Internal Revenue Bulletin: 2005-44
October 31, 2005
Real Estate Mortgage Investment Conduit (REMIC) net operating losses (NOLs). This ruling illustrates the interaction between the REMIC excess inclusion rules and the net operating loss rules. Section 860E(a)(1) of the Code provides that the taxable income of a holder of a residual interest in a REMIC shall not be less than the holder's “excess inclusion” (generally equivalent to REMIC phantom income) for the taxable year. Effectively this prevents the application of NOLs to offset the excess inclusion income. The statute includes NOL coordinating rules in section 860E(a)(3) with the general effect of creating a separate basket for taxing excess inclusion income, so that the amount calculated as an NOL for a year is not reduced by the excess inclusion income and NOL carryovers are not absorbed by excess inclusion income. The ruling simply illustrates the application of the coordination rules.
LIFO; price indexes; department stores. The August 2005 Bureau of Labor Statistics price indexes are accepted for use by department stores employing the retail inventory and last-in, first-out inventory methods for valuing inventories for tax years ended on, or with reference to, August 31, 2005.
The October 2005 revision of Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3, originally published as Rev. Proc. 2005-65, 2005-38 I.R.B. 564, is now posted to the IRS website. Also, Section 2.06 of Part A of Publication 1141 reflects a minor change from Rev. Proc. 2005-65.
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