB #2006-44(HTML)	REG-142599-02	October 30, 2006
Generally, interest on a state or local bond is excluded from gross income. However, the exclusion does not apply to a private activity bond unless the bond is a qualified bond. Proposed regulations under sections 141 and 145 of the Code provide general rules on the allocation of and accounting for bond proceeds for purposes of the private activity bond restrictions which apply to tax-exempt governmental bonds. Special rules are also provided for certain projects that are used by both a private business and government (mixed-use project). Finally, the regulations provide that a partnership in which all the partners are governmental persons are disregarded and any use of the financed property by the partnership is treated as governmental use. A public hearing is scheduled for January 11, 2007.
REG-139059-02(HTML)	IRB #2006-24(HTML)	N/A	June 12, 2006
Proposed regulations under section 21 of the Code conform the rules relating to the child and dependent care credit to statutory changes including amendments under the Working Families Tax Relief Act of 2004, and address significant issues that have arisen administratively. The regulations are renumbered to conform to the renumbering of the statute.
REG-138879-05(HTML)	IRB #2006-08(HTML)	T.D. 9244	February 21, 2006
Final regulations under section 358 of the Code provide a tracing approach for the determination of basis of stock or securities received in exchange for or with respect to stock and securities in certain transactions. Temporary and proposed regulations under section 1502 of the Code provide additional guidance on the treatment of an excess loss account when a consolidated group member's original shares have an excess loss account or the member would otherwise determine that new shares would have an excess loss account at the time of a basis adjustment or determination under the Internal Revenue Code. Rev. Rul. 55-355 obsoleted.
REG-137243-02(HTML)	IRB #2006-03(HTML)	N/A	January 17, 2006
Proposed regulations under section 7216 of the Code update the rules regarding the disclosure and use of tax return information by tax return preparers. The regulations announce new and additional rules for taxpayers to consent electronically to the disclosure or use of their tax return information by tax return preparers. The proposed rules provide guidelines for tax return preparers using or disclosing information obtained in the process of preparing income
REG-136806-06(HTML)	IRB #2006-47(HTML)	N/A	Nov. 20, 2006
Proposed regulations under section 141 of the Code provide guidance relating to the standards for treating payments in lieu of taxes as generally applicable taxes for purposes of the private security or payment test. A public hearing is scheduled for February 13, 2007.
REG-135866-02(HTML)	IRB #2006-27(HTML)	N/A	July 3, 2006
Proposed regulations under sections 367 and 1248 of the Code set forth principles for the attribution of earnings and profits to shares of stock of current or former controlled foreign corporations that participate in certain nonrecognition transactions. The regulations also provide that, for purposes of section 1248, when a foreign partnership sells stock of a corporation, the partners of the partnership are treated as selling their proportionate shares of such stock.
REG-134317-05(HTML)	IRB #2006-26(HTML)	T.D. 9264	June 26, 2006
Final, temporary, and proposed regulations under section 1502 of the Code and others 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 with their federal income tax returns.
REG-133446-03(HTML)	IRB #2006-02(HTML)	T.D. 9232	January 9, 2006
Temporary and proposed regulations under section 1297 of the Code provide guidance for making certain elections for taxpayers that continue to be subject to the passive foreign investment company (PFIC) excess distribution regime of section 1291 even though the foreign corporation in which they own stock is no longer treated as a PFIC. A public hearing on the proposed regulations is scheduled for March 22, 2006.
REG-133036-05(HTML)	IRB #2006-20(HTML)	T.D. 9258	May 15, 2006
Temporary and proposed regulations under section 1502 of the Code revise the tacking rule of the life-nonlife consolidated regulations by eliminating the requirement relating to the separation of profitable and loss activities.
REG-127819-06(HTML)	IRB #2006-48(HTML)	T.D. 9293	Nov. 27, 2006
Final, temporary, and proposed regulations under section 199 of the Code concern the amendments made by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) to section 199, which provides a deduction for income attributable to domestic production activities. A public hearing on the proposed regulations is scheduled for February 5, 2007.
REG-125071-06(HTML)	IRB #2006-36(HTML)	T.D. 9279	Sept. 5, 2006
Final, temporary, and proposed regulations under section 671 of the Code amend regulations section 1.671-5, reporting rules for widely held fixed investment trusts (WHFITs), to clarify and simplify the application of those rules to non-mortgage widely held fixed investment trusts (NMWHFITs). The proposed regulations also include a requirement that trustees of WHFITs file an information return with the IRS and provide for the IRS to create a directory of NMWHFITs and trustees of widely held mortgage trusts (WHMTs). The proposed regulations clarify the market discount reporting rules under the NMWHFIT safe harbor and solicit comments on the WHMT safe harbor.
