Information Reporting for Discharges of Indebtedness

DEPARTMENT OF THE TREASURY

26 CFR Parts 1 and 602

[TD 8654]

RIN 1545-AS21

Information Reporting for Discharges of Indebtedness

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the

information reporting requirements of applicable financial entities for

discharges of indebtedness. The final regulations reflect changes to

the Internal Revenue Code of 1986 (Code) made by section 13252 of the

Omnibus Budget Reconciliation Act of 1993 (the Act). The final

regulations affect certain financial institutions and federal executive

agencies.

DATES: These regulations are effective December 22, 1996.

For dates of applicability, see Sec. 1.6050P-1(h).

FOR FURTHER INFORMATION CONTACT: Sharon L. Hall (timing and amount of

discharge) at (202) 622-4930 or Michael F. Schmit (other issues) at

(202) 622-4960, both of the Office of Assistant Chief Counsel (Income

Tax and Accounting). Neither telephone number is toll-free.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in these final regulations

has been reviewed and approved by the Office of Management and Budget

in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under

control number 1545-1419. Responses to this collection of information

are required for the IRS to monitor whether discharged debtors are

properly complying with tax laws respecting cancellations of

indebtedness.

An agency may not conduct or sponsor, and a person is not required

to respond to, a collection of information unless the collection of

information displays a valid control number.

The time estimates for the reporting requirements contained in

these final regulations are reflected in the burden estimates for Form

1099-C.

Comments concerning the accuracy of this burden estimate and

suggestions for reducing this burden should be sent to the Internal

Revenue Service, Attn: IRS Reports Clearance Officer, T:FP, Washington,

DC 20224, and to the Office of Management and Budget, Attn: Desk

Officer for the Department of Treasury, Office of Information and

Regulatory Affairs, Washington, DC 20503.

Books or records relating to this collection of information must be

retained as long as their contents may become material in the

administration of any internal revenue law. Generally, tax returns and

tax information are confidential, as required by 26 U.S.C. 6103.

Background

Section 6050P was added to the Code by section 13252 of the Act.

Section 6050P requires certain financial entities to report discharges

of indebtedness of $600 or more during any calendar year, and requires

reporting entities to make a return at such time and in such form as

the Secretary may by regulations prescribe.

On December 27, 1993, temporary regulations (TD 8506) relating to

the reporting of discharge of indebtedness under section 6050P were

published in the Federal Register (58 FR 68301). A notice of proposed

rulemaking (IA-63-93) cross-referencing the temporary regulations was

published in the Federal Register for the same day (58 FR 68337).

Written comments were received in response to the notice of

proposed rulemaking. Fourteen speakers provided testimony at a public

hearing held on March 30, 1994. In response to the comments and

testimony, the IRS and Treasury issued Notice 94-73 (1994-2 C.B. 553),

providing interim relief from penalties for failure to comply with

certain of the reporting requirements of the temporary regulations. The

Notice provided that, with respect to a discharge of indebtedness

occurring before the later of January 1, 1995, or the effective date of

the final regulations under section 6050P, no penalties would be

imposed for the failure to report a discharge of indebtedness:

(a) Under title 11 of the United States Code;

(b) Resulting from the expiration of the statute of limitations for

collection of an indebtedness;

(c) For an amount other than principal in the case of indebtedness

arising in

[[Page 263]]

connection with a lending transaction; or

(d) For a person other than the primary (or first-named) debtor in

the case of indebtedness incurred before January 1, 1995, that involves

multiple debtors.

After consideration of all the comments, the proposed regulations

under section 6050P are adopted, as revised by this Treasury decision,

effective for discharges of indebtedness occurring after December 21,

1996. The temporary regulations and interim relief from penalties

provided in Notice 94-73 remain in effect through December 21, 1996, at

which time the temporary regulations are removed. However, no penalties

will be imposed for the failure to report a discharge of indebtedness

occurring after December 21, 1996, and before January 1, 1997, if the

failure to report would have qualified for penalty relief under Notice

94-73 had the discharge occurred prior to December 22, 1996.

Additionally, the final regulations provide that a financial entity

subject to section 6050P may, at its discretion, apply any of the

provisions of the final regulations to any discharge of indebtedness

occurring on or after January 1, 1996, and before December 22, 1996.

The comments and revisions to the proposed regulations are discussed

below.

At the request of commentators, the IRS and Treasury are

considering the issuance of guidance providing uniform procedures for

requesting extensions of time within which to file information returns

with the IRS and related statements to taxpayers. This guidance, if

issued, would apply to the information reporting requirements set forth

in this Treasury decision.

Explanation of Revisions and Summary of Comments

1. Identifiable Events

Comments were received relating to the issue of when an

indebtedness is discharged for purposes of section 6050P. Under the

temporary and proposed regulations, indebtedness is considered

discharged, and reporting is required, upon the occurrence of an

identifiable event indicating that the indebtedness will never have to

be repaid by the debtor, taking into account all of the facts and

circumstances. The temporary and proposed regulations list three

identifiable events, but make clear that the three items do not

represent an exclusive list of events requiring reporting.

Commentators objected to this facts and circumstances test, and

stated that the final regulations should instead provide an exclusive

list of reporting events. The comments indicated that creditors do not

have the resources to weigh all the facts and circumstances in order to

determine whether a debt will never have to be repaid by the debtor.

In response to these comments, the final regulations provide that,

for purposes of section 6050P, indebtedness is considered discharged,

and reporting is required, only upon the occurrence of certain

identifiable events. The regulations contain an exclusive list of eight

identifiable events, and provide that, in the absence of the occurrence

of one of these events, a Form 1099-C is not required to be filed.

A. Discharges of Indebtedness in Bankruptcy

Commentators objected to the requirement in the temporary and

proposed regulations relating to the reporting of a discharge of

indebtedness in bankruptcy. The commentators stated that the obligation

to report debts discharged in bankruptcy was extremely burdensome due

to the large number of information returns that these bankruptcies

would generate. These commentators also stated that some lenders do not

receive information regarding a debtor's bankruptcy discharge in the

normal course of business.

Commentators also objected to the requirement to report debts

discharged in bankruptcy because income from a discharge in bankruptcy

is excludable under section 108(a)(1)(A). Additionally, while

acknowledging that section 108(b) generally requires the reduction of

tax attributes for amounts of cancellation of indebtedness income

excluded under section 108(a), these commentators indicated that the

majority of bankruptcies involve consumer debt, the discharge of which

is unlikely to give rise to attribute reduction. Thus, they contended

that the reporting of consumer debts discharged in bankruptcy will not

further the purposes of section 6050P.

