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August 2006 Plain Language Regulations

User Fees for Processing Installment Agreements
The proposed regulations increase the amount of the user fees imposed under section 300.1 and 300.2 for entering into and restructuring or reinstating installment agreements. The proposed regulations bring the fees in line with the actual costs to the IRS, and will affect taxpayers who wish to pay their liabilities through installment agreements.  REG-148576-05.  Published August 30, 2006.
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Dividends Paid Deduction for Stock Held in Employee Stock Ownership Plan

These final regulations contain rules under sections 162(k) and 404(k) of the Internal Revenue Code providing that a payment in redemption of employer securities held by an employee stock ownership plan (ESOP) is not deductible.  These regulations generally affect administrators of, employers maintaining, participants in, and beneficiaries of ESOPs.  In addition, they will affect corporations that make distributions in redemption of stock held in an ESOP. 
TD 9282.  Published August 30, 2006.
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Special Depreciation Allowance
Taxpayers are allowed to deduct additional depreciation in the first year that certain depreciable property is placed in service.  These regulations explain the requirements that must be met for property to qualify for the additional first year depreciation and how to calculate that depreciation.  TD 9283.  Published August 31, 2006.
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Exclusion from Gross Income of Previously Taxed Earnings and Profits
These proposed regulations provide guidance relating to the exclusion from gross income of previously taxed earnings and profits under section 959 of the Internal Revenue Code and related basis adjustments under section 961 of the Code.  These regulations reflect relevant statutory changes made in years subsequent to 1983.  These regulations also address a number of issues that the current section 959 and section 961 regulations do not clearly answer.  These regulations, in general, will affect United States shareholders of controlled foreign corporations and their successors in interest.
REG-121509-00.  Published August 29, 2006.
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User Fees Relating to Enrollment
This notice of proposed rulemaking implements new user fees for the special enrollment examination for enrolled agents (SEE), the application for enrollment of enrolled agents, and the renewal of such enrollment.   The Office of Professional Responsibility has recently contracted out the SEE to a private contractor and the contractor will furnish the resources, facilities, and services necessary to manage the entire SEE program.  The user fee that the IRS currently charge applicants in order to take the SEE is being modified to reflect the change in IRS costs of administering the exam program as a result of the contracting out of the exam.  Furthermore, the user fees that the IRS currently charge applicants for the enrollment and renewal of enrollment process are less than the actual cost of overseeing the enrollment process.  The proposed regulations establish a $11 per part applicant user fee for the SEE and separate $125 user fees for the enrollment and renewal of enrollment process.
REG-145154-05.  Published August 29, 2006.
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Guidance Regarding Deduction and Capitalization of Expenditures Related to Tangible Property
Taxpayers are required to capitalize, rather than deduct currently, amounts paid to acquire, produce, or improve tangible property.  These regulations clarify what amounts must be capitalized and how the capitalized amounts must be treated.
REG-168745-03.  Published August 21, 2006.
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Determination of Interest Expense Deduction of Foreign Corporations
Foreign corporations that are 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.  A three-step formula under section 1.882-5 applies to the allocable amount of interest expense allowed in determining the net U.S. taxable income.  These proposed regulations, by cross-reference to temporary regulations published in TD 9281, provide amendments to the three-step formula and provides special elections that may be implemented on timely filed returns and amended returns for the first year these rules are effective.  These proposed regulations, by cross-reference to temporary regulations published in TD 9281, also provide amendments to the branch profits tax rules under section 1.884-1(e)(3) to permit foreign corporations greater latitude in electing to treat their net equity as increased and in determining the timing for when earnings are deemed remitted.
REG-120509-06.  Published August 17, 2006.
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Determination of Interest Expense Deduction of Foreign Corporations
Foreign corporations that are 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.  A three-step formula under section 1.882-5 applies to the allocable amount of interest expenses allowed in determining the net U.S. taxable income.  These temporary regulations provide amendments to the three-step formula and provide special elections that may be implemented on timely filed returns and amended returns for the first year these rules are effective.  These temporary regulations also provide amendments to the branch profits tax rules under section 1.884-1(e)(3) to permit foreign corporations greater latitude in electing to treat their net equity as increased and in determining the timing for when earnings are deemed remitted.
TD 9281.  Published August 17, 2006.
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Definition of Essential Governmental Function Under Section 7871