REG-124152-06(HTML)	IRB #2006-36(HTML)	N/A	Sept. 5, 2006
Proposed regulations provide guidance relating to the determination of who is considered to pay a foreign tax for purposes of sections 901 and 903 of the Code. A public hearing is scheduled for October 13, 2006.
REG-122380-02(HTML)	IRB #2006-10(HTML)	N/A	March 6, 2006
Proposed regulations under section 330 of title 31 of the U.S. Code provide proposed amendments to the provisions of Circular 230 relating to various non-shelter items. This document proposes amendments reflecting the Treasury Department and the IRS consideration of the comments received in response to the 2002 advance notice of proposed rulemaking and reflecting amendments to section 330 of title 31 made by the American Jobs Creation Act of 2004. The regulations also include conforming amendments to reflect the final regulations relating to best practices, covered opinions and other written advice published as T.D. 9165, 2005-4 I.R.B. 357, and as T.D. 9201, 2005-23 I.R.B. 1153, but do not otherwise address those final regulations. A public hearing is scheduled for June 21, 2006.
REG-121509-00(HTML)	IRB #2006-40(HTML)	N/A	October 2, 2006
Proposed regulations under sections 959, 961, and 1502 of the Code provide guidance relating to the exclusion from gross income of previously taxed earnings and profits under section 959 and related basis adjustments under section 961.
REG-120509-06(HTML)	IRB #2006-39(HTML)	N/A	Sept. 25, 2006
Final, temporary, and proposed regulations under sections 882 and 884 of the Code state that foreign corporations engaged in a trade or business within the United States are subject to tax on their income that is treated as effectively connected with the trade or business. Expenses related to that income are allocable and deductible against the effectively connected income to determine the foreign corporation's net U.S. taxable income. Special rules apply to the allocable amount of interest expense allowed in determining the net U.S. taxable income. Additional rules for foreign banking corporations are also applicable. Certain clarifications and conforming updates are also made to the 1996 final regulations under section 1.882-5.
REG-118897-06(HTML)	IRB #2006-31(HTML)	N/A	July 31, 2006
Proposed regulations under section 985 of the Code provide translation rates that must be used when translating into dollars certain items and amounts transferred by a qualified business unit to its home office or parent corporation for purposes of computing dollar approximate separate transactions method gain or loss.
REG-118775-06(HTML)	IRB #2006-28(HTML)	N/A	July 10, 2006
Proposed regulations under sections 871 and 881 of the Code clarify how the portfolio interest rules apply with respect to interest paid to a partnership (or simple or grantor trust) that has foreign partners (or beneficiaries or owners). A public hearing is scheduled for Sept. 7, 2006.
REG-113365-04(HTML)	IRB #2006-10(HTML)	N/A	March 6, 2006
Proposed regulations under section 468B of the Code withdraw in part a notice of proposed rulemaking and re-propose rules relating to the taxation of the income earned on escrow accounts, trusts, and other funds used during deferred exchanges of like-kind property, and propose rules under section 7872 of the Code regarding below-market loans to facilitators of these exchanges. A public hearing is scheduled for June 6, 2006.
REG-112994-06(HTML)	IRB #2006-27(HTML)	T.D. 9265	July 3, 2006
Temporary and proposed regulations under section 7874(a)(2)(B) of the Code provide rules for determining whether a foreign corporation is a surrogate foreign corporation. Specifically, the regulations explain when there is an indirect acquisition of a domestic corporation's properties for purposes of section 7874(a)(2)(B). The regulations provide guidance for determining when the expanded affiliated group has substantial business activities in a foreign country for purposes of section 7874(a)(2)(B)(iii). In addition, the regulations include a rule that in certain situations, a publicly traded partnership may be treated as a surrogate foreign corporation. The regulations also provide rules for the treatment of options of the surrogate foreign corporation for purposes of section 7874(a)(2)(B)(ii). A public hearing on the proposed regulations is scheduled for October 24, 2006.
REG-111578-06(HTML)	IRB #2006-24(HTML)	T.D. 9262	June 12, 2006
Temporary and proposed regulations concern the application of section 199 of the Code, which provides a deduction for income attributable to domestic production activities, to certain transactions involving computer software. A public hearing on the proposed regulations is scheduled for August 29, 2006.