Finally, based on language in section 6050P, commentators contended

that the IRS and Treasury lacked authority to require reporting in

bankruptcy. Under section 6050P(a), ``any applicable financial entity

which discharges . . . the indebtedness of any person'' is subject to

the rules of section 6050P. Commentators argued that creditors should

not be subject to the rules of section 6050P for debts discharged in

bankruptcy because it is the bankruptcy court, not the creditor, that

discharges the debt.

In promulgating the temporary regulations, the IRS and Treasury

fully considered the issue of whether bankruptcy discharges could be

excluded from the reporting requirement. The legislative history to

section 6050P states that ``information returns are required regardless

of whether the debtor is subject to tax on the discharged debt. For

example, Congress does not expect reporting financial institutions and

agencies to determine whether the debtor qualifies for an exclusion

under section 108.'' H.R. Conf. Rep. No. 213, 103d Cong., 1st Sess. 1,

671 (1993). This language indicates that Congress intended that

discharges resulting in excluded income (such as bankruptcy discharges)

be reported.

Accordingly, the IRS and Treasury do not believe that a requirement

to report debts discharged in bankruptcy is outside the scope of

section 6050P. In enacting section 6050P, Congress intended to increase

debtor compliance in reporting discharges of indebtedness. With respect

to the tax consequences to the debtor, it generally makes no difference

whether the debt is voluntarily discharged by the financial entity, or

discharged by a court order. Further, the creditor is receiving an

amount that is less than the amount of the outstanding indebtedness

whether the debt is voluntarily discharged or ordered to be discharged

by a court. Thus, the language ``any applicable financial entity which

discharges . . . indebtedness'' should not be narrowly construed to

exclude instances in which a debt is ordered to be discharged or is

discharged by operation of law.

The IRS and Treasury believe that an objective of the legislative

history quoted above is that information reporting under section 6050P

not impose an undue burden on filers by requiring determinations

regarding whether discharges result in income to debtors. However, the

legislative history does not preclude an exception for certain

discharges in appropriate circumstances. Accordingly, in response to

the above concerns of the commentators, the final regulations provide

an exception from reporting in the case of certain bankruptcy

discharges. Under the final regulations, indebtedness discharged in

bankruptcy is required to be reported only if the creditor knows that

the debtor incurred the indebtedness for business or investment

purposes. Therefore, reporting is not required for consumer debts

discharged in bankruptcy or in cases in which the creditor is not aware

of the purpose for the borrowing or that purpose is not clear.

Information relating to whether a debt was incurred for business or

investment purposes will

[[Page 264]]

be available to a creditor in some cases, such as those in which loan

documents require the borrower to state the purpose of the loan. This

limited reporting of debts discharged in bankruptcy will exclude

information returns relating to consumer debt, while retaining

reporting for those discharges most likely to involve the reduction of

tax attributes under section 108(b). Pursuant to Notice 94-73, no

penalties will be imposed for the failure to report any indebtedness

discharged before December 22, 1996, in bankruptcy. Additionally, no

penalties will be imposed for the failure to report any indebtedness

discharged after December 21, 1996, and before January 1, 1997, in

bankruptcy, since the failure to report would have qualified for

penalty relief under Notice 94-73 had the discharge occurred prior to

December 22, 1996.

B. Expiration of Statute of Limitations for Collection

Under the temporary and proposed regulations, an identifiable event

includes a cancellation or extinguishment by operation of law that

renders a debt unenforceable, such as the expiration of the statute of

limitations for collection of an indebtedness.

Comments were received relating to the requirement to report

indebtedness discharged as a result of the expiration of the statute of

limitations. Commentators argued that expiration of the statute of

limitations should not be an identifiable event because of the

recordkeeping and other administrative burdens that are created by such

a rule. Commentators noted that the statute of limitations for

collection of debt varies from state to state, and that debtors may

relocate and be subject to the rules of multiple jurisdictions.

Further, they contended, an isolated payment by a debtor will

frequently restart the running of the statute of limitations. According

to the commentators, making lenders track the expiration of the statute

of limitations for reporting purposes would require special computer

applications not needed for any other creditor function, require legal

expertise in the collection department, and be very costly.

As a legal matter, commentators argued that the statute of

limitations is an affirmative defense, and affects only judicial

enforceability of the obligation. Most commentators indicated that

collection activity routinely continues after the expiration of the

statute of limitations. The temporary and proposed regulations list

collection activity on the part of the creditor as a factor to be

considered in determining whether debt has been discharged. Thus, even

under the temporary and proposed regulations, expiration of the statute

of limitations would rarely mark the date on which debt is considered

discharged, because collection activity routinely continues after that

date.

In response to these comments, the final regulations provide that

expiration of the statute of limitations for collection of an

indebtedness is an identifiable event for which a Form 1099-C is

required to be filed only if, and at such time as, a debtor's

affirmative defense of the expiration of the statute of limitations is

upheld in a final judgment or decision of a judicial proceeding, and

the period for appealing the judgment or decision has expired.

C. Other Discharges by Operation of Law

As stated above, the temporary and proposed regulations provide

that an identifiable event includes a cancellation or extinguishment by

operation of law that renders a debt unenforceable (such as the

expiration of the statute of limitations for collection of the

indebtedness). The temporary and proposed regulations do not specify

all of the circumstances requiring reporting under this identifiable

event.

In order to further the goal of providing an exclusive list of

reporting events, the final regulations specify those discharges

occurring by operation of law that are required to be reported under

section 6050P. In addition to the statute of limitations identifiable

event previously discussed, the events relating to operation of law

that must be reported are (i) a cancellation or extinguishment of an

indebtedness that renders a debt unenforceable in a receivership,

foreclosure, or similar proceeding in a federal or State court, as

described in section 368(a)(3)(A)(ii); (ii) a cancellation or

extinguishment of an indebtedness upon the expiration of a statutory

period for filing a claim or commencing a deficiency judgment

proceeding; (iii) a cancellation or extinguishment of an indebtedness

that renders a debt unenforceable pursuant to a probate or similar

proceeding; and (iv) a cancellation or extinguishment of an

indebtedness pursuant to an election of foreclosure remedies by a

creditor that statutorily extinguishes or bars the creditor's right to

pursue collection of the indebtedness. This final event relating to an

election of foreclosure remedies will require reporting only where a

mortgage lender or holder is barred by local law from pursuing a

deficiency judgment or note collection proceeding following exercise of

a power of sale contained in a mortgage or deed of trust.

