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Internal Revenue Bulletin:

2008-34 August 25, 2008


Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations Elections Regarding Start-up Expenditures, Corporation Organizational Expenditures, and Partnership Organizational Expenses



Internal Revenue Service (IRS), Treasury.


Notice of proposed rulemaking by cross-reference to temporary regulations.


In this issue of the Bulletin, the IRS is issuing temporary regulations (T.D. 9411) relating to the elections to deduct start-up expenditures under section 195 of the Internal Revenue Code (Code), organizational expenditures of corporations under section 248, and organizational expenses of partnerships under section 709. The American Jobs Creation Act of 2004 amended these three sections of the Code to provide similar rules for deducting these types of expenses that are paid or incurred after October 22, 2004. The regulations affect taxpayers that pay or incur these expenses and provide guidance on how to elect to deduct the expenses in accordance with the new rules. The text of those temporary regulations also serves as the text of these proposed regulations.


Comments or a request for a public hearing must be received by October 6, 2008.


Send submissions to: CC:PA:LPD:PR (REG-164965-04), room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-164965-04), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically via the Federal eRulemaking Portal at (IRS REG-164965-04).


Concerning the proposed regulations, Grace Matuszeski, (202) 622-7900; concerning submission of comments or a request for a public hearing, Richard Hurst, at or (202) 622-7180 (not toll-free numbers).


Background and Explanation of Provisions

Temporary regulations in this issue of the Bulletin amend the Income Tax Regulations (26 CFR Part 1) to implement the changes to sections 195, 248, and 709 of the Code made by section 902 of the American Jobs Creation Act of 2004, Public Law 108-357 (118 Stat. 1418). The text of those temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the amendments.

Special Analyses

This notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. Because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and the Treasury Department request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying.

A public hearing will be scheduled if requested in writing by any person that timely submits comments. If a public hearing is scheduled, notice of the date, time and place for the hearing will be published in the Federal Register.

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:


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

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

Par. 2. Section 1.195-1 is revised to read as follows:

§1.195-1 Election to amortize start-up expenditures. [The text of this section is the same as the text of §1.195-1T(a) through (d) published elsewhere in this issue of the Bulletin.]

Par. 3. Section 1.248-1 is amended by revising paragraphs (a) and (c), and adding paragraphs (d) through (f), to read as follows:

§1.248-1 Election to amortize organizational expenditures. (a) [The text of this proposed amendment to §1.248-1(a) is the same as the text of §1.248-1T(a) published elsewhere in this issue of the Bulletin.]

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(c) through (f) [The text of these proposed amendments to §1.248-1(c) through (f) are the same as the text of §1.248-1T(c) through (f) published elsewhere in this issue of the Bulletin.]

Par. 4. Section 1.709-1 is amended by revising the section heading and paragraph (b) to read as follows:

§1.709-1 Treatment of organizational expenses and syndication costs. * * * * *

(b) [The text of this proposed amendment to §1.709-1(b) is the same as the text of §1.709-1T(b)(1) through (b)(5) published elsewhere in this issue of the Bulletin.]

Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.

Note (Filed by the Office of the Federal Register on July 7, 2008, 8:45 a.m., and published in the issue of the Federal Register for July 8, 2008, 73 F.R. 38940)

Drafting Information

The principal author of these regulations is Grace Matuszeski of the Office of the Associate Chief Counsel (Income Tax & Accounting). However, other personnel from the IRS and Treasury Department participated in their development.

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