Today, the IRS issued final regulations (TD 9759) under sections 334(b)(1)(B) and 362(e)(1) that limit the ability of taxpayers to import losses into the federal tax system.  The final regulations adopt, with only a few substantive changes, the proposed regulations issued in September 2013.  In addition, the final regulations adopt, without changes, proposed regulations issued in March 2005 that implement various statutory amendments to sections 332 and 351.  The final regulations provide that the acquiring corporation’s basis in importation property (that is, property that would not be subject to tax in the hands of the transferor but would be subject to tax in the hands of the acquirer) acquired in a loss importation transaction (that is, a tax-free transaction in which the acquirer’s aggregate basis exceeds the aggregate value) is stepped up or down to its fair market value. Lisa Zarlenga, partner in Steptoe’s Washington office, commented, “The loss importation rules provide a planning opportunity because they permit acquirers to step up the basis of built-in gain importation property in addition to stepping down the basis of built-in loss importation property.”  The final rules also contain information collection provisions that require corporations and their shareholders to report separately the fair market value and basis of property (including stock) transferred in a tax-free transaction.  The final regulations are effective March 28.