Gain or Loss on Deemed Sale of Target Affiliates' Stock -- Temporary and Proposed Regulations Under Section 338

 DEPARTMENT OF THE TREASURY

 ACTION: Temporary regulations.

 SUMMARY: This document contains temporary regulations that add new section 1.338-6T. The temporary regulations supplement existing regulations by providing rules relating to the determination of the amount of gain or loss recognized by a target corporation on its deemed sale under section 338(a) of the Internal Revenue Code of 1986 of the stock of certain affiliates of the target corporation. 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.

 EFFECTIVE DATE: These regulations are effective March 14, 1991 and generally apply to transactions occurring on or after January 1, 1987.

 FOR FURTHER INFORMATION CONTACT: Keith Medleau of the Office of Assistant Chief Counsel (Corporate) on 202-566-3551 (not a toll-free number). For foreign aspects, contact Ken Allison of the Office of Associate Chief Counsel (International) on 202-566-6442 (not a toll- free number).

SUPPLEMENTARY INFORMATION:

PAPERWORK REDUCTION ACT

These regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedures Act (5 U.S.C. 553). For this reason, the collections of information contained in section 1.338-6T have been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget (OMB) under control number (1545-1115). The estimated annual burden per respondent varies from 1.9 hours to 2.9 hours, depending on individual circumstances, with an estimated average of 2.4 hours.

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

BACKGROUND

GENERAL INFORMATION. This document adds new temporary regulations section 1.338-6T to Part 1 of Title 26 of the Code of Federal Regulations. The temporary regulations added by this document will remain in effect until superseded by later final regulations relating to these matters or, if earlier, three years after March 15, 1991.

 This document addresses the situation in which the application of section 338 of the Internal Revenue Code of 1986 results in multiple levels of gain or loss recognition with respect to the same economic gain or loss. This document does not conform the regulations under section 338 to other changes made by the Tax Reform Act of 1986 (the "1986 Act"), such as the repeal of old section 337 and conforming amendments to section 338. See, e.g., section 1.338-4T(k) (relating to the application of old section 337 to a deemed sale of assets).

THE OPERATION OF SECTION 338 AND MULTIPLE TAXATION. Section 338 of the Code generally provides that, if a corporation ("target") is acquired by another corporation ("purchasing corporation") in a qualified stock purchase, the purchasing corporation may elect to have the target treated as if it (a) sold all of its assets (as "old target") at the close of the day on which the qualified stock purchase occurred ("acquisition date") and (b) purchased those assets as a new corporation ("new target") at the beginning of the following day for an amount generally equal to the price paid by the purchasing corporation for target stock plus liabilities of target and other relevant items. Section 338(a) and (b). A qualified stock purchase generally is any transaction or series of transactions in which stock of a corporation possessing at least 80 percent of the total voting power and value of the stock of such corporation is purchased by another corporation during a "12-month acquisition period." Section 338(d)(3) and (h)(1).

 The section 338 election may be either an express or a deemed election. Under section 338(f)(1) of the Code, if a purchasing corporation makes an express section 338 election in connection with its qualified stock purchase of the target, a section 338 election generally will be deemed to have been made by the purchasing corporation with respect to any other qualified stock purchase of a "target affiliate" within the "consistency period" defined in section 338(h)(4). A corporation generally is treated as a target affiliate of the target if each of such corporations was a member of an affiliated group that had the same common parent at any time during so much of the consistency period as ends on the acquisition date of the target. Section 338(h)(5) and (6) and section 1.338-5T(c)(1). A target affiliate with respect to which there is a deemed election is an "affected target." See section 1.338-4T(b)(3) and (9).

 Prior to the 1986 Act, the deemed sale of assets of the target generally was governed by the statutory nonrecognition rule in old section 337, which was a codification of the General Utilities doctrine. Under old section 337, subject to certain exceptions (e.g., section 1245), no gain or loss was recognized by the target on the deemed sale of its assets. Section 1.338-4T(k)(1) Q and A 1. The 1986 Act repealed old section 337 as part of the repeal of the General Utilities doctrine, with the result that generally all gain or loss realized on the deemed sale of the assets of the target is recognized. As a consequence, if an election under section 338(g) is made without a corresponding joint election under section 338(h)(10), a target owning stock of an affected target will recognize gain or loss on the deemed sale of that stock and, thereafter, the affected target also will recognize gain or loss on the deemed sale of its assets. The operation of section 338 in such circumstances would result in multiple levels of gain or loss recognition with respect to the same economic gain or loss. There is no indication that, as a consequence of the repeal of General Utilities, Congress intended to tax economic gain (loss) at the corporate level in these circumstances more than once. See Conf. Rep. No. 841, 99th Cong., 2nd Sess. II-204 (1986).