Bonds issued by or on behalf of Indian tribal governments are excluded from gross income only if the proceeds of such bonds are used for an "essential governmental function."  This advanced notice of proposed rulemaking provides that an activity performed by an Indian tribal governments will be treated as essential governmental function if (1) many state and local governments conduct such activity and finance it with tax-exempt bonds, (2) state and local governments have been financing such activity for many years and (3) such activity is not a commercial or industrial activity.
REG-118788-06.  Published August 9, 2006.
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Section 411(d)(6) Protected Benefits
This final regulations provides guidance on certain issues under section 411(d)(6) of the Internal Revenue Code, including the interaction between the anti-cutback rules of section 411(d)(6) and the nonforfeitability requirements of section 411(a).  These regulations also provide a utilization test under which certain plan amendments are permitted to eliminate or reduce certain early retirement benefits, retirement-type subsidies, or optional forms of benefit.  These regulations generally affect sponsors of, and participants and beneficiaries in, qualified retirement plans.
TD 9280. Published August 9, 2006. 
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Stock Transfer Rules: Carryover of Earnings and Taxes
These final regulations provide guidance with respect to the carryover of certain tax attributes, such as earnings and profits and foreign income tax accounts, when two corporations combine in certain foreign-to-foreign or inbound corporate reorganizations or liquidations.  TD 9273.  Published August 8, 2006.
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Section 1221(a)(4) Capital Asset Exclusion for Accounts and Notes Receivable
The Notice of Proposed Rulemaking (NPRM) generally clarifies the circumstances in which an account or note receivable is acquired for services rendered.  The NPRM clarifies that an account or note receivable is not acquired for services rendered or from the sale of inventory if, in exchange for the account or note receivable, the taxpayer provides more than de minimis consideration other than services or inventory, or if the account or note receivable is not issued by the party acquiring the services or inventory.  The NPRM will affect the character of notes held by non-bank lenders and debt buyers that are not dealers in such notes. 
REG-109367-06.  Published August 7, 2006.
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Definition of Taxpayer for Purposes of Section 901 and Related Matters
Subject to applicable limitations, a taxpayer who pays a foreign tax is allowed to claim a credit for the tax against its U.S. tax liability.  The proposed regulations provide rules for determining who has paid a foreign tax.  In general, the proposed regulations clarify that a person is considered to pay a foreign income tax if the person is required to take the income into account for foreign tax purposes.  The proposed regulation contains special rules for foreign consolidated groups and certain types of entities. 
REG-124152-06.  Published August 4, 2006.
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REMIC Residuals Interests--Foreign Holders
This temporary regulation relates to income associated with a Real Estate Mortgage Investment Conduit (REMIC) residual interest that is allocated to a foreign person, including a foreign partner in a domestic partnership. The regulations accelerate the time when the income is recognized for withholding tax purposes to conform to the timing recognition for general tax purposes.  These regulations are necessary to prevent inappropriate avoidance of current income tax liability by foreign persons who are allocated income from REMIC residual REMIC and a domestic partnership's responsibility for withholding tax under sections 1441 and 1442 with respect to a foreign partner's share of REMIC residual interest net income. 
TD 9272.  Published August 1, 2006.
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REMIC Residuals Interests--Foreign Holders
This proposed regulation relates to income associated with a Real Estate Mortgage Investment Conduit (REMIC) residual interest that is allocated to a foreign person, including a foreign partner in a domestic partnership.  The regulations accelerate the time when the income is recognized for withholding tax purposes to conform to the timing of income recognition for general tax purposes.  These regulations are necessary to prevent inappropriate avoidance of current income tax liability by foreign persons who are allocated income from REMIC residual interests.  The proposed regulations also clarify both the sourcing of income associated with a REMIC and a domestic partnership's responsibility for withholding tax under sections 1441 and 1442 with respect to a foreign partner's share of REMIC residual interest net income. 
REG-159929-02.  Published August 1, 2006.
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Reporting Rules for Widely Held Fixed Investment Trusts
These final and temporary regulations amend the reporting rules that apply to the trustees of certain investment trusts and to the brokerage firms that hold interests, as middlemen, for investors in these trusts. TD 9279.  Published  August 3, 2006.Download Full Text

Reporting Rules for Widely Held Fixed Investment Trusts
These proposed regulations amend the reporting rules that apply to the trustees of certain investment trusts and to the brokerage firms that hold interests, as middlemen, for investors in these trusts. REG-125071-06.  Published August 3, 2006.
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Page Last Reviewed or Updated: 23-Jan-2014