Effective Dates for Rules on Partnership Liabilities--Temporary and Proposed Regulations Under Section 752

 DEPARTMENT OF THE TREASURY

 ACTION: Temporary Regulations.

 SUMMARY: This document contains temporary regulations, relating to the treatment of partnership liabilities, that amend section 1.752-4T. The temporary regulations reflect changes to the applicable tax law made by section 79 of the Tax Reform Act of 1984. The text of the temporary regulations set forth in this document also serves as the text of the proposed regulations cross-referenced in the notice of proposed rulemaking in the Proposed Rules section of this issue of the Federal Register.

 DATES: The amendments to section 1.752-4T are effective as of December 29, 1988.

 FOR INFORMATION CONTACT: Mary A. Berman at (202) 566-3440 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

PAPERWORK REDUCTION ACT

This regulation is being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collection of information contained in this regulation has been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget (OMB) under control number 1545-1090. The estimated annual burden per respondent varies from 3 minutes to 8 minutes, depending on individual circumstances, with an estimated average of 5 minutes.

 These estimates are an approximation of the average time expected to be necessary for a collection of information. They are based on such information as is available to the Internal Revenue Service. Individual respondents may require greater or less time, depending on their particular circumstances.

 For further information concerning this collection of information, and where to submit comments on this collection of information, the accuracy of the estimated burden and suggestions for reducing this burden, please refer to the preamble to the cross-reference notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register.

BACKGROUND

 Proposed and temporary regulations under section 752 were published on December 30, 1988, and amended on November 21, 1989 ("temporary regulations"). This document amends the temporary regulations in response to comments with respect to the temporary regulations. New proposed regulations are issued concurrently with this amendment to the temporary regulations. The temporary regulations added by this document will remain in effect until superseded by later temporary or final regulations relating to these matters.

EXPLANATION OF PROVISIONS

 The effective dates in the temporary regulations are amended in three respects. First, partnerships are given another opportunity to elect to apply the temporary regulations as of the first taxable year of the partnership ending after December 29, 1988, to all liabilities to which the temporary regulations did not otherwise apply. The election is made by filing a statement with an amended partnership return for the first taxable year of the partnership ending after December 29, 1988. As a result, if a partnership makes the election, adjustments may be necessary on subsequent partnership returns.

 Second, a transitional election has been added for partnerships to elect to apply the temporary regulations to liabilities incurred or assumed by the partnership on or after December 28, 1991 and before January 1, 1992.

 Finally, for purposes of applying the effective date rules, the temporary regulations clarify that a termination of a partnership under section 708(b)(1)(B) will not cause any partnership liabilities incurred or assumed prior to the termination to be treated as incurred or assumed on the date of the termination.

DRAFTING INFORMATION

 The principal author of these regulations is Mary A. Berman of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). However, personnel from other offices of the Internal Revenue Service and the Treasury Department participated in their development.

 List of Subjects in 26 CFR 1.751-1 through 1.755-2T Income taxes.

Treasury Decision 8355

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1 -- INCOME TAX, TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1953

Paragraph 1. The authority for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.752-0T is amended as follows:

1. The captions listed under "SECTION 1.752-4T EFFECTIVE DATES AND TRANSITION RULES [TEMPORARY]" are revised to read as follows:

SECTION 1.752-4T EFFECTIVE DATES AND TRANSITION RULES (TEMPORARY].

(a) In general.

(b) Partner loans and guarantees.

(c) Duty of consistency.

(d) Election.

(1) In general.

(2) Transitional election.

(3) Time and manner of election.

(e) Coordination with amendments to section 704(b) regulations.

(f) Effect of section 708(b)(1)(B) termination on determining date liabilities are incurred.

(g) Cross reference.

Par. 3. Section 1.752-4T is amended as follows:

1. Paragraph (d)(2) is redesignated as paragraph (d)(3) and revised and new paragraph (d)(2) is added as set forth below.

2. Paragraph (f) is redesignated as paragraph (g) and the following new paragraph (f) is added as set forth below.

SECTION 1.752-4T EFFECTIVE DATES AND TRANSITION RULES (TEMPORARY].

* * * * *

(d) * * *

(2) TRANSITIONAL ELECTION. A partnership may elect to apply the provisions of sections 1.752-1T, -2T, and -3T to liabilities incurred or assumed by the partnership on or after December 28, 1991 but before January 1, 1992.

(3) TIME AND MANNER OF ELECTION. An election under paragraph (d)(1) of this section is made by attaching a written statement to the amended partnership return for the first taxable year of the partnership ending after December 29, 1988. An election under paragraph (d)(2) of this section is made by attaching a written statement to the partnership return for the first taxable year of the partnership ending on or after December 28, 1991. A written statement required pursuant to this paragraph (d)(3) must include the name, address, and taxpayer identification number of the partnership making the statement and contain a declaration that an election is being made under this paragraph (d).

* * * * *

(f) Effect of section 708(b)(1)(B) termination on determining date liabilities are incurred or assumed. For purposes of applying this section, a termination of a partnership under section 708(b)(1)(B) will not cause partnership liabilities incurred or assumed prior to the termination to be treated as incurred or assumed on the date of the termination.

* * * * *

PART 602 -- OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 4. The authority for part 602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 5. Section 602.101(c) continues to read as follows:

"1.752-4T....................................1545-1090."