# Transfers of subsidiary stock and deconsolidations of subsidiaries.
**AGENCY:**
Internal Revenue Service (IRS), Treasury.
**ACTION:**
Correcting amendment.
**SUMMARY:**
This document contains a correction to final regulations (TD 9424) that were published in the *Federal Register* on Wednesday, September 17, 2008 (73 FR 53934).
The regulations apply to corporations filing consolidated returns, and corporations that enter into certain tax-free reorganizations. The regulations provide rules for determining the tax consequences of a member's transfer (including by deconsolidation and worthlessness) of loss shares of subsidiary stock.
**DATES:**
*Effective Date:* This correction is effective on March 5, 2010, and is applicable on September 17, 2008.
**FOR FURTHER INFORMATION CONTACT:**
Maury Passman, (202) 622-7550 or Theresa Abell, (202) 622-7700 (not toll-free numbers).
**SUPPLEMENTARY INFORMATION:**
**Background**
The final regulations (TD 9424) that are the subject of this document are under sections 337, 358, 362 and 1502 of the Internal Revenue Code.
**Need for Correction**
As published, the final regulations (TD 9424) contain an error that may prove to be misleading and is in need of clarification. The final regulations revised § 1.1502-35(a) to provide that, in general, § 1.1502-35 would only apply to transactions completed prior to September 17, 2008. The final regulations also revised the operative rules in § 1.1502-35. However, the effective date prescribed in § 1.1502-35(j) appeared to preclude the application of the revised § 1.1502-35 to transactions completed prior to September 17, 2008. The final regulations are clarified to provide that the revised rules in § 1.1502-35 (including the ten-year termination of application of § 1.1502-35 described in Background section 2.A. of the preamble) apply after September 16, 2008, to all transactions subject to that section.
**List of Subjects in 26 CFR Part 1**
Income taxes, Reporting and recordkeeping requirements.
**26 CFR Part 1**
**Correction of Publication**
Accordingly, 26 CFR part 1 is corrected by making the following correcting amendment:
**PART 1—INCOME TAXES**
*Paragraph 1.* The authority citation for part 1 continues to read in part as follows:
**Authority:**
26 U.S.C. 7805 * * *
**26 CFR Part 1**
*Par. 2.* Section 1.1502-35 is amended by revising the first sentence of paragraph (j) to read as follows:
§ 1.1502-35
(j) *Effective/applicability dates.* This section applies after September 16, 2008. * * *
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).