 For example, assume purchasing corporation, P, purchases in a single transaction all of the stock of domestic target, DT. DT is the common parent of a consolidated group and therefore DT and P cannot make a section 338(h)(10) election with respect to DT and its subsidiaries. DT's sole asset consists of all of the stock of a domestic target affiliate, DT1. The stock of DT1 has a basis of $50 and a fair market value of $150. DT1's assets have a basis of $50 and a fair market value of $150. P makes an express section 338 election with respect to its qualified stock purchase of DT, which triggers a deemed sale of old DT's assets (the DT1 stock) on which DT recognizes gain of $100 and a deemed purchase by new DT of all of the DT1 stock. New DT's deemed purchase constitutes a qualified stock purchase of DT1 stock. The express election for DT causes a deemed election for DT1 under section 338(f)(1) of the Code, since purchases by members of the same affiliated group (here P and new DT) are treated as if made by one corporation under section 338(h)(8). Therefore, old DT1 is deemed to sell its assets and, as a result, also recognizes gain of $100. See section 1.338-4T(c)(3) Q and A 1. Thus, $200 of gain would be recognized with respect to the same $100 of economic gain.

EXPLANATION OF PROVISIONS

 The recognition of gain or loss by a target on the deemed sale of the stock of an affected target, in addition to the recognition of gain or loss by such affected target on the deemed sale of its assets, is an unintended effect of the repeal of General Utilities. Accordingly, temporary regulations section 1.338-6T is added to provide that no gain or loss is recognized by the target on the deemed sale of stock of an affected target with respect to which the target is a section 1.338-6T shareholder if an election under section 338(g) (but not an election under section 338(h)(10)) is made with respect to the affected target. Under new section 1.338-6T, a section 1.338-6T shareholder is a target that directly owns stock in an affected target that meets the requirements of section 1504(a)(2) (i.e., 80-percent vote and value test). Where the common parent of a consolidated group is a target, the term section 1.338-6T shareholder also includes a target that directly owns stock in an affected target not meeting the requirements of section 1504(a)(2) if both the target and affected target are members of the common parent's consolidated group. See section 338(i). The determination and allocation of the aggregate deemed sale price and adjusted grossed-up basis under sections 1.338-4T(h) and 1.338(b)-2T, respectively, will be made by taking into account the stock in all affected targets, including stock with respect to which gain or loss is not recognized under new section 1.338-6T.

 New section 1.338-6T does not provide an exception from multiple taxation in the case of a deemed sale of stock of an affected target by a target that does not meet the definition of a section 1.338-6T shareholder. One case not covered by the new temporary regulations arises where a domestic target (DT) owns all of the stock of two domestic target affiliates (DT1 and DT2) and each of the two target affiliates directly owns 50 percent of the total voting power and value of the stock of another domestic target affiliate (DT3). If a section 338 election is made with respect to a qualified stock purchase of DT, then DT1, DT2 and DT3 would be affected targets. DT is a section 1.338-6T shareholder of DT1 and DT2, but, if DT is not the common parent of an affiliated group filing a consolidated return, neither DT1 nor DT2 would be a section 1.338-6T shareholder of DT3.

 The treatment of some cases where the target is not a section 1.338-6T shareholder may be addressed in regulations under section 336(e) or section 338(h)(10), as revised by the 1986 Act. Section 336(e) grants the Secretary authority to prescribe regulations under which a sale, exchange or distribution of a corporation's stock is treated as a disposition of the corporation's assets and any gain (or loss) on the disposition of the stock is ignored. Section 338(h)(10) grants the Secretary authority to prescribe regulations extending the availability of section 338(h)(10) to affiliated groups that do not file consolidated returns. It is expected, however, that any regulations issued under either section 336(e) or 338(h)(10) will apply only to transactions occurring after the regulations are issued. Comments are requested concerning the scope of any relief from multiple taxation in cases not covered by this regulation and, more generally the scope of any new rules under sections 336(e) and 338(h)(10).