A discharge of indebtedness occurring by operation of law not

enumerated above is not required to be reported under the final

regulations.

D. Collection Activity

Commentators indicated that the temporary and proposed regulations

were unclear regarding the effect of continuing collection activity on

the requirement to report under section 6050P. The temporary and

proposed regulations provide that collection activity is one of the

facts and circumstances to be taken into account in determining whether

a discharge of indebtedness has occurred. The commentators argued that

the final regulations should clarify that reporting is not required

prior to termination of collection efforts on the part of the creditor.

In response to these comments, the final regulations address the

effect of collection efforts on the requirement to report under section

6050P. Under the final regulations, an identifiable event occurs and

reporting is required upon a decision by the creditor, or the

application of a defined policy of the creditor, to discontinue

collection activity and discharge indebtedness. For this purpose, a

defined policy may be either a written policy or a creditor's

established business practice.

Additionally, under the final regulations, there is a rebuttable

presumption that an identifiable event has occurred during a calendar

year if a creditor has not received a payment on an indebtedness at any

time during a 36-month testing period ending at the close of the year.

This presumption is rebutted by the creditor if the creditor (or a

third-party collection agency on behalf of the creditor) has engaged in

significant, bona fide collection activity at any time during the 12-

month period ending at the close of the calendar year, or if facts and

circumstances existing as of January 31 of the calendar year following

expiration of the 36-month testing period indicate that the

indebtedness has not been discharged. Under the final regulations,

significant, bona fide collection activity does not include merely

nominal or ministerial collection action, such as an automated mailing.

Further, facts and circumstances indicating that an indebtedness has

not been discharged include the existence of a lien relating to the

indebtedness against the debtor (to the extent of the value of the

security), or the sale or packaging for sale of the indebtedness by the

creditor.

[[Page 265]]

E. Other Reportable Discharges

Under the temporary and proposed regulations, an identifiable event

includes an agreement between the applicable financial entity and the

debtor to discharge an indebtedness, provided that the last event

necessary to effectuate the discharge has occurred. The final

regulations retain this reporting requirement, restating that an

identifiable event includes a discharge of indebtedness pursuant to an

agreement between an applicable financial entity and a debtor to

discharge indebtedness at less than full consideration. As under the

temporary regulations, this identifiable event will not occur until the

last event necessary to effectuate the discharge has occurred.

The final regulations also provide that a discharge of indebtedness

occurring before the date on which an identifiable event occurs may, at

the creditor's discretion, be reported under section 6050P.

2. Definition of Indebtedness

Commentators objected to the broad definition of indebtedness

provided in the temporary and proposed regulations. The temporary and

proposed regulations provide that, for purposes of reporting the amount

of indebtedness discharged, an indebtedness is any amount owed to the

creditor including principal, interest, penalties, fees, administrative

costs, and fines, to the extent the amount constitutes an indebtedness

under section 61(a)(12). Commentators argued that this definition is

overly broad and should be amended to include principal only (or the

primary indebtedness in the case of a non-lending transaction). In

response to these comments, the final regulations provide certain

exceptions relating to the reporting of amounts other than stated

principal.

A. Reporting of Interest

Commentators offered two main objections to the reporting of

interest. First, commentators stated that reporting interest was

burdensome because interest is not tracked by lenders once indebtedness

is written off or placed on nonaccrual status on the lender's books.

Second, commentators suggested that reporting of interest would be of

marginal benefit to the IRS because in many cases discharged interest

may be excluded from gross income under sections 108(e)(2) and 111.

In response to these comments, and in an effort to reduce the

information reporting burden on affected filers, the final regulations

do not require the reporting of amounts of discharged interest (whether

or not arising in connection with a lending transaction), despite the

fact that some discharged interest will give rise to gross income.

However, at the option of the applicable financial entity, interest may

be included in the amount reported. Additionally, as provided in Notice

94-73, in the case of a discharge of indebtedness before December 22,

1996, no penalties will be imposed for failure to report an amount

other than principal in the case of indebtedness arising in connection

with a lending transaction.

B. Penalties, Fees, Administrative Costs, and Fines

Commentators also argued that, like interest, penalties, fees,

administrative costs, and fines are not tracked by lenders once an

indebtedness is written off on the books of the lender. Thus, they

contended, tracking these amounts would require additional computer

programming and recordkeeping, and would be very costly. With respect

to lending transactions, the IRS and Treasury have concluded that the

benefits that would be derived from requiring the reporting of

penalties, fees, administrative costs, and fines are outweighed by the

burden associated with the requirement. Accordingly, the final

regulations provide that, in the case of a lending transaction, only

discharged amounts of stated principal are required to be reported. In

the case of non-lending transactions, the amount owed, such as a fee,

fine, or penalty, is reportable if discharged.

3. Reporting for Multiple Debtors

Commentators recommended that the multiple debtor rules of the

temporary and proposed regulations be amended so that reporting is

required only with respect to the primary or first-named debtor on the

lender's account. The rationale for this approach is that, in general,

lenders track loans involving multiple debtors only by the name of the

borrower of record, and thus, the information required to be reported

under section 6050P (e.g., the name, address, and taxpayer

identification number (TIN)) for debtors other than the primary debtor

is generally not available to lenders. In addition, the commentators

pointed out that most other information return regulations require

reporting only with respect to a single taxpayer (e.g., Sec. 1.6050H-1

requires reporting only with respect to one designated interest payor

even if multiple debtors are liable on a mortgage). Finally, these

commentators stated that the majority of multiple debtor situations

involve a husband and wife who will likely file a joint return, and

therefore, requiring reporting for each debtor is not necessary.

The IRS and Treasury believe, however, that requiring reporting for

multiple debtors is consistent with section 6050P(a)(1), which provides

that the reporting of a name, address, and TIN is required for each

person whose indebtedness was discharged. Further, while reporting with

respect to only one taxpayer is required under many information

reporting sections of the Code, section 6050J, which is comparable to

section 6050P in that it relates to the reporting of acquisitions and

abandonments of property securing indebtedness, requires reporting for

each person who is a borrower with respect to the secured indebtedness.

