# Application of section 108(i) to partnerships and S Corporations.
**AGENCY:**
Internal Revenue Service (IRS), Treasury.
**ACTION:**
Correcting amendments.
**SUMMARY:**
This document contains corrections to final regulations and removal of temporary regulations (TD 9623) that were published in the *Federal Register* on Wednesday, July 3, 2013 (78 FR 39973). The final regulations are relating to the application of section 108(i) of the Internal Revenue Code to partnerships and S corporations and provides rules regarding the deferral of discharge of indebtedness income and original issue discount deductions by a partnership or an S corporation with respect to reacquisitions of applicable debt instruments after December 31, 2008, and before January 1, 2011.
**DATES:**
This correction is effective on August 14, 2013 and applicable on or after July 2, 2013.
**FOR FURTHER INFORMATION CONTACT:**
Joseph R. Worst, at (202) 622-3070 (not a toll-free number).
**SUPPLEMENTARY INFORMATION:**
**Background**
The final regulations and removal of temporary regulations (TD 9623) that are the subject of this correction are under section 108(i) of the Internal Revenue Code.
**Need for Correction**
As published, the final regulations and removal of temporary regulations (TD 9623) contains errors that may prove to be misleading and are in need of clarification.
**List of Subjects in 26 CFR Part 1**
Income taxes, Reporting and recordkeeping requirements.
**Correction of Publication**
Accordingly, 26 CFR Part 1 is corrected by making the following correcting amendments:
**26 CFR Part 1**
**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 * * *
*Par. 2.* Section 1.108(i)-2 is amended by revising paragraphs (b)(6)(i)(A)( *4* ), (c)(3)(i)(A)( *5* ), and (d)(2)(iii) *Example 2.* (ii) to read as follows:
§ 1.108(i)-2
(b) * * *
(6) * * *
(i) * * *
(A) * * *
( *4* ) In the taxable year that includes the day before the day on which the electing partnership files a petition in a title 11 or similar case.
(c) * * *
(3) * * *
(i) * * *
(A) * * *
( *5* ) In the taxable year that includes the day before the day on which the electing S corporation files a petition in a title 11 or similar case.
(d) * * *
(2) * * *
(iii) * * *
**Example 2.**
* * *
(ii) Under paragraph (d)(2) of this section, ABC partnership's deferred OID deduction for 2012 is the lesser of: $23.25 ($31 of OID that accrues on the new debt instrument in 2012 less $7.75 of this OID that is allowed as a deduction to A in 2012) or $9.75 (the excess of $75 (ABC partnership's deferred COD income of $150 less A's share of ABC partnership's deferred COD income that is included in A's income for 2012 of $75) over $65.25 (the aggregate amount of OID that accrued in previous taxable years of $87 less the aggregate amount of such OID that has been allowed as a deduction by A in 2012 of $21.75)). Thus, of the $31 of OID that accrues in 2012, $9.75 is deferred under section 108(i).
Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).