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petitioner's foreign tax credit limitation under section 904(a).2
We severed this issue because the Department of the Treasury
(Treasury) issued proposed regulations on July 8, 1996, involving
the allocation of losses realized on the disposition of stock
(the stock loss regulations). The summary to the proposed
regulations stated that "The regulations are necessary to modify
existing guidance with respect to stock losses." 61 Fed. Reg.
35696 (July 8, 1996). Pursuant to the proposed regulations,
losses realized on the disposition of stock of a corporation in
which the taxpayer owns a 10-percent or greater interest
generally would be sourced in the residence of the seller. Sec.
1.865-2(a)(1), Proposed Income Tax Regs., 61 Fed. Reg. 35698
(July 8, 1996). With respect to losses realized on the
disposition of all other personal property, the proposed
regulations provide that section 1.861-8, Income Tax Regs., or
other administrative pronouncements will continue to apply. Sec.
1.865-1, Proposed Income Tax Regs., 61 Fed. Reg. 35698 (July 8,
1996). If the proposed regulations are finalized in their
current form, petitioner would be permitted to elect
retroactively to source its Paty stock loss in the United States.
See sec. 1.865-2(a)(1), (e)(2)(i), Proposed Income Tax Regs., 61
Fed. Reg. 35698-35700 (July 8, 1996).
2Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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