Moreover, in Notice 94-73, the IRS addressed the concerns of

commentators by providing that no penalties would be imposed for

failure to report a discharge of indebtedness for other than the

primary (or first-named) debtor in the case of indebtedness incurred

before January 1, 1995, thus allowing creditors time to begin

collecting the necessary information for all debtors in the case of

indebtedness incurred after December 31, 1994. The final regulations

incorporate this relief.

In order to reduce the information reporting burden on applicable

financial entities, the final regulations contain two exceptions

relating to multiple debtor reporting. In the case of indebtedness of

less than $10,000 incurred on or after January 1, 1995, that involves

multiple debtors, reporting is required only for the primary (or first-

named) debtor. Additionally, to avoid duplication, the final

regulations provide a husband/wife exception to the requirement for

reporting in the case of multiple debtors. Under this exception, only

one Form 1099-C must be prepared if the creditor knows, or has reason

to know, that the co-obligors were husband and wife living at the same

address when the indebtedness was incurred, and does not know or have

reason to know that such circumstances have changed at the time of the

discharge. These two exceptions apply to discharges of indebtedness

after December 31, 1994.

The final regulations retain the rule of the temporary and proposed

regulations relating to the amount to be reported with respect to each

joint and several debtor.

4. Multiple Creditors/Lending Pools/REMICs

Commentators indicated that further guidance should be provided in

the final regulations regarding section

[[Page 266]]

6050P reporting obligations in the case of participation loans, lending

pools, and other multiple-creditor situations. In response to these

comments, the final regulations provide a general rule that, in the

case of an indebtedness owned (or treated as owned for federal income

tax purposes) by more than one creditor, each creditor that is an

applicable financial entity must comply with the reporting requirements

of this section with respect to any discharge of indebtedness of $600

or more allocable to such creditor. A creditor will be considered to

have complied with the requirements of this section if a lead bank or

other designee of the creditor complies on its behalf.

Comments were received advocating an exception from reporting for

discharges of certain widely-owned securitized indebtedness. The

commentators reasoned that the owners of widely-held securitized

indebtedness will generally have no knowledge regarding when a

discharge occurs, or the amount of discharged debt allocable to each

owner. Further, commentators suggested that it is likely that a

significant portion of such securitized indebtedness may be owned by

persons that are not applicable financial entities and, therefore, are

not subject to section 6050P.

The IRS and Treasury believe, however, that it would be

inconsistent with the purpose of section 6050P to provide a general

exception from reporting for such securitized indebtedness. Section

6050P is intended to increase the likelihood that a debtor will comply

with the tax laws relating to discharge of indebtedness by requiring

the reporting of that event to the IRS. The fact that indebtedness has

been securitized and sold to numerous owners generally does not affect

the tax consequences to the debtor upon a discharge of that

indebtedness. Thus, the IRS and Treasury do not believe that a

discharge of indebtedness should be excepted from section 6050P

reporting simply because that indebtedness was part of a securitization

arrangement.

Commentators also argued that the discharge of an indebtedness held

by a real estate mortgage investment conduit (REMIC) should not be

required to be reported under section 6050P. Because a REMIC is not an

applicable financial entity, commentators contended that section 6050P

should not apply upon a discharge of indebtedness held by a REMIC.

However, section 860F(e) provides that, for purposes of subtitle F

of the Code (Procedure and Administration, including section 6050P), a

REMIC is treated as a partnership and holders of residual interests in

the REMIC are treated as partners. Under the final regulations,

indebtedness owned by a partnership is treated as owned by the

partners. Thus, arguably a discharge of REMIC indebtedness should be

treated similar to partnership indebtedness and thus should be reported

to the extent the residual owners of the REMIC are applicable financial

entities.

Because the IRS and Treasury believe that further study of these

issues is warranted, the final regulations reserve on the application

of section 6050P to discharges of indebtedness held (1) in a pass-

through securitized indebtedness arrangement, or (2) by a REMIC. For

this purpose, a pass-through securitized indebtedness arrangement is

any arrangement whereby one or more debt obligations are pooled and

held for twenty or more persons whose interests in the debt obligations

are undivided co-ownership interests that are freely transferrable. Co-

ownership interests that are actively traded personal property (as

defined in Sec. 1.1092(d)-1) are presumed to be freely transferrable

and held by twenty or more persons. Pending issuance of further

guidance, no penalties will be imposed for failure to report a

discharge of indebtedness held under these circumstances. This relief

from penalties does not extend to arrangements formed for a principal

purpose of avoiding the reporting requirements of this section. The IRS

and Treasury welcome comments regarding compliance with section 6050P

in the case of pass-through securitized indebtedness arrangements and

REMICs.

5. Coordination of Form 1099-A and Form 1099-C

The legislative history to section 6050P indicates that Congress

intended that the IRS and Treasury coordinate reporting under section

6050P with the reporting required under section 6050J. Section 6050J

requires information relating to foreclosures and abandonments of

secured property to be reported on Form 1099-A.

The final regulations provide that if, in the same calendar year, a

discharge of indebtedness reportable under section 6050P occurs in

connection with a foreclosure or abandonment of secured property

reportable under section 6050J, it is not necessary to file both a Form

1099-A and a Form 1099-C for the same debtor. Under the final

regulations, the filing requirements of section 6050J will be satisfied

with respect to a debtor if, in lieu of filing a Form 1099-A, a Form

1099-C is filed in accordance with the instructions for the filing of

that form. This coordinated filing provision applies to discharges of

indebtedness after December 31, 1994.

6. Direct or Indirect Subsidiary

Commentators requested that the final regulations include a

definition of a direct or indirect subsidiary for purposes of section

6050P. Section 6050P(c)(1)(C) provides that the definition of

applicable financial entity includes a direct or indirect subsidiary of

an entity described in section 6050P(c)(1)(A). In response to these

comments, the final regulations provide that, for purposes of section

6050P(c)(1)(C), the term direct or indirect subsidiary means a

corporation in a chain of corporations beginning with the entity

described in section 6050P(c)(1)(A), if at least 50 percent of the

total combined voting power of all classes of stock entitled to vote,

or at least 50 percent of the total value of all classes of stock, of

such corporation is directly owned by the entity described in section

6050P(c)(1)(A), or by one or more other corporations in the chain.

