Internal Revenue Bulletin: 2004-51
December 20, 2004
Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning January 1, 2005, will be 5 percent for overpayments (4 percent in the case of a corporation), 5 percent for underpayments, and 7 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 2.5 percent.
Proposed regulations define the terms predecessor and successor for purposes of section 355(e) of the Code. These regulations provide guidance in determining whether a corporation is a predecessor or successor of a distributing or controlled corporation, as well as rules to assist taxpayers in determining whether an acquisition of an interest in a corporation would cause a distributing corporation to recognize gain under section 355(e). The regulations affect corporations that distribute the stock of controlled corporations in distributions described in section 355.
Proposed regulations under section 707 of the Code provide guidance relating to the treatment of transactions between a partnership and its partners as disguised sales of partnership interests between partners. The regulations describe circumstances in which a transfer of consideration (including the assumption of a liability) by a purchasing partner to a partnership and a transfer of consideration by the partnership to a selling partner constitute a sale of a partnership interest. In addition, the proposed rules require disclosure of certain transfers and assumptions of liabilities to the Service. A public hearing is scheduled for March 8, 2005.
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