The IRS has issued proposed regulations relating to the nonrecognition of gain or loss on certain dispositions of an installment obligation under Code Sec. 453B .
The proposed regulations republish in Reg. §1.453B-1(c) the general rule in Reg. §1.453- 9(c)(2) under which gain or loss is not recognized upon certain dispositions. In addition, the proposed regulations incorporate and expand the holding of Rev. Rul. 73-423 , 1973-2 CB 161, to provide that a transferor recognizes gain or loss under Code Sec. 453B(a) when the transferor disposes of an installment obligation in a transaction that results in the satisfaction of the installment obligation, including when an installment obligation of a corporation or partnership is contributed to the corporation or partnership in exchange for an equity interest in the corporation or partnership.
Finally, the proposed regulations amend the regulations under Code Secs. 351 , 361 , and 721 to include a cross-reference to the regulations under Code Sec. 453B regarding recognition of any gain or loss upon the satisfaction of an installment obligation.
Written or electronic comments must be submitted timely to the IRS as requested. A public hearing will be scheduled and held upon request by any person who submits written comments.
Proposed Regulations, NPRM REG-109187-11, 2015FED ¶49,635
Code Sec. 351
CCH Reference – 2014FED ¶16,403
Code Sec. 361
CCH Reference – 2014FED ¶16,581
Code Sec. 453B
CCH Reference – 2014FED ¶21,490
Code Sec. 721
CCH Reference – 2014FED ¶25,241
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