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March 2005 Plain Language Regulations

Revisions Regulations Relating to Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons and Revisions of Information Reporting Regulations
The Treasury Department and the IRS issued comprehensive withholding and reporting regulations (TD 8734 and TD 8881) (final regulations) that became effective on January 1, 2001.  In Notice 2001-4 (2001-1 C.B. 267), Notice 2001-11 (2001-1 C.B. 464), and Notice 2001-43 (2001-2 C.B. 72), the Treasury Department and the IRS announced the intention to amend the final regulations.  These proposed regulations would implement certain changes announced in those notices and other changes.  In addition, these proposed regulations would provide guidance under section 411 of the American Jobs Act of 2004 (the Act).
REG-125443-01.  Published March 30, 2005.
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Section 704(c), Installment Obligations and Contributed Contracts
Sections 704(c) and 737 generally restrict a partner's ability to transfer the gain or loss in property contributed to a partnership to another partner. These regulations clarify that if the contributed property is sold for an installment obligation, the installment obligation is treated as the contributed property for purposes of applying sections 704(c) and 737.  Likewise, if the contributed property is a contract, such as an option to acquire property, the property acquired pursuant to the contract is treated as the contributed property for these purposes.  TD 9193.  Published March 22, 2005.
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Application of Section 108 to Members of a Consolidated Group
These regulations finalize with certain amendments temporary regulations (TD 9089, 68 FR 52487, and TD 9098, 68 FR 69024) published September 4, 2003 and December 11, 2003, respectively, and temporary regulations (TD 9117, 69 FR 12069) and proposed regulations (REG-167265-03, 69 FR 12091) published March 15, 2004.  These regulations govern the application of section 108 of the Internal Revenue Code to corporations that are members of a consolidated group.  These final regulations provide guidance concerning how a consolidated group utilizes and reduces its tax attributes when a member realizes discharge of indebtedness income that is excluded from gross income.  TD 9192.  Published March 22, 2005.
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Making Election to Treat Qualified Dividend Income as Investment Income
Time and Manner of Making Section 163(d)(4)(B) Election to Treat Qualified Dividend Income as Investment Income: For taxpayers other than corporations, section 163(d) provides that the deduction for investment interest expense may not exceed the taxpayer's net investment income.  As amended in 2003, section 163(d)(4)(B) allows taxpayers to elect to take qualified dividend income into account as investment income for purposes of calculating the deduction for investment interest expense.  These regulations provide the rules relating to how and when taxpayers may make the election.  TD 9191.  Published March 18, 2005.
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Charitable Remainder Trusts; Application of Ordering Rule
Section 664 contains the rules for charitable remainder annuity trusts and charitable remainder unitrusts (CRTs).  Section 664(b) provides the ordering rules for determining the character of distributions from a CRT in the hands of the recipient of those distributions.  These final regulations also provide guidance on the netting of capital gains and losses following the changes made by the Acts.  These regulations provide guidance on the changes made to the income tax rates applicable to certain dividends, one type of ordinary income, by the Jobs and Growth Tax Relief Reconciliation Act of 2003.  TD 9190.  Published March 16, 2005.
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Property Exempt from Levy

These regulations discuss the types of property which may be claimed by a taxpayer as exempt from levy or seizure in satisfaction of an unpaid tax liability.  The regulations are being revised to incorporate recent changes in the law.  These changes include new judicial approval requirements for seizures of certain principal residences and new approval requirements for seizures of certain business assets.
TD 9189.  Published March 7, 2005.
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Amendment to Definition of Qualified Amended Return
In some circumstances, taxpayers are permitted to file an amended return that reduces or eliminates an accuracy-related penalty.  This type of amended return is called a "qualified amended return."  These regulations provide additional circumstances that end the period during which a taxpayer can file a "qualified amended return."
TD 9186.  Published March 2, 2005.
