Firm Asks IRS to Finalize Relief for Loss Limitation Rules

March 16, 2020

CC:PA:LPD:PR (REG-125710-18)
Courier's Desk
Internal Revenue Service
1111 Constitution Avenue NW
Washington, DC 20224

Re: REG-125710-18, Regulations Under Section 382(h) Related to Built-In Gain and Loss

To Whom It May Concern:

On behalf of T-Mobile US, Inc. (“T-Mobile”),¹ Miller & Chevalier Chartered respectfully submits these comments to the Partial Withdrawal of Notice of Proposed Rulemaking and Notice of Proposed Rulemaking, REG-125710-18, Revised Applicability Dates for Regulations Under Section 382(h) Related to Built-In Gain and Loss, as published in the Federal Register on January 14, 2020 (the “Proposed Regulations”).² We commend the Treasury Department and the Internal Revenue Service (“IRS”) for their efforts to solicit taxpayer and practitioner input and in promptly addressing the concerns raised with respect to the need for transition relief.

On September 10, 2019, the Treasury Department and the IRS published proposed regulations regarding the determination of net built-in gains and losses and recognized built-in gains and losses under Section 382 of the Internal Revenue Code.³ Those proposed regulations provided that the regulations would apply to ownership changes occurring after the date the Treasury decision adopting those regulations as final regulations is published in the Federal Register.⁴ As noted in the preamble to the Proposed Regulations, taxpayers and practitioners expressed concern that this applicability date would impose a significant burden on taxpayers with pending transactions or who are evaluating and negotiating business transactions due to the uncertainty regarding when those transactions would close and when the regulations would be finalized.⁵

As a result of the concerns expressed by taxpayers and practitioners, the Proposed Regulations provide for a delayed applicability date and also provide transition relief for certain ownership changes that occur after that date. Specifically, the Proposed Regulations provide that the regulations will apply to any ownership change that occurs after the date that is 30 days after the date of publication in the Federal Register of the Treasury decision adopting the Proposed Regulations as final regulations.⁶ In addition, the Proposed Regulations provide transition relief for ownership changes that occur immediately after the delayed applicability date if the owner shift or equity structure shift occurs (i) pursuant to a binding agreement in effect on or before the delayed applicability date and at all times thereafter; (ii) pursuant to a specific transaction described in a public announcement made on or before the delayed applicability date;⁷ (iii) pursuant to a specific transaction described in a filing with the Securities and Exchange Commission submitted on or before the delayed applicability date; (iv) by order of a court (or pursuant to a plan confirmed, or a sale approved, by order of a court) in a title 11 or similar case, provided that the taxpayer was a debtor in a case before such court on or before the delayed applicability date; or (v) pursuant to a transaction described in a private letter ruling request submitted to the IRS on or before the delayed applicability date.⁸

Our thanks to the Treasury Department and the IRS for the expedited and thoughtful response addressing the time-sensitive and pressing need for immediate guidance with respect to the applicability date of the regulations and applicable transition relief. In particular, the transition relief for pending publicly announced transactions, as requested by numerous commentators,⁹ is particularly important in order to preserve the parties' expectations for strategic transactions involving large, publicly traded corporations. For all these reasons, we support the Proposed Regulations and respectfully request that they be finalized as proposed.

Thank you in advance for your consideration of this comment letter. We appreciate the opportunity to submit this comment letter and would welcome the opportunity to meet with the Treasury Department and the IRS to discuss it in greater detail or to answer any questions that you may have.

Respectfully submitted,

Marc J. Gerson

David W. Zimmerman

Miller & Chevalier
Washington, DC

cc:
The Honorable David Kautter, Assistant Secretary (Tax Policy), Department of the Treasury
Jeffrey Van Hove, Senior Advisor to the Assistant Secretary (Tax Policy), Department of the Treasury
Krishna Vallabhaneni, Tax Legislative Counsel, Department of the Treasury
Brett York, Associate International Tax Counsel, Department of the Treasury
Colin Campbell, Attorney-Advisor, Department of the Treasury

The Honorable Charles Retttig, Commissioner, Internal Revenue Service
The Honorable Michael Desmond, Chief Counsel, Internal Revenue Service
Robert Wellen, Associate Chief Counsel (Corporate), Internal Revenue Service
Lisa Fuller, Deputy Associate Chief Counsel (Corporate), Internal Revenue Service
Russell Jones, Senior Counsel, Internal Revenue Service
Marie Milnes-Vasquez, Special Counsel — Special Projects, Internal Revenue Service
Jonathan Neuville, Attorney-Advisor, Internal Revenue Service