 Paragraph (d) of new section 1.338-6T sets forth situations in which gain or loss is recognized on the deemed sale of affected target stock.

 Under paragraph (d)(2) of new section 1.338-6T, gain or loss is recognized with respect to stock of a foreign affected target deemed sold by a domestic target.

 Under paragraph (d)(3) of new section 1.338-6T, effectively connected gain or loss is recognized on the deemed sale by a foreign target of the stock of a foreign affected target.

 Under paragraph (d)(4) of new section 1.338-6T, gain attributable to earnings and profits described in section 953(d)(4)(B) is recognized on the deemed sale by a domestic corporation of the stock of an affected target that is a corporation electing under section 953(d). This treatment of the deemed sale of the stock of a corporation electing under section 953(d) is consistent with the treatment of an actual disposition of stock under that provision by way of sale or liquidation. Similarly, paragraph (d)(5) of new section 1.338-6T states that, upon the deemed sale of the stock of a DISC (or former DISC) affected target, gain (but not loss) is recognized in an amount equal to the lesser of the gain realized on the DISC stock or the amount of the accumulated DISC income. This rule is consistent with the current treatment of a DISC upon its sale or the termination of its separate corporate existence.

 Paragraph (d)(6) of new section 1.338-6T provides that if an asset whose adjusted basis exceeds its fair market value is contributed or transferred to an affected target in a carryover basis transaction and a purpose of the transaction is to reduce the gain (or increase the loss) recognized on the deemed sale of that affected target's stock, the gain (or loss) recognized will be determined as if the asset had not been contributed or transferred.

 Paragraph (e) of new section 1.338-6T provides effective dates. Generally, the rules of new section 1.338-6T apply to any qualified stock purchase for which a section 338 election is made on or after March 14, 1991. Special rules are provided that extend the application of section 1.338-6T on an elective basis to certain qualified Stock purchases for which an election was made before March 14, 1991.

 Transitional rules are provided in paragraph (f) of new section 1.338-6T that allow an extension of time to make an election under section 338 if neither a section 338(g) election nor a protective carryover election has been made for a qualified stock purchase and the last date for making either election is on or after March 14, 1991. The transitional rules also permit, if the consent of the Commissioner is obtained, a section 338(g) election or revocation of a regular exclusion election for certain qualified stock purchases.

SPECIAL ANALYSES

 It has been determined that these proposed 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. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking for the regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

DRAFTING INFORMATION

 The principal author of these regulations is Keith Medleau of the Office of Chief Counsel, Internal Revenue Service, except that the principal author of section 1.338-6T(d) is Ken Allison of that office. However, other personnel from the Internal Revenue Service and the Department of Treasury participated in developing the regulations on matters of both substance and style.

LIST OF SUBJECTS

26 CFR sections 1.301-1 through 1.385-6

 Corporate adjustments, Corporate distributions, Corporations, Income taxes, Reorganizations.

26 CFR Part 602

 Reporting and recordkeeping requirements.

ADOPTION OF AMENDMENTS TO THE REGULATIONS

Accordingly, parts 1 and 602 of title 26 of the Code of Federal Regulations are amended as follows:

PART 1 -- Income Tax; Taxable Years Beginning After December 31, 1953

Paragraph 1. The authority citation for 26 CFR part 1 is amended by adding the following citation:

Authority: 26 U.S.C. 7805 * * * section 1.338-6T also issued under 26 U.S.C. 338.

Par. 2. New section 1.338-6T is added to read as follows:

SECTION 1.338-6T TREATMENT OF GAIN OR LOSS ON DEEMED SALE OF AFFECTED TARGET STOCK (TEMPORARY).

(a) SCOPE. This section prescribes rules relating to the treatment of gain or loss realized by a target on the deemed sale of stock of an affected target where an election under section 338(g) (but not an election under section 338(h)(10)) is made with respect to the affected target.

(b) DEFINITIONS AND NOMENCLATURE -- (1) IN GENERAL. The definitions and nomenclature in sections 1.338-1T, 1.338-4T (as modified by section 1.338-5T(b)) and 1.338-5T also apply to this section.

(2) SECTION 1.338-6T SHAREHOLDER. A section 1.338-6T shareholder is a target that directly owns stock in an affected target that meets the requirements of section 1504(a)(2). A section 1.338-6T shareholder is also a target that directly owns stock in an affected target if both the target and affected target are members of a consolidated group filing a final consolidated return described in section 1.338-1T(f)(2)(ii).

