Commodities Sales Info Reporting Rules

 [4830-01]

 ACTION: Final Regulations.

 SUMMARY: This document contains final regulations relating to information returns of brokers. Changes to the applicable law were made by the Tax Equity and Fiscal Responsibility Act of 1982. The regulations affect brokers effecting dispositions (including short sales) of securities, commodities, regulated futures contracts, and forward contracts and provide them with guidance needed to comply with the law.

 EFFECTIVE DATE: The regulations are effective July 1, 1983.

 FOR FURTHER INFORMATION CONTACT: John P. Moriarty, 202-622-4950 (not a toll-free call).

SUPPLEMENTARY INFORMATION:

BACKGROUND

Section 1.6045-1(a)(5) of the Income Tax Regulations (26 CFR part 1) defines the term "commodity" for purposes of the information reporting requirements of section 6045 of the Internal Revenue Code. On January 5, 1984, the Internal Revenue Service published in the Federal Register proposed amendments (49 FR 646) to those regulations to clarify the definition of a commodity. The proposed regulations also contain an exception to the information reporting requirements for sales of small amounts of commodities.

PUBLIC COMMENTS

 A number of comments on the proposed regulations suggested specific de minimis dollar amounts or quantities of commodities that should be excepted from reporting. A public hearing on the January 1984 regulations was held on March 28, 1984. After consideration of all written comments regarding the proposed amendments, the final regulations under section 6045 are revised by this Treasury decision. The Internal Revenue Service anticipates finalizing the remaining aspects of the proposed amendments in the near future.

EXPLANATION OF PROVISIONS

 After considering the comments submitted with respect to the proposed regulations, the Service has concluded that specifically tailored rules that except certain transactions from the information reporting requirements will more appropriately balance the cost of reporting against the improvement in compliance attributable to reporting than a general de minimis rule. Further, the Service has determined that these rules should not necessarily be limited to transactions involving commodities, but rather should apply to sales of securities as well in appropriate circumstances.

 Accordingly, the final regulations provide that no return of information is required for a sale effected by a broker for a customer if the sale is an "excepted sale." A sale is an excepted sale if it is so designated by the Service in a revenue ruling or revenue procedure published in the Internal Revenue Bulletin.

SPECIAL ANALYSES

 It has been determined that these rules are not major rules as defined in Executive Order 12291. Therefore, a Regulatory Impact Analysis is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to these regulations, and, therefore, a final Regulatory Flexibility Analysis is not required.

DRAFTING INFORMATION

 The principal author of these regulations is John P. Moriarty of the Office of the Assistant Chief Counsel (Income Tax and Accounting), Internal Revenue Service. However, personnel from other offices of the Internal Revenue Service and Treasury Department participated in developing the regulations on matters of both substance and style.

LIST OF SUBJECTS

26 CFR 1.6031-1 through 1.6060-1

 Income taxes, Reporting and recordkeeping requirements.

Treasury Decision 8452

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 citation for part 1 is amended by adding the following authority citation:

Authority: 26 U.S.C. 7805 * * * Section 1.6045-1 also issued under 26 U.S.C. 6045 * * *

Par. 2. Section 1.6045-1 is amended by revising paragraph (c)(3) to read as follows:

SECTION 1.6045-1 RETURNS OF INFORMATION OF BROKERS AND BARTER EXCHANGES.

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(c) * * *

(3) EXCEPTIONS -- (i) IN GENERAL. Except as provided in paragraph (c)(3)(ii) of this section, the exceptions set forth in paragraph (c)(3) of section 5f.6045-1 of this chapter apply to sales effected on or after May 29, 1984. For an exception for certain sales of agricultural commodities and certificates issued by the Commodity Credit Corporation after January 1, 1993, see paragraph (c)(7) of this section. With respect to sales effected before May 29, 1984, the exceptions provided in section 1.6045-1(c)(3)(as contained in the CFR edition revised as of April 1, 1984) apply.

(ii) EXCEPTED SALES. No return of information is required with respect to a sale effected by a broker for a customer if the sale is an excepted sale. For this purpose, a sale is an excepted sale if it is so designated by the Internal Revenue Service in a revenue ruling or revenue procedure published in the Internal Revenue Bulletin. (See section 601.601(d)(2)(ii)(b) of this Chapter).

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