The following were originally printed in the Weekly Report, part of the BNA Tax and Accounting Center.

Volume 27 Number 46
Monday, November 17, 2008

Treasury Stands by Authority to Ease Treatment of Bank Losses

A Treasury Department spokesman says the agency had the authority to lift restrictions on the use of losses by banks following an acquisition in Notice 2008-83, which is now under scrutiny by Congress and the subject of debate in the tax community. He says the government issued the notice under §382(h) using its regulatory authority under §382(m). He says Treasury is in communication with lawmakers who have raised concerns about the scope of the impact of the guidance.

IRS Limits 36-Month Rule Application on Cancellation of Indebtedness

IRS issues proposed, temporary, and final rules (REG-118327-08, T.D. 9430) to prevent premature information reporting from certain entities required to submit information returns for cancellation of indebtedness under §6050P. Earlier rules required applicable financial entities to issue Forms 1099-C when an “identifiable event” occurred, one of which was the expiration of a “non-payment testing period” after 36 months if a creditor had not been paid in that time. The new rules limit the application of the 36-month rule to the entities for which it was originally intended, IRS says.

IRS Addresses New Method for REITs to Apply §857 Safe Harbor

IRS issues Rev. Proc. 2008-69 to explain a new method real estate investment trusts can use to apply the prohibited transactions safe harbor under §857. “The revenue procedure promulgates very useful, practical, and efficient guidelines for implementing the new law,” says Tony Edwards, executive vice president and general counsel at the National Association of Real Estate Investment Trusts.

FOCUS: Capital Contributions Can Affect NOL Usage

The author of this week's Focus examines the loss limitation imposed by §382 following an ownership change. The author says that Congress, in enacting §382(l)(1), contemplated that certain capital contributions occurring within the two-year period preceding the date of an ownership change would not give rise to a reduction in the value of the loss corporation's stock—“that capital contributions made to ‘continue basic operations' would enjoy an exemption from the rigors of §382(l)(1)(A).”

Web Solutions

This issue of the Weekly Report includes Web Solutions, exploring the research and technical aspects of the BNA Tax and Accounting Center, a resource providing analysis of critical issues, practice aids, and full text of the Code, regulations, IRS documents, and cases. BNA Tax and Accounting Center includes the U.S. Income Portfolio Series; the Estates, Gifts, and Trusts Portfolio Series; the Foreign Income Portfolio Series; and Tax Practice Series. For information, call 800-223-7270.