International Multifoods Corporation and Affiliated Companies - Page 13

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          prescribe such regulations as may be necessary or appropriate to            
          carry out the purpose of this section, including regulations                
          * * * relating to the treatment of losses".  Nevertheless,                  
          respondent contends that nothing in section 865 requires the                
          Treasury to promulgate "any particular rule" with respect to the            
          allocation of losses on the disposition of personal property.  We           
          disagree.  Through the enactment of section 865(j)(1) directing             
          the Secretary to promulgate regulations necessary to carry out              
          the purpose of this section (i.e., residence-based sourcing),               
          Congress intended to change the rules regarding the allocation of           
          losses realized on the sale of noninventory personal property.              
          Otherwise, section 865(j)(1) would be unnecessary and, indeed,              
          meaningless.  The regulations that respondent would have us apply           
          were already in place prior to the Tax Reform Act of 1986.  If              
          Congress intended those existing regulations to apply, section              
          865(j)(1) is a nullity.                                                     
               The purpose behind section 865(j)(1) is reflected in The               
          General Explanation of the Tax Reform Act of 1986, prepared by              
          the Joint Committee on Taxation, which provides as follows:                 

                    The Act provides that regulations are to be                       
               prescribed by the Secretary carrying out the purposes                  
               of the Act's source rule provisions, including the                     
               application of the provisions to losses from sales of                  
               personal property * * *.  It is anticipated that                       
               regulations will provide that losses from sales of                     
               personal property generally will be allocated                          
               consistently with the source of income that gains would                
               generate but that variations of this principle may be                  
               necessary.  * * *  [Staff of Joint Comm. on Taxation,                  

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