(c) GENERAL RULE -- (1) DEEMED SALE OF AFFECTED TARGET BY A SECTION 1.338-6T SHAREHOLDER. Except as provided in paragraph (d) of this section, if an express or deemed election under section 338 is made with respect to the qualified stock purchase of a target, no gain or loss is recognized by the target on the deemed sale of stock of an affected target with respect to which the target is a section 1.338-6T shareholder.

(2) EXAMPLES. The provisions of this paragraph (c) are illustrated by the following examples:

EXAMPLE 1. P purchases in a single transaction all of the outstanding stock of DT. DT's sole asset consists of all of the outstanding stock of DT1. The stock of DT1 has a basis of $50 and a fair market value of $150. DT1's assets have a basis of $50 and a fair market value of $150. P makes an express section 338 election with respect to DT. Under section 1.338-4T(c)(3)Q and A1, old DT is deemed to sell all of DT's assets (the DT1 stock), resulting in old DT's realizing gain of $100. New DT is deemed to purchase those assets, and its deemed purchase of all the DT1 stock constitutes a qualified stock purchase of DT1 stock. The express election for DT causes a deemed election for DT1 under section 338(f)(1) of the Code, because purchases by members of the same affiliated group (here P and new DT) are treated as if made by one corporation under section 338(h)(8). Because DT is a section 1.338-6T shareholder of affected target DT1, DT's $100 of gain on the deemed sale of DT1 stock is not recognized. However, DT1 recognizes gain of $100 on the deemed sale of its assets.

EXAMPLE 2. DT owns all of the outstanding stock of DT1 and DT2. DT1 and DT2 each directly own 50 percent of the vote and value of DT3 stock. DT is the common parent of a consolidated group and the group's final return is a consolidated return. See section 1.338-1T(f)(2)(ii). DT is a section 1.338-6T shareholder of affected targets DT1 and DT2. Even though neither DT1 nor DT2 directly owns an amount of stock meeting the requirements of section 1504(a)(2), because DT1, DT2 and DT3 are members of DT's consolidated group, DT1 and DT2 are section 1.338-6T shareholders of DT3. Therefore, no gain or loss is recognized by DT, DT1 or DT2 on the respective deemed sales of affected target stock by each of the corporations.

(D) SITUATIONS IN WHICH GAIN OR LOSS IS RECOGNIZED -- (1) IN GENERAL. Notwithstanding paragraph (c) of this section, gain or loss is recognized to the extent provided in this paragraph (d).

(2) DEEMED SALE OF FOREIGN AFFECTED TARGET BY A DOMESTIC TARGET. Gain or loss is recognized by a domestic target on the deemed sale of stock in a foreign affected target (or a corporation that would be a foreign affected target but for the filing of a regular exclusion election under section 1.338-5T(c)(2)). For the proper treatment of such gain or loss, see, e.g., sections 1246, 1248, 1291 et seq., and 338(h)(16) and section 1.338-5T.

(3) DEEMED SALE PRODUCING EFFECTIVELY CONNECTED INCOME. Gain or loss is recognized by a foreign target on the deemed sale of the stock of a foreign affected target to the extent that such gain or loss is effectively connected (or treated as effectively connected) with the conduct of a trade or business in the United States.

(4) DEEMED SALE OF INSURANCE COMPANY AFFECTED TARGET ELECTING UNDER SECTION 953(d). Gain (but not loss) is recognized by a domestic target on the deemed sale of the stock of an affected target that has in effect an election under section 953(d) in an amount equal to the lesser of the gain realized or the earnings and profits described in section 953(d)(4)(B).

(5) DEEMED SALE OF DISC AFFECTED TARGET. Gain (but not loss) is recognized by a foreign or domestic target on the deemed sale of the stock of an affected target that is a DISC or a former DISC (as defined in section 992(a)) in an amount equal to the lesser of the gain realized or the amount of accumulated DISC income determined with respect to such stock under section 995(c). Such gain will be included in gross income as a dividend as provided in sections 995(c)(2) and 996(g).

(6) ANTI-STUFFING RULE. If an asset the adjusted basis of which exceeds its fair market value is contributed or transferred to an affected target as transferred basis property (within the meaning of section 7701(a)(43)) and a purpose of such transaction is to reduce the gain (or increase the loss) recognized on the deemed sale of such affected target's stock, the gain or loss recognized under this paragraph (d) will be determined as if such asset had not been contributed or transferred.

