81 FR 47739 - Income Inclusion When Lessee Treated as Having Acquired Investment Credit Property

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 141 (July 22, 2016)

This document withdraws the notice of proposed rulemaking published in the Federal Register on December 20, 1985, and the notice of proposed rulemaking published in the Federal Register on September 21, 1987. In the Rules and Regulations section of this issue of the Federal Register, the Treasury Department and the IRS are issuing temporary regulations relating to the income inclusion rules under section 50(d)(5) of the Internal Revenue Code (Code) that are applicable to a lessee of investment credit property when a lessor of such property elects to treat the lessee as having acquired the property. The text of those regulations also serves as the text of these proposed regulations.

[Federal Register Volume 81, Number 141 (Friday, July 22, 2016)]
[Proposed Rules]
[Pages 47739-47741]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16561]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-102516-15]
RIN 1545-BM65


Income Inclusion When Lessee Treated as Having Acquired 
Investment Credit Property

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking; and notice of

[[Page 47740]]

proposed rulemaking by cross-reference to temporary regulations.

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SUMMARY: This document withdraws the notice of proposed rulemaking 
published in the Federal Register on December 20, 1985, and the notice 
of proposed rulemaking published in the Federal Register on September 
21, 1987. In the Rules and Regulations section of this issue of the 
Federal Register, the Treasury Department and the IRS are issuing 
temporary regulations relating to the income inclusion rules under 
section 50(d)(5) of the Internal Revenue Code (Code) that are 
applicable to a lessee of investment credit property when a lessor of 
such property elects to treat the lessee as having acquired the 
property. The text of those regulations also serves as the text of 
these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by October 20, 2016.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-102516-15), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-
102516-15), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at www.regulations.gov (IRS REG-102516-15).

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Jennifer 
A. Records at (202) 317-6853; concerning submissions of comments and 
requests for a public hearing, Regina Johnson of the Publications and 
Regulations Branch at (202) 317-6901 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    On December 20, 1985, the Treasury Department and the IRS published 
in the Federal Register (50 FR 51874-01) a notice of proposed 
rulemaking (LR-92-73) under sections 46, 47, 48, and 167 providing 
proposed rules related to the determination of the amount of taxpayer's 
qualified investment and recapture of the investment credit with 
respect to mass assets. On September 21, 1987, the Treasury Department 
and the IRS published in the Federal Register (52 FR 35438-01) a notice 
of proposed rulemaking (LR-183-82) under sections 48, 196, 312, and 705 
providing proposed rules related to the adjustment in the basis of 
property with respect to which a taxpayer claimed the investment 
credit. On April 27, 1993, the Treasury Department and the IRS withdrew 
(58 FR 25587-01) the proposed amendments to Sec.  1.48-7 of the Income 
Tax Regulations that were published as part of the notice of proposed 
rulemaking (LR-183-82) published in the Federal Register (52 FR 35438-
01) on September 21, 1987. Because of numerous statutory changes since 
the publication of those proposed regulations, the remainder of the 
proposed regulations (50 FR 51874-01 and 52 FR 35438-01) are withdrawn.
    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to section 50(d)(5). The temporary regulations provide 
rules regarding the income inclusion required under section 50(d)(5) of 
the Code by a lessee of investment credit property when a lessor of 
such property elects to treat the lessee as having acquired the 
property. The temporary regulations also provide rules to coordinate 
the section 50(a) recapture rules with the section 50(d)(5) income 
inclusion rules and rules regarding income inclusion upon a disposition 
or lease termination outside of the recapture period. The text of those 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the amendments.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required. It also has been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
these regulations, and, because these regulations do not impose a 
collection of information on small entities, the Regulatory Flexibility 
Act (5 U.S.C. chapter 6) does not apply. Therefore, a regulatory 
flexibility analysis is not required. Pursuant to section 7805(f) of 
the Code, these proposed regulations have been submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on their impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The Treasury Department and the IRS request comments on all 
aspects of these proposed regulations. Specifically, the Treasury 
Department and the IRS request comments regarding whether guidance is 
needed to address the applicability of the income inclusion rules under 
section 50(d)(5) to trusts, estates, and/or electing large 
partnerships. All comments will be available for public inspection and 
copying. A public hearing will be scheduled if requested in writing by 
any person that timely submits written comments. If a public hearing is 
scheduled, notice of the date, time, and place for the public hearing 
will be published in the Federal Register.

Drafting Information

    The principal author of these regulations is Jennifer A. Records, 
Office of the Associate Chief Counsel (Passthroughs and Special 
Industries), IRS. However, other personnel from the Treasury Department 
and the IRS participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Withdrawal of Notice of Proposed Rulemaking

    Accordingly, under authority of 26 U.S.C. 7805, the notice of 
proposed rulemaking (LR-92-73) that was published in the Federal 
Register on December 20, 1985 (50 FR 51874-01), and the notice of 
proposed rulemaking (LR-183-82) that was published in the Federal 
Register on September 21, 1987 (52 FR 35438-01), are withdrawn.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority:  26 U.S.C. 7805 * * *

0
Par. 2. Section 1.50-1 is revised to read as follows:


Sec.  1.50-1  Lessee's income inclusion following election of lessor of 
investment credit property to treat lessee as acquirer.

    [The text of proposed amendment to Sec.  1.50-1 is the same as the 
text of Sec.  1.50-1T(a) through (f) published

[[Page 47741]]

elsewhere in this issue of the Federal Register].

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-16561 Filed 7-21-16; 8:45 am]
 BILLING CODE 4830-01-P