IRS REQUESTS COMMENTS ON ISSUES TO BE ADDRESSED IN INTANGIBLES AMORTIZATION REGS.

Announcement 94-92

                             [4830-01-u]

ACTION: Advance notice of proposed rulemaking.

SUMMARY: This notice invites written comments from the public on issues that the IRS may address in proposed regulations under section 197 relating to the amortization of goodwill and certain other intangibles. This notice is intended to help develop guidance to assist taxpayers in applying the rules relating to section 197.

DATES: Written comments concerning the regulations must be received by August 23, 1994. ADDRESSES: Send comments to: CC:DOM:CORP:T:R (PS-29-94), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. In the alternative, comments may be hand delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:T:R (PS-29-94), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: John Huffman or Susan Reaman (202) 622-3110 (not a toll-free number).

SUPPLEMENTARY INFORMATION: Section 13261 of the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) added section 197 to the Internal Revenue Code. Section 197 establishes a uniform 15-year amortization period for acquired goodwill and certain other intangibles. In developing guidance to assist taxpayers in applying the rules of section 197, the IRS has identified certain issues that should be addressed by proposed regulations for section 197.

The IRS invites comments (signed original and eight (8) copies) from the public on these and any other issues for which taxpayers believe guidance is particularly needed. All materials submitted will be available for public inspection and copying. The identified issues are as follows:

SECTION 197 INTANGIBLES -- DEFINITIONS

1) What types of licenses, permits, or other rights should be covered by section 197(d)(1)(D)?

2) What should constitute "an interest in a trade or business or a substantial portion thereof" for purposes of section 197(d)(1)(E) (covenants not to compete)?

INTANGIBLES EXCEPTED FROM SECTION 197 TREATMENT

3) What types of software should be excluded from section 197 treatment under sections 197(e)(3)(A)(i) and (ii)?

4) Under what circumstances should intangibles described in section 197(e)(4)(A), (B), or (C) be considered as not acquired in a transaction (or series of transactions) involving the acquisition of assets constituting a trade or business or substantial portion thereof?

5) What rights, whether under a contract or granted by a governmental unit or agency or instrumentality thereof, should be excluded from section 197 treatment under the regulatory authority of section 197(e)(4)(D)?

ANTI-CHURNING RULES

6) What specific rules are needed to clarify the application of the anti-churning rules of section 197(f)(9)?

                                            Stuart Brown