7. Other Exceptions From Reporting

The IRS and Treasury received numerous comments advocating that the

final regulations include exceptions from reporting with respect to

certain discharges of indebtedness.

A. Reporting for Non-U.S. Debtors

Comments were received relating to the inclusion in final

regulations of an exception for reporting discharges of indebtedness of

certain foreign debtors. These comments noted that, in some cases,

discharges of indebtedness that involve such debtors will not result in

income that is taxable in the United States.

On the other hand, there clearly are cases in which a foreign

person may be subject to U.S. tax with respect to a discharge of

indebtedness. Because there is no clear guidance on which financial

institutions may rely for purposes of determining whether a foreign

person would be subject to U.S. tax with respect to cancellation of

indebtedness income, it is not appropriate to provide a general

exception for foreign persons. However, the IRS and Treasury are

continuing to study the issue of whether reporting is necessary in the

case of foreign debtors whose debt is discharged by foreign branches of

U.S. financial institutions. Accordingly, pending the issuance of

further guidance, no penalties will be imposed if an applicable

financial entity fails to report a discharge of indebtedness of a

foreign debtor by a foreign branch of the entity.

[[Page 267]]

B. Reporting Where Debt Is Acquired by Related Persons

Comments were received requesting that the final regulations

clarify whether reporting is required in circumstances in which there

is a deemed discharge of indebtedness pursuant to the regulations under

section 108(e)(4). Section 108(e)(4) and implementing regulations (see

Sec. 1.108-2) provide that the acquisition of outstanding indebtedness

by a person related to the debtor from a person who is not related to

the debtor is treated as if the debtor had acquired the indebtedness

and may result in a realization by the debtor of income from discharge

of indebtedness. Commentators indicated that applicable financial

entities often will be unaware that the conditions of section 108(e)(4)

have been satisfied and that the debtor's indebtedness is considered to

have been discharged. In response to these comments, the final

regulations provide that no reporting is required under section 6050P

in the case of a discharge of indebtedness under section 108(e)(4)

unless the disposition of the indebtedness by the creditor was made

with a view to avoiding the reporting requirements of this section.

C. Reporting for Guarantors of Indebtedness

Commentators also requested guidance on whether, and under what

circumstances, a Form 1099-C must be filed for a guarantor of an

indebtedness when the underlying indebtedness is discharged. The final

regulations provide that, in the case of guaranteed debt, a guarantor

is not treated as a debtor for purposes of reporting under section

6050P. Thus, reporting for guarantors is not required.

D. Reporting for Non-lending Transactions

A number of comments were received advocating an exception in the

final regulations for discharges of indebtedness where the indebtedness

is incurred in a non-lending transaction. Advocates of this exception

argued that the primary reason applicable financial entities, and not

all trade or businesses, were made subject to section 6050P is that

financial entities have extensive involvement in lending transactions

where the majority of discharges of indebtedness will occur.

Commentators argued that when an applicable financial entity is a

creditor as a result of a non-lending transaction, it should be treated

in the same manner as a non-applicable financial entity with respect to

that indebtedness, and not be subject to section 6050P if a discharge

occurs.

Neither the language of section 6050P nor its legislative history

provides any indication that Congress intended for discharges of non-

lending indebtedness to be excluded from reporting. Moreover, it makes

no difference in determining whether a debtor has income under section

61(a)(12) that the indebtedness was incurred in a non-lending

transaction. Accordingly, the final regulations do not adopt this

suggestion.

E. Reporting of Disputed Liabilities

The temporary and proposed regulations do not address the reporting

requirements under section 6050P in the case of the settlement of a

disputed liability. The preamble to the temporary regulations solicited

public comment relating to this issue. Several commentators urged that

the final regulations include an exception from reporting for

settlements of bona fide disputed liabilities.

The determination regarding whether the settlement of a disputed

liability results in discharge of indebtedness income under section

61(a)(12) is inherently factual. Thus, it continues to be the position

of the IRS and Treasury that this issue should be addressed on a case-

by-case basis, rather than by these final regulations. Therefore, the

final regulations do not provide an exception from reporting for

disputed liabilities. Instead, resolution of the question of whether

there may have been a discharge of indebtedness reportable under this

section remains the obligation of the applicable financial entity. The

IRS and Treasury recognize that a creditor and debtor may take

inconsistent positions on this issue. The IRS does not intend to impose

penalties for good faith failures to report settlements that constitute

discharges of indebtedness.

8. Miscellaneous Comments

Comments were also received relating to whether applicable

financial entities have any information reporting obligations in

instances where payments are received on previously discharged debts.

In response to those inquiries, the final regulations clarify that no

additional reporting or Form 1099-C correction is required if a

creditor receives a payment of all or a portion of a discharged debt

that has been reported to the IRS for a prior calendar year.

Comments were received respecting the TIN solicitation requirements

of the temporary and proposed regulations. In response to those

comments, the final regulations provide that a reasonable effort

(rather than all reasonable efforts) must be made to obtain the correct

name/TIN combination of the person whose indebtedness is discharged.

The IRS and Treasury received a number of other comments in

addition to those summarized above. Some of the suggestions contained

in the comments have been adopted in the final regulations. Other

suggested changes were not adopted primarily because those suggestions

were inconsistent with the purpose of the statute and its legislative

history.

Special Analyses

It has been determined that this Treasury decision is not a

significant regulatory action as defined in EO 12866. Therefore, a

regulatory assessment is not required. It also has been determined that

section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5)

and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to

these regulations, and, therefore, a Regulatory Flexibility Analysis is

not required. Pursuant to section 7805(f) of the Internal Revenue Code,

the notice of proposed rulemaking preceding these regulations was

submitted to the Chief Counsel for Advocacy of the Small Business

Administration for comment on its impact on small business.

Drafting Information

The principal authors of these regulations are Sharon L. Hall and

Michael F. Schmit, Office of the Assistant Chief Counsel (Income Tax

and Accounting), IRS. However, other personnel from the IRS and

Treasury Department participated in their development.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by

removing the entry for Sec. 1.6050P-1T and adding an entry in numerical

order to read as follows:

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

Section 1.6050P-1 also issued under 26 U.S.C. 6050P. * * *

[[Page 268]]

Par. 2. Sections 1.6050P-0 and 1.6050P-1 are added to read as

follows:

Sec. 1.6050P-0 Table of contents.

This section lists the major captions that appear in Sec. 1.6050P-

1.