REG-110405-05(HTML)	IRB #2006-48(HTML)	N/A	Nov. 27, 2006
Proposed regulations provide guidance regarding the application of section 362(e)(2) of the Code to determine the bases of assets and stock transferred in certain nonrecognition transactions. They also provide instructions on how to make an election to apply section 362(e)(2)(C).
REG-109512-05(HTML)	IRB #2006-30(HTML)	T.D. 9268	July 24, 2006
Final, temporary, and proposed regulations provide guidance under sections 6038 and 6038A of the Code. The final regulations under section 1.6038-2 are revised to remove and replace obsolete references to a form and IRS offices. The regulations clarify the information required to be furnished regarding certain related party transactions of certain foreign corporations and certain foreign-owned domestic corporations. The regulations also increase the amount of certain penalties, and make certain other changes, to reflect the statutory changes made by the Taxpayer Relief Act of 1997.
REG-109367-06(HTML)	IRB #2006-41(HTML)	N/A	October 10, 2006
Proposed regulations clarify the circumstances in which accounts or notes receivable are "acquired ... for services rendered" within the meaning of section 1221(a)(4) of the Code. A public hearing is scheduled for Nov. 7, 2006. Simultaneously with the publication of these proposed regulations in the Federal Register, the following revenue rulings are being declared obsolete: Rev. Ruls. 72-238 and 73-558.
REG-107722-00(HTML)	IRB #2006-04(HTML)	N/A	January 23, 2006
Proposed regulations under section 6655 of the Code provide guidance to corporations on the requirements to make estimated tax payments and withdraw proposed regulations under section 6655 that the Service issued in 1984. These regulations reflect changes to the law since 1984 and address abuses that are inherent in the current regulations. A public hearing is scheduled for March 15, 2006.
REG-106418-05(HTML)	IRB #2006-07(HTML)	T.D. 9240	February 13, 2006
Final, temporary, and proposed regulations under section 954 of the Code contain rules for determining whether a controlled foreign corporation's (CFC's) distributive share of partnership income is excluded from foreign personal holding company income under the exception contained in section 954(i) (active insurance exception). These regulations will affect CFCs that are qualified insurance companies, as defined in section 953(e)(3), that have an interest in a partnership, and U.S. shareholders of such CFCs.
REG-105248-04(HTML)	IRB #2006-43(HTML)	N/A	October 23, 2006
Proposed regulations under section 853 of the Code would eliminate country-by-country reporting by a regulated investment company (RIC) to its shareholders of foreign source income received by the RIC and foreign taxes paid by the RIC. Under these regulations, the IRS and the Treasury Department would continue to require the reporting of per-country information by RICs to the IRS because this information remains relevant to monitoring compliance with the foreign tax credit provisions.
REG-104385-01(HTML)	IRB #2006-05(HTML)	N/A	January 30, 2006
Proposed regulations under section 168 of the Code provide guidance on the normalization requirements applicable to public utilities that benefit (or have benefited) from accelerated depreciation methods or from the investment tax credit permitted under pre-1999 law. The regulations permit a utility whose assets cease to be public utility property to return to its ratepayers the normalization reserve for excess deferred income taxes (EDFIT) with respect to those assets and, in certain circumstances, also permit the return of part or all of the reserve for accumulated deferred investment tax credits (ADITC) with respect to those assets. A public hearing is scheduled for April 5, 2006.
REG-103043-05(HTML)	IRB #2006-49(HTML)	T.D. 9295	Dec. 4, 2006
Proposed regulations under section 6112 of the Code provide the rules relating to the obligation of material advisors to prepare and maintain lists with respect to reportable transactions. These regulations cross-reference T.D. 9295 in this Bulletin.
REG-103039-05(HTML)	IRB #2006-49(HTML)	T.D. 9295	Dec. 4, 2006
Proposed regulations under section 6111 of the Code provide the rules relating to the disclosure of reportable transactions by material advisors. These regulations cross-reference T.D. 9295 in this Bulletin.
REG-103038-05(HTML)	IRB #2006-49(HTML)	T.D. 9295	Dec. 4, 2006
Proposed regulations under section 6011 of the Code amend the rules relating to the disclosure of reportable transactions by taxpayers. These regulations cross-reference T.D. 9295 in this Bulletin.

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