Daily Tax Update - July 20, 2007

IRS ISSUES FINAL REGS ON AGENT DESIGNATION FOR CONSOLIDATED GROUP WITH FOREIGN COMMON PARENT:  Today, the IRS issued final regulations (T.D. 9343) under section 1502 authorizing the IRS to designate a domestic member of a consolidated group as a substitute agent to act as the sole agent for the group when a foreign entity is the group's common parent.

  • The final regulations apply to corporations that join in the filing of a consolidated income tax return when the common parent of the consolidated group is a foreign entity that is treated as a domestic corporation under section 7874(b) or as the result of a section 953(d) election, and the foreign parent would otherwise be the agent for the group. 
  • The final regulations adopt in substance temporary and proposed regulations published on March 14, 2006.  The final regulations clarify and explain the rules governing the designation of an agent for the members of a consolidated group.   The final regulations also clarify the term of the domestic substitute agent's agency and indicate that Treas. Reg. section 1.1502-77(e)(1) is applicable to determine whether a domestic substitute agent's existence has terminated.
  • The final regulations apply to taxable years for which the consolidated Federal income tax return is due (without extensions) after July 23, 2007.
  • The regulations can be accessed here.

TAX BILLS INTRODUCED JULY 19TH:
H.R. 3105: To amend the Internal Revenue Code of 1986 to expand the credit for electricity produced from certain renewable resources and the investment energy credit to include ocean thermal energy conversion projects.
Sponsor: Rep. Faleomavaega, Eni F.H. [AS] (introduced 7/19/2007)      Cosponsors (3)

H.R. 3107: To amend the Internal Revenue Code of 1986 to provide a credit for residential biomass fuel property expenditures.
Sponsor: Rep. Hodes, Paul W. [NH-2] (introduced 7/19/2007)      Cosponsors (5)

H.R. 3109: To amend the Internal Revenue Code of 1986 to allow reimbursement from flexible spending accounts for certain dental products.
Sponsor: Rep. Lewis, Ron [KY-2] (introduced 7/19/2007)      Cosponsors (1) 

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
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