IRS withdraws pair of proposed regulations

Tax Hot Topics newsletterThe IRS has withdrawn two unrelated proposed regulations affecting corporations and their shareholders.

The first (REG-143686-07) set, issued in January 2009, contained comprehensive rules providing a single model for stock basis recovery applicable to Section 301 and 302 transactions. The proposed regulations received much commentary and the IRS ultimately decided that the proposed regulations cannot be finalized in current form without significant modification, prompting withdrawal.

The second (REG-124627-11), issued in December 2011, provided additional guidance under the “Signing Date” rule for measuring continuity of shareholder interest in a tax-free Section 368 reorganization. The underlying Signing Date rule regulations were finalized on the same day (TD 9565).  The proposed regulations have been withdrawn with the explanation that current guidance is sufficient without the additional proposed regulations (including the final regulations and Rev. Proc. 2018-12 on valuation safe harbor methods).

Greg Fairbanks
Managing Director
Washington National Tax Office 
T +1 202 521 1503

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