The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-125710-18) as guidance concerning the treatment of built-in gains and losses under section 382(h).
These proposed regulations [PDF 364 KB] (19 pages as published in the Federal Register) reflect changes made by the 2017 U.S. tax law (Pub. L. No. 115-97)—the legislation that is often referred to as the “Tax Cuts and Jobs Act” (TCJA).
As explained in the preamble to today’s proposed regulations, the TCJA introduced substantial changes to the Code that:
…have generated significant, additional uncertainty regarding the application of section 382 in general . . . [and] the changes to various provisions of the Code made by the TCJA have exacerbated longstanding, unresolved issues regarding the application of section 382(h) and created new areas of complexity and ambiguity for taxpayers and the IRS. In particular, the Treasury Department and the IRS have identified numerous issues that would arise from the interaction of the 338 approach with various provisions of the Code following the TCJA’s enactment.
Accordingly, Treasury and the IRS issued these proposed regulations to provide “clearer and more comprehensive guidance” for taxpayers in applying section 382(h). The proposed regulations aim to:
The purpose of this report is to provide text of these just released proposed regulations. A more detailed discussion of the proposed regulations will be provided in a future report from KPMG.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.