Internal Revenue Bulletin: 2005-32
August 8, 2005
This notice provides supplemental guidance for foreign banks concerning interest expense allocation. The notice also indicates that the Treasury Department and the IRS are evaluating foreign banking industry data to determine whether the 93-percent fixed ratio in step 2 of the interest expense allocation formula under regulations section 1.882-5 should be increased, and whether the fair market value election for valuing U.S. assets should require the use of the actual ratio in step 2. The notice also permits taxpayers who use the adjusted U.S. book liability method to calculate excess interest by reference to a published LIBOR rate rather than the taxpayer’s actual non-U.S.-based dollar borrowing rate.
This procedure provides the maximum vehicle values using the special valuation rules under sections 1.61-21(d) and (e) of the regulations. These values are indexed for inflation and must be adjusted annually by referring to the Consumer Price Index (CPI).
This procedure prescribes how an eligible educational institution may obtain automatic consent from the Service to change its method of reporting under section 6050S of the Code and section 1.6050S-1 of the regulations. For calendar years beginning after December 31, 2003, an eligible educational institution must elect to report either the aggregate amount of payments received, or the aggregate amount billed, for qualified expenses during the calendar year for students enrolled for any academic period. Section 1.6050S-1(b)(1) provides that once an eligible educational institution elects to report either amounts billed, or payments received, it must continue to use the same method of reporting for all subsequent calendar years for which it is required to file information returns, and furnish information statements, unless permission is granted to change its reporting method. An eligible educational institution that complies with all of the conditions and procedures of this revenue procedure has obtained consent to change its method of reporting as required by section 1.6050S-1(b)(1).
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