Sec. 1.6050P-1 Information reporting for discharges of

indebtedness by certain financial entities

(a) Reporting requirement.

(1) In general.

(2) No aggregation.

(3) Amounts not includible in income.

(4) Time and place for reporting.

(i) In general.

(ii) Indebtedness discharged in bankruptcy.

(b) Date of discharge.

(1) In general.

(2) Identifiable events.

(i) In general.

(ii) Statute of limitations.

(iii) Decision to discontinue collection activity; creditor's

defined policy.

(iv) Expiration of non-payment testing period.

(3) Permitted reporting.

(c) Indebtedness.

(d) Exceptions from reporting requirement.

(1) Certain bankruptcy discharges.

(i) In general.

(ii) Business or investment debt.

(2) Interest.

(3) Non-principal amounts in lending transactions.

(4) Indebtedness of foreign persons held by foreign branches of U.S.

financial institutions.

(i) Reporting requirements.

(ii) Definition.

(5) Acquisition of indebtedness by related party.

(6) Releases.

(7) Guarantors and sureties.

(e) Additional rules.

(1) Multiple debtors.

(i) In general.

(ii) Amount to be reported.

(2) Multiple creditors.

(i) In general.

(ii) Partnerships.

(iii) Pass-through securitized indebtedness arrangement.

(A) Reporting requirements.

(B) Definition.

(iv) REMICs.

(3) Coordination with reporting under section 6050J.

(4) Direct or indirect subsidiary.

(5) Use of magnetic media.

(6) TIN solicitation requirement.

(i) In general.

(ii) Manner of soliciting TIN.

(7) Recordkeeping requirements.

(8) No multiple reporting.

(f) Requirement to furnish statement.

(1) In general.

(2) Furnishing copy of Form 1099-C.

(3) Time and place for furnishing statement.

(g) Penalties.

(h) Effective dates.

(1) In general.

(2) Earlier application.

Sec. 1.6050P-1 Information reporting for discharges of indebtedness by

certain financial entities.

(a) Reporting requirement--(1) In general. Except as provided in

paragraph (d) of this section, any applicable financial entity (as

defined in section 6050P(c)(1)) that discharges an indebtedness of any

person (within the meaning of section 7701(a)(1)) of at least $600

during a calendar year must file an information return on Form 1099-C

with the Internal Revenue Service. Solely for purposes of the reporting

requirements of section 6050P and this section, a discharge of

indebtedness is deemed to have occurred, except as provided in

paragraph (b)(3) of this section, if and only if there has occurred an

identifiable event described in paragraph (b)(2) of this section,

whether or not an actual discharge of indebtedness has occurred on or

before the date on which the identifiable event has occurred. The

return must include the following information--

(i) The name, address, and taxpayer identification number (TIN), as

defined in section 7701(a)(41), of each person for which there was an

identifiable event during the calendar year;

(ii) The date on which the identifiable event occurred, as

described in paragraph (b) of this section;

(iii) The amount of indebtedness discharged, as described in

paragraph (c) of this section;

(iv) An indication whether the identifiable event was a discharge

of indebtedness in a bankruptcy, if known; and

(v) Any other information required by Form 1099-C or its

instructions, or current revenue procedures.

(2) No aggregation. For purposes of reporting under this section,

multiple discharges of indebtedness of less than $600 are not required

to be aggregated unless such separate discharges are pursuant to a plan

to evade the reporting requirements of this section.

(3) Amounts not includible in income. Except as otherwise provided

in this section, discharged indebtedness must be reported regardless of

whether the debtor is subject to tax on the discharged debt under

sections 61 and 108 or otherwise by applicable law.

(4) Time and place for reporting--(i) In general. Except as

provided in paragraph (a)(4)(ii) of this section, returns required by

this section must be filed with the Internal Revenue Service office

designated in the instructions for Form 1099-C on or before February 28

of the year following the calendar year in which the identifiable event

occurs.

(ii) Indebtedness discharged in bankruptcy. Indebtedness discharged

in bankruptcy that is required to be reported under this section must

be reported for the later of the calendar year in which the amount of

discharged indebtedness first becomes ascertainable, or the calendar

year in which the identifiable event occurs.

(b) Date of discharge--(1) In general. Solely for purposes of this

section, except as provided in paragraph (b)(3) of this section,

indebtedness is discharged on the date of the occurrence of an

identifiable event specified in paragraph (b)(2) of this section.

(2) Identifiable events--(i) In general. An identifiable event is--

(A) A discharge of indebtedness under title 11 of the United States

Code (bankruptcy);

(B) A cancellation or extinguishment of an indebtedness that

renders a debt unenforceable in a receivership, foreclosure, or similar

proceeding in a federal or State court, as described in section

368(a)(3)(A)(ii) (other than a discharge described in paragraph

(b)(2)(i)(A) of this section);

(C) A cancellation or extinguishment of an indebtedness upon the

expiration of the statute of limitations for collection of an

indebtedness, subject to the limitations described in paragraph

(b)(2)(ii) of this section, or upon the expiration of a statutory

period for filing a claim or commencing a deficiency judgment

proceeding;

(D) A cancellation or extinguishment of an indebtedness pursuant to

an election of foreclosure remedies by a creditor that statutorily

extinguishes or bars the creditor's right to pursue collection of the

indebtedness;

(E) A cancellation or extinguishment of an indebtedness that

renders a debt unenforceable pursuant to a probate or similar

proceeding;

(F) A discharge of indebtedness pursuant to an agreement between an

applicable financial entity and a debtor to discharge indebtedness at

less than full consideration;

(G) A discharge of indebtedness pursuant to a decision by the

creditor, or the application of a defined policy of the creditor, to

discontinue collection activity and discharge debt; or

(H) The expiration of the non-payment testing period, as described

in paragraph (b)(2)(iv) of this section.

(ii) Statute of limitations. In the case of an expiration of the

statute of limitations for collection of an indebtedness, an

identifiable event occurs under paragraph (b)(2)(i)(C) of this section

only if, and at such time as, a debtor's affirmative statute of

limitations defense is upheld in a final judgment or decision of a

judicial proceeding, and the period for

[[Page 269]]

appealing the judgment or decision has expired.