(7) EXAMPLE. The provisions of this paragraph (d) are illustrated by the following example:

EXAMPLE. (i) P purchases in a single transaction all of the outstanding stock of DT. DT's sole asset consists of all of the outstanding stock of FT1. FT1's sole asset consists of all of the outstanding stock of FT2. The stock of FT1 has a basis of $25 and a fair market value of $150. The stock of FT2 has a basis of $75 and a fair market value of $150. FT1 and FT2 each have $50 of accumulated earnings and profits for purposes of section 1248(c) and (d). FT2's assets have a basis of $125 and a fair market value of $150, and their sale would not generate subpart F income under section 951. The sale of the stock of FT2 or of FT2's assets would not generate income effectively connected with the conduct of a trade or business within the United States. FT1 does not have an election in effect under section 953(d) and neither FT1 nor FT2 is a passive foreign investment company.

(ii) P makes an express section 338 election with respect to DT, which triggers a deemed sale of old DT's assets (the FT1 stock). New DT's deemed purchase of all of the FT1 stock constitutes a qualified stock purchase of the FT1 stock. No regular exclusion election for FT1 and FT2 is filed under section 1.338-5T(c)(2). The express election for DT causes a deemed election for FT1 under section 338(f)(1), because purchases by members of the same affiliated group (here P and new DT) are treated as if made by one corporation under section 338(h)(8). See section 1.338-4T(c)(3) Q and A1. The deemed election for FT1, in turn, triggers a deemed sale of FT1's asset (the stock of FT2) and a deemed election for FT2 (and deemed sale of FT2's assets), for the reasons described above with respect to FT1.

(iii) DT recognizes $125 of gain on the deemed sale of the FT1 stock under paragraph (d)(2) of this section. FT1's $75 of gain on the deemed sale of the FT2 stock is not recognized under paragraph (c) of this section. FT2 recognizes $25 of gain on the deemed sale of its assets. The $125 gain DT recognizes on the deemed sale of the FT1 stock is included in the income of DT as a dividend in its entirety under the rules of section 1248, because FT1 and FT2 have sufficient accumulated and deemed sale earnings and profits for full recharacterization ($50 of accumulated earnings and profits in FT1, $50 of accumulated earnings and profits in FT2, and $25 of deemed sale earnings and profits in FT2). Section 1.338-5T(g). For purposes of sections 901 through 908 of the Code, the source and foreign tax credit limitation basket of $25 of the recharacterized gain on the deemed sale of the FT1 stock will be determined under section 338(h)(16).

(e) EFFECTIVE DATE -- (1) IN GENERAL. This section applies to any qualified stock purchase for which a section 338 election is made (or deemed to have been made) on or after March 14, 1991.

(2) ELECTIVE APPLICATION OF THIS SECTION TO PRIOR SECTION 338 ELECTIONS. If an express or deemed election under section 338 was made before March 14, 1991, for a qualified stock purchase for which the acquisition date is after December 31, 1986, the purchasing corporation may elect, to the extent the amendments made by section 631 of the Tax Reform Act of 1986 apply to such qualified stock purchase, to have this section apply to such qualified stock purchase by filing an irrevocable transitional section 1.338-6T election in accordance with the procedural rules in paragraph (g) of this section. Any election made pursuant to this paragraph will apply to the qualified stock purchase of the target and all affected targets for which the acquisition date is after December 31, 1986, to the extent the amendments made by section 631 of the Tax Reform Act of 1986 apply to such qualified stock purchase.

(f) TRANSITIONAL RULES WITH RESPECT TO OTHER ELECTIONS UNDER SECTION 338 -- (1) IN GENERAL. This paragraph (f) applies to any qualified stock purchase for which the acquisition date is after December 31, 1986, to the extent the amendments made by section 631 of the Tax Reform Act of 1986 apply to such qualified stock purchase.

(2) EXTENSION OF TIME TO MAKE AN ELECTION. Notwithstanding section 1.338-1T(c)(1), if neither a section 338(g) election nor a protective carryover election under section 1.338-4T(f)(6) has been made for a qualified stock purchase and the last date for making either election (without regard to this sentence) is on or after March 14, 1991, the last day for making either election will not be earlier than July 12, 1991.

