[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1362-7]

[Page 733-734]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1362-7  Effective dates.

    (a) In general. The provisions of Sec. Sec. 1.1362-1 through 
1.1362-6 apply to taxable years of corporations beginning after December 
31, 1992. For taxable years to which these regulations do not apply, 
corporations and shareholders subject to the provisions of section 1362 
must take reasonable return positions taking into consideration the 
statute; its legislative history; the provisions of Sec. Sec. 18.1362-1 
through 18.1362-5 (see 26 CFR part 18 as contained in the CFR edition 
revised as of April 1, 1992). In addition, following these regulations 
is a reasonable return position. See Notice 92-56, 1992-49 I.R.B. (see 
Sec. 601.601(d)(2)(ii)(b) of this chapter), for additional guidance 
regarding reasonable return positions for years to which Sec. Sec. 
1.362-1 through 1.1362-6 do not apply. Section 1.1362-6(b)(2)(iv) is 
applicable for taxable years beginning on and after May 14, 2002.
    (b) Special effective date for passive investment income provisions. 
For taxable years of an S corporation and all affected shareholders that 
are not closed, the S corporation and all affected shareholders may 
elect to apply the provisions of Sec. 1.1362-2(c)(5). To make the 
election, the corporation and all affected shareholders must file a 
return or an amended return that is consistent with these rules for the 
taxable year for which the election is made and

[[Page 734]]

each subsequent taxable year. For purposes of this section, affected 
shareholders means all shareholders who received distributive shares of 
S corporation items in the taxable year for which the election is made 
and all shareholders of the S corporation for all subsequent taxable 
years. However, the Commissioner may, in appropriate circumstances, 
permit taxpayers to make this election even if all affected shareholders 
cannot file consistent returns.

[T.D. 8449, 57 FR 55456, Nov. 25, 1992, as amended by T.D. 8994, 67 FR 
34401, May 14, 2002]