(iii) Decision to discontinue collection activity; creditor's

defined policy. For purposes of the identifiable event described in

paragraph (b)(2)(i)(G) of this section, a creditor's defined policy

includes both a written policy of the creditor and the creditor's

established business practice. Thus, for example, a creditor's

established practice to discontinue collection activity and abandon

debts upon expiration of a particular non-payment period is considered

a defined policy for purposes of paragraph (b)(2)(i)(G) of this

section.

(iv) Expiration of non-payment testing period. There is a

rebuttable presumption that an identifiable event under paragraph

(b)(2)(i)(H) of this section has occurred during a calendar year if a

creditor has not received a payment on an indebtedness at any time

during a testing period (as defined in this paragraph (b)(2)(iv))

ending at the close of the year. The testing period is a 36-month

period increased by the number of calendar months during all or part of

which the creditor was precluded from engaging in collection activity

by a stay in bankruptcy or similar bar under state or local law. The

presumption that an identifiable event has occurred may be rebutted by

the creditor if the creditor (or a third-party collection agency on

behalf of the creditor) has engaged in significant, bona fide

collection activity at any time during the 12-month period ending at

the close of the calendar year, or if facts and circumstances existing

as of January 31 of the calendar year following expiration of the 36-

month period indicate that the indebtedness has not been discharged.

For purposes of this paragraph (b)(2)(iv)--

(A) Significant, bona fide collection activity does not include

merely nominal or ministerial collection action, such as an automated

mailing;

(B) Facts and circumstances indicating that an indebtedness has not

been discharged include the existence of a lien relating to the

indebtedness against the debtor (to the extent of the value of the

security), or the sale or packaging for sale of the indebtedness by the

creditor; and

(C) In no event will an identifiable event described in paragraph

(b)(2)(i)(H) of this section occur prior to December 31, 1997.

(3) Permitted reporting. If a discharge of indebtedness occurs

before the date on which an identifiable event occurs, the discharge

may, at the creditor's discretion, be reported under this section.

(c) Indebtedness. For purposes of this section, indebtedness means

any amount owed to an applicable financial entity, including stated

principal, fees, stated interest, penalties, administrative costs and

fines. The amount of indebtedness discharged may represent all, or only

a part, of the total amount owed to the applicable financial entity.

(d) Exceptions from reporting requirement--(1) Certain bankruptcy

discharges--(i) In general. Reporting is required under this section in

the case of a discharge of indebtedness in bankruptcy only if the

creditor knows from information included in the reporting entity's

books and records pertaining to the indebtedness that the debt was

incurred for business or investment purposes as defined in paragraph

(d)(1)(ii) of this section.

(ii) Business or investment debt. Indebtedness is considered

incurred for business purposes if it is incurred in connection with the

conduct of any trade or business other than the trade or business of

performing services as an employee. Indebtedness is considered incurred

for investment purposes if it is incurred to purchase property held for

investment, as defined in section 163(d)(5).

(2) Interest. The discharge of an amount of indebtedness that is

interest is not required to be reported under this section.

(3) Non-principal amounts in lending transactions. In the case of a

lending transaction, the discharge of an amount other than stated

principal is not required to be reported under this section. For this

purpose, a lending transaction is any transaction in which a lender

loans money to, or makes advances on behalf of, a borrower (including

revolving credits and lines of credit).

(4) Indebtedness of foreign debtors held by foreign branches of

U.S. financial institutions--(i) Reporting requirements. [Reserved]

(ii) Definition. An indebtedness held by a foreign branch of a U.S.

financial institution is described in this paragraph (d)(4) only if--

(A) The financial institution is engaged through a branch or office

in the active conduct of a banking or similar business outside the

United States;

(B) The branch or office is a permanent place of business that is

regularly maintained, occupied, and used to carry on a banking or

similar financial business;

(C) The business is conducted by at least one employee of the

branch or office who is regularly in attendance at such place of

business during normal working hours;

(D) The indebtedness is extended outside of the United States by

the branch or office in connection with that trade or business; and

(E) The financial institution does not know or have reason to know

that the debtor is a United States person.

(5) Acquisition of indebtedness by related party. No reporting is

required under this section in the case of a deemed discharge of

indebtedness under section 108(e)(4) (relating to the acquisition of an

indebtedness by a person related to the debtor), unless the disposition

of the indebtedness by the creditor was made with a view to avoiding

the reporting requirements of this section.

(6) Releases. The release of a co-obligor is not required to be

reported under this section if the remaining debtors remain liable for

the full amount of any unpaid indebtedness.

(7) Guarantors and sureties. Solely for purposes of the reporting

requirements of this section, a guarantor is not a debtor. Thus, in the

case of guaranteed indebtedness, reporting under this section is not

required with respect to a guarantor, whether or not there has been a

default and demand for payment made upon the guarantor.

(e) Additional rules--(1) Multiple debtors--(i) In general. In the

case of indebtedness of $10,000 or more incurred on or after January 1,

1995, that involves more than one debtor, a reporting entity is subject

to the requirements of paragraph (a) of this section for each debtor

discharged from such indebtedness. In the case of indebtedness incurred

prior to January 1, 1995, and indebtedness of less than $10,000

incurred on or after January 1, 1995, involving multiple debtors,

reporting under this section is required only with respect to the

primary (or first-named) debtor. Additionally, only one return of

information is required under this section if the reporting entity

knows, or has reason to know, that co-obligors were husband and wife

living at the same address when an indebtedness was incurred, and does

not know or have reason to know that such circumstances have changed at

the date of a discharge of the indebtedness. This paragraph (e)(1)

applies to discharges of indebtedness after December 31, 1994.

(ii) Amount to be reported. In the case of multiple debtors jointly

and severally liable on an indebtedness, the amount of discharged

indebtedness required to be reported under this section with respect to

each debtor is the total amount of indebtedness discharged. For this

[[Page 270]]

purpose, multiple debtors are presumed to be jointly and severally

liable on an indebtedness in the absence of clear and convincing

evidence to the contrary.

(2) Multiple creditors--(i) In general. Except as otherwise

provided in this paragraph (e)(2), if indebtedness is owned (or treated

as owned for federal income tax purposes) by more than one creditor,

each creditor that is an applicable financial entity must comply with

the reporting requirements of this section with respect to any

discharge of indebtedness of $600 or more allocable to such creditor. A

creditor will be considered to have complied with the requirements of

this section if a lead bank, fund administrator, or other designee of

the creditor complies on its behalf in any reasonable manner, such as

by filing a single return reporting the aggregate amount of

indebtedness discharged, or by filing a return with respect to the

portion of the discharged indebtedness allocable to the creditor. For

purposes of this paragraph (e)(2)(i), any reasonable method may be used

to determine the portion of discharged indebtedness allocable to each

creditor.