(3) REVOCATION OF CERTAIN REGULAR EXCLUSION ELECTIONS. Notwithstanding section 1.338-5T(c)(2)(v)(A), if a regular exclusion election under section 1.338-5T(c)(2) is made before May 13, 1991, in connection with a qualified stock purchase, the purchasing corporation may revoke the regular exclusion election if the purchasing corporation obtains the consent of the Commissioner.

(4) REVOCATION OF CERTAIN PROTECTIVE CARRYOVER ELECTIONS. Notwithstanding section 1.338-4T(f)(6)(i)(A), if a protective carryover election is made before May 13, 1991, for a qualified stock purchase, the purchasing corporation may revoke the protective carryover election and make a simultaneous section 338(g) election if the purchasing corporation obtains the consent of the Commissioner.

(5) OTHER QUALIFIED STOCK PURCHASES. If a section 338(g) election was not made for a qualified stock purchase and the last date for making the election was before March 14, 1991, the purchasing corporation may make a section 338(g) election for the qualified stock purchase if the purchasing corporation obtains the consent of the Commissioner.

(6) CONSENT. The consent required in paragraphs (f)(3), (4) and (5) of this section will be granted in the discretion of the Commissioner. Consent will be granted only if the purchasing corporation establishes to the satisfaction of the Commissioner --

(i) that a regular exclusion election was made or a section 338(g) election was not made, in either case, primarily because of a concern about multiple taxation affecting the buyer or the seller, and

(ii) that application of this section would provide relief from such multiple taxation.

If consent is granted, this section, including procedural rules similar to those provided in paragraph (g) of this section, will apply. A section 338(h)(10) election will not be allowed in connection with any election under section 338(g) for which consent is granted. Consent should be applied for in the same manner as an advance ruling from the Internal Revenue Service, not later than July 15, 1991.

(g) PROCEDURAL RULES. A transitional section 1.338-6T election must --

(1) Contain the name, address, and employer identification number of the purchasing corporation;

(2) Contain the name, address, and employer identification number of the original target;

(3) Be filed on or before July 12, 1991;

(4) Be filed where the section 338(g) election was originally filed;

(5) Have attached to it a copy of the previously filed section 338(g) election, but schedules of information, supplemental statements, and corrective statements described in section 1.338-1T(e)(1) need not be attached;

(6) State that "THIS TRANSITIONAL SECTION 1.338-6T ELECTION IS MADE PURSUANT TO SECTION 1.338-6T";

(7) Include a list that sets forth each affected target and its employer identification number, and indicates each original or affected target that is a section 1.338-6T shareholder. The list must indicate for each affected taxable year (as defined in section 1.338-1T(m)(12)) whether each such corporation is required to file amended return(s) and the place of such filing or (if applicable) whether an amended consolidated return or combined deemed sale return (see section 338(h)(15) and section 1.338-4T(k)(6)) must be filed;

(8) Include a declaration that "TAXPAYER AGREES TO EXTEND THE STATUTE OF LIMITATIONS ON ASSESSMENT FOR TWO YEARS FROM THE DATE OF THE FILING OF THIS TRANSITIONAL SECTION 1.338-6T ELECTION, TO THE EXTENT THE PERIOD OF LIMITATIONS WOULD OTHERWISE EXPIRE EARLIER, FOR ANY TAXABLE YEAR AFFECTED (WITHIN THE MEANING OF SECTION 1.338-1T(m)(12)) BY THE FILING OF THIS ELECTION";

(9) Include a declaration that either "AMENDED RETURN(S) WILL BE TIMELY FILED BY OR FOR EACH TARGET (INCLUDING ANY AFFECTED TARGET) FOR ALL AFFECTED TAXABLE YEARS, AS DEFINED IN SECTION 1.338-1T(m)(12), UNLESS SUCH REQUIREMENT IS WAIVED IN WRITING BY THE DISTRICT DIRECTOR OR HIS DELEGATE" or "THE ORIGINAL RETURNS ARE CONSISTENT WITH THE PROVISIONS OF SECTION 1.338-6T"; and

(10) Be signed by a person who states under penalties of perjury that he or she is authorized to make the transitional section 1.338-6T election on behalf of the purchasing corporation.

There is need for immediate guidance with respect to the provisions contained in the Treasury decision. It is therefore found impracticable and contrary to the public interest to issue this Treasury decision with notice and procedure under section 553(b) of Title 5 of the United States Code or subject to the effective date limitation of section 553(d) of Title 5, United States Code.