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Amendment to Definition of Qualified Amended Return
In some circumstances, taxpayers are permitted to file an amended return that reduces or eliminates an accuracy-related penalty.  This type of amended return is called a "qualified amended return."  These regulations provide additional circumstances that end the period during which a taxpayer can file a "qualified amended return."
REG-122847-04.  Published March 2, 2005.
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Sickness or Accident Disability Payments
Under current law, payments to an employee or any of the employee's dependents on account of sickness or accident disability are subject to social security taxes, for the first six months the employee is out of work, unless the payments are received under a workers' compensation law.  These proposed regulations explain that a workers' compensation law includes a statute that is in the nature of a workers' compensation law.  REG-160315-03.  Published March 11, 2005.
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Disclosure of Return Information to the Department of Commerce
The Internal Revenue Code authorizes the Internal Revenue Service to disclose tax information to the Department of Commerce (Commerce) for the purpose of structuring censuses and national economic accounts and conducting related statistical activities authorized by law.  This document contains temporary regulations related to the disclosure of tax information to Commerce. The temporary regulations add two items of mandated Small Area Income and Poverty Estimates.  The temporary regulations also remove four items of information that Commerce indicated it no longer requires.  REG-147195-04.  Published March 11, 2005.
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Disclosure of Return Information to the Department of Commerce
The Internal Revenue Code authorizes the Internal Revenue Service to disclose tax information to the Department of Commerce (Commerce) for the purpose of structuring censuses and national economic accounts and conducting related statistical activities authorized by law.  This document contains temporary regulations related to the disclosure of tax information to Commerce.  The temporary regulations add two items of return information disclosed to Commerce solely for the purpose of producing statutorily mandated Small Area Income and Poverty Estimates.  The temporary regulations also remove four items of information that Commerce indicated it no longer requires.  TD 9188.  Published March 11, 2005.
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Transactions Involving the Transfer of no Net Value
These proposed regulations provide rules on when corporate formations, liquidations, and reorganizations involving insolvent corporations will be tax free under the relevant statutory provisions.  The proposed regulations also apply to transactions involving solvent corporations that raise similar issues.  Generally, the rules require that the fair market value of the assets transferred exceeds the amount of the liabilities assumed by the acquiring corporation and the amount of property other than stock received by the transferor corporation.  The rules also require that the acquiring corporation be solvent after the transaction.  The rules also provide guidance on the circumstances in which, and the extent to which, creditors of an insolvent corporation are treated as owning the proprietary interests in the corporation.  REG-163314-03. 
Published March 10, 2005.
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Collection after Assessment
The Internal Revenue Code and accompanying regulations provide that a tax may be collected for up to ten years after it is assessed. The proposed revisions to the regulations incorporate changes to the Code that were made in 1998.  These changes limit the IRS's ability, as of January 1, 2000, to enter into agreements to extend the statutory period for collecting a tax.  These changes also address the continued effect of such agreements executed prior to January 1, 2000.  REG-148701-03. Published March 4, 2005.
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Designated Roth Contributions to Cash or Deferred Arrangements
These proposed regulations would provide guidance concerning the requirements for designated Roth contributions to qualified cash or deferred arrangements under section 401(k).  These proposed regulations would affect section 401(k) plans that provide for designated Roth contributions and participants eligible to make elective contributions under these plans.  REG-152354-04.  Published March 2, 2005.
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Loss Limitation Rules
This document contains final regulations under sections 337(d) and 1502 of the Internal Revenue Code.  These regulations disallow certain losses recognized on sales of subsidiary stock by members of a consolidated group.  These regulations apply to corporations filing consolidated returns, both during and after the period of affiliation, and also affect purchasers of the stock of members of a consolidated group.
TD 9187.  Published March 3, 2005.
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Diversification Requirements for Variable Annuity, Endowment, and Life Insurance Contracts
These regulations remove provisions of the Income Tax Regulations that apply a look-through rule to assets of a nonregistered partnership for purposes of satisfying the diversification requirements of section 817(h) of the Internal Revenue Code.
TD 9185. Published March 1, 2005.
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