Internal Revenue Bulletin: 2004-17
April 26, 2004
Table of Contents
Final regulations eliminate the references to manually signed returns in the current regulations under section 6695 of the Code. In addition, the regulations provide that the Commissioner may prescribe, in forms, instructions, or other appropriate guidance, the manner in which preparers may satisfy their obligations under section 6107 to furnish returns to taxpayers and to retain copies of returns.
S corporation tax shelter. This notice advises taxpayers and their representatives about a tax shelter in which a shareholder of an S corporation donates nonvoting stock of the S corporation to an organization described in section 1361(c)(6) of the Code that is not subject to tax on unrelated business income under section 511 or that has UBIT carry-over losses. The transaction is made in order to defer taxation on S corporation income. The notice notifies taxpayers and their representatives that the claimed tax benefits purportedly generated by these transactions are not allowable for federal income tax purposes. The notice also states that this transaction is a listed transaction and warns of the potential penalties that may be imposed if taxpayers participate in such a transaction.
This notice identifies as a listed transaction under section 6111 of the Code certain equity financing structures using partnerships, special allocations of partnership items, and guaranteed payments that are entered into to avoid the limitations of section 163(j).
This procedure permits certain owners of royalty interests (RI) to claim the credit for producing fuel from a nonconventional source in the taxable year (including a 2003 taxable year) in which they receive the income from the sale of qualified fuel, rather than in a prior taxable year in which the owner of the operating interest (OI) sold the qualified fuel.
The document contains corrections to final regulations (T.D. 9088, 2003-42 I.R.B. 841) under section 482 of the Code that clarify that stock-based compensation is taken into account in determining the intangible development costs of a controlled participant in a qualified cost sharing arrangement.
This document contains corrections to proposed regulations (REG-166012-02, 2004-13 I.R.B. 655) under section 446 of the Code that relate to the inclusion into income or deduction of a contingent nonperiodic payment made pursuant to a notional principal contract.
This announcement explains that Rev. Proc. 2004-27, as published in this Bulletin, differs from the version that was advance released on April 5, 2004, in that all references to the cash method of accounting have been removed.
|More Internal Revenue Bulletins|