(ii) Partnerships. For purposes of paragraph (e)(2)(i) of this

section, indebtedness owned by a partnership is treated as owned by the

partners.

(iii) Pass-through securitized indebtedness arrangement--(A)

Reporting requirements. [Reserved]

(B) Definition. For purposes of this paragraph (e)(2)(iii), a pass-

through securitized indebtedness arrangement is any arrangement whereby

one or more debt obligations are pooled and held for twenty or more

persons whose interests in the debt obligations are undivided co-

ownership interests that are freely transferrable. Co-ownership

interests that are actively traded personal property (as defined in

Sec. 1.1092(d)-1) are presumed to be freely transferrable and held by

twenty or more persons.

(iv) REMICs. [Reserved]

(3) Coordination with reporting under section 6050J. If, in the

same calendar year, a discharge of indebtedness reportable under

section 6050P occurs in connection with a transaction also reportable

under section 6050J (relating to foreclosures and abandonments of

secured property), an applicable financial entity need not file both a

Form 1099-A and a Form 1099-C with respect to the same debtor. The

filing requirements of section 6050J will be satisfied with respect to

a borrower if, in lieu of filing Form 1099-A, a Form 1099-C is filed in

accordance with the instructions for the filing of that form. This

paragraph (e)(3) applies to discharges of indebtedness after December

31, 1994.

(4) Direct or indirect subsidiary. For purposes of section

6050P(c)(1)(C), the term direct or indirect subsidiary means a

corporation in a chain of corporations beginning with an entity

described in section 6050P(c)(1)(A), if at least 50 percent of the

total combined voting power of all classes of stock entitled to vote,

or at least 50 percent of the total value of all classes of stock, of

such corporation is directly owned by the entity described in section

6050P(c)(1)(A), or by one or more other corporations in the chain.

(5) Use of magnetic media. Any return required under this section

must be filed on magnetic media to the extent required by section

6011(e) and the regulations thereunder. A failure to file on magnetic

media when required constitutes a failure to file an information return

under section 6721. Any person not required by section 6011(e) to file

returns on magnetic media may request permission to do so under

applicable regulations and revenue procedures.

(6) TIN solicitation requirement--(i) In general. For purposes of

reporting under this section, a reasonable effort must be made to

obtain the correct name/taxpayer identification number (TIN)

combination of a person whose indebtedness is discharged. A TIN

obtained at the time an indebtedness is incurred satisfies the

requirement of this section, unless the entity required to file knows

that such TIN is incorrect. If the TIN is not obtained prior to the

occurrence of an identifiable event, it must be requested of the debtor

for purposes of satisfying the requirement of this paragraph (e)(6).

(ii) Manner of soliciting TIN. Solicitations made in the manner

described in Sec. 301.6724-1(e)(1)(i) and (2) of this chapter will be

deemed to have satisfied the reasonable effort requirement set forth in

paragraph (e)(6)(i) of this section. A TIN solicitation made after the

occurrence of an identifiable event must clearly notify the debtor that

the Internal Revenue Service requires the debtor to furnish its TIN,

and that failure to furnish such TIN may subject the debtor to a $50

penalty imposed by the Internal Revenue Service. A TIN provided under

this section is not required to be certified under penalties of

perjury.

(7) Recordkeeping requirements. Any applicable financial entity

required to file a return with the Internal Revenue Service under this

section must also retain a copy of the return, or have the ability to

reconstruct the data required to be included on the return under

paragraph (a)(1) of this section, for at least four years from the date

such return is required to be filed under paragraph (a)(4) of this

section.

(8) No multiple reporting. If discharged indebtedness is reported

under this section, no further reporting under this section is required

for the amount so reported, notwithstanding that a subsequent

identifiable event occurs with respect to the same amount. Further, no

additional reporting or Form 1099-C correction is required if a

creditor receives a payment of all or a portion of a discharged

indebtedness reported under this section for a prior calendar year.

(f) Requirement to furnish statement--(1) In general. Any

applicable financial entity required to file a return under this

section must furnish to each person whose name is shown on such return

a written statement that includes the following information--

(i) The information required by paragraph (a)(1) of this section;

(ii) The name, address, and TIN of the applicable financial entity

required to file a return under paragraph (a) of this section;

(iii) A legend identifying the statement as important tax

information that is being furnished to the Internal Revenue Service;

and

(iv) Any other information required by Form 1099-C or its

instructions, or current revenue procedures.

(2) Furnishing copy of Form 1099-C. The requirement to provide a

statement to the debtor will be satisfied if the applicable financial

entity furnishes copy B of the Form 1099-C or a substitute statement

that complies with the requirements of the current revenue procedure

for substitute Forms 1099.

(3) Time and place for furnishing statement. The statement required

by this paragraph (f) must be furnished to the debtor on or before

January 31 of the year following the calendar year in which the

identifiable event occurs. The statement will be considered furnished

to the debtor if it is mailed to the debtor's last known address.

(g) Penalties. For penalties for failure to comply with the

requirements of this section, see sections 6721 through 6724.

(h) Effective dates--(1) In general. The rules in this section

apply to discharges of indebtedness after December 21, 1996, except

paragraphs (e)(1) and (e)(3) of this section, which apply to discharges

of indebtedness after December 31, 1994.

(2) Earlier application. Notwithstanding the provisions of

paragraph (h)(1) of this section, an applicable financial entity may,

at its discretion, apply any of the provisions of this section to any

discharge of indebtedness occurring on or after

[[Page 271]]

January 1, 1996, and before December 22, 1996.

Secs. 1.6050P-0T and 1.6050P-1T [Removed]

Par. 3. Sections 1.6050P-0T and 1.6050P-1T are removed.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 4. The authority citation for part 602 continues to read as

follows:

Authority: 26 U.S.C. 7805.

Sec. 602.101 [Amended]

Par. 5. In Sec. 602.101, paragraph (c) is amended by removing the

entry for 1.6050P-1T and adding an entry in numerical order in the

table to read ``1.6050P-1..........1545-1419''.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved: December 12, 1995.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 96-131 Filed 1-3-96; 8:45 am]

BILLING CODE 4830-01-U