Internal Revenue Bulletin: 2003-46
November 17, 2003
Table of Contents
Stocks and securities; distribution. This ruling concludes that, in determining whether a distribution of controlled corporation stock satisfies the business purpose requirement of regulations section 1.355-2(b), the fact that the distribution avoids gain recognition under section 311(b) of the Code does not present a potential for avoidance of federal income tax.
Gross income; compensation for injuries or sickness; disaster relief payments. Taxpayers are informed of the tax treatment under sections 61, 104, 130, and 139 of the Code of periodic payments to claimants of the September 11th Victim Compensation Fund.
Helicopters. This ruling concludes that a helicopter is not an airplane for purposes of section 147(e) of the Code which provides that a private activity bond is not a qualified bond if issued as part of an issue and any portion of the proceeds of such issue is to be used to provide any airplane, skybox, or other private luxury box, health club facility, facility primarily used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises.
Low-income housing credit; satisfactory bond; “bond factor” amounts for the period October through December 2003. This ruling announces the monthly bond factor amounts to be used by taxpayers who dispose of qualified low-income buildings or interests therein during the period October through December 2003. This ruling also provides a summary of the bond factor amounts for dispositions occurring during the period January through September 2003.
Final regulations under section 61 of the Code provide comprehensive guidance on the federal tax treatment of split-dollar life insurance arrangements. The regulations provide two mutually exclusive regimes to tax split-dollar life insurance arrangements for federal income, employment, and gift tax purposes. Under the economic benefit regime, the owner of the life insurance contract is treated as providing current life insurance protection and other taxable economic benefits to the non-owner of the contract. Under the loan regime, the non-owner of the life insurance contract is treated as loaning premium payments to the owner of the contract. If the loan from the non-owner does not provide for sufficient interest, the loan is a below-market loan, and is subject to imputations under section 7872 as modified by these final regulations.
The Internal Revenue Service announces that it will resume ruling on the issue of significant chemical change for synthetic fuels for purposes of section 29 of the Code.
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