Chicago Managing Director and Assistant General Counsel, Bob Gordon, along with colleagues at the ABA Section of Taxation, recently submitted Comments to the IRS related to regulations enabling elections for certain transactions undue section 336(e).
The Comments address the regulations that enable the election under section 336(e) for
certain sales and distributions of stock. Proposed regulations on this subject were issued on August 25, 2008 (the “Proposed Regulations”). Final regulations were adopted on May 15, 2013 (the “Final Regulations”). The 2014-2015 Priority Guidance Plan lists as a priority project, “[r]egulations under §336(e) to revise the treatment of certain stock dispositions as asset sales.”
We commend the Treasury Department (“Treasury”) and the Internal Revenue Service (the “Service”) for the detailed consideration of issues in the regulations, especially their responsiveness to comments on the Proposed Regulations. We believe that, as the tax practitioner and business communities become familiar with the regulations, the election will become increasingly useful and will simplify many business transactions.
The purpose of the Comments is not to revisit basic policy judgments reflected in the regulations, such as the use of the section 338(h)(10) regulations (including the consistency rules) as the model for the section 336(e) election regime and the disallowance of certain losses on stock distributions. Nor is our purpose to address possible future regulations to make the election available in transactions involving foreign corporations.