Proposed regulations update, revise consolidated return regulations

Proposed regulations issued Friday (REG-134420-12) would update and revise the consolidated return regulations to reflect legislative action taken during the past 50-plus years, remove consolidated return regulations that have no practical applicability to taxpayers, eliminate obsolete or otherwise incorrect terms and cross-references, remove transition rules for transactions occurring in or before 2009, and eliminate antiquated or regressive terminology.

The proposed regulations would also withdraw or partially withdraw numerous proposed regulations that are being incorporated in the new proposed regulations or have been incorporated in revised form in final regulations or that have been obsoleted by other final regulations. Also being eliminated are various proposed regulations that cross-referenced temporary regulations that were removed, have expired, or otherwise have become obsolete. Additionally, the proposed regulations would withdraw temporary regulations that no longer have practical applicability to taxpayers or that would be replaced when the proposed regulations are finalized.

Among the changes the proposed regulations would make to reflect statutory amendments, the proposed regulations would modify the definition of the word “tax” in Sec. 1.1502(b)(5) to add a reference in Sec. 55(a), to reflect the amendment of Sec. 55 to impose the new corporate alternative minimum tax by the Inflation Reduction Act of 2022, P.L. 117-169. They also would add a reference to the Sec. 59A base erosion and anti-abuse tax (BEAT) that was added in the law known as the Tax Cuts and Jobs Act, P.L. 115-97.

Regarding replacing antiquated language, the proposed regulations would replace all gender-specific pronouns and other identifiers in the consolidated returns regulations with gender-neural pronouns and identifiers. They would also identify American Samoa, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam, and the U.S. Virgin Islands as “territories” rather than “possessions” of the United States.

Updating the consolidated return regulations to reflect statutory changes and removing obsolete rules from them was included in the most recent priority guidance plan published by IRS and also in previous versions.

Written or electronic comments and requests for a public hearing must be received by Nov. 6.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com