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process. We agree with respondent that petitioner’s problem, to
the extent it has one, does not arise under U.S. income tax law
but under United Kingdom tax law, which has not given effect to
the increase in Standard Chartered-U.K.’s basis as provided under
the Temporary Regulation. The failure of the competent authority
process to resolve this inconsistent treatment under U.S. and
U.K. tax laws is unfortunate, but it does not reflect upon the
validity of either section 267(f) or the Temporary Regulation.
III. Respondent’s Authority To Limit the Retroactive Effect
of the Final Regulation
During the administrative proceedings of this case,
petitioner requested elective retroactive application of the
Final Regulation. In a January 16, 1997, Technical Advice
Memorandum, respondent denied petitioner’s request. Petitioner
argues that respondent’s denial was not authorized by section
7805(b).
Section 7805(b) provides:
(b) Retroactivity of Regulations or Rulings.--
The Secretary may prescribe the extent, if any, to
which any ruling or regulation, relating to the
internal revenue laws, shall be applied without
retroactive effect.[14]
14 Sec. 7805(b) was amended in 1996, effective for
regulations that relate to statutory provisions enacted on or
after July 30, 1996. See Taxpayer Bill of Rights 2, Pub. L.
104-168, sec. 1101(b), 110 Stat. 1452, 1469 (1996). Accordingly,
the amendments are inapplicable to the instant case.
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